Lower US inflation could dampen interest rate hikes – Daily Business
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3:30 p.m.: US inflation falls
Headline CPI inflation in the United States fell last month and is below expectations, rising to 7.7% year-on-year in October from 8.2% in September and from the consensus forecast of 7 .9%.
This has raised hopes that the inflationary beast may be contained and that future interest rate hikes in the United States and elsewhere may not be so aggressive.
The data boosted stock markets. One hour before closing FTSE100 was up 78 points at 7,373.79.
Samuel Fuller, Director of Online Financial Markets, said: “Policymakers got their wish. Signs indicate that a series of rapid interest rate hikes could finally bring runaway inflation under control. Prices are cooling faster than expected in the US, making a 0.75% rate hike next month extremely unlikely.
“This will calm nerves on both sides of the Atlantic as the data offers the tantalizing promise of calmer waters where ratemakers don’t have to destroy economies to get inflation under control.”
Rob Clarry, Investment Strategist at Evelyn Partnerssaid, “After a year in which inflation consistently surprised on the upside, today’s CPI report finally brought some good news.
“October’s inflation print surprised on the downside, with annual and monthly numbers weaker than expected. The 0.3% increase in core inflation was the weakest reading since September 2021.
“The immediate market reaction to today’s CPI print was positive. S&P500 futures climbed +2.5% as investors hoped this would be the start of a continued deceleration in headline inflation.
“This does not change our view that the Fed will continue to stay the course with its monetary policy tightening plans in the coming months. However, we expect lower rate hikes after four consecutive rate hikes. 75 basis points.”
Danni Hewson, financial analyst for AJ Bell, was more cautious about easing monetary policy. She said: “Will the change in circumstances prevent a fifth straight 75 basis point hike in Fed interest rates next month? This is the question that will be on the minds of all investors today.
“But the October figure is still uncomfortably warm, almost four times the central bankers’ target, and they will most certainly want to see a sustained easing in underlying inflation before they ease off.”
British Gas owner Centrica said it expects profits to rise despite its retail division’s profits falling short of expectations due to warmer than normal weather in October.
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National Grid is investing a further £40bn in critical infrastructure over the next four years, of which £29bn will go directly to decarbonising energy networks after spending a record £3.9bn over the past four years. of the semester.
To date, it has achieved £225m in operating cost savings, enabling the business to alleviate some inflationary pressures on the business and customers. It also announced funding to help its most vulnerable customers and communities this winter and next.
Underlying pre-tax profit for the half to September 30 was 47% higher at £1.45 billion. The board declared an interim dividend of 17.84 pence per share in line with policy (17.21 pence per share in the prior period).
Stationery retailer and travel agent WH Smith turned a full-year profit as a rebound in air and rail travel boosted revenue, and it said the momentum has continued in the current financial year .
The company recorded a pre-tax profit of £63m, compared to a loss of £116m a year ago when Covid-19 travel restrictions were in place.