Born In The USA

Given the slow retreat in services inflation and economic support from loose fiscal policies, central banks are not in a hurry to end their restrictive policy stances. While the ECB has cautiously started its descent from the peak, Fed policy rates are still plateauing. However, more benign inflation data, potentially coupled with further signs of labor market cooling, keep the possibility of a first Fed cut in September alive. Still, with US growth slowing but not yet falling off a cliff, the risk of a first cut after the US elections should not be disregarded.