Report19 June 2017Updated 3 months ago

Waiting for a raise

In our latest monthly update, we look at why there is little sign of a significant acceleration in inflation, despite maturing recoveries and falling unemployment on both sides of the Atlantic.

Executive summary

Despite maturing recoveries and falling unemployment on both sides of the Atlantic, there is little sign of a significant acceleration in inflation. In part this is because wage inflation is failing to pick up as expected. This is complicating the central banks’ plans to raise interest rates. While the US Federal Reserve looks set to take two small steps in the coming months, there may be a longer wait for further moves. Meanwhile, the European Central Bank is no hurry to raise, despite brighter economic and political news.


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