The numerous signs of a deceleration of the rise in prices in the United States from the June peak “are good news”, because “the United States has anticipated” the global trend of inflation, underlined the Governor of the Banque on Tuesday 15 November de France François Villeroy de Galhau in a speech in Japan, during an event organized by the financial center of Paris. The US central bank’s (Fed) policy of trying to control inflation “has had a major impact on the rest of the world as the dollar strengthens,” he also estimated. The euro spent long weeks below parity with the dollar, and reached levels not seen since 2002.
US consumer prices rose 7.7% in October compared to October 2021, according to the benchmark CPI, a weaker increase than the 8.2% increase recorded in September and less than the waited. Enough to have investors cheering, with shares surging sharply after this release. The Fed is expected soon to slow the pace at which it raises its key rate, the main tool to fight inflation, its vice chair Lael Brainard said on Monday, stressing however that the institution has not yet to stop these hikes. It is between 3.75% and 4.00%, the highest level since January 2008.
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Even for the European Central Bank (ECB) the sharp rises in rates “should not become a habit”, declared the governor of the Banque de France, who thinks they should continue to rise “but in a more flexible and perhaps slower way”. after its last meeting of 2022, scheduled for December. Eurozone price inflation hit a record 10.7% in October, and it will take “clear signs of a reversal in underlying inflation,” which rules out more volatile food and commodity prices, to halt rate hikes. The ECB’s reference rate is currently at 1.50%, while before the summer it was negative.
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