The Fed joins the global easing cycle, and the focus now shifts to the relative pace of cuts, TDS macro analysts note.

Headline inflation to rise in the coming months

“While the relative timing of central banks' first cuts has been an important theme in markets in recent months, the focus now shifts to the relative pace of cuts, and here we see the Fed starting late and going faster. We see little reason why faster Fed cuts will spill over to other major central banks in the near-term, but risks skew to the downside in 2025 as inflation risks fade.”

“Despite souring sentiment in some regions, year-ahead growth forecasts have generally been revised up across the G5 in the last three months (the US is the exception). This is somewhat reflected in our global demand factor, which has moved off its lows, though still has some way to recover to positive territory.”

“Headline inflation will rise in the coming months in most economies. While mainly driven by base effects that central bankers will look through, it risks undoing some of the recent improvement in household inflation expectations.”