Inflation drivers continue to paint a mixed picture, but inflation is likely to head lower towards 2024 in the US and euro area. Underlying inflation and wage growth have begun to ease in the US, but remain sticky in the euro area.

(US) October CPI surprised to the downside in both headline and core terms. As underlying price pressures continue to moderate, we still expect the Fed to cut rates in March 2024.

(EU) Inflation fell significantly again in October due to base effects from energy and food prices but also waning inflationary momentum. Going forward, we expect the decline in core and food inflation to continue while energy inflation provides some upside risks to headline inflation.