Fully Fed-independent ?

US inflation has now been higher than expected for three consecutive months, dashing the chance of a Fed rate cut before the summer end. We have changed our Fed call and now expect only 50 bp cuts in the second half of this year. While the ECB said it was Fed-independent, central banks are not fully independent due to financial and trade links. The Swedish Riksbank will be next in line to test at the May meeting its independence from a changed outlook for the Fed. We still expect the ECB to cut rates in June . But the path thereafter has become more uncertain in light of latest developments. The B ank of Canada also signaled a June cut as being in the “realm of possibilities “. Thus, for now it seems that several central banks will move ahead of the Fed .