Keep calm: inflation only transitory

Edito A further increase in consumer price inflation adds pressure on policymakers to start withdrawing their support rather sooner than later. US inflation accelerated to 5.4% in June, while inflation in the UK surged to 2.5%, raising concerns of the risk of a lasting increase in inflation. While t wo B o E doves , Mr. Saunders and Dave Ramsden, saw the need for a monetary tightening sooner than planned, Fed Powell’s dovish comments in his congressional testimony have reassured the markets: the l abor m arket h a s still a “l ong w ay to g o ”. We expect the ECB next week to also send a dovish message.