How Has The Inflation Fight Progressed Overseas?

  • The inflation spike in 2021/2022 was a global phenomenon, which led central banks around the world to raise rates in response.
  • In Europe, CPI is beginning to stabilize around the 2% target of the European Central Bank (ECB). Meanwhile, US inflation numbers have plateaued a bit on a level above the Fed’s similar 2% target.
  • The result has been a divergence in rate-cut expectations in June showing near certainty of a cut in Europe and almost no chance of a cut in the US (see chart).
  • The implications have been continued strengthening of the US Dollar this year, but also higher equity valuations in Europe which have boosted international market indexes.
  • Whenever the Fed does begin easing the policy rate domestically, the backdrop for international stocks could improve even more due to relative valuations that are still attractive and a weaker US Dollar.


  1. Charles Schwab:
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