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Generally easing global inflation. Inflation drivers continue to paint a mixed picture, but inflation is likely to head lower through 2023 in the US and euro area. Price pressures from food, freight and energy have clearly eased. Labour markets remain tight, but underlying wage and inflation pressures have shown tentative signs of easing in the US. In euro area, services sector remains the key inflation driver, as price pressures continued to accelerate in April. Despite the uncertainty around financial stability risks, we expect the ECB to hike rates three more times, and the Fed to stay on hold for now. In China, CPI dropped further to 0.1% y/y in April from 0.7%; hence inflation is getting closer to deflation pointing to more stimulus. Read more in Global Inflation Watch - Diverging core inflation trends, 11 May. ....
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