Inflation in the US as measured by consumer prices fell to 4.9 percent in April. The expectations for today’s inflation statement were that it would continue to remain at the same level (5 percent).
The underlying so-called core inflation in April, which strips out energy and food prices, landed at 5.5 percent.
– Total inflation will likely continue downward and it could end up at 3 percent already by the summer, says Olle Holmgren, analyst at SEB.
Happy stock market and inflation stop
Several US stocks, including Nvidia, Alphabet and Tesla, bounced up ahead of the US market opening. The Stockholm stock exchange also turned upwards on the inflation announcement.
– We believe that inflation has reached its peak in Sweden as well. This is because energy prices have fallen since the winter. As far as the underlying inflation is concerned, more positive signs are starting to appear in Sweden, for example food prices which now appear to be on the way to leveling off, says Holmgren further.
Economic concerns in several places
To combat inflation, the US central bank, the Federal Reserve (Fed), has raised the key interest rate to the range of 5-5.25 percent.
In recent months, several regional banks have been in crisis in the new interest rate environment – the latest being First Republic Bank, which was taken over by US authorities last week and then sold to the big bank JP Morgan Chase.
Another troubling cloud in the American financial sky is the national debt. US Treasury Secretary Janet Yellen has said that the US could hit the debt ceiling as early as June 1. With only three weeks left before the Democrats and Republicans must agree, the situation is becoming more and more pressing.