Inflation divergences: Implications for monetary policy The Intuition Finance Digest

Inflation dynamics across developed economies are
diverging. US inflation data has come in “hot” so far in 2024, but inflation in Europe has eased, falling short of expectations. While the Fed is opting to look through the data for now and sticking to its guidance for policy easing to start this year, any further bad data will test the Fed and the markets. The ECB appears to be facing no such dilemma, with easing expected to start in earnest in June, though the divergence itself is a potential obstacle.