Federal Reserve

Tech prices having swung from consistently falling over recent decades to posting large gains, although non-tech inflation is also high.

Upside risks to global inflation from the energy shock have abated, but US inflation is still too high, pointing to higher interest rates.

The Fed now narrowly expects one rate hike this year. Policy rules point to a peak in the funds rate of about 4½% (previously around 4%).

Analysis suggests there is merit to Warsh arguing that trimmed mean inflation is better than the traditional core PCE series.

Warsh has pointed to a less commonly-used measure of inflation that is close to the Fed's target.

Core inflation remained strong ahead the spike in energy prices. The Fed will talk tough on inflation risks as it shifts to a neutral bias.

Rates markets are worried about risks to inflation, although central banks will ultimately balance both inflation and unemployment.

The Fed is formally forecasting a couple more rate cuts, but CCI's policy rules continue to point to a higher funds rate.

The Fed will probably keep interest rates unchanged next week after cutting the funds rate by 25bp to 3½–3¾% last month in a split decision.

A new rate-cutting cycle is good news for equities, but investors shouldn't get complacent, says global market strategist Kerry Craig.