Slack Attack: G-3 Core Inflation Sets Record Lows

Slack Attack: G-3 Core Inflation Setting Record Lows

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• G-3 core inflation’s rapid approach to zero locks in low-for-long policy stances
• Inflation and policy dynamics differ elsewhere
Core CPI inflation is setting record lows in the G-3 economies, reaching an estimated 0.4%oya last month. US core inflation fell to 0.9%oya in April, a level last seen very briefly in the early 1960s. Euro area core inflation declined to 0.7%oya, the lowest level in recorded history dating back to 1991. Japan’s core inflation rate (calculated to exclude all food and energy) is expected to hit a new low of -1.9%oya in next week’s April report, although the decline from -1.1% in March largely represents a reduction in high school tuition, rather than fundamental forces.

Slack Attack: G-3 Core Inflation Setting Record Lows

ENDS

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