US inflation unlikely to change the hawkish Fed outlook – Danske Bank

Analysts at Danske Bank note that softer US inflation data is unlikely to alter the US Federal Reserve’s (Fed) outlook on rate hikes and quantitative tightening (QT).

Key quotes

“The main event today is the US inflation data for December, where the headline inflation is expected to reach 7% y/y and core-inflation 5.4% y/y.”

“However, the core-inflation is expected to decline from 0.8% m/m to 0.4% m/m.”

“Still, a lower m/m number should not change much on the pricing of the Federal Reserve as they need more than one number to change their view on QT and rate hikes.”