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What to make of the latest forward guidance

Now that inflation has passed its peak and many central banks have begun to slow the pace of policy tightening, markets are back to scouring their communications for evidence of what’s to come. So far, central banks are taking a cautious approach, warning that their job is not yet done and that any change in the policy path will depend on future inflation outcomes. We expect a further sharp reduction in price pressures to cause the US Fed to follow the Bank of Canada with a more dovish tone before long, but the ECB will lag some way behind.

We have created a new data dashboard to accompany the Global Central Bank Watch, which includes our suite of monetary policy forecasts together with information on market expectations and long-run neutral rates. The dashboard and underlying data are available for CE Advance clients to view and download here.

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