Capital Economy, Business and Finance
Two weeks ago world equity markets were swooning and fears of a US recession undermined Democrats’ new optimism under Kamala Harris. Yesterday US inflation came in a tenth of a per cent lower than the WSJ forecast and expectations of a rate cut next month strengthened. Most of the debate now centres on whether the cut will be by half a point or just a quarter. Either way it'll be a big relief for anyone servicing debts pegged to a base rate which hasn't gone below 5.25 per cent in 13 months. Democrats still need to be realistic: barely one US homeowner in 20 has a variable rate mortgage, so most won't feel a cut the way many Europeans do. And 70 per cent of Americans feel strongly negative about their economy, not least because inflation may be falling but prices – and especially rents – are still going up.
