There were mixed feelings surrounding the US inflation data released this week. Pleasing the market, we saw the annual rate of inflation fall for the ninth consecutive month to 5%, the lowest level recorded since May 2021.

Weaker economic data set the tone for interest rate expectations in the US last week. Firstly, we had the Institute of Supply Management (ISM) Manufacturing Purchasing Managers Index (PMI). This came in at 46.3 for March.

After the events of the previous two weeks a quieter few days was probably in order. In the UK, economic data was on the lighter side.

The central banks of the US and UK continued their battle against inflation this week, both lifting their key interest rate by 0.25%. This took the US Fed Funds Rate to 4.75%-5% and the UK base rate to 4.25%.

There are some weeks when content for Ear to the Ground is hard to come by. This week is certainly not one of those weeks. We touched upon Silicon Valley Bank (SVB) in our previous edition. The UK arm was successfully sold to HSBC.

This week we heard from Jerome Powell who provided his update to Congress. Here he confirmed that he was prepared to increase the pace of interest rate hikes if the data warranted this.