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Is inflation on its way to being beaten? US markets say yes

American investors are getting their mojo back, and if this rebuilding of confidence over there is sustained, it will have a positive knock-on impact over here, writes Hamish McRae

Sunday 14 August 2022 17:28 BST
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<p>The cheerful markets are probably right; the gloomy economists are probably wrong</p>

The cheerful markets are probably right; the gloomy economists are probably wrong

Too early to celebrate that inflation is being beaten? Well, yes, but that is what the markets seem to be doing.

In America, the most important share index, the S&P 500, has recouped half of its losses of the first quarter and on Friday was at a three-month high. The main driver of that was the US consumer price index coming in at “only” 8.5 per cent, down from 9.1 per cent the month before.

Maybe, the argument runs, the peak of inflation is past and interest rates will not have to rise as much as many feared. The cost of filling the car with fuel has fallen quite sharply, with the average gasoline price below $4 a gallon, the lowest since March.

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