The impetus on global disinflation is slowing. This reflects different sectoral dynamics:
– persistence of higher-than-average inflation in service prices, tempered to some extent by stronger disinflation in goods prices.
– nominal wage growth remains brisk, above price inflation in some countries, partly reflecting the outcome of wage negotiations earlier this year.
– an increase in sequential inflation in the United States States during the first quarter delayed the normalization policy. That put other advanced economies such as the euro zone and Canada, where core inflation is cooling more as expected, ahead of the U.S. States in the easing cycle.
At the same time, a number of central banks in emerging market economies remain cautious about cutting interest rates due to external risks triggered by changes in interest rate differentials and the associated depreciation of these economies’ currencies against the dollar.
https://www.imf.org/en/Publications/WEO/Issues/2024/07/16/world-economic-outlook-update-july-2024
