JP Morgan concerned about sticky inflation, "Central banks could stay higher for longer"

<p>A note from JP MOrgan with the transmission channel from stick inflation to higher for longer rates and thus a lid on the equity market. </p><ul><li>

“we stick to our long-held view that inflation will keep moderating, we worry that there is no cushion here anymore, most are fully on board with the view”</li></ul><p>But … </p><ul><li>

“At the same time, it is likely easier for inflation to move down from say 10% to 5%, but the move from 5% to 2% becomes incrementally harder”</li></ul><p>On the implication for central banks:</p><ul><li>"Central banks could stay higher for longer …"</li></ul><p>And thus equities:</p><ul><li>" … which would limit any prospect for multiple expansion, and the market would then need to solely rely on earnings growth for upside"</li></ul><p>—-</p><p>And, more:</p><p>JPM say that there is </p><ul><li>“a growing possibility that core PCE inflation could actually run above core CPI inflation for a time — reversing the historical gap between these two measures"</li></ul><p>And this:</p><p>"We continue to look for the Fed to keep rates on hold into 2H24—barring an unexpected recession”</p><p>Too early to celebrate. </p>

This article was written by Eamonn Sheridan at www.forexlive.com.