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Inflation Remains Risk Confronting Financial Markets
Overall inflation has moderated meaningfully in recent months in the United States and euro area, as energy and food prices have fallen significantly. Year-on-year headline inflation is now around 3 percent in the United States and below 5.5 percent in the euro area. However, core inflation, excluding food and energy prices, has declined more slowly. Services inflation has proven to be particularly sticky. According to market pricing, investors expect headline inflation to continue to decline quite rapidly in coming quarters. However, some market participants still see upside risks to the inflation outlook, likely ... (full story)