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ING: Empl.Cost Index Arguably "The More Significant Infl News"


Further to our comments earlier today (0855ET) on the strong U.S. Q1 Employment Cost Index, ING writes that they see this development as potentially important for Fed policy:

  • "Note too that employment cost index rose 0.9% QoQ versus 0.7% expected. This is arguably the more significant inflation news as it shows price pressures are spreading to the jobs market. This is typically viewed as a signal that inflation could be stickier over the longer term....and is being driven by both salary & wages and higher benefits in the private sector."
  • As for the totality of today's data (including March personal income/spending): "with more income, more spending and more inflation in the US household sector we continue to view the risks being skewed to an earlier reversal of the Federal Reserve's monetary policy stance than officials are signaling" - they see taper by year-end and first rate hike in early 2023.

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