• All inflation items are indeed trending lower but core measures of price growth show signs of stickiness. This means the price stability battle could remain open. Moreover, multiple rate hikes and reduced liquidity are challenging the banking sector with systemic second-order effects on confidence and financial stability. In fact, the extreme asset price movements registered in March were connected to banking sector turmoil and signs of crippling financial stability.
• The short term is characterised by a weak economic perspective across DM countries, where US developments are mainly driven by banking sector stress and the credit crunch. Central banks, employing a more data-dependent approach, could thus pause their hiking intentions.

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