The pound dropped on Wednesday after data showing British inflation slowed by more than expected in September, making it easier for the Bank of England to cut interest rates further.

UK inflation fell more than expected to a three-year low of 1.7 per cent in September, prompting traders to increase bets on further rate cuts from the Bank of England this year. Wednesday’s data release by the Office for National Statistics shows that inflation has come back under the BoE’s 2 per cent target for the first time since April 2021.

Federal Reserve Bank of San Francisco President Mary Daly said on Tuesday that even with last month’s rate cut monetary policy is still working to bring inflation pressures down. The half percentage point cut in the federal funds rate target implemented in September was a “right-sizing” of the stance of interest rate policy,

Michael Bordo and Mickey Levy document the 50-year history of the Shadow Open Market Committee and highlight the differences in its policy prescriptions with the Fed's.

The New York Fed found that consumers' expectations about missed debt payments edged higher in September for the fourth consecutive month, as some may face increased budget pressures.

Buried inside last Friday’s data from the University of Michigan was a shocking inflation outlook from a small segment of consumers — one that is causing some nervousness about whether Treasury-market traders are underestimating the upside risks to prices.