Psagot Analysts Warn of Rising US Inflation and Rate Hike Risks
Psagot Investment House highlights US inflation pressures, rising Fed rate hike expectations, European monetary tightening, and a cautious recovery in Israel's housing market.
Psagot Investment House analysts released their weekly economic review, highlighting US inflation data and rising rate hike expectations, alongside surging oil prices. The report also addresses European rate hikes, eurozone inflation forecasts, and a slight recovery in the Israeli real estate market alongside persistent inventory challenges.
According to Psagot, US inflation data tilts the scale toward a Federal Reserve rate hike. The headline index rose by 0.4%, while a 0.3% increase in the core index indicates that pressures extend beyond energy prices. Oil climbing above $100 per barrel and the need to reinforce central bank credibility further support a projected Fed rate hike.
Meanwhile, the European Central Bank raised interest rates by 0.25% and signaled a hawkish stance amid concerns over secondary inflationary pressures. Eurozone inflation forecasts were revised upward, with inflation expected to remain above target through 2028.
In Israel, the real estate market is showing a mild recovery, driven largely by increased sales of new apartments. However, total sales remain historically low and the inventory of unsold new units stays elevated, suggesting that overall price trends are unlikely to shift significantly.
