Full reverse. First of all, let's review recent history. Last week was a busy one in terms of both economic statistics and monetary policy announcements. On the inflation front, there's nothing new: the US CPI and PPI came out broadly in line with expectations, but as we pointed out a few weeks ago, the situation is more one of stabilization than of real decline. In other words, the effects of the restrictive policies pursued by central banks are not sufficient to curb price rises in the long term. In this respect, the speeches by Jerome Powell and Christine Lagarde are surprising. On both sides of the Atlantic, monetary institutions have raised their inflation forecasts for 2024. However, the Fed decided to leave rates unchanged in June, and is likely to have to keep interest rates at high levels for longer than it thought, if not raise them. But how much credibility can be given to an institution whose aura is a shadow of its former self? The infographic below is a perfect illustration. In the space of two decades and four Presidents, the confidence index has been halved to around 36%.

The Fed has missed the opportunity to turn the screw one more time to ensure the effectiveness of its action, rather than expose itself to having to chase the inflation train once again with multiple rate hikes. If the train leaves the station in a hurry, the chances of soft-landing will quickly vanish.