May 2023 Market Update – The pace of price rises cools at home and abroad

US inflation has eased to its lowest level in two years but is still well above the Fed’s 2% inflation target. The UK’s annual inflation rate has also fallen but remains stubbornly high at 10.1%.

Government bonds and global stock markets rallied in April after cooling inflation bolstered hopes the US Federal Reserve (Fed) may slow its rate hikes. US annual inflation fell from 6% in February to 5% in March, the slowest pace for price increases in almost two years. However, the rate is still well above the Fed’s 2% inflation target.

Oil prices jumped to $86 a barrel as members of the Opec+ cartel agreed to a surprise cut in production. The move, led by Saudi Arabia, will take effect in May and reduce the supply of crude by more than one million barrels a day. The share prices of large oil producers surged in response.