How inflation releases influence asset prices

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Inflation data is one of the most market-moving economic indicators.

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Higher-than-expected inflation often leads markets to anticipate tighter monetary policy, pushing interest rates and bond yields higher. This can pressure equity valuations and strengthen currencies if higher rates are expected to attract capital.

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Lower-than-expected inflation may ease concerns about rate hikes, supporting bonds and equities. Because inflation plays a central role in central bank decision-making, inflation releases frequently set the tone for broader market movements.