Recent US consumer data is compellingly strong, as reflected in December retail sales and weekly jobless claims, making it likely that the US is heading for a “soft landing”. While inflation remains above target, the Fed is likely to remain cautious in the short term about cutting interest rates. In SA, latest retail sales data is disappointing, reflecting declining household incomes. As inflation is largely under control, the SARB is likely to keep rates unchanged in the short term but may begin rate cuts in May.