It has been a long time coming but just over eleven years to the day that the European Central Bank last raised official interest rates, it is set at its July 21 meeting to begin hiking them from an all-time low as it battles to contain the surge in inflation that has hit not just the Eurozone but the world as a whole. At its most recent meeting, in June, the ECB released … [Read more...] about Eurozone braces for series of ECB rate-hikes
“The report of my death was an exaggeration,” the American humourist Mark Twain quipped after newspapers mistakenly published his obituary. We can probably say the same about the prognosis of recession swirling in the financial markets now. There’s no doubt the backdrop for growth is challenging. China’s stringent zero-Covid policy continues to disrupt supply chains. The … [Read more...] about Are recession concerns overdone?
The world loves a label. The very low price increases during the decade that followed the global financial crisis (GFC) were termed, appropriately enough, “lowflation”—in other words, inflation that fell short of central banks’ targets but was positive and therefore wasn’t deflation. Now, amid the current surge in inflation, have we entered the decade of “highflation”—inflation … [Read more...] about No, we are not about to return to 1970s-style inflation
The consensus among economists puts the odds of a recession starting sometime in the next year at 30%, according to Bloomberg’s most recent survey. No wonder the S&P 500 is deep in correction territory and flirting with an official bear market. We think the near-term pessimism is overdone. Yes, a recession is likely on the way, but it probably has about two more years … [Read more...] about Recession unlikely in 2022
Intellectuals and politicians often try to verbally summarise or justify conventional thinking in pithy ways. Milton Friedman (in 1965) and Richard Nixon (in 1971) both said different versions of the phrase “we are all Keynesians now.” John Maynard Keynes, one of the most famous economists of all time, supported deficit spending and government manipulation of economic activity. … [Read more...] about We Are All Keynesians