The Consumer Price Index (CPI) came in essentially flat in July (actually down a very slight -0.02%), led by a roughly 8% decline in petroleum products. Outside of food and energy, the so-called core CPI rose 0.3%, also a substantial slowing from the prints of recent months. While the core CPI rose more than the headline number, it is worth noting that the bulk of that gain … [Read more...] about Some relief in latest US inflation report
The European Central Bank (ECB) has raised its interest rates for the first time in 11 years and it has done so in an urgent manner. Despite signalling a 25 basis points (bps) rise at its last governing council meeting, the ECB opted for a more aggressive 50 bps increase instead, taking the deposit rate up to zero, the main refinancing rate to 0.50% and the marginal lending … [Read more...] about ECB plays catch-up as it ends era of negative rates
If you follow the financial press, the conventional wisdom has come to the simple conclusion that the way to fight inflation is raising interest rates. Unfortunately, this is just not true. Yes, raising rates may slow the economy, but that alone won’t fix inflation. Starting in 2009, for seven years the Federal Reserve held the federal funds rate at zero and yet inflation … [Read more...] about How to fix inflation
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?