Daily update
Daily update
- Perhaps Federal Reserve Chair Powell has opened an economics book (possibly “How the world really works—the economy”). Powell told the Senate banking committee that cutting rates too early would be bad, but cutting rates too late would also be bad. Unfortunately, the Fed Chair insisted that more “good data” was required to induce a rate cut. With inflation down over eight percentage points in less than two years, real rates soaring, and deflation peppering sectors of the US, it is starting to look like rate cuts are too late.
- China’s consumer price inflation inched back toward deflation in spite of strong pork prices (food prices carry more weight in China’s inflation than in developed economies). The implication is that expectations of domestic policy support will continue.
- We hear from Bank of England Chief Economist Pill today. Chief economists’ remarks should always be heard with reverential attention, but with speculation about UK rate cuts Pill’s comments assume even more importance.
- Politics continues to create noise. France’s caretaker government can do little to produce fiscal stability, and coalition negotiations are meandering. NATO’s summit puts US President Biden’s competence under international scrutiny. These issues are not market moving in the short term, but matter in the long term.
