Daily update
Daily update
- Sweden’s Riksbank is expected to cut interest rates at its meeting today (this is a widespread but not a universal expectation). Swedish inflation is some way above 2%, but the trend has been for slower price increase. In cutting rates, the Riksbank would simply be following inflation lower (as with the earlier Swiss rate cut).
- Developed economies’ central bankers need to ask themselves whether they want their policy stance to become ever more repressive toward economic growth. If the answer is “no”, then real interest rates should be stabilized (and a case may be made for them being reduced)—hence reacting to inflation. The problem is picking the inflation measure. Federal Reserve Chair Powell’s unnecessary elevation of the role of the consumer price index has probably delayed US rate cuts.
- Assorted central bankers are speaking. However, if the necessity of interest rates following inflation lower is established, the only insight from central bank commentary is the speakers’ views on the future direction of inflation (about which they are unlikely offer any better quality views than those of private sector economists).
- US wholesale sales and inventory data are due. While the wholesale sector is a worthy part of the economy, it is hard to get excited about it.
