Daily update
Daily update
- US politics keeps resurrecting ideas from the 1970s—most recently questioning central bank independence. Some economists argue that Federal Reserve Chair Powell is the worst central bank head since Fed Chair Burns (who served US President Nixon). Burns was independent in theory, but not in practice. Former US President Trump suggested this week’s rate cut was political in nature, and that the Fed should be more under his control. US President Biden defended Fed independence yesterday.
- Politically, voters are unexcited about central bank independence (many US voters do not know what the Fed does or who Powell is—at times economists would regard such ignorance as bliss). Economically, independent central banks were the main reason inflation was tamed after the 1970s. Markets appear not to be taking threats to Fed independence seriously—if they did, the implications could be significant.
- Japan’s consumer price inflation data was unexciting, rising very slightly as markets expected. German producer price inflation was a little stronger, with rising consumer goods prices contributing.
- UK August retail sales were strong (not US-hedonism strong, but respectable). Warm weather and price discounting helped. Clothing sales were especially strong—these are goods related to spending on having fun. People want to wear something new when creating Instagram posts of congealed restaurant food.
