Daily update
Daily update
- Economists are overstimulated by the US today. We have the excitement of US consumer price inflation. We have the excitement of a Federal Reserve policy decision. Fed Chair Powell’s press conference can be relied upon to dampen economists’ passions. The Fed is unlikely to change policy. The fabled dot plots of policy projections will add confusion (a black mark on a chart gives no sense of confidence or risk).
- The ECB cut rates with near identical inflation, but Powell’s focus on consumer price inflation is unnecessarily delaying Fed easing. The main consumer price numbers should be stable—the details matter. Market prices (ignoring the fantasy element) give a better indication of actual spending power. Regional inflation tells us whether inflation might be persistent (a clear “no” at the moment) and hints at possible political issues.
- China’s price data is far less relevant to the global economy, and is mainly a domestic concern. Core non-food consumer goods prices remained weak, hinting at weak domestic demand. Producer prices are still in deflation.
- EU economic nationalism means the European Commission is imposing a sizable tax on domestic consumers of electric vehicles from China. The total tax level, at 35%, is not as high as the US (100%). It will probably prompt retaliation from China.
