BBC (June 13)
“UK wages have risen at their fastest rate in 20 years, excluding the pandemic, raising expectations that UK interest rates will have to rise. Regular pay excluding bonuses increased by 7.2% in the three months to April, although it still lags behind inflation.” The Bank of England has raised “interest rates 12 times since 2021 to try to slow price rises” and warned that surging pay is contributing to inflation.
Tags: 7.2%, BOE, Bonuses, Expectations, Inflation, Interest rates, Pandemic, Pay, Price, Surging pay, UK, Wages
Investment Week (June 12)
“Earlier this month, US Federal Reserve Chairman Jerome Powell said he does not expect inflation to decline quickly, signalling resistance against the market consensus. We believe it would have to be a severe economic recession for the Fed to begin cutting interest rates before the end of the year, as is currently priced in by the forward markets. Therefore, we believe, interest rates will remain ‘higher for longer’. This is inherently positive for MMFs, where yields and total returns are driven for the most part by central bank rates. A higher-for-longer interest rate trajectory could potentially yield 4.5% to 5% for MMFs in US-dollar terms in the next three, six and 12 months.”
Tags: 4.5% to 5%, Consensus, Fed, Forward markets, Higher for longer, Inflation, Interest rates, MMFs, Powell, Recession, Resistance, Total returns, U.S., Yields
The Economist (June 4)
“For the past two years Recep Tayyip Erdogan, Turkey’s president, has pursued a zany policy of trying to bring down inflation by making borrowing cheaper. It is precisely the opposite of what any mainstream economist would advise, and it was never going to work.” His new cabinet “includes Mehmet Simsek, a voice of economic orthodoxy.” The new treasury and finance minister has said “Turkey has no choice left but to return to a rational basis” for policymaking. “Such words will be music to the ears of many foreign investors, who have given up on Turkey over the past couple of years. But they will not count for much unless they are backed up by concrete steps to fix the country’s economy.”
Tags: Borrowing, Cabinet, Cheaper, Economist, Erdogan, Finance Minister, Inflation, Mainstream, Orthodoxy, Policy, Rational, Simsek, Treasury, Turkey
Investment Week (May 10)
“The Bank of England is widely expected to make a 25 basis points hike tomorrow (11 May) as inflation remains stickily in the double digits, despite record rises in interest rates over the past two years. The move would come in the wake of similar decisions from the Federal Reserve and European Central Bank last week.” Looking ahead, a rate cut seems more likely from the Fed, with analysts “split on the path forward for the BoE following the presumed 25bps hike, with much depending on economic data released over the next few months.”
Tags: 25 basis points, Analysts, BOE, ECB, Economic data, Fed, Hike, Inflation, Interest rates, Rate cut, Split
Investment Week (March 23)
“The UK’s higher than expected inflation results forced the Bank of England to prioritise bringing it down, rather than focusing on the fractures of the banking sector.” In February, “UK inflation hit 10.4%…an unexpected increase that followed three months of consecutive declines.”
Tags: 10.4%, Banking sector, BOE, Declines, February, Fractures, Increase, Inflation, Prioritize, UK, Unexpected
New York Times (March 21)
“The failures of Silicon Valley Bank and three other lenders over the past 11 days” have “put the Fed in a difficult position as it prepares to deliver on Wednesday one of the most consequential decisions on interest rates of the Jay Powell era.” In addition to tightening rates to curb inflation while somehow avoiding a recession, the “banking crisis hands the central bank a third crucial challenge: how to steer the banking sector out of the predicament and restore confidence in the sector.”
Tags: Banking crisis, Consequential, Decisions, Failures, Fed, Inflation, Interest rates, Powell, Predicament, Recession, SVB
The Guardian (March 18)
“The UK remains on track for a ’disastrous decade’ of stagnant incomes and high taxes, despite cuts to public services” based on recent budget analysis. The Resolution Foundation thinktank determined that, after accounting for inflation, “typical household disposable incomes were on course to be lower by the end of the forecast period in 2027-28 than they were before the pandemic.”
Tags: Analysis, Budget, Disastrous decade, Disposable incomes, Forecast, High taxes, Household, Inflation, Pandemic, Public services, Stagnant incomes, Thinktank, UK
New York Times (March 8)
“It seems even the most bullish on Wall Street now get the message: The Federal Reserve is prepared to raise interest rates until it feels it’s sufficiently beaten back inflation — even if those moves cool off the job market and send the economy into recession.” It will now clearly be “higher for longer.”
Tags: Bullish, Economy, Fed, Higher for longer, Inflation, Interest rates, Job market, Recession, Wall Street
Wall Street Journal (February 16)
“Fresh figures on jobs and prices drove the economy’s surprising vigor this year, joining rising household incomes, consumer resilience and other data that have persuaded investors the Federal Reserve’s battle against inflation is likely to be a longer one than they hoped.” In January, U.S. hiring rose while “unemployment fell to a 53-year low.”
Tags: Consumer resilience, Economy, Fed, Hiring, Household incomes, Inflation, Investors, January, Jobs, Prices, Rising, Surprising, U.S., Vigor
The Hindu (February 15)
Reserve Bank of India Governor Shaktikanta Das proclaimed the worst of inflation was in the rear-view mirror. Five days later, January CPI estimates “revealed a disconcerting reversal in price gains trend. Headline retail inflation… quickened by 80 basis points last month to 6.5%. Propelling the acceleration was a 175 basis-points jump in food prices.” This “surprise reversal” suggests that “inflationary expectations in the economy are nowhere near anchored and will necessitate further policy action both from the RBI and fiscal authorities.”
Tags: Acceleration, Anchored, CPI, Economy, Expectations, Food prices, India, Inflation, Price gains, Reserve Bank, Surprise reversal
