If the economy is decelerating but inflation is not (although this is really a misreading of statistical noise), could this be a hint that higher rates are useless? And that higher rates can do a lot of damage without fixing the real causes of inflation?
A hawkish cut with the usual Sources leak was not enough to move EURxxx. In many ways I feel sorry for Christine Laggard. Sure Communication is not her strong point but continued leaks from The Germans doesn't help anyone. Least of all the single mandate. Thank you for you take George Lagarias, MBA
Without a dramatic “change of lane”, I think the steer given recently tells us much of what we need to know…
“In terms of the real rate, with inflation coming down compared to where we were in the autumn, you can have the same amount of REAL RESTRICTION (my emphasis) with a lower nominal rate.”
Philip Lane. FT interview 24 May
📊 Big week ahead for economic data!
Next week is packed with key updates:
- **Tuesday**: UK Labour Market figures
- **Wednesday**: UK GDP and US Inflation reports
- **Thursday**: ECB Policy Decision
Make sure to enjoy and rest up this weekend because next week could be a busy one! 💼📈
Vuca Treasury LtdCommSenseFX#economics#UK#US#ECB#markets#busyweek#restup#data
3 key takeaways in May’s Macro Matters:
1️⃣ Growth: U.S. growth has slowed but is still outperforming international growth.
2️⃣ Inflation: Inflation momentum in the U.S. has been on the rise, while Europe is getting closer to their inflation target.
3️⃣ Rates: We expect monetary policy divergence ahead.
Read the full report here. 👇
Market Watch: Key Events This Week
Stay ahead of the curve! This week, four major events will shape the global economy:
ECB Meeting (Sept 12): Will they change interest rates, impacting the European economy and euro value?
US Inflation Data: How fast are prices rising? This will inform the Federal Reserve's interest rate decisions.
UK Economic Data: Employment, wages, and economic growth numbers will be released.
China Economic Data: Inflation, production, sales, and investment numbers will be revealed.
Why it matters: These events affect the economy, interest rates, and stock market. Investors and businesses, take note!
In simple terms: Interest rates = borrowing costs. High rates = expensive borrowing. Low rates = cheaper borrowing. These events impact borrowing costs and economic growth.
Stay informed and make informed decisions! #marketwatch#ecb#usinflation#ukeconomy#chinaeconomicdata#interestrates#economy
🔍 Global Economic Outlook: Key Insights from the BIS Report 🔍
The Bank for International Settlements – BIS (#BIS), often referred to as the central bank for central banks, has recently published a comprehensive report on the global economy. (Thanks to Coinbureau Asia)
Here are the most critical takeaways every professional should know:
👉 The Bank for International Settlements (BIS), known as the central bank for central banks, has released a report predicting potential negative changes in the global economy.
👉 The report notes that monetary policy has succeeded in controlling inflation, suggesting that central banks may soon lower interest rates despite inflation still being above target levels.
👉 The BIS report cautions about significant global debt levels, which limit fiscal and monetary policy options and pose risks to economic stability.
👉 The BIS warns that divergent monetary policies across different central banks could lead to global market volatility, especially if interest rates rise in Japan, affecting the Yen carry trade.
👉 Inflation risks remain due to rising costs of goods, labour shortages, and potential geopolitical tensions, which could also increase commodity prices.
👉 The BIS points out the possible repercussions of excessive government spending, which could interfere with central banks' efforts to control inflation and lead to fiscal policy challenges.
👉 The report suggests that while central banks have kept interest rates high to fight inflation, productivity must increase to sustain economic growth and manage debt levels.
👉 Artificial intelligence (AI) is highlighted as a transformative force in the economy, potentially affecting productivity, consumption, investment, and labour markets, though it also raises concerns about biases and data control by a few large companies.
👉 The BIS suggests that central banks use AI to enhance operations and advises governments to control excessive spending and focus on structural reforms for better income distribution.
👉 The BIS outlines two potential scenarios for the future: a resurgence of inflation or a hard economic landing (recession), with a possible new cycle of growth and prosperity emerging in the next decade.
🌍 The world stands at a crucial economic juncture. Let's engage in meaningful discussions on how we can collectively drive growth, enhance productivity, and foster global stability.
What are your thoughts on the BIS report findings? Share your insights below! 👇
#Economy#BISReport#GlobalEconomy#MonetaryPolicy#AI#Productivity#Inflation#Debt#LinkedInDiscussion#globaleconomy#thecentralbankforcentralbanks
#globaleconomy | #inflation : Bank for International Settlements – BIS has released the Annual Economic Survey 2024.
This year's Annual Economic Report takes the pulse of the global economy and explores policy challenges. It also devotes particular attention to two issues. Looking back, it reflects on the lessons learned so far from the conduct of monetary policy in the tumultuous first quarter of the 21st century. Looking forward, it examines the opportunities and risks associated with the rise of #artificialintelligence.
. The recent stickiness of inflation in some key jurisdictions reminds us that central banks' job is not yet done. Financial vulnerabilities have not gone away. Fragile fiscal positions cast a shadow as far as the eye can see. Subdued productivity growth clouds economic prospects. Beyond the near term, laying a more solid foundation for the future is as difficult as ever. It could not be otherwise: it is an arduous task that requires a long-term view, courage and perseverance.
Several pressure points pose risks to the global outlook. Inflation could prove sticky, esp. from services and wages, financial stresses could emerge, and precarious fiscal positions and weak productivity growth add to vulnerabilities.
Quantitative Portfolio Manager - Alternative Investments, Commodities, Structured Products
6moIf the economy is decelerating but inflation is not (although this is really a misreading of statistical noise), could this be a hint that higher rates are useless? And that higher rates can do a lot of damage without fixing the real causes of inflation?