J.P. Marín-Arrese |Christine Lagarde announced the first rate hike in a decade as an upfront offensive against inflationary pressures. While no one doubts this tightening aims at cutting short the current price race, the claim that it is an early reaction fails to match the records. For more than a year, all advanced economies have witnessed soaring prices. Yet, the ECB dismissed this trend as a temporary mismatch betwen demand…
Juan Pedro Marín-Arrese | Blaming Putin for the current inflationary bout no longer holds. No one disputes that sanctions aimed at crippling the Russian economy following the aggression on Ukraine have made the prices of vital commodities skyrocket, mainly due to wild speculative movements. Nowadays, we are witnessing sharp falls in raw materials while prices gather further momentum. Thus, claiming we only face a cost shock from such products seems…
J.P. Marín-Arrese | Now that the monetary tables are turning, it is not at all prudent to indulge in overspending. Inflation undoubtedly has a dampening effect by automatically raising fiscal drag while lowering liabilities in real terms. But if the slowdown deepens, the most vulnerable countries could once again come under suspicion. This is a real risk, no matter how much we try to ignore it. In such turbulent times,…
J.P. Marín-Arrese | The new Opposition leader has decided to confront the government on economic policies, which signals a departure from his predecessor’s bitter bickering and acrimony toward Mr Sánchez. Mr Casado practised a scorched earth policy treating the Premier as a mendacious liar, felon and traitor. Such terms of abuse stirred the hearts of hardline supporters but did little to convince mainstream voters of his suitability to govern the…
J.P. Marín-Arrese|Skyrocketing prices confront central bankers with a challenging dilemma. Their sacred duty to preserve stability forces them to take vigorous action to curb inflation. Yet, they are conscious that tightening the monetary stance will fail to put on hold the current supply shock. Worse still, only by pulling hard on the hand brake coulld they stop short prices from escalating. A move that would come at a heavy cost…
J.P. Marín-Arrese | Ever since the Soviet Union collapsed, the US has shown utter disdain for Russia. It flouted the pledge made to Gorbatchev to keep former Warsaw Pact countries out of NATO so that Russia could have a security buffer zone along its frontiers. It openly invited the Ukrainian government to disregard the Minsk agreement, which was brokered to ensure that Ukraine would remain neutral. John Kerry, the former…
J.P. Marín-Arrese | The centre-right party leader, Mr Casado, has been at odds for months with the president of the Madrid region, Ms Díaz Ayuso. He has not provided any convincing reasons for refusing her bid to head the PP in the Madrid region. Now, we know he feared a corruption scandal might spark off as the regional government, which she heads, granted a public procurement to a family friend…
J.P. Marín-Arrese | Biden needs to bolster his tarnished presidency before the upcoming elections. Failing to deliver his electoral promises for the less well off, he faces the grim prospect of losing control of the Chambers. His economic record seems appallingly lacklustre as inflation is eroding incomes of most American households. Moderate Democrats allied themselves with Republicans to dump bombastic plans to provide widespread social benefits. Growth and jobs are…
Juan Pedro Marín-Arrese | Christine Lagarde is trying to convince the markets of the ECB’s strong determination to tame the current inflationary bout. To avoid having its reputation as caretaker of price stability tarnished, the ECB has to reverse the benign neglect shown up to now. Yet, Lagarde is conscious of the narrow scope monetary policy has when dealing with supply-side cost hikes. Thus, rather than taking the pivotal action…
Juan Pedro Marín-Arrese | The hawkish and straightforward message Jerome Powell delivered yesterday surprised analysts and markets alike. They expected a non-committal press conference following a routine FOMC meeting. Instead, Powell unfolded the planned roadmap for monetary tightening. He even announced a rate hike in March, breaking the rule of refraining from providing precise tips on future action, coupled with a sharper than expected increase in federal funds rates. It…