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inflation

inflation board

World economy 23rd April 2021

Globalisation Ensures Low Inflation For A Long Time To Come

Ofelia Marín Lozano | In March, April and May this year we will see published inflation close to or above 2% year-on-year. But this can simply be explained by the rise in oil prices. Crude oil, which a year ago, at the height of its confinement, fell to levels of around 30 dollars per barrel, is now trading above 60 dollars per barrel, is now trading at over 60 dollars. In our opinion, although inflation could pick up notably in the second quarter of 2021, with year-on-year readings above the 2% that the US Federal Reserve and the ECB have set as a benchmark for the long term, the underlying inflationary risks remain well under control and support the maintenance of an accommodative monetary policy for a prolonged period of time. Simply put: core inflation only rises consistently if wages rise and, with higher unemployment, it is very difficult for that to happen.

dollar rally

European economy 23rd April 2021

While Europe Is Expecting An Inflation Peak Of 2.5%, The US Is Talking About 4.1%!

Mutuactivos | How would you react to an inflation figure of 4.1%, albeit temporary? In short, we believe that it could push the T-note above 2% temporarily, even a scare in the markets, but in that case it is likely that the Fed would try to influence it to moderate it: either by changing its “active passive” discourse to one of greater involvement, closer to that of the ECB, or directly by buying debt to control the yield curve.

electricity prices

Spanish economy 30th March 2021

Spain CPI Soars 1 Percentage Point In March To 1.3%, Its Highest Level In Almost Two Years

The Consumer Price Index (CPI) rose by 1% in March compared to the previous month, taking it to 1.3%, almost 1.5 points higher than in February (0.0%), according to preliminary data published today by the National Statistics Institute (INE). With this upturn, with which the annual CPI marks its third consecutive positive rate, inflation climbs to levels unseen for almost two years. In fact, such a high CPI rate had not been reached since April 2019, when it stood at 1.5%.

Fed ECB

European economy 10th March 2021

Fed Memo To The ECB: “My Rates, Your Problem”

Bruno Cavalier (Oddo BHF) | There are two types of central banks in the world. On the one hand, those who believe that the recent rate hike is widely justified. This is the case for the Fed, at least so far. On the other hand, those who think the opposite. This is the case of the ECB, which is exasperated to see European rates rising, not as a sign of a solid recovery, but because of the contagion of the US bond correction.

inflation course

In the World, World economy 8th December 2020

What About Inflation? When It Will Come?

José Ramón Díez Guijarro (Bankia Estudios) | In the more recent past, the central banks have had enough to deal with trying to combat the risk of deflation linked to the structural changes of recent decades: globalisation, ageing population, digitalisation, etc. And now, practically without any solution of continuity, they have to face a crisis which may lead to new permanent “shocks” in inflation. These would derive from changes in the consumption patterns and from the accelerated digitalisation process. Or from the intensive use of non-conventional monetary policy measures.

Jay Powell

In the World, World economy 23rd August 2020

Inflation Is The Key

Chris Iggo (AXA Investment Managers) | Next month the Fed is expected to announce some changes to its long-term monetary policy framework. Many observers expect that to include an “average inflation target” which in theory means the Fed will allow inflation to rise above 2% for a long enough period to compensate for when inflation has been below 2%. It likely will need to back this up with forward guidance suggesting that rates won’t be increased until it is convinced its inflation target (and maybe an unemployment target) has been met. 

ipc

European economy 22nd August 2020

Euro Area Economic Watch Inflation update: it’s bad already, but it will probably get worse

Rubén Segura-Cayuela (BoAML) | We still expect a top-up of the Pandemic Emergency Purchase Programme (PEPP) by another EUR500bn to stretch until end-2021- probably announced in December. That will be necessary to accommodate the economy. But it will not suffice to tackle long-term inflation dynamics and faltering expectations. More and longer policy support is needed, urgently. 

inflation board

World economy 7th July 2020

The Other Looming V-Shaped Recovery

DWS | There are a few reasons to think that unlike the economy, inflation could see a V-shaped recovery. Recently published inflation data seem to confirm this theoretical view. Without taking into account the energy component, which, thanks to the oil price, fluctuated wildly in 2020, the inflation rate in the Eurozone was 1.3% in June. That is exactly the same level as at the beginning of the year.

Leverage loans. The next trigger?

World economy 26th May 2020

Inflation Is Impossible: The Speed Of Money Circulation Is At An All-Time Low

Miguel Navascués | The Fed is continuing to buy assets and issue money to chosen subjects (for the first time not just the banks). The purchases made so far are more than double those made in 2008. However, the speed of money circulation (i.e., GDP/M2), shows a decline to levels never seen before: each unit of money in circulation moves just $1.4 of GDP. Or, in other words, more and more money is needed to move the same amount of GDP.