BARCLAYS | Headline inflation surprised slightly to the downside while core prices increased more than we had expected. At the non-core level, energy inflation remains weak (-8.7%). At the core level, both non-energy industrial goods (NEIG) and services prices increased by 0.1pp, to +0.4% and +1.3%, respectively, and leading the unexpected 0.1pp rise in core inflation.
James Alexander via Historinhas | Yet again today we saw the “zero (long and variable) lags” in monetary policy. Central bankers moving markets and thus changing NGDP Expectations happens all the time. It’s perfectly rational too.
PARIS | Francesco Saraceno | What I’d like to express here is my jealousy for the discussions (and the confrontation) that we observe in the US about rate rises. These discussions are a sideproduct, a very positive one if you ask me, of the institutional design of the Fed.
In December 1985, Thomas Sargent spent some time in Brazil, giving speeches and talking to policymakers. Back home in January 1986, he published in the WSJ an Open Letter to the Brazilian Finance Minister: …When you have exhausted all of your opportunities to borrow, you will have to make one or more of unpleasant adjustments such as taxes rises, government expenditures cuts or default on some of you debt…
On face value, the ruthless tools used by central bankers to inject piles of money into the economy point to a brand new way of conducting monetary policy. Never before, except for in wartime, did they dare to trigger such massive asset-buying programmes. And never before did they so blatantly disregard the future risks a huge liquidity glut might fuel.
BARCLAYS | We have been arguing for some time that we see no grounds for attaching a high probability to a reflation scenario for the euro area, at least in the near term
Estimations for the Eurozone’s inflation in September have been met: prices turned negative again after six months above zero. Some analysts think this time “the ball in not in the ECB’s court”.
What really shocked the markets was not the Fed’s decision to maintain zero interest rates for a few more months, but the statement that accompanied it.
It is a simple story of failure, but one that fits the facts. It´s also based on a simple premise: An inflation obsession that took hold in 1974.
London | UBS | At the risk of making an obvious point, the fall in crude oil prices is not all there is to the impact of oil on consumer price inflation.