The surprise rise in British inflation from zero to 0.1 percent and core inflation by 0.4 percentage point to 1.2 percent in July supports the view rates soon must go up – and also it doesn’t.
Depending on who you read, underlying price pressures are picking up in the economy and will give policymakers added confidence they will need to tighten policy; or the data are mainly down to a seasonal timing issue over discounting of clothing and footwear; or on the whole the numbers still suggest widespread disinflation pressures in the economy and so tell us little about the timing of the first rate hike.
It’s not very often you come across a chart like this. Usually this kind of thing happens once every 10 years or so.
If this surge in this reliable gauge of services business in the world’s largest economy is for real and sustained, it may just be the sign of rapid acceleration that everyone has been waiting for in what so far has been a fitful recovery.
LONDON, Aug 6 (Reuters) – China’s economy is growing only
half as fast as official data shows, or maybe even slower,
according to foreign investors and analysts who increasingly
challenge how the world’s second largest economy can be measured
so swiftly and precisely.
Beijing’s official statisticians reported last month that
China’s economy grew by a steady 7.0 percent in the first two
quarters of the year, spot on its official 2015 target.
LONDON (Reuters) – Now that U.S. Federal Reserve chief Janet Yellen has made it clear she’s looking out for “some” improvement in the job market before voting for the first Fed interest rate rise in nearly a decade, so is everyone else.
The challenge is that the U.S. economy is generating very little inflation – not to mention disinflation coming from China and nearly no inflation in Europe – leaving many questioning whether the Fed even should be considering a rate rise.
A U.S. Federal Reserve interest rate hike in September is almost certain according to many forecasters and investors, but the decision to tighten policy for the first time in nearly a decade is not as clear-cut as it may appear.
Leaving aside that just a few months ago most of the same people said the same thing about June, which came and went with no rate rise, any unanimity around such a key turning point for the global economy ought to be extremely rare.
BENGALURU/LONDON (Reuters) – With little sign of accelerating growth or inflation, most central banks are still looking to ease monetary policy, in stark contrast to the U.S. Federal Reserve which is on the brink of its first rate hike in nearly a decade.
That bias towards easing, from China to Canada, comes at a time when the world economy, with a few exceptions like the United States, appears weak despite historically-low oil prices and bond yields along with soaring stock and property prices.
After years of defying gravity and outperforming the rest of Europe, Britain’s job market looks like it might be slowing down.
That means that renewed worries about an imminent rise in British rates, which have just resurfaced this week following hawkish remarks from Bank of England Governor Mark Carney and outgoing rate-setter David Miles, might not be on such a solid footing.
As the U.S. Federal Reserve edges closer to its first interest hike in nearly a decade, its critics are lining up into one of two camps: either the Fed is hopelessly behind the curve, and will have to grapple with runaway inflation very soon; or the Fed seems overzealous in wanting to get interest rates back to what it would call a normal level and instead should wait until late this year or next before hiking.
The last thing it wants to do is to make a false start.
A simple chart measuring some of the most basic but crucial economic variables explains a lot. Weekly first-time claims for unemployment benefits have tumbled to the lows they last reached during the boom from the stock market bubble of the late 1990s. They are below where they were at the height of boom times during the peak of the real-estate bubble that preceded the worst global financial crisis and recession since the Great Depression.
Slightly more than a year ago, the European Central Bank launched, with as much fanfare as can be expected from a central bank, a new incentive programme for commercial banks to lend to euro zone businesses, which they had been doing less and less of over the previous few years.
An increase in lending was key, ECB President Mario Draghi argued at the time, to reviving growth in the euro area – and particularly to get inflation, which the central bank targets at just under 2 percent, to rise up from low digits. Euro zone inflation was last reported at 0.2 percent.
LONDON (Reuters) – Global inflation appears tamer than many had thought it would be by now, still held back by a modest outlook for economic growth, meaning central banks look likely to leave rates lower for longer — or even ease policy further.
With a few exceptions such as Brazil, many major economies are still generating low or no consumer price inflation but instead higher asset prices, particularly stocks, and in many countries, a renewed pickup in house price inflation.