Broad money growth slows – but
Broad money growth is slowing in the five largest world economies But, apart from in China, it remains rapid by historical standards The risk of sustained above-target inflation remains very much alive The last time I looked at broad money growth in the five largest world economies (the United States,…
What surveys say about inflation
The Fed maintains that high US inflation is transitory UK and EA inflation is low, but is it measured correctly? Business and consumer surveys show higher EA inflationary pressures In an article in The Times on Monday 27th July, my former colleague Simon Ward is quoted arguing that current British inflation is rather higher than…
El Salvador and Bitcoin – a silly decision
El Salvador has voted to make Bitcoin legal tender. It is difficult to see any rationale for this. In fact, it is a ridiculous move, highlighting President Bukele’s ignorance of economics In early June, the Congress of El Salvador, acting on a proposal from President Nayib Bukele, passed a law…
Move along, nothing to see – the nonchalance of central banks
Inflation continues to accelerate in most advanced economies. This is true for both monthly and annual data, both headline and core. So why are central banks so sanguine about inflation developments? Recent months have, on the whole, seen inflation continue to accelerate in most of the large advanced economies. As…
Ignore 12-month inflation, look at recent numbers
Inflation numbers are coming in above expectations and inflation concerns are rising But 12-month numbers are not that important, what matters is more recent data Central banks remain sanguine about inflation, meaning they are likely to react late Inflation in the major world economies continues to edge up. Recent data…
US credit trends support optimistic outlook
US consumer and corporate loan growth are picking up The Fed ignores money, pays attention to credit Central banks say one thing, do another US broad money growth is accelerating again after easing somewhat in late 2020.[1] In the year to February, broad money grew by 14.1%. While this was the…
Factored in – but how high and for how long?
Markets have woken up to the inflation risk Central bankers, however, display less concern But markets may still underestimate the extent of coming inflation Bond yields have begun to rise and equity markets have fallen, both developments apparently because market actors have woken up to the risk of higher inflation.…
Money has to go somewhere, inflate something
European and US broad money growth is picking up, Chinese and Japanese is weaker. Unless private sector demand to hold cash is limitless, money has to go somewhere. This means continued asset price inflation, or rising consumer price inflation, or both. Late 2020 saw a dichotomy in global broad money…
Future inflation ≠ past inflation
Recent inflation data is generally weakening.But the pandemic and various degrees of lockdowns make CPI data meaninglessBusiness and consumer surveys are beginning to hint at coming price rises The end of the month is usually when countries publish updated inflation numbers. Latest data show price pressures in the largest economies…
More on the new Fed policy
The new policy of average inflation targeting involves a loss of clarity. Its credibility is questionable. It means rather higher inflation than markets currently expect. Last month the Fed switched to alternative inflation targeting (AIT), a change covered in a Stein Brothers Comment at the time. However, the change bears…