In theory, the ECB should find it easier than most central banks to fight inflation. In fact, it is finding it more difficult, preferring to do nothing and rely on Mr Micawber’s dictum. This is partly because the ECB is in a process of transition, from ‘Teutonic’ to ‘Latin’. All…
Nominal broad money growth is slowing but is still inflationary. Higher inflation is eroding real broad money growth, implying weaker activity. The macroeconomic outlook for 2022 is decidedly less pleasant. The fact that current inflation may not turn out to be transient (whatever that means) after all, is beginning to…
Central banks continue to claim that current elevated inflation is transitory. This is partly to reassure markets that monetary policy will not tighten (or not by much). But higher inflation would only be transitory if central banks treated it as permanent. Inflation remained above target in all major economies over…
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,…
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…
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…
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 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…
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.…
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…
