Skip to main content

US consumer price growth.

 


Annual consumer price growth slowed to 7.7 per cent, less than the 8 per cent forecast by economists, to hit its lowest level since January. The S&P 500 surged by more than 4 per cent after the data were published. The two-year Treasury yield, particularly sensitive to interest rate expectations, dropped 0.3 percentage points to 4.32 per cent. The lower-than-expected readings ease pressure on the Fed to maintain its aggressive interest rate rises policy to combat inflation.

«The fact the Fed may slow down from here means what could break out is a conversation not just about recession rather than inflation but a conversation about maybe avoiding a recession entirely,» said Jim Paulsen, chief investment strategist at The Leuthold Group, a research firm. Investors in the futures market increased bets that the Fed would lift interest rates by 0.5 percentage points in December, having raised by 0.75 percentage points at its past four meetings. The inflation data, released by the Bureau of Labor Statistics, followed unexpectedly tight midterm elections that left the battle for control of Congress still hanging in the balance. High inflation has dogged Joe Biden’s administration for most of his presidential term, igniting fears of a pronounced economic downturn at some point next year as the Fed steps up its efforts to get price pressures under control.

Most economists expect rates to peak at close to 5 per cent next year, well above the 4.6 per cent projected by most Fed officials as recently as September. Powell has repeatedly warned that the higher interest rates need to rise, the longer they stay at a level constraining economic activity, and the greater the odds of the economy tipping into a recession. Most economists expect a contraction next year, with the jobless rate rising substantially.

www.sba.tax

Labels:

Comments

  1. Martha11 November 2022 at 17:11

    Avoiding a recession entirely?! I don't know what to say about this. I think we are already in one although some refuse to acknowledge it. I think it's inescapable in most countries around the world, not just the US.

    ReplyDelete

Post a Comment

Cloud Bookkeeping

US FED rate rise.

  The US Federal Reserve officials have indicated that they plan to resume increasing interest rates to control inflation in the world's biggest economy. During the June meeting, the Federal Open Market Committee reached a consensus to keep interest rates stable for the time being to evaluate whether further tightening of policy would be necessary. However, the majority of the committee anticipates that additional rate increases will be required in the future. The minutes of the meeting have recently been made public. According to the minutes, most participants believed maintaining the federal funds rate at 5 to 5.25 per cent was appropriate or acceptable, despite some individuals wanting to raise the acceleration due to slow progress in cooling inflation. Although Fed forecasts predicted a mild recession starting later in the year, policymakers faced challenges in interpreting data that showed a tight job market and only slight improvements in inflation. Additionally, officials gr...
Post a Comment
Read more

EU business slide.

  S&P Global’s flash eurozone composite purchasing managers’ index, a key gauge of business conditions for the manufacturing and services sector, fell 1 point to 47.1, figures showed yesterday. That is its lowest level since November 2020 and the fourth consecutive month below the crucial 50 mark separating growth from contraction. One of the few bright spots in the survey was that companies in all sectors reported a slight easing of cost pressures, price growth and supply chain constraints. However, prices charged for goods and services still rose at the sixth fastest rate since such data started in 2002. Jobs growth increased marginally from October but remained low compared with the past 18 months. Following a few months of falling price pressure in manufacturing and services, the October print shows an overall stabilisation said Jens Eisenschmidt, chief European economist at Morgan Stanley. However, German businesses, at the hub of Europe’s energy crisis, reported that manu...
1 comment
Read more

Tariffs on UK electric cars.

  The European Commission has confirmed that it will continue with its plan to impose tariffs on electric cars exported between the UK and EU starting next year. This is due to the "rules of origin" requirement that mandates EVs traded across the English Channel to have 60% of their battery and 45% of their parts sourced from the EU or UK or face a 10% tariff. A senior Commission official, Richard Szostak, recently informed parliamentarians from the UK and EU that the bloc's battery investment has significantly declined, making the tariffs necessary to encourage domestic production. In 2022, the EU's share of global investment in battery production shrank from 41% to only 2% after the US offered substantial subsidies through its Inflation Reduction Act. Starting in 2024, car manufacturers in the UK will need to have 22% of their sales come from zero-emission vehicles, which means they may need to import EVs from the continent to meet this requirement. If EU carmakers ...
Post a Comment
Read more