Fed inflation target

RBI Governor Shaktikanta Das (File image) The Reserve Bank of India (RBI) is “well on track” to bringing down inflation and inflation expectations in the economy against the backdrop of supply side disruptions, the governor said. “Until December, CPI (Consumer Price Index) inflation is expected to remain higher than the upper tolerance level; thereafter it is expected to go below 6 percent as per our current projections,” Shaktikanta Das said in an interview to The Times of India. "There will be inflationary pressures, and only in the fourth quarter, we have projected it to go below 6 percent.” The governor acknowledged that high inflation hurts people the most, especially the lower segment of society which is hit the hardest. Hence, it is desirable that the country has a framework for inflation and that monetary policy operates within that, Das said. The RBI’s analysis shows that when consumer inflation exceeds 6 percent, it is negative for growth, he said, adding … [Read more...] about RBI well on track to bringing down inflation, says Governor Shaktikanta Das

Share to Twitter Share to Linkedin Topline Despite increased concerns over a looming recession, a growing number of experts believe that upcoming discounts and easing supply chain disruptions may help cool the rate of inflation more quickly than expected, potentially offering a much-needed respite to cash-strapped Americans and investors wary over the implications of rapidly tightening monetary policy. Key Facts Though spiking gas prices may push overall inflation higher this year, core inflation, which excludes volatile food and energy prices, has peaked “and will fall faster than markets and the Federal Reserve expect,” economists at Pantheon Macro wrote in a Wednesday note. With a stronger dollar starting to make imports cheaper and rising inventories starting to quell supply shortages, the economists project inflation, which unexpectedly hit a 41-year high of 8.6% in May, will fall to 4.9% by the beginning of next year as core inflation … [Read more...] about Why A Strong Dollar And Retail Inventory Blunders Could Help Push Inflation Down By Next Year

Share to Twitter Share to Linkedin The drumbeats of economic blame have been pounding away. Inflation. Inflation. Inflation. Some, like Lawrence Summers, have been saying this for many years. Too much money in the system that would in theory boost activity and eventually drive prices up. Or, as an economist, who will remain anonymous, once said jokingly about a big name in his field and predictions of recessions, “Paul Krugman made a career of saying, ‘We're going to have a recession this year” for 15 years. When one finally happened, he said, ‘See? I told you.’ And he got the Nobel Prize.” Oh, Nobel Committee, Summers is waiting for that telephone call. Ironically, as someone who’s frequently been wrong and loath to admit it , as Michael Hirsch wrote about Summers some time back in The Atlantic, there’s a strong argument that he helped propel the reckless global capital flows and fight off regulation that would result in the Great Recession, the … [Read more...] about Inflation Blame Game Targets Consumers And Workers

Share to Twitter Share to Linkedin Topline European stocks and U.S. stock futures slumped early on Thursday amid fears of a recession, a day after Federal Reserve Chairman Jerome Powell told Congress the central bank will continue to hike interest rates to combat inflation and acknowledged that a downturn was a “possibility.” Key Facts The London Stock Exchange’s FTSE 100 slumped more than 0.7% after markets opened on Thursday morning while the Frankfurt Stock Exchange’s DAX index was down 1.27%. The pan-European Stoxx 600 Index was down more than 1.1% an hour after markets opened. Stock markets in Asia appeared to be largely unperturbed, however, with Hong Kong’s Hang Seng index being up 1.26% while the Tokyo Stock Exchange’s Nikkei 225 was up 0.08% when markets closed on Thursday U.S. stock futures were also down in premarket trading early on Thursday with the benchmark S&P 500 index dropping 0.2% while the Dow Jones Index slid … [Read more...] about European Stocks And U.S. Futures Slump After Fed Chairman Acknowledges Possibility Of Recession

- A + A NEW YORK/WASHINGTON (June 23): The European Central Bank’s Isabel Schnabel started it. In February, she flashed a chart showing how much the euro had weakened against the US dollar. Two months later, the Bank of Canada’s Tiff Macklem bemoaned the decline of the Canadian dollar. Swiss National Bank President Thomas Jordan suggested he’d like to see a stronger franc. The US dollar had been soaring — now up 7% for the year — as the Federal Reserve prepared to aggressively combat inflation. And so one by one, central bankers elsewhere, just as desperate to tame the relentless march of inflation in their own backyards, began sending not-so-subtle signals that they would for once welcome a stronger currency — which helps reduce the cost of imports by boosting buying power abroad. It’s a form of intervention so rare that their jawboning alone moved markets. On June 16, two of them upped the ante: Switzerland surprised traders with the first rate increase since … [Read more...] about Currency war breaks out in a world short on fixes for inflation

UOB: Room for Bank Negara to hike OPR by another 50bps before end-September - A + A KUALA LUMPUR (June 22): There is growing pressure on Bank Negara Malaysia to hike rates faster in the face of an aggressive US Federal Reserve, while there is widening consensus that global food and energy prices will continue to stay elevated for longer, with any potential supply shocks seen capable of driving prices and inflation even higher. In a note on Wednesday, UOB Global Economics and Market Research cautioned that the key takeaway is that "doing nothing or acting too slow" could sow seeds of more persistent and elevated inflation in the future, with more negative effects on demand and the economy. "Rate hikes would then also need to be sharper and more abrupt in that scenario. There may also be a need to act faster now in order to have sufficient policy buffers in preparation for the next recession (when it happens). A lagged policy response by BNM relative to peers … [Read more...] about Growing pressure on Bank Negara to hike rates faster

Representative image A characteristic of the ongoing market correction has been heavy selling by foreign investors. Since October last year, they have withdrawn about net Rs 2.08 lakh crore equities, as per NSDL data. Not surprisingly, indices are trading lower by about 18 percent from their highs. Apparently the nine month long winter is likely to get even longer now. Commentaries from foreign money managers and expectations from domestic analysts suggest that it will take a lot of factors to culminate for them to come back. A couple of major reasons why foreign investors have been bearish on Indian markets are rising US dollar which has also led to more yields on bonds, and monetary tightening that is likely to have a negative impact on the economy. Concerns over near-term risks including tightening monetary conditions, a slowing economic outlook, likely earnings cut for the Nifty and headwinds from higher crude oil prices will likely keep them away, say analysts. BofA … [Read more...] about Long winter on the Street set to get longer! FIIs don’t seem to be coming back anytime soon

Jayanth Varma, one of the three external members of the Reserve Bank of India's Monetary Policy Committee (MPC), has said the rate-setting panel's members should start taking the first steps to providing interest rates projections by initially giving their individual views on where they see the policy rate in the near-term. "I believe it is possible to start with baby steps and proceed gradually towards the desired goal," Varma told Moneycontrol via e-mail. "It is possible to start with projections only for the next quarter and slowly expand the horizon. It is possible to begin with broad ranges for the policy rate and then progressively refine the range. These are all matters of implementation detail. The important thing is to have a consensus on whether this is worth doing." Varma's comments come after he was cited as saying in the minutes of the June 6-8 meeting, released on June 22, that the time was "ripe" for the committee's members to start moving towards providing … [Read more...] about MPC members can start with near-term interest rate forecasts, says Jayanth Varma

Gold traded lower on Thursday as a stronger dollar and remarks from U.S. Federal Reserve Chair Jerome Powell about the central bank’s commitment to tame rising prices dimmed its safe-haven appeal. Spot gold fell 0.4% to $1,829.89 per ounce by 1056 GMT. U.S. gold futures inched 0.4% lower to $1,830.70. While the precious metal is considered a hedge against inflation and economic instability, it also contends with the dollar as a safe-store of value. Therefore, a firmer dollar makes greenback-priced bullion more expensive for overseas buyers. [USD/] Gold is expected to face gradual downward pressure and move towards $1,800, with Powell reiterating the rate hike path and the dollar also strengthening, Bank of China International analyst Xiao Fu said. ”Because gold’s a safe haven asset, it will attract buying on (recession risk) demand, but the rising rates are very powerful in terms of impacting other asset classes and including gold.” Close Higher US … [Read more...] about Gold dips as dollar gains upper hand after Powell remarks

The Reserve Bank of India (RBI) will not let go off the bond market, deputy governor Michael Patra said June 24, adding that the central bank will aid the government's market borrowing. “(The) RBI is reacting on an ongoing basis,” Patra said at an event in New Delhi. “This year we have to shift our gaze to inflation but we will not let go off the bond market and we will make dispensation of other type like the HTM (held to maturity).” In this year’s budget, the government had estimated a fiscal deficit target of 6.4 percent of gross domestic product. Simply put, a fiscal deficit occurs when the government’s expenditure exceeds revenue from taxes and other sources. A fiscal deficit is mainly financed through market borrowings like treasury bills and government bonds. New Delhi aims to borrow a record Rs 14.31 lakh crore via bonds this financial year. The RBI, as the government's debt manager, is expected to manage the borrowing programme and keep yields low. It is currently … [Read more...] about RBI will not let go off bond market, says Deputy Governor Patra