How will the Bank of England respond to the return of inflation?

How will the Bank of England respond to the return of inflation?

British inflation Climb to the top Following last month’s increase in excess of expectations, the Bank of England has set its target at 2% for the first time in the past two years. Investors want to know whether policymakers will respond to the Fed’s hawkish shift this week.

The rate of price increase facing the Bank of England is different from that of the Federal Reserve, which is dealing with the annual inflation rate soaring to 5%. But according to Nomura Securities, the Bank of England had already expressed at its last meeting that it was more willing to reduce its emergency stimulus measures by reducing the pace of bond purchases-although this did not change the planned total purchase economist George Barkley.

Buckley said that the Bank of England may “talk about the upside risks of its current inflation view this year”, while reiterating its message that most of the current price increases may be temporary. Andy Haldane, the chief economist who left the central bank after Thursday’s meeting last month, was the only opponent in the Bank of England’s nine-member interest rate-setting committee and voted to end the current asset purchase program early.

Barkley said: “The outgoing chief economist brings other members to the board of directors, which may indeed lead to greater differences in the committee.” Tommy Stabington

Will the Fed bear the pressure?

Just a few weeks after the release of U.S. inflation indicators display Consumer prices have risen the most in the past 13 years. The Fed’s preferred price growth indicator this week may put more pressure on the central bank. The central bank only advanced its interest rate hike expectations by one year last week.

Economists said that the May personal consumption expenditure price index to be released by the Ministry of Commerce on Friday will show that the core index rose by 0.6% month-on-month, excluding fluctuating food and energy prices. Bloomberg investigation. In April, this indicator climbed 0.7% from the previous month and set the largest year-on-year increase jump Since the 1990s, it has been 3.1%.

Although the Fed and investors have basically ignored these data points, believing that as the pandemic subsides, any major inflationary pressures will subside, but last week’s policy meeting showed that the central bank is more adaptable to high inflation risks than the previous message.

The Fed’s interest rate forecast announced last week transmit signal There will be at least two increases in 2023-this forecast is much faster than many investors expected. But Chairman Jay Powell emphasized that these estimates do not represent official forecasts.

Brian Rose, chief economist of UBS Global Wealth Management, warned that the outlook is also highly uncertain, which means that the inflation debate may not be resolved for some time.

“The Fed’s forecast is definitely a very tricky environment,” Ross said. “This is why they will continue to rely more on data than their predictive models.” Colby Smith

Can China control the rise in metal prices?

Metal price Fall down Last week, China announced that it would put a batch of copper, aluminum and zinc on the market to alleviate supply shortages.

Copper for various uses from electric vehicles to home wiring hit a two-year low of $9,415 per ton after the announcement, down 8% this week, the largest five-day drop since the peak of the pandemic in mid-March, according to broker Marex Spectron said last year. During the same period, aluminum prices fell by 2.4%, while zinc prices fell by 5%.

Beijing’s move is intended to control cost inflation. National Development and Reform Commission spokesperson Meng Wei said that these metals will be provided to local processing and manufacturing enterprises and small and medium-sized enterprises.

recent grow rapidly Commodity prices-copper prices climb to A record high She said that the price of US$10,460 per ton on the London Metal Exchange in early May has exceeded the fundamentals of supply and demand and the “reasonable recovery range”. She added that the government will issue multiple batches of metal to encourage prices to return to a “reasonable range.”

However, given that commodities are traded globally, it may be difficult for Beijing to control commodity prices.As China takes action to meet its needs, demand for metals may also increase the goal Because of their use in clean energy technologies, they will be carbon neutral by 2060.

Goldman Sachs analyst Jeffrey Currie said at the Financial Times Global Commodities Summit last week that the United States and Europe are now price makers in global commodity markets, not China. This will make it more difficult for Beijing to limit price increases. Henry Sanderson

Source link