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Global financial media last night this morningThe headlines of common concern mainly include:
1. New York Fed President: It is reasonable to predict another rate hike in May
2. Federal Reserve official Goolsbee: Monetary policy should remain cautious amid uncertain credit environment
3. IMF downgrades global economic growth forecast due to financial risks intensifying pressure
4. Affected by the banking crisis, small businesses in the United States have fallen into the most severe credit environment in 10 years
5. BlackRock sees inflation above Fed target for years to come
6. The economist who first predicted skyrocketing inflation sounded the alarm that the collapse of the money supply may herald a recession
New York Fed President: Forecast of another rate hike in May is reasonable
New York Fed President John Williams said policymakers’ outlook in March was for one more rate increase this year before leaving rates unchanged. That’s a “reasonable starting point,” although the ultimate path will depend on how economic data unfolds next.
“We need to do what we’re supposed to do to make sure inflation is kept down,” Williams said in an interview on Tuesday. He said inflation was falling but remained well above the Fed’s 2 percent target and that a key price measure was little changed recently.
“We’ve seen continued strong data, inflation has been very high and the impact of the recent turmoil in the banking sector on the economy is uncertain,” Williams said.
Fed’s Goolsbee: Monetary policy should remain cautious amid uncertain credit environment
Chicago Fed President Austan Goolsbee said the central bank should be “cautious and patient” in raising interest rates as it assesses how much last month’s turmoil in the banking sector has affected lending tightening.
“Given the uncertainty around the direction of these financial headwinds, I think we need to be cautious,” Goolsbee said at an event on Tuesday. “We should collect further data and be cautious about excessive interest rate hikes until we can see how much resistance exists on the road to reducing inflation.”
Newcomer Goolsbee, who has a vote on monetary policy this year, was also the first Fed official to signal possible support for keeping rates unchanged in May. But he declined to express support for a pause in rate hikes.
IMF cuts global growth forecast as financial risks intensify pressure
The International Monetary Fund (IMF) cut its global growth forecast, warning of high levels of uncertainty and risks as woes in the financial sector add to pressure from tighter monetary policy and the conflict between Russia and Ukraine.
Global GDP is likely to grow 2.8 percent this year and 3 percent next year, each 0.1 percentage point lower than its January forecast, the IMF said in its quarterly update to the World Economic Outlook on Tuesday. The GDP growth rate in 2022 is 3.4%.
“Risks are heavily skewed to the downside, largely because of the financial turmoil of the past month and a half,” said IMF chief economist Pierre-Olivier Gourinchas. “The situation is contained for now, but we are concerned that a sharper and more severe economic downturn could result if financial conditions deteriorate significantly.”
U.S. small businesses plunge into toughest credit environment in a decade as banking crisis hits
More small businesses in the U.S. reported more difficulty getting loans in March after multiple bank failures tightened credit conditions further.
A net 9 percent of small business owners who borrow frequently say financing is more difficult than it was three months ago, the highest percentage since December 2012, according to a survey released Tuesday by the National Federation of Independent Business (NFIB). The same proportion of respondents expected tougher credit conditions in the next three months, matching the highest level in a decade.
The collapse of four banks in March, including Silicon Valley Bank and Signature Bank, prompted many banks to tighten business lending standards. Small businesses are having a harder time getting loans, adding to an already tough funding environment a year after the Federal Reserve raised interest rates.
BlackRock sees inflation above Fed target for years to come
blackrockIt reinforced its overweight stance on inflation-linked bonds on the grounds that price pressures will remain well above the Fed’s 2% target.
Strategists at BlackRock have held a strategic overweight stance on inflation-linked bonds for several years, acknowledging that structural trends could keep inflationary pressures in check, writing in an April 10 note. That stance was reinforced when market indicators of monthly inflation expectations fell. Consumer price data due on Wednesday will confirm the stickiness of inflation, they wrote.
“We will live with inflation,” strategists including Jean Boivin and Wei Li wrote in a report. “We do think that inflation will cool as consumption patterns normalize and energy prices ease, but we expect inflation to remain above the policy target for several years.”
Economist who first predicted skyrocketing inflation sounds alarm bells as plunging money supply could signal recession
The UK’s money-supply economists are sounding the alarm again. These economists made a splash during the pandemic, correctly predicting sky-high inflation levels before anyone else.
Money supply growth is plummeting in the UK, the euro zone and the US, which these economists interpret as warnings of recession and deflation. If the monetarists are proven right again, central bankers who have raised rates too high say they should be “cleaned out.”
British economists Simon Ward and Tim Congdon hold this view. Ward was Janus Henderson’s economic adviser, while Congdon was a leading figure in the British monetary school and was an adviser to Margaret Thatcher when she was prime minister. Their analysis is in line with the prevailing consensus that the economy is starting to pick up and inflation is largely due to supply shocks and energy prices.But for monetarists, economic growthLong andInflation is a function of the amount and velocity of money in circulation (i.e., the number of times money changes hands), and these indicators now point to an economic downturn.
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