Blog # 7 Contingent Inflation Across Major Economies
Contingent Inflation Across Major Economies
This week's economic data unveils an undeniable acceleration in economic growth and robust labor market participation, highlighting the enduring strength of major economies including the USA, Eurozone, China, Germany, and Korea.
In an intriguing development, several Reserve Bank Presidents have signaled a notable shift in policy direction. Initially, there was an anticipation of seven rate cuts within the year. However, this perspective has recently been adjusted, with the forecast now suggesting up to three rate cuts. It's crucial to remember that the Federal Reserve operates as an apolitical entity. Historically, it has steered clear of initiating new policies within six months of the U.S. presidential elections.
To provide a clearer picture, let's delve into 10 key economic indicators that have shaped recent discussions:
China Exports (Feb) saw a significant jump to 10.30M (CNY) from 3.80M (CNY) in the previous month, with year-over-year growth for February hitting 7.1%, surpassing the 1.9% forecast.
China Imports (YoY) (Feb) also exceeded expectations, recording a 3.5% increase against a forecast of 1.5%.
Foreign Investments in Japanese Stocks stood at 283.9B, marking a shift from the previous period where foreign investors were net sellers at 206.3B.
Foreign Japanese Bond Buying reached 484.6B, in contrast to the previous phase where there was a net selling of Japanese bonds amounting to 250.1B.
Japanese Average Cash Earnings rose by 2.0%, outperforming the 1.3% economic forecast.
The USA Atlanta Fed GDPNow (Q1) estimate is 2.5%, higher than the 2.1% forecast.
USA JOLTs Job Openings exceeded expectations, registering at 8.863M.
USA Mortgage Applications (WoW) observed a 9.7% increase, compared to 5.6% in the preceding period.
German Exports (MoM) (Jan) surged by 6.3%, vastly outpacing the 1.5% increase forecasted by economists.
German Imports (MoM) (Jan) also saw a substantial rise of 3.6%, against a forecast of 1.8%.
These indicators not only underscores the robustness of global economic activity but also challenges the conventional understanding of inflation dynamics. As previously analysed, inflation is poised to remain a key concern into Q2,.
The evolving narrative around interest rate cuts by various Reserve Banks underscores a strategic pivot in response to global economic signals.
Written by : Associate Professor Mordechai Katash
