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Major economies start to grapple inflation as tapering seems imminent

Per the FED press release from March the 16th, The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. With appropriate firming in the stance of monetary policy, the Committee expects inflation to return to its 2 percent objective and the labor market to remain strong. In support of these goals, the Committee decided to raise the target range for the federal funds rate to 1/4 to 1/2 percent and anticipates that ongoing increases in the target range will be appropriate. In addition, the Committee expects to begin reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities at a coming meeting.

Advance estimates of U.S. retail and food services sales for February 2022, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $658.1 billion, an increase of 0.3 percent (±0.5 percent) from the previous month, and 17.6 percent (±0.9 percent) above February 2021.

Total sales for the December 2021 through February 2022 period were up 16.0 percent (±0.7 percent) from the same period a year ago. The December 2021 to January 2022 percent change was revised from up 3.8 percent (±0.5 percent) to up 4.9 percent (±0.2 percent).

In February, Canadian consumer prices increased 5.7% year over year, up from a 5.1% gain in January. This was the largest gain since August 1991 (+6.0%). February marked the second consecutive month where headline inflation exceeded 5%.

Price increases were broad-based in February, pinching the pocketbooks of Canadians. Consumers paid higher prices for gasoline and groceries in February 2022 compared with the same month a year earlier. Shelter costs continued to trend higher, rising at the fastest year-over-year pace since August 1983.

Canadian investors reduced their holdings of foreign securities by $14.4 billion in January, following a large $21.3 billion investment in December. At the same time, foreign investors acquired $13.5 billion of Canadian securities, mainly in the form of bonds.

As a result, international transactions in securities generated a net inflow of funds of $27.9 billion in the Canadian economy in January, the largest monthly inflow since April 2020.

New Zealand economy up in December 2021 quarter. Economic activity rose 3.0 percent in the December 2021 quarter as measured by gross domestic product. This follows a fall of 3.6 percent in the September 2021 quarter. Average annual GDP rose 5.6 percent through the year to December 2021. Service industries, which make up about two-thirds of the economy, rose 2.5 percent. Goods-producing industries, which make up about one-fifth of the economy, rose 6.5 percent. Primary industries, which make up the remainder of the economy, fell 2.2 percent.

The seasonally adjusted unemployment rate fell to 4.0 per cent in February 2022, the lowest unemployment rate since August 2008, according to data released today by the Australian Bureau of Statistics (ABS). Employment increased for the fourth month in a row, by around 77,000 people (0.6 per cent) in February and was around 202,000 people (1.5 per cent) higher than the period of June 2021. Seasonally adjusted hours worked rebounded in February by 8.9 per cent, following the large fall of 8.6 per cent in January, when an unseasonally high number of people were sick or on leave.

The Bank of England’s Monetary Policy Committee (MPC) sets monetary policy to meet the 2% inflation target, and in a way that helps to sustain growth and employment. At its meeting ending on 16 March 2022, the MPC voted by a majority of 8-1 to increase Bank Rate by 0.25 percentage points, to 0.75%. One member preferred to maintain Bank Rate at 0.5%.

Core CPI inflation was expected to rise further, to around 5 to 5½% in 2022 Q2 accounted for largely by increases in core goods price inflation. Core goods inflation was expected to remain above its average during the previous decade. Services price inflation was projected to increase slightly, above recent historical averages. The overall near-term profile for core inflation was slightly higher than the expectation at the time of the February Report. Global supply chain disruptions posed an upside risk to the outlook for core goods price inflation.