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HomeWorld NewsInflation is still a main worry for large economies

Inflation is still a main worry for large economies

Per the released ECB Monetary policy decisions the monthly net purchases under the APP will amount to €40 billion in April, €30 billion in May and €20 billion in June. At today’s meeting the Governing Council judged that the incoming data since its last meeting reinforce its expectation that net asset purchases under the APP should be concluded in the third quarter. The calibration of net purchases for the third quarter will be data-dependent and reflect the Governing Council’s evolving assessment of the outlook.

The interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.50% respectively.

Accordingly, the Governing Council expects the key ECB interest rates to remain at their present levels until it sees inflation reaching 2% well ahead of the end of its projection horizon and durably for the rest of the projection horizon, and it judges that realized progress in underlying inflation is sufficiently advanced to be consistent with inflation stabilizing at 2% over the medium term.

Advance estimates of U.S. retail and food services sales for March 2022, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $665.7 billion, an increase of 0.5 percent (±0.5 percent) from the previous month, and 6.9 percent (±0.9 percent) above March 2021. Total sales for the January 2022 through March 2022 period were up 12.9 percent (±0.7 percent) from the same period a year ago. The January 2022 to February 2022 percent change was revised from up 0.3 percent (±0.5 percent) to up 0.8 percent (±0.2 percent).

Retail trade sales were up 0.4 percent (±0.4 percent) from February 2022, and up 5.5 percent (±0.7

percent) above last year. Gasoline stations were up 37.0 percent (±1.8 percent) from March 2021, while food services and drinking places were up 19.4 percent (±4.6 percent) from last year.

The Reserve Bank of New Zealand Monetary Policy Committee today increased the Official Cash Rate (OCR) to 1.50 percent. The Committee agreed it is appropriate to continue to tighten monetary conditions at pace to best maintain price stability and support maximum sustainable employment.

The Committee remained comfortable with the outlook for the OCR as outlined in their February Monetary Policy Statement. They agreed that moving the OCR to a more neutral stance sooner will reduce the risks of rising inflation expectations. A larger move now also provides more policy flexibility ahead in light of the highly uncertain global economic environment. The level of global economic activity continues to generate rising inflation pressures. However, the pace of global economic activity continues to slow. In New Zealand, underlying strength remains in the economy, supported by sound balance sheets, continued fiscal support, and strong export earnings. Heightened global economic uncertainty and inflation are dampening consumer confidence. The rise in mortgage interest rates – amongst other factors – have acted to reduce mortgage demand and house prices. However, economic capacity pressures remain, with a broad range of indicators highlighting domestic capacity constraints and ongoing inflation pressures. Employment is above its maximum sustainable level and labor shortages are impacting many businesses.

The Bank of Canada today increased its target for the overnight rate to 1%, with the Bank Rate at 1¼% and the deposit rate at 1%. The Bank is also ending reinvestment and will begin quantitative tightening (QT), effective April 25. Maturing Government of Canada bonds on the Bank’s balance sheet will no longer be replaced and, as a result, the size of the balance sheet will decline over time.

The Bank forecasts that Canada’s economy will grow by 4¼% this year before slowing to 3¼% in 2023 and 2¼% in 2024. Robust business investment, labor productivity growth and higher immigration will add to the economy’s productive capacity, while higher interest rates should moderate growth in domestic demand.