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Whipping inflation doesn’t necessarily require a recession – but some may not get a choice

Posted by Neil Shearing | Category : The Chief Economist's Note.

A debate is raging among market participants about whether inflation has accelerated to such an extent that a recession has now become necessary in order to bring it back down.  As we explained in a piece published last week, the answer depends to a large extent on how much of the rise in inflation has … Continue reading “Whipping inflation doesn’t necessarily require a recession – but some may not get a choice”

In this new age of uncertainty, central banks should double down on inflation targeting

Posted by Neil Shearing | Category : The Chief Economist's Note.

25 years ago this month the Bank of England was granted operational independence by the then-Chancellor Gordon Brown. Uncomfortably for current members of the Monetary Policy Committee, the anniversary coincides with a new set of forecasts by the Bank’s staff showing that UK inflation is on track to hit 10% by the end of this … Continue reading “In this new age of uncertainty, central banks should double down on inflation targeting”

Q2 Global Economic Outlook: Paying the Price of High Inflation

Posted by David Wilder | Category : Capital View.

Our Q2 Global Economic Outlook warns that the world economy faces higher inflation and weaker growth than many forecasters expect this year. The latest edition of this quarterly report provides crucial insight into the global outlook, exploring the impact of the war in Ukraine and the global fight against inflation. The report explains why we … Continue reading “Q2 Global Economic Outlook: Paying the Price of High Inflation”

China’s FX reserve options are limited by its choice of friends

Posted by David Wilder | Category : Chart In Focus.

China may, quite reasonably, be considering how to safeguard its foreign exchange reserves in light of the West’s financial sanctions against Russia. It has no good options, says Chief Asia Economist Mark Williams. He estimates that almost all of the estimated $5trn that constitute China’s foreign exchange reserves plus the foreign assets of its state … Continue reading “China’s FX reserve options are limited by its choice of friends”

China’s economic challenges won’t stop with defeating Omicron

Posted by Neil Shearing | Category : The Chief Economist's Note.

All three of the world’s major economic blocs are now facing significant headwinds. In the US, these stem from an increasingly hawkish Federal Reserve, while the euro-zone faces pressure from a huge squeeze in real incomes that threatens to push the region into recession. In China, the government’s immediate challenge has been to quash the … Continue reading “China’s economic challenges won’t stop with defeating Omicron”

This wave of globalisation was over long before Russia invaded Ukraine

Posted by David Wilder | Category : Capital View.

China’s re-emergence as an economic power was the big driver of globalisation over the past two decades. But it also contained the seeds of a fracturing Sino-US relationship. Globalisation is now in partial reverse as separate US- and China-led economic spheres emerge and the decoupling that began with trade increasingly spreads into technology, market access … Continue reading “This wave of globalisation was over long before Russia invaded Ukraine”

From ‘Roaring’ to ‘Recessionary Twenties’ – how convincing is the market’s latest story?

Posted by Neil Shearing | Category : The Chief Economist's Note.

Financial markets love a good story. Twelve months ago, the dominant narrative was that we were heading into another “Roaring Twenties”, with the global economy set to see years of above-trend growth as it emerged from the pandemic. What a difference a year makes: the narrative has now flipped as concerns about recession have spread. … Continue reading “From ‘Roaring’ to ‘Recessionary Twenties’ – how convincing is the market’s latest story?”

The French presidential election – The macro and market risks of Le Pen vs Macron

Posted by David Wilder | Category : Capital View.

The outcome of the French presidential election on 24th April could have far-reaching consequences for economies and markets. In a 21st April online briefing, Andrew Kenningham and Jessica Hinds from our Europe team, and Jonas Goltermann, the head of our FX Markets service, discussed some of the risks. The following are extracts from that conversation, … Continue reading “The French presidential election – The macro and market risks of Le Pen vs Macron”

Reports of the dollar’s demise are (still) greatly exaggerated

Posted by Neil Shearing | Category : The Chief Economist's Note.

The debate about the role of the dollar in the global economy is an old one. Over the years it’s been given fresh life by events including the creation of the euro, China’s rise and the Global Financial Crisis. Most recently, the decision by the US and its allies to impose severe financial sanctions on … Continue reading “Reports of the dollar’s demise are (still) greatly exaggerated”