“There never was a good war or a bad peace”. (Benjamin Franklin, 1783)
leontsirlin.substack.com
Outlook: Reducing Demand in a period of Tight Commodity Supply Are we heading to a global recession? I think that the consensus view that the Global Economy is heading for a recession is not necessarily wrong. Higher policy rates could bring economic demand to a suboptimal level while making only modest progress in inflation. Inflation is likely to remain elevated because the war in Ukraine and related sanctions will restrain supply of many tradable commodities. The situation can only get worse if Russia decides to retaliate by reducing their exports to the West. It would probably be a good idea for Central Banks to encourage a quick resolution of the war in Ukraine, but unfortunately Central Banks have no tools for that. All they can do is set rates, create money, and buy or sell bonds. Chair Powell has recently suggested that “additional 50 basis points increase will be on the table at the next couple of meetings”, leaving the possibility it can be done a few times, not just twice. During the press conference Powell has repeated this a couple of times, namely three times.
“There never was a good war or a bad peace”. (Benjamin Franklin, 1783)
“There never was a good war or a bad peace…
“There never was a good war or a bad peace”. (Benjamin Franklin, 1783)
Outlook: Reducing Demand in a period of Tight Commodity Supply Are we heading to a global recession? I think that the consensus view that the Global Economy is heading for a recession is not necessarily wrong. Higher policy rates could bring economic demand to a suboptimal level while making only modest progress in inflation. Inflation is likely to remain elevated because the war in Ukraine and related sanctions will restrain supply of many tradable commodities. The situation can only get worse if Russia decides to retaliate by reducing their exports to the West. It would probably be a good idea for Central Banks to encourage a quick resolution of the war in Ukraine, but unfortunately Central Banks have no tools for that. All they can do is set rates, create money, and buy or sell bonds. Chair Powell has recently suggested that “additional 50 basis points increase will be on the table at the next couple of meetings”, leaving the possibility it can be done a few times, not just twice. During the press conference Powell has repeated this a couple of times, namely three times.