Daily update
Daily update
- US President Trump’s social media post suggests a deal has been done with India to reduce the tariffs paid by US importers (from 35% to 18%, with special tariffs relating to Russian oil purchases set to zero). The move will have little effect on the US affordability crisis—Indian imports are less than 3% of the US total. While tariff increases are readily passed to consumers, tariff reductions (strangely) are less likely to be passed through.
- French January consumer price inflation is likely to confirm the virtual absence of inflation. This is facilitating rising real income growth, which is why the French economy defies all the political noise and continues to perform adequately. The ECB bank lending survey is due, but European growth is not especially credit dependent.
- Gold prices have stopped falling overnight. If the froth is removed from the market, gold may again start to offer some signals as to market perceptions of political risk (concerns over the perceived shift in US international standing and risk-averse investors' questions around the rule of law having motivated some of the initial rise in price).
- The Reserve Bank of Australia raised rates, as expected—inflation is currently above target, and is projected to remain so. There are no international implications—policy is a local affair.