Follow Paul Donovan

Inflation rises. Disagreements arise

| Posted by: Paul Donovan | Tags: Paul Donovan

  • An American man in his seventies has levelled implicit criticism at the policy proposals of an American woman of roughly the same age. The Fed's Fischer and Yellen seem to disagree on how "hot" the Fed should let the economy run (other US policy disagreements are also available).
  • Today's release of US consumer price inflation is unlikely to resolve any of the Fed disputes but it will show the impact of the oil price base effect. Remember that core inflation is also vulnerable to oil price base effects, as embedded oil prices appear in things like air fares.
  • UK consumer prices have oil base effects and the possibility of the impact of the currency drop. Normally currency moves impact little more than commodity prices, but the recent sterling move is more structural in nature. Producer prices are already showing the effects.
  • The Euro area is not really trying to compete, though it does offer the ECB's bank lending survey. The problems of Italian bank lending are likely to be of interest to investors.