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Politics and prices

| Posted by: Paul Donovan | Tags: Paul Donovan

  • The interminably tedious EU-UK divorce is still tediously interminable. The UK government has cancelled a parliamentary vote on the divorce settlement. UK Prime Minister May is to go to Brussels to renegotiate. One of the many EU presidents (Tusk this time) has said the EU will not renegotiate but it will help get ratification – which sounds a bit like a soft renegotiation.
  • The governor of the Reserve Bank of India has resigned "for personal reasons", after government pressure on the bank to ease policy (there are elections next year) and help the government pay for its budget deficit. Markets generally get upset when central bank independence is challenged, and the rupee has weakened.
  • US producer price inflation is due, indicating pricing power by US companies. With part of the existing trade taxes being evaded, tariffs are unlikely to push prices up much. Labor costs are a more serious challenge, but oil prices will tend to push down both headline and core rates.
  • French President Macron unveiled a series of concessions to protestors, including a rise in the minimum wage and tax-free overtime. The protests will have had a negative economic effect (much like the strikes earlier this year).