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Keep on tightening

| Posted by: Paul Donovan | Tags: Paul Donovan

  • The US Federal Reserve behaved as expected. There was no policy change (it is too soon to be thinking of a tightening at every meeting). Nonetheless, the statement is consistent with the idea of a quarter point a quarter of interest rate increases.
  • Eurozone inflation data is due. Can life be much more exciting than this? Yes, it can. The regional numbers are pointing to a fairly unexciting set of consumer price figures although oil and company pricing power should conspire to raise producer price inflation a bit.
  • There are a multitude of ECB speakers due. These come in the wake of remarks Bundesbank President Weidmann (and head of the German faction of the ECB). Weidmann signalled that it would be wrong to delay ending bond buying (there are those who would argue it has been wrong to carry on so long). Also that rates should rise mid-next year.
  • US productivity data is due. This in theory measures how hard people work. It actually measures the sum total of things economists do not understand about the economy. US unit labor costs are expected to rise, however, which with company pricing power is relevant for inflation pressures.