Daily update
Daily update
- The ECB raised interest rates 0.5%, and signalled that future policy would be data-dependent. One would hope that in any well-run central bank, policy would always be data dependent. ECB President Lagarde was asked about the role of profits in driving inflation—the answer was not terribly insightful. Raising rates should tackle profit-led inflation, but it is an unnecessarily destructive way of achieving that goal.
- The US has embraced recycling. As retail depositors have taken money from small banks to put into larger banks, larger banks are now taking money to deposit in smaller banks (or one bank in particular). This may stabilize the system in the near term, but in the longer term, some thought needs to be given to managing reputation risk in the social media age. For the economy, whether banks accelerate credit tightening is the key focus.
- US Michigan consumer sentiment has the always entertaining split between Republican and Democrat views of the economy. The index was supported last month by Republicans becoming less pessimistic. This seems more about political partisanship than economic reality. Industrial production data is due—the consensus forecast range is too chaotic to be a useful guide to expectations.
- Euro final consumer price inflation for February is due. These figures are rarely revised.
