from TheDailyGold
ECB to Begin Cutting Rates Even as Inflation Fight Continues
by Francesco Canepa and Balazs Koranyi
Reuters.com
FRANKFURT, June 6 (Reuters) – The European Central Bank was all but certain to cut interest rates from record highs on Thursday and was likely to acknowledge it had made progress in its battle against high inflation, while also stressing the fight was not yet over.
ECB policymakers have clearly telegraphed their intention to lower borrowing costs after seeing inflation in the 20 countries that share the euro fall from more than 10% in late 2022 to just above their 2% target in recent months.
The broad-based decline was seen as more than enough for the ECB to begin undoing the steepest streak of interest rate hikes in its history, which were a response to spiralling prices in the wake of Russia’s invasion of Ukraine.
Sunak’s Cap On Migration Would Complicate BOE’s Inflation Fight
by Irina Anghel
BNN Bloomberg
(Bloomberg) — Prime Minister Rishi Sunak’s pledge to cap the number of immigrants entering the UK risks colliding with the Bank of England’s effort to keep inflation in check.
Struggling to gain traction in his bid for re-election, Sunak has promised to introduce a strict annual limit on visas issued to those seeking to come to Britain. Economists warn that those curbs could reduce the flow of workers, restraining the UK’s ability to grow without sparking a jump in wages and prices.
Such limits could play into the central bank’s decision on when to lower interest rates, which have been stuck at a 16-year high since last September. While inflationary forces are receding, BOE officials led by Governor Andrew Bailey say they’re watching wage data carefully for signs that those pressures will stick around.
Why the U.S. is Heading for Hyperinflation – and What Will Happen When it Arrives
Bonds will be losers, stock picking trickier and high-priced tech stocks a sell, writes Frank Giustra. So how can you protect yourself from the coming disaster?
by Frank Giustra
The Star
In politics it is necessary either to betray one’s country or the electorate. I prefer to betray the electorate. – Charles de Gaulle
In the opinion piece I wrote last week, I warned of a looming financial crisis in the U.S. (and other Western nations) fuelled by spiralling debt, money printing and a broken political system — and that most people will be unprepared.
Although much of the population is anxious, no one can imagine a worst-case scenario, simply because unlike my parents’ generation, our generation has never experienced the effects of a depression, hyperinflation, or war. The sad reality is that history has shown us that these cycles occur every 70 to 100 years and the patterns leading up to these crises are recognizable.
Inflation Feels Bad No Matter How You Define It
Rising prices make Americans gloomy about the economy, even if they’re not climbing as fast as they used to.
by Claudia Sahm
Bloomberg.com
The people who experience the US economy continue to disagree with the people who measure it, and the most likely reason is inflation: Most Americans still see it as a major problem, while most economists don’t. But this debate recently veered from economics to semantics. Has the common definition of “inflation” changed, and do economists just need to accept it?
Felix Salmon of Axios essentially answers yes to both questions. “The meaning of the word ‘inflation’ has changed” he writes. “It used to mean rising prices; now it means high prices.” This helps explain, he says, the disconnect between Americans’ perceptions of the economy and economists’ assessment of it.
Amid Rising U.S. Food Prices, What Should We Be Cooking From Scratch?
One way to reduce the cost of your next grocery store or restaurant visit is to consider making some foods from scratch at home – here are five recipes
by Victoria Namkung
The Guardian
If you have felt startled by your total at the grocery store checkout line, you’re not alone. Since the onset of the Covid pandemic, US grocery prices have risen faster than the rate of inflation. People are now paying 25% more for their groceries than they were pre-pandemic, and for the past three years, grocery prices have increased more and grown faster than other prices, according to a recent report.
And since almost every household regardless of income buys groceries on a regular basis, it’s no surprise that higher prices are a top concern for American families. Restaurants have also gotten more expensive due to higher food and labor costs.
Food can be one of the bigger line items of our budgets, so one way to reduce the cost of your next grocery store or restaurant visit is to consider cooking some foods from scratch at home, even if you’re a smaller household.
Fed President: People Would Rather Have Recession Than High Inflation
by Breck Dumas
Yahoo! Finance
“The American people – and maybe people in Europe, equally – really hate high inflation,” Kashkari told the Financial Times podcast “The Economics Show with Soumaya Keynes” last week. “I mean, really, viscerally hate high inflation.”
Kashkari, who has led the Minneapolis Fed since 2016, said he has participated in several roundtable discussions with labor groups and workers around his region over the past couple years, and the comment that stuck with him the most was from a labor leader who represents low-income service workers.
Former Obama Adviser: Greed Isn’t Causing Inflation, Companies Didn’t Only Decide to Maximize Profit Under Biden
by Ian Hanchett
Breitbart.com
On Monday’s broadcast of CNBC’s “Last Call,” Professor of the Practice of Economic Policy at Harvard University and the Harvard Kennedy School Jason Furman, who served as Chairman of the Council of Economic Advisers under President Barack Obama and on the Council of Economic Advisers and the National Economic Council under President Bill Clinton dismissed arguments that corporate greed is the cause of inflation and argued that companies always try to maximize their profits and didn’t just start deciding to do so in the past couple years, and the real culprit was demand spiking.
Host Brian Sullivan asked, “Is corporate greed, in your mind, a part of this inflationary story?”
Furman answered, “I don’t think greed had very much to do with any of this. The thing to understand is that corporate greed is like gravity.
NY Fed Gauge of Inflation Persistence Shows Stickiness Following Surge
by John Carney
Breitbart.com
Inflation persistence has eased only slightly after surging higher at the start of the year, according to a gauge from the Federal Reserve Bank of New York.
A New York Fed model that aims to measure how much inflation is likely to keep going was revised higher for the first three months of the year, data from the bank showed Monday. The most recent reading shows only a slight decline in April, the most recent month measured.
The persistent barometer, known as the Multivariate Core Trend or MCT, jumped to 3.3 percent in January, upwardly revised from the earlier estimate of three percent. February’s figure was revised up to 3.1 percent from 2.7 percent and March’s to 2.9 percent from 2.6 percent.
Yellen Wants Price Inflation to Rise So the Feds Can Keep Spending
by Daniel Lacalle
Mises.org
The long-term forecast for higher interest rates, according to Treasury Secretary Janet Yellen, makes it more difficult to control US borrowing needs, which emphasizes the significance of raising revenue in the forthcoming budget talks with Republican lawmakers. There is only one problem. She is wrong.
According to the Congressional Budget Office (CBO) baseline, which does not assume a single year of recession and already counts with record tax revenues, the 2025 primary deficit will reach $851 billion, while net interest outlays will rise to $951 billion. Furthermore, the minimum expected primary deficit from 2025 to 2034 will be a staggering $676 billion with $1.2 trillion of net interest outlays, while the average annual deficit will likely be above $700 billion. The accumulated figures are even more concerning. The CBO estimates that the aggregate primary deficit in the 2025–2034 period will reach a brutal $7.4 trillion, with accumulated interest expenses of $12.4 trillion. We must remember that the CBO baseline estimates no recession and constantly rising tax receipts above the record 2024 level.
Retailers Notice Shoppers Seeking Savings Amid Inflation
Inflation and high interest rates drive cautious spending, but a potential rebound is anticipated
by Freschia Gonzales
Wealth Professional
Canadian Tire Corp., Tim Hortons parent company Restaurant Brands International, Roots Corp., and Alimentation Couche-Tard Inc. have all observed that shoppers are increasingly seeking cost savings and reconsidering some purchases.
According to BNN Bloomberg, this trend was noted across the latest set of quarterly earnings calls, with many companies attributing it to a mix of inflation and higher interest and mortgage rates that strained budgets last year and have continued to slow consumer spending into this year.
However, there is consensus that the latter half of 2024 might see these concerns ease, especially if the Bank of Canada cuts its key lending rate over the summer.