Race of Central Banks Amid Economic Problems

19 ott 2021

Last week, in the minutes of the last FOMC meeting, the Fed practically announced the start of a cycle of monetary tightening. But inflation is not just a US problem. Central banks' inflation targets have been exceeded several times in the Eurozone and the UK. This means that both the Bank of England and the ECB need to tighten monetary policy. Tellingly, verbal interventions from both sides have already started.

The head of the Bank of Italy Ignazio Visco (member of the ECB) admitted that inflationary expectations were higher than the ECB would like. Governor of the Bank of England Andrew Bailey made perhaps the most aggressive statement for himself, noting that the central bank "will have to act."

In this regard, the fate of the euro and the pound in pairs with the dollar does not seem so obvious and, by and large, will depend on the outcome of the race of the central banks.

Although we would still sell the pound. The situation with the pandemic in Britain is getting worse again. The number of new cases of diseases has reached a three-month high.

Well, and even more strange against the background of the planned tightening of monetary policy in the world, the dynamics of stock markets looks, especially the United States, especially against the background of yesterday's data on industrial production in the United States, which decreased by 1.3% in September.

However, China was not happy yesterday with its weak data on GDP. In general, logistics problems are starting to worry economists more and more. Even outside the context of bottlenecks, there are plenty of problems. For example, the cost of booking a 40-foot container from Shanghai to Los Angeles was $ 10,229 in the first week of August, up 238% from the same time a year earlier.

As a result, toy manufacturers, for example, are ditching a range of products and relying on small stuffed toys. So do not be surprised by the emergence of a new fashion, as well as the fact that prices will continue to rise against the background of empty shelves for some items of the product range.