economic news

The US Fed has hiked interest rates by more than a quarter of a percent, its most aggressive rate hike in at least three decades. Wall Street is expecting more of the same from the Fed. Moreover, inflation and manufacturing have slowed more than most economists expected.

Inflation slowing more than many economists expected

The Consumer Price Index (CPI) for November showed inflation slowing more than many economists expected. This sparked a rally on Wall Street, as it is the first time in eight months that inflation has dipped below 8%.

The biggest annual increase in the CPI was in the categories of fuel oil, butter and margarine. These prices are likely to come back down to earth as production levels rise.

Overall inflation has been quite mild compared to what it was in the early 1980s. Still, this year’s yearly increase is the largest since November 1981.

Manufacturing slowing at mid-year

Manufacturing activity has been on the rise for nearly 18 months, but that has now slowed down. Many manufacturers wonder if supply disruptions are the only reason for the slowdown.

The ISM’s manufacturing production index fell to a more than two-year low in July, reflecting a marked slowdown in output growth. A manufacturing production index that falls below 50% indicates production lags demand.

However, the overall index is still above average, indicating that production is increasing. This may mean that firms are adding to their inventory in response to shortages of key inputs.

Fed hikes more than three quarters of a percent

The Federal Reserve hiked interest rates by three quarters of a percentage point on Wednesday, marking its sixth hike in just over six months. Economists have warned the faster than expected rate hikes will slow the economy and could lead to a recession.

Despite the Fed’s recent hikes, the unemployment rate has remained low, a sign of a robust job market. However, a number of factors are causing inflation to spike. These include supply and demand imbalances, Russia’s war in Ukraine, and a weaker outlook for global economic activity.

Wall Street expects the impact of the Fed’s most aggressive year of interest rate hikes in at least three decades to continue

The Federal Reserve raised the federal funds rate by a quarter of a percentage point on Wednesday. It’s the first time in nearly a decade that the central bank has pushed the rates to this high.

Interest rate hikes are aimed at taming white-hot inflation. Prices are at 40-year highs and the consumer price index has been soaring. Economists aren’t sure if it’s working.

Higher rates can stifle economic growth, increase unemployment and dampen demand. If you’re a business owner, you might have to cut back on hiring or corporate profits.

Russia’s export of mineral fertilizers may drop by 15 per cent this year

Russia is an important global fertilizer producer. However, its export of mineral fertilizers may be decreasing by 15% this year.

The UN has called for Russia to remove obstacles to its fertilizer exports. Some countries, like the U.S., have already begun issuing “comfort letters” to help facilitate trade in critical goods from Russia. But it’s not easy to gauge the impact of sanctions on global supply chains.

Supply chain vulnerabilities are caused by a number of factors. They include bilateral dependency and persistent market asymmetries. These supply chain weaknesses are further exacerbated by Russian government actions that create barriers to trade. In particular, the recent war in Ukraine has affected the supply of critical raw materials.

China’s abrupt reversal of its Covid Zero policy

China’s abrupt reversal of its Covid Zero policy has led to a wave of infections across the country. This is a worrying development given the vulnerabilities of the vast nation’s health system.

According to reports, more than a million infections are expected to break out within China in the coming months. That may create snags for the economy in the long term.

Despite the government’s claim to be taking a prudent and moderate approach, China’s rapid reopening of its Covid-19 quarantine policies has led to an unprecedented surge of infection. Many cities have been overrun with cases, with hospitals struggling to cope.

Tunisia’s increasingly authoritarian president appears determined to upend its political system

As Tunisia’s increasingly authoritarian president appears determined to upend the country’s political system, European policy must reflect these new realities. Its failure to act is risky and may only strengthen the impression of European values. This article examines the key issues and implications for European policy.

The EU should use its diplomatic and financial leverage to help stabilize Tunisia. But it should not assume over-optimistic scenarios. And it should consider suspending macro-financial support if domestic tensions escalate.

The President of Tunisia has resorted to an aggressive rhetorical strategy to attack his political opponents. Moreover, his relationship with the security apparatus has become more authoritarian.