Overseas Headlines – June 24, 2022

June 24, 2022


United States:

Fed’s Bullard Says US Recession Unlikely and Expansion Is in Early Stage

Federal Reserve Bank of St. Louis President James Bullard said fears of a US recession are overblown, as consumers are flush with cash built up during the Covid-19 pandemic and the expansion is in an early stage. “I actually think we will be fine,” Bullard said in a speech in Zurich Friday. “It is a little early to have this debate about recession probabilities in the US.” Bullard repeated his call for further “front-loading” of rate hikes to contain inflation. The Federal Open Market Committee raised interest rates by 75 basis points last week and Fed Chair Jerome Powell indicated that either another move of that size, or of half a percentage point, will be on the table when policy makers meet again in late July. While a growing number of economists have started to predict a US recession, Bullard said “this is in the early stages of the US recovery — or US expansion, we are beyond recovery. It would be unusual to go back into recession at this stage.“




UK Petrol Hits Fresh Record, Intensifying Cost-of-Living Crunch

UK retail petrol and diesel prices touched new highs on Thursday, ratcheting up the pressure on consumers’ finances. The average price of petrol jumped to 190.22 pence a litre, bringing the cost of filling up a 55-litre family car to £104.62 ($128.37), according to the RAC motoring organization. Diesel increased to 198.46 pence, taking it within sight of the £2 a litre milestone. “The cost of petrol at the pumps should really have stopped rising by now and should in fact be going into reverse,” said RAC fuel spokesman Simon Williams. “While there is no doubt wholesale costs increased dramatically a few weeks ago, this is not the case now.” Though the price of unleaded petrol should fall, diesel is “likely to rise,” according to the RAC website.




India Inflation Fight Will Not Be Painless, Central Banker Says

Inflation will return to the Reserve Bank of India’s mid-point target in two years, a senior central banker said, with policy actions aimed at cooling price pressures set to take a toll on the economy.

Speaking at an industry meet in New Delhi, Deputy Governor in charge of monetary policy, Michael Patra, said inflation based on the consumer price index, would stay above the RBI’s target range of 2%-6% for the next three quarters. Those comments caused a sell-off in the bond market, with the yield on the 10-year sovereign note jumping as much as 5 basis points, before easing a bit. Failure to keep inflation within the mandated range for three straight quarters will force the RBI to write a letter to the federal government, explaining why it missed the target and lay out remedial measures. The RBI has already raised the benchmark repo rate by 90 basis points in the recent past and is poised to hike it further as the six-member rate-setting panel steps up its fight to cool prices.




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