Overseas Headlines – May 19, 2021

United States:

Specter of 1960s Inflation Takeoff Haunts U.S. Economy Today

“A newly-elected president promising to tackle racial injustice and build a better and fairer economy and society. A Federal Reserve chairman who’d voiced satisfaction with the course of monetary policy the previous year. A sharply accelerating economy with an inflation rate that’s been below 2% for years. 2021? No, 1965, a year that marked the start of a years-long climb in inflation to double-digit levels the following decade. That’s an upward trend that some experts fear could be about to begin today, as a super-charged federal budget combines with a lax monetary posture to once again overheat the economy.”



U.K. Inflation Doubles as Post-Lockdown Spending Splurge Starts

“Britain’s inflation rate doubled in April, marking the beginning of a surge in prices that will fuel speculation about when the Bank of England could start taking its foot off the stimulus pedal. Consumer prices rose 1.5% from a year earlier last month after a 0.7% gain in March, the Office for National Statistics said on Wednesday. The reading was in step with economists’ expectations.”



China Will Need to Give Up FX Controls Eventually, PBOC Official Says

“China has to give up its control over the currency’s exchange rate eventually if it wants to achieve greater global use of the yuan, according to a central bank official. The yuan exchange rate will have to be determined by global market participants, and this will allow China to have free cross-border capital flows and pursue an independent monetary policy, Zhou Chengjun, director of the People’s Bank of China’s finance research institute, said in a speech published Wednesday.”



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