The global financial market does not sit idly by waiting for Norges Bank in vain to give its verdict on Norwegian monetary policy. This week was different. The program of The 0.25 high rate increases his interest rate was the most visible form of a adjust the direction of the monetary policy which is spreading all over the world.
Currently bankers do not want to do everything possible to make money available to families, companies and governments to borrow at a better price. In addition to the economic crisis in Norway, the first of its kind since the beginning of the epidemic, four emerging banks in Pakistan, Hungary, Paraguay and Brazil – raised the rental price again this week, however US Federal Reserve and the Bank of England both mark a way to promote financial values.
These fund managers are often convinced that the economic recovery has proven to be stronger than they expected at the beginning of the year. But they are beginning to worry that money might be cheaper in the long run. This can threaten inflation, over-lending and even Economic instability when the world comes out of coronavirus infections.
“The stable economy now shows that it is necessary to re-introduce these changes,” said Oystein Olsen, the Norges Bank’s ambassador to the bank. Recognizing the increase from zero percent to 0.25% interest rate may not be final, he added that when inflation rises to 2%, a gradual interest rate program could address economic crises such as multiple mortgages and house prices.
To some extent, Norway’s economic performance is similar to that of developing countries. Strong predictions from the OECD showed the G20 countries continue to recover until they say they will return to the results and operations, which are expected before the epidemic, by the end of 2022.
Compared to the financial crisis of 2008-09, when much of the economy did not come close to addressing the financial crisis, the OECD’s predictions would be successful.
But this is a temporary claim compared to a decade ago that his claims did not satisfy OECD chief economist Laurence Boone. Most of the economy had a lot of unemployment before the epidemic, he says, especially in Europe, so he “could do better”. It is not enough, he adds, just to return the property back to “where it was before but with a lot of debt”.
The cost of continuous is rising
The growing global economic woes coupled with the disruption of the epidemic have brought with it countless problems.
Shipping costs have risen almost fivefold since the beginning of 2019 with a relatively small but affordable and unique prices. A decrease in global semiconductor has delayed shipping and prevented manufacturers from meeting consumer demands, especially automobiles. With the electronic hurdles and the Covid-19 explosion disrupting the flow of goods, prices have begun to rise, adding to the prospect of a temporary decline.
“This is already a transition from a conservative / reformist approach [just] a few months ago, ”wrote a team of economists in Citi this week.
The world of sustainable prices is increasing and unexpected breaks in recovery are difficult central banks to deal with it. Their strategy is to ensure that they have a good understanding of employment and to produce goods and services as much as possible and to manage spending effectively to keep inflation low and stable, usually only looking at 2%.
With the recovery from Covid-19, the higher prices rise and the lower the rate, the more difficult it is to determine the potential and the amount of money needed for a coronavirus-infected economy. That is why central banks have to set up interest rates while keeping in mind the amount of demand and demand.
This week, an increase in evidence of unemployment and a resurgence of spending money made it even more difficult with interest rates. The U.S. Federal Reserve’s financial summit on Wednesday signaled a clear agreement that it was planning to reimburse emergency aid set up in the early days of the epidemic to end a major deal.
Jay Powell, Fed chairman, he continued with plans to cut $ 120bn a month to buy goods the central bank promised to continue until it “went ahead” on two goals of 2% inflation and big business. He announced at the next meeting in November to launch a “drawing” project that would reduce purchases, and that there would be support for the Federal Open Market Committee to make the incentives possible by mid-2022.
His comments came with new estimates of future US interest rates, which show that the number of office bearers is increasing next year. The committee was similarly divided on the 2022 reforms, according to reports, with an increase of three rates so far at the end of 2023.
“A group of [FOMC] has determined that because inflation appears to be overpopulated and the risks involved in expectations and inflation are high, they should [act] a little faster. . . pulling the trigger, ”said Donald Kohn, a former Fed deputy at the Brookings Institution.
The Bank of England also sees rising inflation and frustration as evidence that inflation should remain high over the long term – at a rate of more than 4% over the 2022 average – than previously predicted. This has turned into a concern for that lack of laziness in the labor market and rising commodity prices, although temporary, can feed companies the freedom to raise prices and wages.
Philip Rush, founder of Heteronomics, says there was a “bad bias” during the BoE conference this week. This prompted many financial analysts to take the statement of the central bank as a sign of the start of a price hike in February, with the slightest possibility that the day would come until November.
As was the case with the Fed, the BoE’s sentiment was very different from earlier this summer when the two central banks set up tensions that needed to be crossed before serious consideration could be made.
The euro city is not in the same location. It has the problem of stabilizing low prices and 1m more people are losing their jobs than at the start of the epidemic.
Christine Lagarde, President of the European Central Bank, reiterated her view that inflation was “temporary” in CNBC interview Friday is that ideas will be “fulfilled” when problems are solved. But he also said that electricity prices would remain a problem for some time and that prices had risen faster than the ECB had expected.
Lagarde’s assertion did not match the fullness of one of his presidents this week. Luis de Guindos reported the online event of the Financial Times that “there is a risk of further inflation” especially if the recent inflation, which is exacerbated by rising electricity prices, requires significant compensation.
Turkey goes it alone
Newly arrived wealth often does not have the opportunity to be waiting to see before doing anything. Without a long history of rising prices, investors are keeping their feet close to the fire and demanding action as prices rise. Food and energy also provide a large share of consumption and in many developing countries – Argentina, Brazil, Mexico, Russia and Turkey – these ideas have been tarnished by the OECD, which says high inflation “should continue for a while”.
In most lands, the central bank has already responded with a high interest rate. Brazil has increased its stance by 1% on Wednesday to 6.25%, with the central bank calling for “extra funding, investment and regulatory measures” to change its stance.
Over the global trend towards monetary policy in Turkey, where the central bank ignored economic sentiments, said inflation was short-lived and reduced interest rates by 1% to 18%, even though inflation reached 19.25% in August. .
Many saw this as Political move by the governor of the central bank who was appointed to the post in March after President Recep Tayyip Erdogan removed his predecessors due to extreme inflation. The Turkish lira has fallen sharply which could cause domestic inflation to outweigh foreign exchange rates. At worst, Turkey’s economy will now be monitored to see if its export market responds to the weakening ring and whether inflation is still maintained.
Turkey is the only one this week to ratify the law. Orthodox central banking has changed. They were all amazed at how fast the economy has gone up this year and the global economic downturn as people’s incomes have shifted from job to job. They all expect the economic crisis to be temporary but strong prices are rising rapidly, high inflation could continue beyond expectations in the past few weeks.
Even the world’s most powerful economy is now concerned with rising prices in a way that was previously unimaginable earlier in the year. The ground has changed and finances have changed. Central banks now have the idea of pressing points.