{"id":35673,"date":"2018-07-02T16:33:49","date_gmt":"2018-07-02T21:33:49","guid":{"rendered":"http:\/\/olduvai.ca\/?p=35673"},"modified":"2018-07-02T16:33:49","modified_gmt":"2018-07-02T21:33:49","slug":"emerging-market-crisis-spreads-to-the-core-central-banks-face-catch-22","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=35673","title":{"rendered":"Emerging Market Crisis Spreads To The Core, Central Banks Face Catch-22"},"content":{"rendered":"
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Emerging Market Crisis Spreads To The Core, Central Banks Face Catch-22<\/a><\/h3>\n<\/header>\n
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One of the things giving \u201cdata-driven\u201d central banks wiggle room on their pledge to tighten monetary policy is the fact that there are several definitions of inflation. In the US the thing most people think of as inflation is the consumer price index, or CPI, which is now running comfortably above the Fed\u2019s target. But the Fed prefers the personal consumption expenditures (PCE) price index, which tends to paint a less inflationary picture. And within the PCE universe, core<\/em> PCE, which strips out energy and food, is the data series that actually motivates Fed action.<\/p>\n

And that, at long last, is now above the 2% target, having risen 2.3% in the past year<\/strong><\/a>.
\nOn the following chart, the core PCE is the blue line. Note the steepening slope towards mid-year. This is clearly a trend with some momentum which, if it continues, will take this index from slightly above target to substantially above.<\/p>\n

\"PCE<\/a><\/p>\n

A more surprising above-target reading just came from Germany, which didn\u2019t used to have inflation of any kind. But now it does:<\/strong><\/a><\/p>\n

(Reuters) \u2013 German inflation surpassed the target set by the European Central Bank for the euro zone in June, the second month in a row it has done so, lending support to the ECB\u2019s decision to close its bond purchase scheme at the end of the year.<\/p>\n

Data published by the Federal Statistics Office on Thursday showed that EU-harmonised German consumer prices rose 2.1 percent year-on-year. The same measure had increased by 2.2 percent in May. The yearly figure matched a Reuters forecast.<\/p><\/blockquote>\n

\"German<\/a><\/p>\n

Again, note the pop over the last couple of months. If this is sustained, the European Central Bank will have to speed up its leisurely tightening pace. Right now it\u2019s scaling back its bond-buying but not signaling higher rates \u2013 which will definitely have to be on the menu if German inflation stays above 2%.<\/p>\n

\u2026click on the above link to read the rest of the article\u2026<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Emerging Market Crisis Spreads To The Core, Central Banks Face Catch-22 One of the things giving \u201cdata-driven\u201d central banks wiggle room on their pledge to tighten monetary policy is the fact that there are several definitions of inflation. In the US the thing most people think of as inflation is the consumer price index, or […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[2623,124,213,233,1732,282,284,426,7544],"class_list":["post-35673","post","type-post","status-publish","format-standard","hentry","category-economics","tag-catch-22","tag-central-banks","tag-dollar-collapse","tag-ecb","tag-emerging-markets","tag-european-central-bank","tag-european-union","tag-inflation","tag-john-rubino"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/35673","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=35673"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/35673\/revisions"}],"predecessor-version":[{"id":35674,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/35673\/revisions\/35674"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=35673"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=35673"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=35673"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}