{"id":47321,"date":"2019-07-19T08:53:29","date_gmt":"2019-07-19T13:53:29","guid":{"rendered":"https:\/\/olduvai.ca\/?p=47321"},"modified":"2019-07-19T08:53:36","modified_gmt":"2019-07-19T13:53:36","slug":"strait-outta-hormuz","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=47321","title":{"rendered":"Strait Outta Hormuz"},"content":{"rendered":"\n

Strait Outta Hormuz<\/a><\/h3>\n\n\n\n

The Strait of Hormuz these days seems to be what the streets of Compton used to be in the 90s. <\/strong>Yesterday, Iran\u2019s Revolutionary Guard said it has seized a \u201cforeign vessel\u201d for smuggling fuel. And this morning, news came in that the US has shot down an Iranian drone in the Strait of Hormuz, after it allegedly threatened a US warship. About a fifth of global daily oil consumption (c. 21 million barrels) passes through the Strait each day. Moreover, tensions between the US and Iran are more likely to increase than not (don\u2019t forget Iran also shot down a US drone last month). So don\u2019t expect a smooth ride for oil prices this summer.<\/p>\n\n\n\n

\"\"\/<\/figure>\n\n\n\n

From the Strait of Hormuz, to back to Europe. According to Bloomberg sources, ECB staff is looking into potentially reforming its inflation target from \u201cbelow, but close to 2%\u201d to perhaps a policy band around 2%. Such a band would explicitly make the inflation target symmetric (something President Draghi favours), which means that the ECB can better signal willingness to overshoot the target for a short while. As such, it can reinforce inflation expectations if it is seen as a signal of more (or a prolonged period of) loose monetary policy. However, our ECB watcher Bas van Geffen cautions that the risk of such a symmetric band is that the market could also interpret the lower bound as \u2018good enough\u2019, especially if inflation keeps undershooting the ECB\u2019s aim. Suppose the band is 0.5%. This implies the ECB might target an inflation rate of 2.5%, but it also implies that an inflation rate of 1.5% is within the ECB\u2019s target band. Hooray, the ECB has achieved its inflation target by simply changing the definition of the target. What does that mean for its credibility? To avoid that situation, a symmetric band should probably be accompanied by more stimulus to rekindle inflation expectations.<\/p>\n\n\n\n

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

Strait Outta Hormuz The Strait of Hormuz these days seems to be what the streets of Compton used to be in the 90s. Yesterday, Iran\u2019s Revolutionary Guard said it has seized a \u201cforeign vessel\u201d for smuggling fuel. And this morning, news came in that the US has shot down an Iranian drone in the Strait of […]<\/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":[2,5],"tags":[233,282,4800,16502,12324,24135,24136,9311],"class_list":["post-47321","post","type-post","status-publish","format-standard","hentry","category-economics","category-geopolitics","tag-ecb","tag-european-central-bank","tag-inflation-target","tag-iran-revolutionary-guard-corps","tag-irgc","tag-michael-every","tag-rabobank","tag-strait-of-hormuz"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/47321","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=47321"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/47321\/revisions"}],"predecessor-version":[{"id":47322,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/47321\/revisions\/47322"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=47321"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=47321"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=47321"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}