Inflation in US Means Higher Interest Rates

Inflation in US Means Higher Interest Rates

Inflation in US Means Higher Interest Rates

Speakers from the Fed are talking of up to 3 more Fed rate hikes this year.

It is clear that Fed tightening is warranted by the steady rise in US inflation and the debate is more about the degree of tightening and the mechanism of tightening that is required to prevent the central bank from slipping behind the curve.

Keep in mind that Key indicators suggest that the Fed’s announced tightening pace should be accelerated.

A central bank gets behind the curve when it is not raising rates at a pace fast enough to keep up with inflation.

Note: there is no growth without inflation.

Meanwhile, President Donald Trump’s healthcare reform may be not quite as dead as had been thought.

President Trump  told senators attending a White House reception that he expected lawmakers to reach a deal “very quickly” on healthcare, he did not offer specifics, but he always means what he says.

This is worth watching.

The “long goodbye” from the UK from the EU is now underway with US Prime Minister May declaring that there is no turning back.

Prime Minister Theresa May’s letter to the European Council President Donald Tusk reads the following important words: “The United Kingdom wants to agree with the European Union a deep and special partnership that takes in both economic and security cooperation … If, however, we leave the European Union without an agreement the default position is that we would have to trade on World Trade Organisation terms. In security terms a failure to reach agreement would mean our cooperation in the fight against crime and terrorism would be weakened.”

Considering that the UK ranks 5th in the world on nominal GDP, this mean the EU it is on its way to losing the following:

  1. 12% of its population,
  2. 16.67% of its nominal GDP (Eurostat: UK represented 16.67% of Y 2016 EU nominal GDP)
  3. 50% of its nuclear weapons and
  4. 1 of its 2 permanent seats at the United Nations Security Council Security Council. The other seats remain with France alongside the United States, China and Russia.

The Brexit affair now descends into normal EU negotiations. The 1st major discussion will be about how discussions are to take place.

Have a terrific weekend.

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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