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The Bank of England should welcome the rise in real wages rather than punish it | Notayesmanseconomics's Blog
This morning has brought a reminder of the sometimes contrary nature of economic statistics. The UK has just experienced a quarter of what even in past times would have been regarded as decent GDP growth at 0.6% for the first quarter. But we see employment doing this. The UK employment rate for January to March…
China seeks to solve its economic problems with the same old policies | Notayesmanseconomics's Blog
It is time again to look East but this time not to Japan but China. Although the news suggests that China is rather aping its Pacific economic neighbour. Chinese authorities have kicked off plans to sell Rmb1tn ($140bn) of long-dated bonds, as Beijing raises spending to stimulate the economy. The People’s Bank of China has…
Strong UK GDP growth rather embarrasses the Bank of England | Notayesmanseconomics's Blog
This morning the UK has received some economic news which fits with the recent sunny and warmer weather. UK gross domestic product (GDP) is estimated to have increased by 0.6% in Quarter 1 (Jan to Mar) 2024, following declines of 0.3% in Quarter 4 (Oct to Dec) and 0.1% in Quarter 3 (July to Sept)…
Japan discovers that a lower Yen and surges in equity markets can come with falling real wages. | Notayesmanseconomics's Blog
Overnight has brought more news on one of both the main causes and features of the Lost Decade period in Japan. But before we get to that we can look at one of the symptoms which is the ongoing weakness in the Japanese Yen. Here is the Japanese owned Financial Times from last Friday. When…
The Riksbank of Sweden leads the charge to lower interest-rates | Notayesmanseconomics's Blog
This morning has brought another example of the contrary times in which we live. After yesterday's news from the Reserve Bank of Australia which may be mulling another interest-rate rise we received this from the world's oldest central bank. Inflation is approaching the target while economic activity is weak. The Riksbank can therefore ease monetary…
Should Australia have raised interest-rates today? | Notayesmanseconomics's Blog
As the UK returns after its May Day break we find the economic news being set in a land down under. At its meeting today, the Board decided to leave the cash rate target unchanged at 4.35 per cent and the interest rate paid on Exchange Settlement balances unchanged at 4.25 per cent. That is from the Reserve Bank…
The Bank of England should take note of the money supply and abandon QT bond sales | Notayesmanseconomics's Blog
On the surface this has been a quiet week for the Bank of England along the lines of the Norges Bank of Norway which has just voted to keep interest-rates at 4.5%. But as I pointed out yesterday its QE and now QT efforts have left it singing along with Coldplay. Oh no, what's this?A…
More and more problems are emerging with the QE programme the Bank of England presented as a triumph | Notayesmanseconomics's Blog
Last night brought some bad news for the QE programmes employed by the world's central banks and ironically it came from the world's main central bank. The Federal Reserve has signalled that US borrowing costs are likely to remain higher for longer, as it wrestles with persistent inflation across the world’s biggest economy. ( Financial…
There are consequences from US interest-rates remaining at 5.5% for the fiscal deficit and the Japanese Yen | Notayesmanseconomics's Blog
Today is Federal Reserve day when just after 7pm (they are usually late) we learn the interest-rate decision of Jerome Powell and his colleagues. On the surface not much is expected which is highlighted by the front page of the Financial Times not mentioning it at all as I type this.Yet underneath the surface it…
Can the Bank of England finally catch up with what is happening in the UK economy? | Notayesmanseconomics's Blog
As the day started and we reached a minute past midnight there was some very welcome news for the Bank of England. INFLATION BROUGHT TO A HEEL The headline from the British Retail Consortium will no doubt have been emphasised by the research student presenting the morning meeting. A "well played Governor" never does career…
The ECB will be cutting its balance sheet as it cuts interest-rates under present plans. | Notayesmanseconomics's Blog
We can start our look at the Euro area economy with a reflection via the Dine series of books. For those unaware in Dune it is the future which is known and the past which is uncertain. I thought of this as I read the latest HCOB PMI update last week. “The eurozone got off…
Japan has put itself into rather a mess as the Japanese Yen weakens again | Notayesmanseconomics's Blog
The pace of action is picking up and again we find ourselves looking East to the Pacific where economic events are in motion. I will look at the Bank of Japan statement in a bit but we can infer it from the response to it as explained by the Japanese owned Financial Times. The yen…
How the Euro area and ECB mislead people over the inflation numbers | Notayesmanseconomics's Blog
This week has brought something of a confession from the European Central Bank. It relates to something that they and the Euro area establishment have kept out of their official inflation measure for 25 years now. It is owner occupied housing costs and they matter a lot which from time to time they confess as…
Has the Pacific switched to interest-rate rises rather than cuts? | Notayesmanseconomics's Blog
As we approach summer in the Northern Hemisphere we can look back on a year that is not going as planned. We began 2024 with markets on a surge backed by anticipation of a succession of interest-rate cuts which were supposed to begin in March. Such thoughts may be causing a bit of an itch…
As the UK government seems addicted to borrowing today’s economic growth news is especially welcome | Notayesmanseconomics's Blog
This morning has brought the latest update on the UK public finances and after some more welcome numbers today's is more nuanced. Borrowing – the difference between public sector spending and income – was £11.9 billion in March 2024, £4.7 billion less than in March last year. The lower borrowing from last year is welcome…
The Bank of England sets out a road map for UK interest-rates to fall to 4% | Notayesmanseconomics's Blog
On Friday evening we got quite a significant policy speech from the Bank of England. This is partly because of its structure as of the 9 members of the Monetary Policy Committee some 5 of them are "insiders" under the patronage of the Governor. So if the operate as a pack which they usually do…
UK March Retail Sales are either flat (seasonally adjusted) or up 4.3% | Notayesmanseconomics's Blog
This morning has seen the latest UK Retail Sales release and on the surface not much is happening. Retail sales volumes (quantity bought) were estimated to be flat (0.0%) in March 2024, following an increase of 0.1% in February 2024 (revised from 0.0%). In literal terms there is an improvement via the February revision but…
US fiscal policy has juiced bond yields, interest-rates and economic growth | Notayesmanseconomics's Blog
The economic story of 2024 is again being driven by the US economy. Back on the 4th of this month we were ahead of the game. The Bond market sold off in response to the above and the thirty-year yield has moved above 4.5%. Or if you prefer the bond market was not buying what…
UK Inflation continues to improve but the cost of living remains high | Notayesmanseconomics's Blog
This morning has brought some better news for the UK on the inflation front. The Consumer Prices Index (CPI) rose by 3.2% in the 12 months to March 2024, down from 3.4% in February. So we have seen quite a decline since the 11.1% peak in annual terms and considering the nature of the inflation…
Is it a coincidence that UK unemployment has risen following a methodological change or an effect of it? | Notayesmanseconomics's Blog
This morning's UK laboir market release is a bit of a change on what we have become used to. But we can start with something that is both familiar and in my opinion good news. Annual growth in regular earnings (excluding bonuses) was 6.0%, and annual growth in employees’ average total earnings (including bonuses) was…
What can we learn from the Bernanke Review of Bank of England Forecasting? | Notayesmanseconomics's Blog
Friday brought something which could have come straight from the pages ( or tv programmes) of Yes Minister. What I mean by that is releasing the Bernanke Review at Midday on Friday meant many minds were already drifting towards the weekend. Especially for those who still observe the Friday lunchtime pub run. Also there was…
UK GDP has started 2024 strongly but per head we have lost around 1% over the past year | Notayesmanseconomics's Blog
This morning has started pretty brightly for the UK economy via the latest monthly GDP release. From the Office for National Statistics. Monthly real gross domestic product (GDP) is estimated to have grown by 0.1% in February 2024, following growth of 0.3% in January 2024 (revised up from 0.2% growth in our previous publication). So…
The Bank of England should not cut interest-rates says Megan Greene | Notayesmanseconomics's Blog
This morning we have heard from the Bank of England or at least one of its nine ( like the Nazgul in The Lord of the Rings) policymakers. But before we get to the words of Megan Greene there is something disappointing about it. This is that it is behind the Financial Times paywall rather…
Germany is facing deindustrialisation caused by its own energy policies | Notayesmanseconomics's Blog
A rise in energy costs is an especially big issue if you are an exporting manufacturer. The issue is in play for my subject of yesterday Japan, but when one thinks about it the classic case is Germany. We have been observing this for a couple of years now but it has taken a while…
How many times have we been told that Real Wages in Japan are about to rise? | Notayesmanseconomics's Blog
This week has started with the focus switching East to Japan. One factor in play is this. SUZUKI: WATCHING FX DEVELOPMENTS WITH HIGH SENSE OF URGENCY ( @FirstSquawk) So we are back in the phase where the Japanese Finance Minister is conducting open mouth operations versus the Japanese Yen. The reason for that is that…
Why Shadowstats is right about Owners Equivalent Rent ( Imputed Rents) | Notayesmanseconomics's Blog
The issue of rents and their role in the economy is a complex one.You might think that it is simple as in renter's pay and landlord's receive. But it pops up in quite a few areas of economic measurement that leads to what Taylor Swift calls "Trouble, Trouble, Trouble". The simplest is something that I…
What have the interest-rate rises in India actually achieved? | Notayesmanseconomics's Blog
This morning we have heard from the Reserve Bank of India but before we get to it here is something I spotted on Tuesday. India’s manufacturing sector ended the current fiscal year with a stellar performance. The HSBC India PMI® climbed to a 16-year high on the back of the strongest increases in output and…
Divergent house price trends in the Euro area highlight the issue of economic convergence | Notayesmanseconomics's Blog
The European Central Bank has entered a phase when even the good news presents it with a problem. We have seen two examples of that in the last 24 hours and let me start with this morning's release. “Finally some good news again. The service sector in the eurozone is gradually finding its footing, with…
US interest-rate cuts look to be moving further away | Notayesmanseconomics's Blog
Whilst many of us were enjoying an Easter break the US Bureau of Economic Analysis carried on working and produced this. From the preceding month, the PCE price index for February increased 0.3 percent. Prices for goods increased 0.5 percent and prices for services increased 0.3 percent. Food prices increased 0.1 percent and energy prices increased…
The Bank of England will welcome the news on both mortgage lending and interest-rates | Notayesmanseconomics's Blog
Today the economic focus switches to the UK and the Bank of England as we get a raft of monetary data. Even before then we have gad something for the research student presenting the morning meeting to be pleased about. That is the recent rally in the UK FTSE 100 which has a new big…
The ECB is increasingly concerned about the Euro area productivity problem | Notayesmanseconomics's Blog
Yesterday I took a look at the state of play in Sweden and life would be a whole lot easier for the Riksbank if the ECB cut interest-rates first. In monetary terms it is kind of a big brother or sister via the exchange-rate between the Euro and the Krona. As I pointed out yesterday…
The Riksbank of Sweden gets ready for interest-rate cuts | Notayesmanseconomics's Blog
As we head for the Easter weekend we have seen Sweden set the economic agenda this morning. The Riksbank has announced this. Inflation is in the process of stabilising at the target, but inflationary pressures are still somewhat elevated. The Executive Board has therefore decided to leave the policy rate unchanged at 4 per cent.…
There are warning signs about the US fiscal position and the national debt | Notayesmanseconomics's Blog
Today a story which was all the rage around 6 months ago has come back to the surface as the Financial Times has led with this. The US faces a Liz Truss-style market shock if the government ignores the country’s ballooning federal debt, the head of Congress’s independent fiscal watchdog has warned. To be fair…
Japan and China are back in the forefront of the currency wars | Notayesmanseconomics's Blog
We find ourselves starting the week by looking East again and in one clear context economics 101 might be struggling with this as a response to the interest-rate rise in Japan. But the first rise in Japanese borrowing costs in 17 years — coming at a time when other major central banks are contemplating rate…
The Bank of England should stop its QT bond sales | Notayesmanseconomics's Blog
Today the focus is on the UK as we have a continuation of the time of the month where we get economic data plus some Bank of England news. We can start with what was a good Retail Sales release this morning. Retail sales volumes (quantity bought) were estimated to be flat (0.0%) in February…
The UK Public Finances continue to improve as debt interest falls | Notayesmanseconomics's Blog
Today our focus remains on the UK but not for the reason that you might think. I am not expecting an interest-rate change from the Bank of England today although the cat has been put amongst the central banking pigeons with this announcement. The Swiss National Bank is lowering the SNB policy rate by 0.25…
Even the UK ONS agree I was right about Rental Inflation, will they also fold on the RPI? | Notayesmanseconomics's Blog
This morning has brought some much better news for the UK on the inflation front so let us get straight to it. The Consumer Prices Index (CPI) rose by 3.4% in the 12 months to February 2024, down from 4.0% in January. The inflatiionary episode we have been experiencing is calming down. We can see…
A new era starts in Japan as it exits negative interest-rates | Notayesmanseconomics's Blog
This morning has brought some big news from Japan. In one way it could be summarised by the famous South Park description of the credit crunch "And its Gone" The Bank decided to set the following guideline for market operations for the intermeeting period. The Bank will encourage the uncollateralized overnight call rate to remain…
The Bank of England is facing the consequences of its own past actions | Notayesmanseconomics's Blog
This week is one packed with central bank policy meetings. However the picture has changed considerably since the start of the year when markets were expecting March to start the interest-rate cutting cycle. Indeed if the rumours about the Bank of Japan ending its policy of negative interest-rates are true this month may be know…
China continues to see its house prices fall | Notayesmanseconomics's Blog
Yesterday evening I stopped to take a look at the twin towers at the Vauxhall end of the Nine Elms development which from the picture in my Instagram feed below look nearly complete. As they have changed hands they symbolise the problems that China is experiencing in the real estate sector and we can this…