Musical Chairs
In a busy week for central bank governors, Carney reversed his post-Brexit policy error, Yellen got set for a lucrative retirement, PBOC governor Zhou Xiaochuan, (one of the longest serving CB Chairs) looked set to step down, and BOJ Kuroda could have done with a pat on the back from his boss. (Macro Thoughts will release a report on Zhou and Kuroda at the beginning of next week).
Bank of England
By raising base rates to 0.50%, returning them to the level they were prior to Brexit, a level they had been at since March 2009, are the BOE admitting they made a mistake, and that their error has pushed inflation far higher than it needed to be? Carney has the option of blaming Brexit, but, clearly, cutting rates and introducing QE was meant to weaken Sterling, and as a result consumer and producer inflation spiked.
US Employment and AHE
During the week, Macro Thoughts cautioned a number of Investment Managers to expect a lower than consensus NFP figure, but with revisions, and forecast AHE of sub 2.5%.
Although this month’s unemployment rate fell to 4.065%, (the lowest since December 2000), with the U6 unemployment rate dropping to 7.9%, the lowest since December 2006, 764,000 workers left the labour force....
New Fed Chairman
With unemployment at record low levels and inflation falling, he may be forgiven for feeling complacent and that the timing for assuming control of rates is right, but if history repeats, he can expect some kind of crisis within the first 12 months of taking office in April.
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