Monetary Policy Effect on Global Inflation Drivers May be 'Limited' -NY Fed

Reuters2022-01-28

Domestic monetary policy actions may do little to tame some of the inflation being driven by global supply chain pressures, researchers for the New York Federal Reserve said in a paper on Friday.

Much of the persistently high inflation seen during the coronavirus pandemic, including in producer price and goods inflation, is highly linked to global supply chain disruptions, researchers said in a new blog post

"Their global nature and their source (that is, supply as opposed to demand) suggest that domestic monetary policy actions would have only a limited effect on these sources of inflationary pressures," the researchers wrote.

Inflationary pressures could ease if the supply chain bottlenecks and higher energy costs seen during the pandemic come down, researchers said, pointing to some of the unknowns policymakers will have to navigate as they work to keep higher inflation from becoming entrenched.

U.S. central bank officials signaled this week that they are likely to raise interest rates starting in March to remove the extraordinary support provided during the pandemic. But Fed Chair Jerome Powell offered little guidance on the pace of future rate increases. That outlook may remain clouded as officials wait to see how inflation, the pandemic, and the overall economy react in coming months.

Friday's blog post incorporates a new index released earlier this month by the New York Fed, which found that global supply chain pressures are near historically high levels but may have peaked

The index, which is based on global shipping rates, air freight costs and other variables, dipped slightly in November and December.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

  • WifeWhyWhy
    2022-01-29
    WifeWhyWhy
    Ok
  • PearlynCSY
    2022-01-29
    PearlynCSY
    US printing of money and the mind boggling amount of national debt at around $31 trillion is the root cause of today global economic malaise and 40-year high inflation rate
  • InvisibleP
    2022-01-29
    InvisibleP
    But shares drop so much 
  • 41ee170e
    2022-01-29
    41ee170e
    K
  • yatylime
    2022-01-28
    yatylime
    wow
Leave a comment
6