Inflation cooled in June, boosting chances that the Fed will stop raising interest rates. Fed officials are focused on core inflation because they see it as a better predictor of future inflation than the headline inflation rate. The U.S. economy continues to defy predictions of an economic downturn.—wsj.com
Category: MAT6
Macroeconomic Policy
Keywords: Federal budget, Debt, Supply-side, Fiscal stimulus, Monetary transmission
Parkin 14e Chapters 13, 14
Bade-Parkin 9e Chapters 16, 17
Parkin-Bade Canada 11e Chapters 13, 14
Parkin-Bade Australia 2e Chapters 16, 17
Parkin-Powell-Matthews 11e Chapters 29, 30
Turkey Hikes Interest Rates to 15%
Turkey’s central bank almost doubled interest rates to 15%. Annual consumer inflation has come down from 85.5% in October but was still 39.6% in May. The lira weakened further after Thursday’s rate hike news, dropping more than 2% to a new record low of 24 to the US dollar.—cnn.com
Government Debt in Advanced Economies Slowing Economic Growth
World Bank President David Malpass says the debt-to-GDP ratios of the advanced economies are higher than ever before and must be lowered to restore a stable environment and the return of economic growth.—cnbc.com
U.S. Debt Ceiling Deadline Could Be Sooner Than Anticipated
The U.S. government's deadline to raise the $31.4 trillion debt ceiling could be sooner than expected. Goldman Sachs analysts said weak tax collections in April indicate a higher probability that the so-called "X-date," when the government is no longer able to pay all its bills, would be reached in June. —reuters.com
Russia Swings to $29 bln First-Quarter Budget Deficit
Russia's federal budget balance sank to a deficit of 2.4 trillion roubles ($29 billion) in the first quarter of 2023. Spending accelerated 34% in the quarter to 8.1 trillion roubles. In the same quarter of 2022, Russia posted a surplus of 1.13 trillion roubles.—reuters.com
U.S. on Track to Add $19 Trillion in New Debt Over 10 Years
The United States will add $19 trillion to its national debt over the next decade. The Congressional Budget office projects a $1.4 trillion budget gap this year. Over the following 10 years, tax receipts will fail to keep pace with the rising costs of Social Security and Medicare benefits.—nytimes.com
Fed Raises Interest Rates Half a Point to Highest Level in 15 years
The Federal Reserve raised its benchmark interest rate to the highest level in 15 years, indicating the fight against inflation is not over. Fed officials believe raising rates reduce demand and ultimately pulls prices lower.—cnbc.com
World Bank Bumps Up India’s Growth Projection
The World Bank forecasts growth for India in the current year at 6.9%, as stronger consumption and more robust domestic activity are expected. A World Bank senior economist said India’s fiscal deficit is expected to decline over the next few years.—Bloomberg.com
China Central Bank Boosts Stimulus to Aid Covid-Hit Economy
The People’s Bank of China (PBOC) lowered the required reserve ratio and cut its key interest rates twice this year.—Bloomberg.com
Russia’s 2022 Inflation Seen at 14.5%
Russia's central bank will continue cutting rates this year as inflation will be lower than previously thought. The average forecast among 15 analysts polled in late June suggests the Russian economy is on track to shrink by 7.1% this year —reuters.com