After cutting interest rates last year, the Fed expected inflation to remain just above its 2% target. Instead, inflation stayed between 3% and 4%, making the Fed’s 3.5%–3.75% policy rate close to zero or negative in real terms. It is the real interest rate that matters for spending decisions.—wsj.com  

New Yorker Jen Caramichael bought a new Seiko watch in Tokyo for 120,000 yen. At the market exchange rate, that is about $740, compared with the approximately $1,000 she would expect to pay in New York. —wsj.com    

While visiting Tokyo, Jen Caramichael noticed that a Seiko watch sells for about $740 there but around $1,000 in New York.—wsj.com    

The RBNZ raised its Official Cash Rate (the rate commercial banks earn on deposits with, or pay on borrowing from, the central bank) from 2.0% to 2.5%. Although the rate still encourages borrowing, the neutral rate is uncertain. Further rate increases may be needed to bring inflation back to target.—wsj.com

Many wealthy Britons have emigrated as capital gains taxes have increased. Despite this, a senior politician has proposed raising the highest capital gains tax rate from 24% to 45%.—wsj.com In October 2024, capital gains tax rates were increased for all categories of taxpayers. The capital gains tax rate for top earners rose from 20% to … Continue reading Britain’s Laffer Curve for Capital Gains Tax On Top Earners

The U.S. dollar fell after BLS data released on April 10 showed a rise in total CPI inflation—driven by higher oil prices—but stable core inflation, signaling that the Federal Reserve is unlikely to raise interest rates.—wsj.com  

Analysts say China’s economy is producing less than it could if labor and capital were fully employed. To close this gap in 2026, China’s economy would need to grow by more than 5.3 percent.—economist.com China’s Real GDP According to the National Bureau of Statistics of China, the country’s annual real GDP reached approximately 140 trillion … Continue reading China’s Output Gap

The Federal Reserve nominee, Kevin Warsh, supports reducing the size of the Federal Reserve’s balance sheet. President Trump prefers lower interest rates to reduce the government’s cost of borrowing.—ft.com  

To end deflation, the Bank of Japan has for years been buying Japanese government bonds. As a result, after many years at zero or below, annual inflation has spent much of the past year above 3 percent. These bond purchases have also kept yields low and reduced the government’s cost of borrowing.—economist.com