Jerome Powell, chairman of the US Federal Reserve: he warned earlier this month that additional interest-rate increases will be needed to cool inflation amid a labor market that recent data shows remains very tight. Photograph: Valerie Plesch/BloombergConsumer confidence in the euro area has risen to its highest level in a year, while stock market indices are near all-time highs.
There is also the fact that inflation is coming down. The rate of growth in prices in Ireland fell for the third straight month in January, mirroring the moderation in inflation seen in other countries. Slicing through this more upbeat outlook, however, are some worrying signs. Goldman Sachs and Bank of America now say they expect the US Federal Reserve to raise interest rates three more times this year, lifting their estimates after recent data pointed to more persistent inflation and a resilient labour market. A tighter jobs market has the potential to push up wages, which fuels inflation.
Another more generalised reason why inflation might stay elevated is the reversal of globalisation. Geopolitical tensions, populism and trade barriers are going to make trade costlier, keeping prices higher. For decades the West – under the globalisation agenda – has effectively exported inflation by shifting business to low-cost destinations, which kept a lid on prices, but that process has stalled.
France Dernières Nouvelles, France Actualités
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