EU inflation is 6.1% and rate hike is mandatory. From the previously forecasted values of 3%, we have a deviation of 3% which is caused by multiple factors:
- Russia & Ukraine conflict
- Energy Price
- Supply Chains disruption
Goldman Sachs also cut their US economic growth forecasts from 2.6% to 2.4% this weekend.
Slowdown in growth should help lower job openings, it is also likely to raise the unemployment rate a bit.
Blankfein former chief executive of Goldman Sachs and currently senior chairman of Goldman Sachs says "firms should be prepared for a recession this year" and also:
"We're certainly heading - it's certainly a very, very high risk factor. And there's - but, you know, there's a path. It's a narrow path. But I - I think the FED has very powerful tools. It's hard to finally tune them and it's hard to see the effects of them quickly enough to alter it."
https://www.cbsnews.com/news/lloyd-blankfein-face-the-nation-transcript-05-15-2022/
FITCH says that the global recovery is to slow down in 2022 and 2023. Policy interest rates are rising, and FITCH believes that this marks an end to an era of very low borrowing costs for governments.
Remarks from Powel has changed a lot from the last year when he considered that the inflation was transitory and some pain is needed.
“The question whether we can execute a soft landing or not, it may actually depend on factors that we don’t control. The process of getting inflation down to 2% will also include some pain, but ultimately the most painful thing would be if we were to fail to deal with it and inflation were to get entrenched in the economy at high levels.”
This week, CPI is lowering from 8.3% to 6% (Core CPI). This means that inflation will not decrease, it will slow the pace of growth, and the price of goods are not going to decline. The price of goods will grow with a moderate pace.
