Global economy chart: Inflation data underscores Fed urgency


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(Bloomberg) – The latest inflation readings in the United States have reinforced the recent urgency of the Federal Reserve to start raising interest rates, the German economy has contracted in the last months of 2021 while Taiwan’s expansion progressed.

European governments, meanwhile, are focused on bolstering energy security in the event of war in Ukraine. Central banks in five countries, including Chile and South Africa, raised interest rates to ease price pressures.

Here are some of the charts that appeared on Bloomberg this week on the latest developments in the global economy:

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Employment costs rose at a healthy pace for a second consecutive quarter, capping the highest year of labor inflation in two decades as companies competed for a limited supply of workers.

Price-adjusted consumer spending fell last month the most since February, suggesting Americans have tempered buying amid the latest wave of Covid-19 and the fastest inflation in nearly 40 years.

Economic growth accelerated more than expected in the fourth quarter, fueled by inventory rebuilding. However, a 1.9% gain in actual final sales to domestic buyers, a measure of underlying demand that excludes the trade and inventory components of gross domestic product, was slightly higher than the 1.3% rate seen in the third quarter. trimester.

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Europe

Germany’s economy shrank 0.7% in the fourth quarter as consumers spooked by a fresh wave of Covid-19 infections and factories reeling from supply chain issues.

The European Union and the United States are working with other countries to diversify European fuel supplies in case a conflict with Ukraine disrupts shipments from Russia, which provides about a third of the bloc’s natural gas.

Asia

Taiwan’s economy expanded in 2021 at the fastest pace in 11 years, with growth set to pick up a further acceleration this year thanks to an unprecedented spending spree by its largest corporation.

The Bank of Japan should maintain its inflation-targeted stimulus and consider shortening the duration of its yield target to make its easing framework more durable, the International Monetary Fund said. The fund’s recommendations that the BOJ continue to press ahead with stimulus measures to boost inflation highlight different circumstances than the BOJ’s counterparts at the Federal Reserve and Bank of England. .

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Emerging Markets

Mexico’s annual inflation slowed slightly less than expected in early January and remained well above target, leaving the central bank in dire straits as the economy is in recession.

Brazil’s annual inflation slowed less than expected in early January, disappointing investors and underscoring the lingering price pressures the central bank faces as it prepares to raise interest rates next week.

World

The damage since Russia annexed Crimea and backed separatists in Ukraine’s eastern Donbass region indicates the range of options Russian President Vladimir Putin has at hand as he pressures Kyiv and Russia. West, barring a high-risk, full-scale invasion aimed at seizing large swaths of territory.

Central bankers in Chile, Colombia, Hungary, Kazakhstan and South Africa raised interest rates this week, after their peers in South America and Eastern Europe launched the year by raising borrowing costs to temper soaring inflation. The Federal Reserve signaled readiness to raise rates in March and Canada said higher borrowing costs were imminent.

©2022 Bloomberg LP

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