Markets continue hoping that rate cuts are close while central banks remain happy to oblige them, without actually delivering the goods. Fed chairman, Jay Powell, said it was not far from gaining confidence that inflation is trending to target and that cuts would likely be appropriate later this year. Not for the first time, the Fed had its imitators. European Central Bank president, Christine Lagarde, noted cuts were still several months away and that “we will know a little more in April but a lot more in June”.
In China, there was, once again, reinforcement of the 5% GDP growth target that has always seemed a little too exact to those not minded to take everything at face value. It appears even more so today given China’s economy has concomitant property and banking crises. Under normal circumstances, this would be deflationary but with more deficit spending and subsidies to boost the consumption of consumer goods, we suspect stagflation looks a more likely outcome. This also remains our concern for developed nations, almost all of which are running substantial budget deficits with seemingly no political will to deal with them.
