January 10, 2024
United States:
US Inflation Is Set to Fade in 2024 as Goods Prices Keep Falling
US inflation is set to further recede in 2024, ending the year near the Federal Reserve’s 2% target as economic disruptions from the pandemic fade further and prices of some goods even decline.
The downdraft should keep the US central bank firmly on course for lower interest rates, with cuts expected to come as soon as March. President Joe Biden, for his part, may have a harder time capitalizing politically on the campaign trail, especially if lower inflation comes alongside a broader slowdown in the economy.
Europe:
Euro-Zone Economy May Continue to Struggle, Guindos Says
The euro-area economy may have experienced a downturn at the end of last year and will probably continue to struggle, according to European Central Bank Vice President Luis de Guindos.
“Soft indicators point to an economic contraction in December too, confirming the possibility of a technical recession in the second half of 2023,” Guindos said Wednesday in a speech. “Incoming data indicate that the future remains uncertain, and the prospects are tilted to the downside.”
Asia:
Japan’s Slower Wage Growth Adds to Reasons for BOJ to Hold
Headline wage growth for Japanese workers slowed sharply in November, an unwelcome development for the Bank of Japan as it seeks evidence of a virtuous cycle linking pay hikes to price increases as a prerequisite for normalizing monetary policy.
Nominal cash earnings for workers rose 0.2% from the previous year, decelerating sharply from a 1.5% increase in October, the labor ministry said Wednesday. Economists had expected the pace to hold steady. Real wages declined 3%, much deeper than the consensus call for a 2% drop.
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