Russia’s invasion of Ukraine is raising food prices across the world. Developing and emerging economies are being hit hardest due to their reliance on the region for fuel and grain imports. Price hikes in these countries could spur further political turbulence and even violence. Ukraine is the world’s largest producer of sunflower oil. Combined with […]
Category: Prices & interest rates
The interconnectedness of global supply chains means that when one price goes up, others tend to follow. Increases in labour, energy and transport costs are contributing to inflation around the world, posing difficult policy challenges. Back when we could travel easily, a regular announcement at airports all over the world was: ‘The airline would like […]
In August, America’s central bank, the Federal Reserve, announced two important shifts in its monetary policy strategy. The extent to which these changes will affect the economic recovery depends on the expectations of households and firms about future inflation. The US Federal Reserve (known as ‘the Fed’) is in the process of changing the way […]
Russia’s economy looks likely to experience a deep recession following the country’s invasion of Ukraine. Increased spending on defence and refugees may limit the adverse effects of the conflict on Western European GDP, but it will to add to pressure on resources and drive up inflation. The war in Ukraine will have a significant impact […]
Covid-19 helped to boost UK house prices, with demand especially strong for bigger properties. The stamp duty holiday also played a role; as did the job furlough scheme protecting wider consumer confidence. Rising inflation and the likelihood of higher interest rates bring new challenges. In 2020, the average UK house price increased by 2.9% compared […]
The UK has recently scrapped its ‘tampon tax’. While this decision has been welcomed, its effects on prices and efforts to end period poverty have so far been minimal. The start of January 2021 saw the abolition of the 5% ‘tampon tax’ in the UK – that is, the reduced rate of value-added tax (VAT) […]
Since the Brexit vote in 2016, the exchange rate of the pound against other leading currencies has fallen significantly. This seems to reflect a generally negative outlook among international investors for the UK’s economic prospects outside the European Union. At the start of 2021, the pound was approximately 15% weaker relative to the euro than […]
When central banks are keeping policy interest rates near to zero, inflation has a big impact on the economy, notably by making real interest rates negative. This redistributes from savers to borrowers – and since the government is the largest borrower, there is a substantial ‘inflation tax’. Inflation is rising to levels that are much […]
Over the past 15 years economic models have evolved to place the differences between individuals at their heart. This new breed of model is helping us understand the implications of rising inequality, the pandemic and the recovery. The world is unequal both in its downs and its ups: the costs of recessions hit some harder […]
By buying up private sector assets – and so extending their balance sheets – central banks can both support businesses directly and underpin financial markets in times of crisis. This ‘qualitative’ easing is likely to be needed to deal with the sharp Covid-19 downturn. Central banks fall into different groups. This article mainly considers a […]