FirstFT: IMF warns US inflation has not ‘turned the corner yet’
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Inflation in the US has not “turned the corner yet” and it is too early for the Federal Reserve to declare victory in its fight against soaring prices, a top IMF official has warned.
In an interview with the Financial Times, Gita Gopinath, the fund’s second-in-command, urged the US central bank to press ahead with rate rises this year despite a recent moderation in headline inflation following one of the most aggressive tightening campaigns in the Fed’s history.
“If you see the indicators in the labour market and if you look at very sticky components of inflation like services inflation, I think it’s clear that we haven’t turned the corner yet on inflation,” she said, adding that the fund’s advice to the Fed was to “stay the course”.
The comments from the fund’s deputy managing director come after a flurry of data suggested inflation in the US, Europe and other economies might have peaked, as energy prices fall from recent highs and the cost of goods such as home appliances and used cars starts to decline.
Chief among Gopinath’s concerns is the continued resilience of the labour market, which on average is adding roughly 400,000 jobs each month. The unemployment rate still hovers near historic lows and an acute worker shortage has helped to push wage increases to a level that is far too high for the Fed to hit its 2 per cent inflation target.
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3. UK needs ‘war effort’ to cut energy bills To boost energy efficiency and rapidly insulate millions of homes, the House of Commons environmental audit committee has said the UK needs a “war effort”. In a report released today the cross-party group of MPs urged the government to do more to reduce energy demand and speed up the transition to cleaner sources of power.
4. House at impasse as McCarthy fails to clinch Speaker post The US House of Representatives has failed for a second day to select a new Speaker, after California congressman Kevin McCarthy suffered a humiliating setback in more rounds of voting amid sustained opposition from an intransigent group of Republican party rebels.
5. Chinese rival to take iPhone business from Foxconn Apple is expected to enlist Chinese manufacturer Luxshare Precision to produce its premium iPhone models, breaking Foxconn’s hold on production after worker protests over Covid-19 curbs last year. Luxshare has reportedly been producing small numbers of the iPhone 14 Pro Max to compensate for lost production at Foxconn since November.
The day ahead
Funeral of former Pope Benedict The funeral of the first pontiff in 600 years to resign from his post, who died on Saturday at the age of 95, will be held in the Vatican. Pope Francis will preside over the event.
French inflation figures While inflation is falling elsewhere in the eurozone, new data in France are expected to show a small uptick in price growth. French inflation is forecast to peak in the first quarter of 2023, according to the French central bank.
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Take a break from the news
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