In January 2023, the UK’s annual inflation rate dropped to 10.1% from 10.5% in December but fell short of market expectations of 10.3%. The transportation, restaurant, and hotel industries saw lower costs, contributing to the decrease, while customary New Year discounts slowed the increase in food, non-alcoholic drinks, clothing, footwear, and furnishings. However, inflation increased in recreation and culture, health, alcoholic drinks, and cigarettes. The CPI declined by 0.6% every month, the first fall in a year and the largest since January 2019, mainly due to significant fuel and air transportation declines. Despite recent food price increases, the market consensus expects inflation to be below 10% this month due to slowed energy prices.
During his recent hearing before US Congress, Fed Chair Powell stated that the Fed is prepared to quicken the rate rise rate if economic data necessitates tightening. The Federal Reserve is committed to implementing a tight monetary policy to get inflation back to 2%. In its February 2023 meeting, the Fed raised the target range for the fed funds rate by 25bps to 4.5%-4.75%, marking the second consecutive meeting in which the Fed has dialed back the size of the increase but still brought borrowing costs to their highest level since 2007.
The Bank of England (BoE) raised interest rates by 50 basis points to 4.0% during its February meeting, the highest level since late 2008, with a 7-2 majority vote. This marks the 10th consecutive rate hike as the policymakers’ efforts to combat high inflation have continued despite the expected economic recession this year. However, the central bank has dropped its promise to keep increasing rates “forcefully” if necessary, indicating that inflation has probably peaked and the rate increases may slow down soon. The Bank Rate is expected to rise to around 4.5% by mid-2023 and fall back to slightly over 3.25% within three years—market consensus tables for a 25 bps interest rate hike.
During a Farm Bill listening session in Texas, farmers and ranchers voiced their concerns and provided suggestions on issues they feel need to be addressed. Suggestions included improvements to crop insurance, investments in infrastructure and artificial intelligence to improve production efficiency, disaster assistance, better crop insurance policies, and stability with water resources for the specialty crop industry. In addition, Agriculture Secretary Tom Vilsack called for more attention to small and midsize farmers who often receive limited revenue from agriculture. Still, Senator Debbie Stabenow cautioned against a small farm versus significant farm conflict in writing the new farm bill. Presently, large-scale operators receive the majority of U.S. farm subsidies because payments are tied to production volume.
Photo by micheile henderson on Unsplash
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