Aurelia Butler

PARIS (Reuters) – Jupiter has lost his thunder. Emmanuel Macron, whose first presidential mandate was marked by a top-down government style he compared to that of the almighty Roman god, will have to learn the art of consensus-building in the second.Deprived of an absolute majority by voters on Sunday, the French president can no longer count on parliament as a mere rubber-stamping house. Instead, he will be forced to negotiate with demanding allies and new partners with a vendetta.Projections showed that Macron’s “Ensemble!” coalition bloc had missed an absolute majority by between 40 to 60 lawmakers, a much bigger shortfall than expected and a crushing outcome for the president.That means he will probably have to seek support from the conservative Les Republicains (LR) party, which will relish its kingmaker role and will want to exact a heavy price from Macron for legislative support — including perhaps a change in prime minister. “This culture of compromise is one we will have to adopt but we must do so around clear values, ideas and political projects for France,” said Finance Minister Bruno Le Maire, himself a former conservative, in an apparent attempt to reach out to his former political family.However, in a country which post-war leader Charles de Gaulle famously said was ungovernable given its 246 types of cheese, it will be hard for Macron but also potential partners to learn the northern European art of consensus-building and coalition work.Senior Les Republicains officials seemed to reject a broad coalition deal on Sunday night and would remain in opposition, but will be “constructive” — hinting at possible deals on a bill-by-bill basis. “I fear we’ll be more in an Italian-style political situation where it will be hard to govern than in a German situation with its consensus-building,” Christopher Dembik, an analyst at SaxoBank, told Reuters.”It’s not necessarily a tragedy, in my view. It may be an opportunity to reinvigorate French democracy and return to the real meaning of parliament,” he said. Macron was frequently criticised during his first mandate for ramming through parliament pro-business reforms that were drafted by his aides at the Elysee palace without consulting lawmakers or outside stakeholders.Rivals regularly accused the president of being out of touch and arrogant. One government source said that was probably what voters had sought to sanction. “It’s a message about the lack of grassroots and the arrogance we have sometimes shown,” the source said.During the campaign, Macron sought to counter this accusation by promising a “new method” of government, offering to create a new body outside parliament that would be filled with figures from civil society and with whom he would consult on future reforms.In the end, French voters, it seems, were unconvinced.FILIBUSTERINGMacron is likely to face filibustering from both sides of the chamber. The left-wing Nupes alliance, which has turned an already-combative contingent of lawmakers into parliament’s biggest opposition force, will be relentless in its obstruction.Parliament rules stipulate that an opposition lawmaker must head the powerful finance committee, which can demand access to confidential tax information from the government and can block budget bills temporarily. That would be a particularly painful way to hold Macron’s feet to the fire. On the other side of the aisle, Marine Le Pen’s far-right Rassemblement National is also likely to make the most of its newly-acquired right as a parliamentary group of lawmakers to launch parliamentary investigations and challenge bills before the constitutional court, senior RN officials have said. These investigations can force government ministers or even presidential aides to testify publicly in parliament.These parties will also replenish their coffers with taxpayer money that is distributed to political parties on the basis of their election results — raising the spectre of strong challenges from them in the next presidential election in 2027.Of course, compromising doesn’t necessarily mean paralysis.Macron’s new centre-right partners will find it hard not to back his most conservative-oriented reform plans, such as pushing back the retirement age to 65 or making welfare benefits conditional on training or community work.Some legislation may be laboriously passed. But how long Macron accepts to share power remains to be seen. The president has the power to call a snap parliamentary election anytime, and political sources expect a new crack of thunder from Jupiter at some point. “I expect a dissolution of parliament in a year or so,” a centre-right lawmaker whose party may try to get a deal with Macron’s party told Reuters. More

Globalisation is not unravelling but the era of ever greater reductions in barriers to trade is at an end, according to one of the shipping world’s top executives.Søren Skou, chief executive of AP Møller-Maersk, the world’s second-largest container shipping group, told the Financial Times that he saw little evidence of US or European manufacturers bringing production back home. Instead, they were looking for additional suppliers around Asia.“Global trade is where it is. It’s going to grow more or less with GDP,” he said. “It’s not liberalising more, so we’re not going to see [even] more growth. It’s also not going sharply in reverse.”The comments from the Maersk boss, whose company is a bellwether for global trade as it transports more than one in six containers across the oceans, contrast sharply with the gloom of many business executives who believe globalisation is under attack, particularly from populist politicians. Last month data provider Sentieo found that mentions of nearshoring, onshoring and reshoring in company results meetings and investor briefings were at their highest level since at least 2005. Skou acknowledged the impact of populist political movements and the lack of new trade deals in the US but underscored that he saw no dramatic shift in supply chains.“We don’t see our customers moving production back to Europe. They’re spreading it around in Asia,” Skou said. “It’s very difficult to see in the short term or maybe even the mid term that you will see a dramatic change in the way the world produces consumer goods.”Maersk is expecting container shipping volumes to be lower in the first half of this year as world economic growth stalls. But thanks to record freight rates, congestion in ports and supply chain woes, the Danish group is forecasting record earnings in 2022.Skou said that container shipping could soon be hit by a sharp reversal of the factors that have led to it booming since the end of the first wave of the coronavirus pandemic. He added that there could be a “bullwhip effect” where demand contracts and supply increases, after almost two years of the opposite phenomenon during which shipping groups were unable to respond to a surge in consumer spending. “When it happens, it could go quite quickly,” he added.He said it was unlikely to happen at the beginning of the second half of the year — as Maersk had previously assumed — but could happen in August or later in the year. “I don’t want to say I’m afraid of it,” he said, pointing to an increase in long-term contracts in container shipping and a rapidly growing logistics business on land.Skou also made his first public comments on a MeToo scandal that has roiled Maersk and lifted the curtain on abuses of female seafarers in a male-dominated sector after a former cadet claimed she was raped on one of the company’s vessels.Maersk’s chief executive said that “imagining that can happen on one of our ships is absolutely horrible”. He said the company had known about the alleged rape for almost a year, and had since introduced new policies to ensure that there was always more than one woman per vessel and that the boat’s captain and chief engineer received suitable training. Maersk employs 350 female seafarers out of a total of 12,000 on its vessels. The International Maritime Organization estimates that women make up just 1.28 per cent of the global seafaring workforce — or roughly 24,000 seafarers. These crew remain on board for two months or more, and during the pandemic many were at sea well beyond the end of their contracts as ports refused permission to disembark. More

Recession risks are growing and it would take “a couple of years” for inflation to return to the US Federal Reserve’s target of 2 per cent, Loretta Mester, president of the Cleveland Fed, said on Sunday.“I’m not predicting a recession,” she said. “The recession risks are going up, partly because monetary policy could have pivoted a little earlier than it did. We’re doing that now by moving interest rates up but, of course, there’s a lot of other things going on as well,” Mester said on CBS’s “Face the Nation”.“We do have growth slowing . . . and that’s OK, we want to see some slowing of demand to get in better line with supply.”Mester said that while monetary policy can target the excessive demand in the economy, it will take time to get the supply side “to come back into better balance”. “It isn’t going to be immediate that we see 2 per cent inflation, it will take a couple of years, but it will be moving down,” she said.US Treasury secretary Janet Yellen conceded on Sunday that the economy would slow, but said a recession was not “inevitable”.

“I expect the economy to slow, it’s been growing at a very rapid rate as the labour market has recovered and we’ve reached full employment,” Yellen said on ABC’s This Week. “We expect a transition to steady and stable growth but I don’t think a recession is at all inevitable.”The Fed this week raised its main interest rate by 0.75 percentage points, the first time it has done so since 1994. It also set the stage for much tighter monetary policy in the near term, with officials projecting rates to rise to 3.8 per cent in 2023 and most of those increases scheduled for this year. They now hover between 1.50 per cent and 1.75 per cent. On Saturday, Fed governor Christopher Waller said he would support another 0.75 percentage point interest rate rise at the central bank’s next meeting in July if, as expected, data showed that inflation had not moderated enough.Fed chair Jay Powell has said his goal is to bring inflation down while maintaining a strong labour market.“That’s going to take skill and luck, but I believe it’s possible,” Yellen said.Yellen said that while there was month-to-month volatility in consumer spending, overall it remained strong and she did not expect a drop off in spending would cause a recession.“It’s clear that most consumers, even lower-income households, continue to have buffer stocks of savings that will enable them to maintain spending,” the Treasury secretary said. “I don’t see a drop off in consumer spending is a likely cause of the recession in the months ahead.”The labour market also remained strong, she said, with two job openings for every unemployed worker.Yellen reiterated the Biden administration’s argument that Russia’s war on Ukraine was partly to blame for high inflation because it boosts global food and energy prices. Supply chain snarls from lockdowns in China are also contributing, she said. Though these factors will not change immediately she said she expected inflation to go down. “I do expect in the months ahead that the pace of inflation is likely to come down, although, remember there are so many uncertainties relating to global developments,” she said. Other senior officials on Sunday repeated the line that recession was not inevitable, even as surveys show economists and business leaders expect one next year.“Where we are in the economy right now is a transition and I’ve spoken to CEOs over the past week from sectors across the economy and they’re figuring out how to navigate the transition,” said Brian Deese, director of the US National Economic Council. Deese said Biden was working with Congress on legislation to lower costs for things such as prescription drugs and utilities. “The single most impactful thing we can do right now is to work with Congress to pass legislation that would lower the costs of things that families are facing right now,” he said.The White House also wants the package to include tax reforms that would lower the deficit and is working with senior Senate Democrat Chuck Schumer to put measures in place in the coming weeks, Deese said. Biden is also looking to reduce petrol prices, and senior administration officials said on Sunday that the US was weighing a temporary pause on the federal gas tax. Yellen said it was “an idea certainly worth considering” and that Biden was looking to work with Congress to try to bring gas prices down.Energy secretary Jennifer Granholm said on CNN that the Biden administration was evaluating a proposal for a gas tax holiday. More

The EU will propose new rules this week that would allow it to impose trade sanctions against countries that breached conditions on labour rights and climate change in bilateral deals with the bloc.Valdis Dombrovskis, EU trade commissioner, said in an interview he wanted to put “sustainability at the heart of trade policy” by improving enforcement of the trade and sustainable development (TSD) clauses in the deals.The move comes days after the World Trade Organization clinched its first agreement on sustainability and trade, limiting subsidies for vessels fishing in unregulated international waters and for overfished stocks.Dombrovskis said the fishing deal marked “a real turning point” after 21 years of talks. “Sustainability has gone from a side show to being centre stage when it comes to global trade. It shows there is now greater willingness by the global community to address these issues.”The EU has included TSDs in all trade deals since 2009 but has rarely used them to force trading partners to change domestic policies. “We will be outlining our new approach on sustainable development chapters in our bilateral trade deals, including by stepping up enforcement and implementation of sustainability commitments,” Dombrovskis said. The new rules, to be formally agreed by the European Commission on Wednesday, are likely to win broad acceptance among member states and in the European Parliament, which must approve them.They will include tighter enforcement of TSDs in new trade deals and the ability to impose sanctions such as tariffs if countries breach “core provisions”, according to people briefed on the plan. Those core provisions meet the standards of the International Labour Organization and the Paris agreement to cut carbon emissions, the people said.The EU has found it increasingly hard to ratify trade deals in all 27 member states without addressing concerns that they will cause environmental destruction or labour abuses as partners increase production to meet EU demand. Brussels has negotiated a deal with South American trading bloc Mercosur, which includes Brazil and Argentina, but several EU countries have refused to ratify it until Brazil signs a side letter promising to protect the Amazon rainforest.“If we want to get more bilateral trade deals done . . . we have to reinforce sustainability commitments”, Dombrovskis said.However, both parties to any trade deal would have to agree with the EU conditions. The first big challenge could come in talks with India, known as a tough negotiator, which restarted on Friday after a decade.At last week’s WTO gathering, Piyush Goyal, India’s commerce minister, refused to cut most fishing subsidies in domestic waters, saying developed nations had “allowed their gigantic industrial fleets to exploit and plunder the ocean’s wealth over the past several decades”. A proposed deal with New Zealand is largely finished and would not be affected. Dombrovskis said the WTO’s ministerial conference in Geneva last week had put “multilateralism back on track”. As well as a plan to make it easier for poorer countries to make cheap copies of Covid vaccines, trade ministers agreed to limit food export restrictions to tackle global food shortages. They also temporarily extended duty-free trade in digital products such as films, computer software and data,“When the globe is facing a multitude of acute challenges, stronger and better global rules are more important than ever,“ the trade commissioner said.The EU is increasingly using its muscle as the world’s largest trader to change policies in developing countries. Earlier this year it proposed imposing tariffs on countries that block the return of deported migrants.But the EU’s use of trade to export its values globally has previously faced resistance. Jair Bolsonaro, Brazil’s populist president, in 2019 told Berlin to “reforest Germany” when it said he was failing to protect the Amazon. More

Hello and welcome to the working week.Or rather, welcome to the “summer of discontent” if you live in the UK. What started with misery at the pumps due to rising fuel prices, then air travel disruption due to staff shortages will this week spread to trouble on the trains — in the country that gave you this transport mode. A series of national rail strikes, and in London another walkout on the Underground system, are likely to bring the network to a standstill. The dispute focuses on pay demands and the impact on jobs of efficiency savings made more urgent by revenue decline during the pandemic lockdowns. Government ministers, which as this piece notes now effectively control all rail financing following changes brought in during the pandemic, have been refusing to talk directly with the RMT, the main union calling the action.Whether this will greatly have an impact on the two British by-elections on Thursday — this week’s main election news — is a moot point given the polling already indicating a double whammy for the Conservatives — one “red wall” and one “blue wall” constituency — amid anger at their leader, and the country’s prime minister, Boris Johnson.The aviation industry will also be in the spotlight this week as the annual general meeting of the International Air Transport Association (Iata) is held in Doha. News here is unlikely to be very positive. Last October, the Iata predicted 2.3bn people would fly in 2021 and 3.4bn in 2022, down from 4.5bn people who travelled in 2019.Another international gathering this week will be the delayed meeting of Commonwealth heads of state in Rwanda. The venue will provoke some uncomfortable questions for Prince Charles, who will be attending on behalf of the Queen, given the UK’s deal with the country to take British asylum seekers, a policy the heir to the throne had described as “appalling” according to a report in the Times newspaper.The week will end with German chancellor Olaf Scholz welcoming his counterparts from the other G7 nations for a summit at Bavaria’s secluded Schloss Elmau castle, the same venue his predecessor Angela Merkel chose in 2015. The most notable point here, however, is the special guest, India’s Narendra Modi, and whether this will help western powers — Australia will be doing something similar in a state visit to India earlier in the week — in the battle for allies to counter the growing closeness between Russia and China.Thank you, once again, for those of you writing in to share your views on current events and opinions on what we should add or lose in the list. Keep them coming to [email protected] dataSurveys are the theme for this week with a clutch of purchasing managers’ index reports, regional Fed announcements in the US and Germany’s Ifo business confidence figures.The highlight in terms of central banker speeches — and there are a few this week — will be Jay Powell’s semi-annual appearance in front of the Senate banking, housing and urban affairs committee to give his monetary policy report. And in case you have not had enough data on the cost of living, we will also get more inflation updates from Germany, Canada, the UK and Japan.CompaniesThe cost of living and trends in shopping will be a discussion point among the global retailing groups gathering in Dublin this week for the Consumer Goods Forum. The chief executives of Unilever, Coca-Cola, Carrefour, Tesco and Walmart are among those on the list of speakers.Not a lot of diaried earnings announcements this week. FedEx will be reporting fourth-quarter figures on Thursday but this was pre-empted last week with the US delivery company shrugging off concerns about the economy when it announced an increased dividend and two new board members.Key economic and company reportsHere is a more complete list of what to expect in terms of company reports and economic data this week.MondayGermany, May producer price index (PPI) figuresUK, trade figures, Rightmove monthly house price index plus Office for National Statistics data on house affordability. Also, Jonathan Haskel, professor of economics at Imperial College Business School, speaks at techUK’s Tech Policy Leadership Conference about the subject of his book Restarting the Future: How to Fix the Intangible EconomyTuesdayCanada, April retail sales figuresUK, Kantar monthly grocery market share figures plus Bank of England chief economist Huw Pill is a panellist at the Institute of Chartered Accountants in England and Wales East of England economic summitResults: Lennar Q2WednesdayCanada, May consumer price index (CPI) figuresEU, flash consumer confidence figures plus the governing council of the European Central Bank holds a non-monetary policy meeting in FrankfurtUK, May CPI and PPI dataUS, Federal Reserve chair Jay Powell will give his semi-annual monetary policy report to the Senate banking, housing and urban affairs committeeReports: Berkeley Group FY, KB Home Q2ThursdayArgentina, Q1 GDP figuresEurozone, France, Germany, UK, US: IHS Markit and S&P Global flash composite (manufacturing and services) purchasing managers’ index (PMI) dataEU, ECB publishes its monthly economic bulletinUK, May public sector finances data plus GfK consumer confidence surveyUS, Federal Reserve publishes its annual bank stress tests resultsResults: FedEx Q4FridayGermany, Ifo monthly business confidence indexJapan, May CPI dataSoftBank AGMSpain, final Q1 GDP figuresUK, May retail sales and consumer confidence figures plus Huw Pill gives a speech at a conference on “Inflation and Debt — Challenges for Monetary Policy after Covid-19”Results: CarMax Q1World eventsFinally, here is a rundown of other events and milestones this week.MondayArgentina, the public holiday of Flag Day, commemorating the death of General Manuel Belgrano, creator of the Argentine flag, in 1820India, Australian defence minister Richard Marles visits India, continuing under the newly elected prime minister Anthony Albanese the country’s focus on tightening relations with the subcontinent as a counter to ChinaBelgium will return a “relic” of Patrice Lumumba, the first prime minister of the Democratic Republic of Congo, who was assassinated in 1961, at an official ceremony in BrusselsEU foreign affairs council meets in LuxembourgQatar, chief executives of some of the world’s leading airlines will be meeting for the 78th International Air Transport Association (Iata) AGM in DohaRwanda, Commonwealth heads of government meeting begins. This event was delayed from 2020 due to the pandemicSwitzerland, executive council of the World Meteorological Organization meets in GenevaUK, sixth anniversary of the EU membership referendumUK, the FT’s Innovative Lawyers Summit returns in person in London with speakers from Chatham House, easyJet and Airbnb to discuss what being a responsible business leader in the law means todayTuesdaySummer solstice is celebrated in the northern hemisphere, marking the longest day of the year and the first day of summerPrince William, third in line to the British throne, turns 40Ireland, 2022 Consumer Goods Forum global summit begins in DublinUK, 40,000 staff rail staff are expected to walk out in a three-day series of rail strikes — expected to cause six days of disruptionWednesdayRussia, commemoration in Moscow of the anniversary of the German invasion of the Soviet Union in 1941UK, 50th Glastonbury music festival begins, having returned from a two-year pandemic-related hiatus to its venue at Worthy Farm in Pilton, Somerset. The headline acts include Sir Paul McCartney, Billie Eilish and ElbowThursdayBelgium, EU leaders meet in Brussels with an agenda including approval for Croatia’s bid to join the eurozone in 2023Grenada, general electionLuxembourg, National Day public holidayUK, by-elections being held in two former Conservative seats, Wakefield plus Tiverton and Honiton, seen as a litmus test of the extent of disapproval of British prime minister Boris Johnson after the partygate revelationsFridayGermany, 74th anniversary of the start of the Berlin blockade, one of the first major international crises of the cold warVenezuela, Armed Forces Day public holidaySaturdayCroatia, Slovenia: Statehood DayGermany, 2022 G7 summit begins at Schloss Elmau, near the city of Garmisch-Partenkirchen, in BavariaMozambique, National DayUK, deadline for the government to extend funding for Transport for London, operator of the capital’s Underground and bus network More

WASHINGTON (Reuters) -Cleveland Federal Reserve Bank President Loretta Mester said it will take two years for inflation to fall to the central bank’s 2% target, adding that it will be “moving down” gradually from the current level.A surge in inflation, which is at its highest level in 40 years, has made hawks of nearly all Fed policymakers, only one of whom dissented earlier this week against what was the central bank’s biggest rate increase in more than a quarter of a century.”It isn’t going to be immediate that we see 2% inflation. It will take a couple of years, but it will be moving down,” Mester said in an interview with CBS News on Sunday.Mester said she was not predicting a recession despite slowing growth.”We do have growth slowing to a little bit below trend growth and we do have the unemployment rate moving up a little bit. And that is OK, we want to see some slowing in demand to get it in line with supply,” Mester added, referring to forecasts submitted in the past week by participants of the Federal Open Market Committee’s meeting.Policymakers currently expect to raise the Fed’s benchmark overnight interest rate, now in a range of 1.50%-1.75%, to at least 3.4% in the next six months. A year ago, the majority thought the rate would need to stay near zero until 2023.On Friday, the Fed called its fight against inflation “unconditional.” More

Last week’s marathon ministerial meeting of the World Trade Organization breathed a little life back into the multilateral trading system. It was able to trumpet a package of deals, including a partial waiver on Covid vaccine patents and cuts to fishing subsidies; these lacked much real substance, though their impact depends on their implementation. Yet the WTO remains, in many ways, on life support. Keeping it alive is important; if it did not exist, the world would need to reinvent it — which would be very hard today. Indeed, with multilateralism under such strain, and problems of managing global public goods multiplying, it is arguably needed even more today than when it was created in 1995.Globalisation, of which the WTO has been a driver and enabler, has stalled. The global financial crisis was followed by a populist backlash against open borders. Donald Trump’s election led to a US trade war with China. The Covid-19 pandemic closed borders, gummed up global trade and prompted companies to reconsider the wisdom of extended supply chains.That makes the likelihood of further big rounds of trade liberalisation in the foreseeable future almost non-existent. Indeed, preferences on how to regulate some of today’s main growth areas, such as digital services, differ so much across the world it is hard to see a basis for agreeing on global rules. Yet open trade remains so important to global prosperity and there are so many issues countries must deal with that a forum such as the WTO can still play a key role. One example, despite the paucity of last week’s deal, is limiting subsidies for fishing that are destroying global fish stocks. Another is climate policy. The carbon border adjustment mechanism being implemented by the EU — putting tariffs on imports where the producer is not paying a cost for emissions — is bound to lead to arguments over which are legitimate and which are protectionist. Without at least a way to resolve disputes, trade wars could result.Ngozi Okonjo-Iweala, the WTO’s energetic director-general, deserves great credit for keeping the body’s heart beating. Its future health and vitality, however, will depend on national governments — and above all on whether the US, a driving force in its creation, and China, one of its main beneficiaries, see value in its existence.Though it claims to have “recommitted” to the WTO, the Biden administration has done little to reverse the assaults on the trade body of the Trump years. The White House has little appetite for new trade initiatives that it knows would be politically onerous; its approach to trade is a form of “America First Lite”. A key test will be whether it is prepared to engage productively in discussions agreed last week on having a functioning dispute resolution mechanism by 2024 — it has rendered the existing panel useless by refusing since the Trump era to allow new members to be appointed.China, whose 2001 accession was meant to be proof of the WTO’s worth, has under Xi Jinping expanded policies that run counter to free trade principles. India, meanwhile, seems more intent on special-pleading and posturing as leader of the developing world than on real engagement. This opens an opportunity for the EU to be a standard-bearer on free trade. There are limits to what it can achieve, however, without the support and commitment of other big trading powers. The best that can be hoped for is that the WTO can meanwhile be preserved as a discussion forum and — with luck — an arbiter of disputes. The next generation of political leaders might one day rediscover its importance. More

TORONTO (Reuters) – The risk of inflation becoming entrenched in Canada’s economy is growing, say analysts, as surging prices for gas and other highly visible consumer items undercut efforts by the Bank of Canada to keep expectations for price increases in check.Once inflation gets built into an economy it tends to become more difficult to bring under control without triggering an economic slowdown, or even a recession.Canada’s consumer price index data for May, due on Wednesday, which will include new basket weights that are unlikely to have a major impact, is expected to show inflation climbing above April’s three-decade-high of 6.8%.What central banks dread is a situation in which price increases become self-fulfilling – expectations for higher prices cause people to raise wage demands and accelerate purchases, driving further price increases.The Bank of Canada is fighting a “battle” to control inflation expectation, said Derek Holt, head of capital markets economics at Scotiabank, who projects a 7.8% rate of growth for May CPI.”They missed their chance to nip it in the bud and now you’ve got consumers and businesses who aren’t fussing over what’s driving it. They are engaged in extrapolative behavior, which is the path central banks always want to avoid.” As in other countries, much of the reason for soaring prices comes from supply constraints related to the COVID-19 pandemic and the war in Ukraine. But as inflation lingers, expectations that price pressures will continue have climbed.A Conference Board of Canada survey for May shows that 78% of Canadians expect inflation to exceed the BoC’s target of 2% over the next three years, up from 77% in April.Investors have taken note, betting that the central bank will match the Federal Reserve’s recent three-quarter-percentage-point rate increase when it next meets on July 13, which would be the biggest hike in 24 years. The threat of unmoored inflation expectations comes as Canadian gas prices climbed in June to a record high of C$2.15 a liter.”Central bankers can’t be too happy with what’s happening at the gas pumps, since it’s one of the prices that households most closely track, and along with some other staples like milk and bread, has more influence over perceptions of inflation than its actual weight in the consumer basket,” said Avery Shenfeld, chief economist at CIBC Capital Markets.To keep expectations anchored while it unwinds stimulus in an overheating economy, the BoC has taken the rare step of providing guidance on the path of rates, saying they could move above the top of the 2%-3% neutral range.On July 4 the central bank is due to release its quarterly surveys of businesses and households, which includes measures of their inflation outlook.”I think the surveys will keep pushing up,” Holt said. “It’s a faster and steeper pace of rate hikes in order to correct those expectations.” More