Aurelia Butler

South Koreans expect consumer inflation to average a median 3.3% over the next 12 months, up from 3.1% in April, touching its highest since October 2012, the Bank of Korea’s monthly survey showed.The finding comes just before the central bank’s monetary policy review on Thursday. The BOK has raised rates by a total of 100 basis points in four steps since August last year from a record-low 0.50% to fight inflation.In April, annual consumer inflation in Asia’s fourth-largest economy quickened far more than expectations to hit a more than 13-year high of 4.8%, prompting analysts to increase their bets for further tightening.The central bank also said on Tuesday the consumer sentiment index dipped to 102.6, its lowest since August last year, from 103.8 in April.The sentiment index still stood above the long-term average of 100 separating optimism and pessimism about the future. More than 2,300 households in urban areas participated in the survey, which polled for inflation expectations and consumer sentiment among other topics, between May 10-17. More

Also sworn in on Monday were Lael Brainard as the Fed’s new vice chair, and the two newest members of the Fed’s Board of Governors, Philip Jefferson and Lisa Cook, who are both Black economists, the Fed said in a statement.Powell was nominated for his first term as Fed chief by former President Donald Trump, then was chosen by President Joe Biden last November to serve another four years. The former private equity lawyer survived severe criticism from Trump during his first term at the helm of the central bank.The U.S. Senate voted on May 12 to confirm Powell to the post with bipartisan backing. Powell has served on the Fed’s Board of Governors since 2012.Cook is the first Black woman ever to serve on the Fed’s board. This is also the first time the Fed will have had more than one Black policymaker at the same time. The swearing in means six of the seven seats on the Fed’s board are filled just weeks before the central bank’s June 14-15 policy meeting, at which it is expected to raise its benchmark overnight lending rate by half a percentage point as it battles inflation.Jefferson was most recently dean of faculty at Davidson College, and has written extensively about poverty. Cook was an economics professor at Michigan State University where her research focused on the economic impact of gender and racial inequality.Neither is expected to have an immediate impact on the Fed’s monetary policy trajectory, decided at regular meetings throughout the year by the Fed Board and the presidents of the 12 regional Fed banks. Powell has promised to keep pushing on rate hikes until there is clear and convincing evidence that inflation is dropping. Traders of futures tied to the Fed’s policy rate are betting that means that the overnight lending rate between banks – currently in the 0.75%-1% range – will rise to 2.75%-3% by the end of the year, high enough to start putting the brakes on economic growth.Biden’s pick to fill the Fed’s seventh seat, former senior Treasury Department official Michael Barr, is likely to win Senate confirmation as the central bank’s vice chair for supervision, Republican U.S. Senator Pat Toomey told Reuters on Monday. That post would see Barr take on a sweeping portfolio overseeing the nation’s largest banks. More

Andrew Bailey fought back on Monday against critics of the Bank of England’s handling of inflation, insisting that the central bank had not allowed the economy to overheat and was treading a “narrow path” to contain price rises without triggering a recession.The BoE governor, speaking at a conference in Vienna, said he rejected the argument that the monetary policy committee had allowed demand to get out of hand and stoked inflation.“The facts simply do not support this,” he said, arguing that UK output was barely above its pre-coronavirus level, and that price pressures stemmed rather from an unprecedented succession of global shocks, combined with an unexpected shrinking in the size of the UK’s workforce.“What we do have is a very tight labour market. But that does not look like a story about rapid demand growth . . . It looks much more like an impact from the supply of labour,” he said.Bailey has come under intense criticism over the BoE’s failure to contain the recent surge in UK inflation, which hit 9 per cent in April and looks likely to stay high for longer than in other European countries.He admitted that the BoE could not lay claim to any “tremendous foresight” in the current situation, but underlined that it had already raised interest rates four times since December and was “prepared to do so again based on the assessment at each of our meetings”.However, he warned that the BoE was still trying to judge how far inflation would fall on its own, as higher energy prices ate into household incomes and forced consumers to retrench.“We are facing a very big negative impact on real incomes caused by the rise in prices of things we import, notably energy. We expect that to weigh heavily on demand,” he said, adding that this made him wary of making any public commitments on the likely path of interest rates.“We have to be careful and we have to take these decisions meeting by meeting, which is why I don’t want to overuse forward guidance,” he said, noting that the BoE faced the twin risks of “high inflation on one side and the risk of a recession on the other”.He said the biggest uncertainties over the outlook for UK inflation were whether consumers would spend the savings they had accumulated during the pandemic, in order to maintain living standards in the face of higher prices; and whether workers who had dropped out of the labour market would return as their savings ran out — or prove able to fund early retirement.Although the BoE had on average kept inflation on target over the period since the global financial crisis, Bailey said it now faced “a moment to be reflective and self-critical” as it sought to bring inflation under control without “undue damage to output”. More