From global markets to questions of development, money and economic activity.
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Could euro area inflation turn into a wage and price spiral? Robin Brooks and Jonathan Fortun compare broadly shared price increases with subdued negotiated wage growth across much of the periphery. Their May 2023 analysis interprets that divergence as evidence of remaining labor market slack and a stronger role for supply shocks, making an aggregate spiral unlikely.
Read the workEmerging markets attracted $9.8 billion in portfolio investment during April 2023. Jonathan Fortun separates $7.7 billion entering debt markets from $2.1 billion entering equities. Chinese equities received $3.8 billion, exceeding the overall equity total and revealing offsetting withdrawals elsewhere.
Read the workFinancial sanctions can have different effects on countries that need foreign capital and those earning external surpluses. Robin Brooks, Jonathan Fortun and Jonathan Pingle examine how Russia’s 2022 energy windfall supported access to foreign currency despite sanctions. Their May 2023 assessment links that buffer to the rapid easing of domestic financial conditions and the economy’s capacity to sustain the war.
Read the workBrazil’s expanding trade surplus and Turkey’s repeated credit booms point to different currency valuation pressures. This April 2023 assessment defends the Brazilian real estimate despite persistent market weakness and explains how Turkish credit expansion had weakened the lira’s fair value through larger external deficits. A change in Turkey’s growth model was presented as a possibility around the forthcoming election.
Read the workChinese equities accounted for more than the entire emerging market equity inflow in March 2023. Jonathan Fortun reports $9.4 billion in total portfolio inflows, split between $6.8 billion in equities and $2.6 billion in debt. China’s $7.2 billion equity intake implies offsetting withdrawals elsewhere, revealing uneven participation in the recovery.
Read the workRussia’s exceptional external surplus was fading by early 2023 after an estimated $215 billion energy windfall since mid 2021. Robin Brooks, Jonathan Fortun and Jonathan Pingle attribute part of the reversal to the EU oil embargo and G7 price cap. Their March assessment also warns that an expanding tanker fleet outside the cap could weaken its reach.
Read the workUS inflation signals pointed in conflicting directions in March 2023. Robin Brooks, Jonathan Fortun and Jonathan Pingle find continued pressure in underlying services inflation alongside a retreat in the breadth of price increases. Their assessment rejects both a clear slowdown and an uncontrolled acceleration, supporting a cautious 25 basis point rate increase at the following Federal Reserve meeting.
Read the workA century of US inflation reveals lower volatility without a clear downward trend in its level. Robin Brooks, Jonathan Fortun and Jonathan Pingle examine major inflation surges associated with oil shocks, wars and fiscal expansions. Their February 2023 review notes that earlier spikes generally faded within a few years, sometimes without Federal Reserve rate increases.
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