Coronavirus latest: Beijing Winter Olympics to admit only spectators from mainland China

Four of the world’s leading central bankers have warned supply bottlenecks are likely to last longer than expected and said they are watching for as-yet unrealised signs of them spawning a self-fulfilling cycle of higher expected inflation and wage increases.

Jay Powell, chair of the US Federal Reserve, said it was “frustrating” that supply-chain bottlenecks were holding back the recovery of the world’s largest economy and have helped to fuel more elevated price pressures as they have intensified.

“The combination of strong demand for goods and the bottlenecks has meant that inflation is running well above target,” Powell said on a panel with European Central Bank president Christine Lagarde, Bank of England governor Andrew Bailey and Bank of Japan governor Haruhiko Kuroda on Wednesday. “We expect that it will continue to do so in the coming months before moderating as bottlenecks ease.”

His warnings echoed similar comments from Lagarde, Bailey and Kuroda, who highlighted the uncertainties still clouding the economic outlook as a result of supply-side disruption and the more contagious Delta variant.

Lagarde said supply bottlenecks “seem to be accelerating in some areas” such as container shipping and semiconductors. She added: “How long these bottlenecks will take to fade out is a question we are monitoring very closely and this is on our radar screen.”

UK fuel shortages, which have left some people unable to fill their cars with petrol, are showing signs of easing, Bailey said, adding that the ending of Britain’s furlough scheme this week could help labour market shortages. But he said UK economic output may not return to pre-pandemic levels until early next year — “a few months later” than thought.

As the global economy has rebounded from the impact of the coronavirus pandemic, inflation has risen faster than many central bankers expected, driven by soaring energy prices, resurgent demand, delays in the delivery of goods and shortages of materials and products.

Read more here.

Leave a Reply

Your email address will not be published.