Interest rates on the up. Carney sticks it to Trump - and the UK

episode

The Other Hand 32 min 2 speakers 8 chapters transcribed just now

▲ 0

Transcript

jump: chapters · speakers · find in transcript

Transcript

Transcript generated automatically by AI and may contain errors.

What did the hosts discuss in the opening and how did they introduce the guest?

Chris Johns 0:10

The other hand is part of the Acast Creator Network. Hi everyone. It's great today to welcome the venerable great man himself back to the podcast, James Power. And I hope you had a great break, Jim, and are going to enlighten us all with all of your deep thoughts, uh that you have no doubt collected while sitting on a beach somewhere exotic, eating and drinking all sorts of different things, I expect, and g knowing your habits. And so I'm going to just simply let you at it because I'm sure you've got so much to tell us.

Jim Power 0:47

Yeah, th thank you very much for that great welcome back, Chris. Uh I was in Madeira for the week, mainly hiking, very energetic. Um, lots of walking, lots of sunshine, because we're recording this on Friday morning and this afternoon I'm out to Bilbao to do that two day torture in the Camino, starting on the French side of the Pyrenees, going over that tomorrow. And then on Sunday, I think there's another 45 kilometers lined up for us. And um, as I said before, it's for a charity Michael's fan. Michael's fan club is very close to my heart. So looking forward to that. But Monday evening, Chris, I will be back on terra firma again and uh Hopefully uh we'll be able to get back to a more normal schedule of um podcasts.

Jim Power 1:36

But I have to say uh the ones you've done while I was away are really good. So well done on that and thanks for keeping going. A lot has happened since I've been away. We've seen three majors three major central banks increase interest rates by a quarter percent each. The European Central Bank, the Federal Reserve and the Bank of Japan.

How have the ECB, the Fed and the Bank of Japan recently changed interest rates?

Jim Power 1:58

The Federal Reserve one is obviously particularly interesting given that Kevin Wart took over the Fed in May, a Trump appointee. And Trump had obviously been extremely critical of Jay Powell and his refusal to cut interest rates. So it was a bit of a slap in the face for Trump. Um and he posted on social media that the Fed needs to cut rates to one percent immediately. And I think he's blaming the board rather than his appointee for that move. But it was interesting and actually I think a very positive move in terms of the independence of the US financial system. So I I de I definitely think Kevin Walsh actually has been playing a blinder since he took over. So I think we can bury our reservations. In the case of, or any we had, in the case of Japan, rates have gone from 1% to 1.

Jim Power 2:55

It's the highest since 1999. Yeah, 1995. Yeah, that's some statistic. Uh core inflation in August came in at 1.7% this morning. 2% is the target. But the governor of the Bank of Japan has come out and said that that is likely to overshoot its 2% goal over the coming months. A lot happening on the interest rate side, and I I think it's indicative of number one. the resilience of the global economy in the face of all of these shocks. And secondly, you know, there are there are undoubtedly inflation and price pressures feeding through from the Iranian situation in the main. And this morning we got, for example, German producer prices for August up four point six percent year on year compared to three percent in July, the fifth straight month of growth.

Jim Power 3:48

So from a central banker's perspective, there's a lot to worry about out there actually on the price front.

Chris Johns 3:54

I think central banks are caught in a cleft stick because they know they can't do anything about high oil prices. That's one of the things that's happened since you've been away, Jim, is h oil prices have gone up again, as we thought that they would. World's oil reserves have been run down now. I think the strategic petroleum reserve in the United States is at an all time low and that's been replicated elsewhere in the various ways the world holds its oil reserves and the the situation in in The Street of Hormuz is now the situation in the Red Sea. So high oil prices, the gas price in Europe is a real problem for us, both here in the UK and in Ireland, for you and everybody else in Europe, to be honest.

Chris Johns 4:32

So central banks can do absolutely nothing about that. And so you wonder why, as you have done on this podcast, why they put up interest rates when energy prices go up.