By Jonathan Cable
LONDON (Reuters) – The risk of a global recession is growing as consumers face a generation of high inflation, polls showed on Tuesday , while central banks aggressively tighten policy when support is needed.
Supply chains that have not recovered from the coronavirus pandemic further damaged by Russia’s invasion of Ukraine and China’s strict Covid-19 outbreak – 19 blockade, hurting manufacturing.
A large survey of purchasing managers from Asia to Europe to the United States released on Tuesday showed that
“In short, it is the extremely high inflation rate that Households are having to pay more for the goods and services they have to buy Capital’s Paul Dales said buying means they spend less on other items.
Economic output, which is The cause of the recession. Higher interest rates played a small role, but it was actually higher inflation.”
U.S. private sector business activity rose for the second consecutive month in August The month contracted, and was at its weakest in months, with the services sector showing a particularly weak performance.
There is a 20 % probability of a US recession within one year and 50% within two years, according to a Reuters poll on Monday, economists largely said they would [ECILT/US]
in the euro zone There was a similar situation, where the cost of living crisis meant customers had their hands in their pockets and business activity across the EU contracted for a second month.
Disappointing data pushes EUR/USD to 20 year lows as gasoline prices surge The pain of dragging into recession.
In the UK outside the EU, slowing private sector growth has been a factor in falling output, with the larger services sector only barely expanding, suggesting a recession is imminent.
Japan’s factory growth slowed to 20 month low as output and new orders fell deeper, while Australia’s composite PMI fell below the 100 dividing line between growth and contraction.
Feeling the pressure
Inflation in many parts of the world has reached its highest level in decades, forcing central banks to tighten monetary policy as they are tasked with maintaining Prices are stable.
The Federal Reserve has raised its benchmark overnight rate by 2.25 percentage points this year as it tries to contain decades – Reuters on Monday Inflation is stubbornly high and is expected to rise again next month, according to an opinion poll in . [ECILT/US]
However, despite aggressive policy inflation is likely to remain above the Fed’s target beyond this year and next.
Last month the Bank of Canada surprised the market by raising its benchmark interest rate more than expected and said further rate hikes were needed.
The European Central Bank, which has struggled for years to achieve any meaningful inflation but now faces well above target inflation, started a rate hike cycle in July with more than expected rate hikes, A Reuters poll predicts that it will continue to tighten policy. [ECILT/EU]
The Bank of England was one of the first of its peers to raise borrowing costs and is widely expected to continue to do so, despite warnings that the country faces a prolonged recession as energy bills are expected to rise in 10 The month pushed consumer price inflation over %. [ECILT/GB]
Central bank heavyweights including Fed Chairman Jerome Powell held their annual symposium this week in Jackson Hole, Wyoming, and could shed light on how much future rate hikes will be how strong the economy is.
“With signs of an end to rate hikes by central banks that have led to tightening, investors may expect the Fed, ECB and Bank of England may end of the first half of the rate hike,” Charles Schwab (NYSE : SCHW).
” This year’s seminar may provide an early indication of when a rate hike may occur Shift to reduced production.”