U.S. Interest Rates & Inflation

Wednesday, July 16, 2008 | 09:15 AM

UBS on yesterday's PPI data:

Whilst Bernanke took centre stage, macro data showed the increasing problems we face. Producer prices rose by 9.2% y/y, the highest by quite a margin since July 1981 when U.S. interest rates were still at 15.5%.

At the same stage retail sales growth, which is not adjusted for price changes, slowed to just 0.1%. This stagflation mix will I believe get worse as high energy prices turn whole economic models such as the free trade doctrine of comparative advantage, on its head, reversing globalisation.

-UBS Macro Derivatives Sales Daily– Wednesday 16/7/08 London

To reiterate, the last time Producer prices were this high, the Fed had rates up in the double digits -- not at 2% . . .


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Wednesday, July 16, 2008 | 09:15 AM | Permalink | Comments (27) | TrackBack (0)
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Comments

Hopefully it will get so expensive to ship things from China that we'll have to bring all our manufacturing jobs back to the states. Then our economy will actually grow because of JOBS not bailouts and monetary policy.

Posted by: Greg | Jul 16, 2008 9:24:24 AM

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