This normalization implies that month-on-month inflation took a huge jump of 0.6%, the biggest monthly surge in eight years. Demand for many goods is currently dampened as millions of Americans have lost their job in the coronavirus crisis. Between January and March, US GDP fell at an annualized rate of -5%. An even deeper slump is expected in the second quarter, as the fight against the pandemic in the spring led to extensive plant and business closures. This suggests that inflation shoud remain muted going forward and that the Fed will keep feeding the system with cheap money.
The Bank of Japan (BoJ) maintained its monetary policy on Wednesday, confirming its view that the economy would gradually come out of the devastating full-blown coronavirus pandemic. The national bank is keeping its feet still for the moment, after having already taken strong stimulus measures twice this year and thus intervened enough for now. Meanwhile, Japanese industrial production has plummeted by a massive -26.3% year-on-year, a contraction of the magnitude last seen during the financial crisis. Although the BoJ is optimistic, the economic figures for the export-dependent economy do not yet indicate a recovery. At least the mood in some surveys has become slightly more positive, especially from the service sector, according to the BoJ's quarterly Tankan survey. In the manufacturing sector, however, all sector categories are still pointing downwards, underlining the tough conditions in the coming months.
Industrial companies in the euro area are ramping up their production again after the turmoil surrounding the corona containment measures. Although overall output still contracted by -20.9% year-on-year, growth picked up again in May and production rose by 12.4% compared to the previous month, according to Eurostat. The increase is less than experts had expected. At the same time the slump in April was corrected from -17.1% to -18.2%, bringing more transparency in the situation and making it even more serious than expected. The individual countries of the monetary union showed different developments. The highest increases in industrial production were recorded in Italy (42.1%), France (20.0%) and Slovakia (19.6%). In Germany, industrial production increased by 9.7%. Ireland (-9.8%) and Finland (-1.3%) came last.
|08:00||UK||Consumer Price Index (year-on-year)||0.5%|
|15:15||USA||Industrial Production (month-on-month)||1.4%|
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