Dusk Chorus: Early wage, price pressures easing
ANZ survey of price and wage setters includes early signs of easing inflation pressures, showing risk central banks will over-tighten as 'generals fight the last war' to regain inflation credibility
TLDR: Wage and cost pressures are beginning to ease for business owners and managers, but it may flow through too slowly into consumer price inflation measures to stop central banks from over-tightening in a way that ‘generals fighting the last war’ do too much to win back their inflation fighting credibility.
The bigger risk is this over-tightening causes such big financial market pressures that there is an ‘accident’ in emerging markets and a much faster economic slowdown that actually drives inflation and interest rates lower in the next couple of years than either central banks want or investors mostly expect.
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