The ‘PPI’ came out +11.2% at an annual rate (+1.4% in March 2022, thwarting a consensus which was counting on +1.2%) but the ‘PPI core’ jumped 1% in March 2022 (i.e. +7% at an annual rate), against a consensus of +0.5% (after +0.4% in February).
James Bullard warned that this historic inflation associated with a necessary rise in rates induces a high risk of recession and that any other interpretation of the situation falls under ‘fanciful’ theses.
But the ‘fait accompli’ seems to have worked against the Dollar since the ‘$Index’ reversed (-0.45%) after testing an annual zenith at 100.50 and finished at 99.85.
Note the sharp rise in the Canadian dollar (+0.8% 1.2565/$) while the Central Bank of Canada raised its key rate by +50Base points 1% on April 13 to fight inflation: the objective could be between 2 and 3% by the end of 2022 depending on the economic situation.
The Euro has rebounded on the eve of the ECB meeting: this could be an opportunity for Christine Lagarde to confirm that controlling inflation remains the priority and that a cycle of rate hikes could occur as soon as September resumes. , see in July as some anticipate, which will lead to a reassessment of growth objectives in Europe.
The Banque de France has incorporated this phenomenon into its forecasts: it is revising its growth target for the 1st quarter by half, from +0.5% to +0.25% (which makes the annual target of +3.6% in 2002 lapsed).
It should be noted that the decline in the dollar benefits gold, which is still progressing (+1.3%) and crosses the cap of $1,980/Oz, silver advances by +1.5%.
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