Energy shock, three readings: ECB waits on wages, Turkey's monthly CPI jumps, US runs on capex
Serguey Asael Shinder1 min readThree official documents from the past few days show the same energy shock through three different lenses. In Helsinki on 2 November, Bank of Finland board member Tuomas Välimäki said euro area inflation rose to 3.8% in September, largely because of energy, but that underlying inflation, wages and expectations show little sign of a second round yet, which is why the ECB held rates and decides meeting by meeting.
In Ankara, the central bank's inflation table shows consumer prices up 2.58% in October alone, the largest monthly rise since April, with annual inflation at 29.77%. The bank's summary of its 22 October policy meeting describes energy prices as elevated and volatile because of geopolitical developments, and agricultural prices as high because of weather. Its gross reserves fell by $9.6 billion between mid-September and mid-October.
In Washington, the Treasury's 2 November statement to its borrowing committee describes an economy growing at 3.4% in the third quarter, driven by a 20.9% jump in equipment investment and triple-digit growth in data-centre spending, with imports surging and net exports subtracting 3.3 points from growth. The energy shock barely appears in the document.
What it means
The common shock produces different policy problems. The euro area is asking whether a price-level jump becomes persistent; Turkey, already starting from near 30% annual inflation, has much less room for a monthly surprise; the United States is reading its own data through an investment boom. For currencies, the difference in starting points matters more than the shock itself.