Guardrails

Daily update

The resignation of Federal Reserve Vice-Chair Barr highlights the guardrails in protecting central bank independence. While Barr’s resignation from the supervision role might be politically inspired, Barr has not resigned as Fed governor. All seven gubernatorial positions are filled, and a vice-chair of the board of governors needs to be a member of the board of governors. The next term to end is Governor Kugler’s in 2026.
Bond and currency markets exhibited volatility yesterday on speculation about US trade taxes. The Washington Post suggested a universal tariff would only apply to certain imports. US President-elect Trump then denied the story. An unpredictable management style may create opportunities in negotiation, but market volatility also creates economic costs.
UK BRC shop sales figures were stronger than expected in December (albeit very few economists forecast the numbers). With goods prices generally deflating, this implies a real increase. Online sales may be more important, given seasonal ‘flu could limit in-person shopping.
French, Italian, and Eurozone preliminary December consumer price inflation figures are due, with energy likely to add something to headline inflation rates. German numbers were somewhat higher than expected yesterday, but the ECB is more likely to focus on underlying inflation pressures (only evident when more detailed data is released).