US officials recently said inflation was âtransitory.â
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Follow Us [Get the newsletter]( As inflation runs hot, so increasingly will the political finger pointing. Central banks in theory operate with a level of independence in most countries. That doesnât stop politicians from sending signals on what they expect monetary policy makers to do, and every now and then for a central banker to signal what they think governments should do. Key reading: - [Worldâs Central Banks Got It Wrong, and Economies Pay the Price](
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- [ECB to Discuss Using PEPP Reinvestments as Crisis Response]( That is especially the case when inflation is on the boil. Blockbuster numbers like $5 for a gallon for gasoline in the US or £100 to fill up a car in the UK take on an almost mythical quality, becoming established fact for voters even if prices do eventually fall back. Throw elections into the mix and the question becomes â whose job is it to fix inflation? The Federal Reserve is expected to hike rates by 75 basis points today. Thatâs as inflation in the US hits a 40-year high (and consumer sentiment drops) and only after officials moved away from their dogged insistence that inflation was âtransitory.â The White House, with a close eye on the coming midterms as President Joe Bidenâs popularity stutters, is increasingly leaning on the central bank: âThe Fed has the tools that it needs, and we are giving them the space that it needs to operate,â National Economic Council Director Brian Deese pronounced last week. In Asia, thereâs already an open spat between Thailandâs government and central bankers on where rates should go and when. Signs of tension may yet emerge in Europe. The European Central Bankâs Governing Council is holding a surprise meeting today amid investor concern about whether it can juggle raising rates with keeping bond yields in check. Italy is among the member states whose leaders are finely tuned to the trajectory on yields. Expect the debate to pick up as voters fret: How much of the onus is on governments, and how much on central banks? â [Rosalind Mathieson]( Protesters in Washington yesterday urging the Federal Reserve to focus on full employment instead of inflation. Photographer: Tom Brenner/Bloomberg Click [here]( to follow Bloomberg Politics on Facebook and share this newsletter with others. They can sign up [here](. Global Headlines Ripple effects | Some Biden administration officials are privately concerned that US and European sanctions on Russia are exacerbating inflation, worsening food insecurity and punishing ordinary Russians rather than [pressuring]( President Vladimir Putin or his allies. While initially impressed by companiesâ willingness to âself-sanctionâ and leave Russia, the administration was caught off-guard by the potential knock-on effects from supply-chain bottlenecks to uninsurable grain exports. - Follow our rolling coverage of the war in Ukraine [here](.
- Russiaâs central bank is keeping a close watch on a key piece of market infrastructure [targeted]( by EU sanctions. Ukrainian soldier after an artillery strike in the city of Lysychansk in the Donbas region on June 11. Photographer: Aris Messinis/AFP/Getty Images Diplomatic switch | Chinaâs transfer of one of its top diplomats and defenders of Russia to a state media regulator is stoking speculation that [tensions]( with the West may be weighing on the appointment of its next foreign minister. The move comes as the ruling Communist Party prepares for a twice-a-decade party congress this year thatâs expected to see President Xi Jinping secure a third term as leader. - Building-materials manufacturers are participating in [forced]( labor programs in Xinjiang, according to a report published days before the US bans such goods from the far western Chinese region. The 500 wealthiest people in the world have [lost]( a combined $1.4 trillion this year, according to the Bloomberg Billionaires Index, as global financial markets buckle under the weight of higher interest rates and inflation anxiety. Saudi reversal | Bidenâs visit to oil-rich Saudi Arabia to mend US ties with the kingdom is unlikely to [resolve]( the energy crisis plaguing the global economy. As [Grant Smith]( and [Salma El Wardany]( explain, even if he secures a promise of additional oil supplies, it may fail to cool a rally that has propelled US gasoline to unprecedented levels and underpinned the inflationary spiral.
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- [US Monkeypox Response Repeats Errors of Covid: Danzig & Lawler]( Biggest regret | Carrie Lam, whose tumultuous five-year term as Hong Kongâs chief executive is coming to an end, said her government could have prevented more deaths from Covid-19 with a stronger vaccination drive. But, in an [interview]( with Bloomberg Television, she refused to apologize for anything during her leadership of the city, which suffered more than 9,000 fatalities when omicron swept through the under-vaccinated elderly population this year. Explainers you can use - [Ragtag Hackers Wage Ad Hoc Cyberwar on Putinâs Supply Line](
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- [Goldman Investigation Tarnishes ESG Halo as Investors Bail]( In trouble | The party thatâs governed South Africa since the end of apartheid in 1994 is being buffeted by a [scandal]( implicating its leader, Cyril Ramaphosa, setting back efforts to reclaim support lost during nine years of misrule by his predecessor Jacob Zuma. A top police unit is probing the circumstances around a large amount of foreign currency stolen from the presidentâs game farm two years ago, the latest blow for the African National Congress. Japan is taking an increasingly confident role in international affairs. Whatâs behind this sudden change and what does it mean for other countries â including China? Tune in at 6 a.m. ET in [ThePoliticsSpace]( with our global [@bpolitics]( team. News to Note - The European Union is restarting infringement proceedings against the UK and will launch two new legal [actions]( after London proposed legislation to override part of the Brexit withdrawal agreement, an EU official said.
- Members of Prime Minister Boris Johnsonâs Conservative Party demanded the UK [withdraw]( from the European Convention on Human Rights after a court ruling forced it to cancel its first deportation flight to Rwanda at the 11th hour.
- The House passed a US Supreme Court [security bill]( yesterday, sending it to Biden for his signature just days after an armed man was arrested near the home of Justice Brett Kavanaugh.
- Mitch McConnell, the highest ranking Republican in the US Senate, said heâs inclined to support a bipartisan outline of new [gun-safety]( legislation, indicating it could gain widespread backing.
- Australian Foreign Minister Penny Wong announced her third visit to the Pacific in a month, the latest [diplomatic]( step-up by Canberra in the region as the Chinese government also seeks to expand its influence. And finally ... Chinaâs giant Sky Eye telescope may have picked up signs of [alien]( civilizations, according to the state-backed Science and Technology Daily, which then appeared to have deleted its report and posts about the discovery. Electromagnetic signals detected by the worldâs largest radio telescope differ from previous ones captured, it said, citing Zhang Tonjie, chief scientist of an extraterrestrial civilization search team. The suspicious signals could also be some kind of radio interference and require further investigation, Zhang said. Chinaâs âSky Eye.â Source: China News Service Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. You received this message because you are subscribed to Bloomberg's Balance of Power newsletter.
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