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U.S. Inflation Eases, Mortgage Rates Fall, Stricter Pollution Limits on Cars

Shemesh Shahar
Latest News
April 12 2023 07:59AM

U.S. Inflation Eases

In March, U.S. inflation eased to 5% from a year earlier, marking its lowest level in nearly two years. However, underlying price pressures remained elevated despite the Federal Reserve’s efforts to slow rapid price increases. The consumer-price index, a closely watched gauge of inflation, rose less than in February, with a 6% increase, and was the smallest gain since May 2021, according to the Labor Department. While prices for food and shelter increased, prices for gasoline and used vehicles decreased. Core prices, which exclude volatile energy and food categories, accelerated slightly to 5.6% in March from the prior month’s 5.5%.

Mortgage Rates Fall

Mortgage rates for 30-year fixed loans in the US fell for the fifth-straight week, reaching the lowest level in two months. Data from the Mortgage Bankers Association showed that the contract rate dropped by 10 basis points to 6.3% in the period ending April 7. This decrease in rates has boosted demand for home purchases, with the group’s index of mortgage applications for home purchases increasing by 7.8%, the largest increase since mid-January. Despite falling rates, borrowing costs remain relatively high and limited housing inventory continues to impact homebuying activity.

Stricter Pollution Limits on Cars

The Biden administration has proposed stricter pollution limits on cars in the US in an effort to promote electric vehicle sales. The proposed regulations aim for approximately 67% of new vehicles sold in the country to be electric by 2032, compared to the current figure of around 6%. The Environmental Protection Agency forecasts that these new caps could result in the avoidance of nearly 10 billion tonnes of carbon emissions by 2055.

Joe Biden in Northern Ireland

Joe Biden, the President of the United States, arrived in Northern Ireland to commemorate the 25th anniversary of the Good Friday Agreement, a deal that helped to largely end sectarian violence in the region. He is scheduled to meet with his British counterpart, Rishi Sunak, and deliver an address at Ulster University. However, Stormont, the region’s parliament, will not welcome Mr. Biden as it has not been in session since the main unionist party walked out last year.

Bird Flu Death in China

The World Health Organization reported that a woman in China has become the first person to die from the H3N8 subtype of bird flu. While this strain cannot spread from person to person, it has infected two people in Guangdong province last year and one person last month. The WHO has assessed the risk of the virus spreading among humans nationally or internationally as low.

IMF Calls for Debt Control

A top official from the International Monetary Fund (IMF) has called on seven of the world’s largest economies, including Brazil, China, Japan, South Africa, Turkey, the UK, and the US, to bring their government borrowing under control more quickly. The IMF’s head of fiscal policy, VĂ­tor Gaspar, told the Financial Times that these countries are projected to increase their public debt by more than 5 percentage points of gross domestic product over the next five years. Gaspar warned that by 2028, the global public debt burden is expected to reach almost 100% of GDP, returning to record levels seen during the pandemic, and emphasized the need to address high inflation and financial instability.

EU Urges Restraint in Azerbaijan-Armenia Conflict

The EU has urged Azerbaijan and Armenia to exercise restraint following the recent deadly military clashes between the two countries. At least seven soldiers were killed in the exchange of artillery and machine gun fire over their disputed border. Azerbaijan has warned that it will take all necessary measures to prevent provocations from its neighbor. The conflict between these former Soviet republics has been ongoing for decades over the territory of Nagorno-Karabakh, which was largely captured by Azerbaijan in a full-scale war in 2020.

Green Tax Credits Popular

Green tax credits from last year’s climate law are expected to be more popular than initially anticipated, potentially reducing carbon emissions but also increasing costs for U.S. taxpayers. Recent estimates from Goldman Sachs Group Inc. (NYSE:GS), researchers at a Brookings Institution conference, and the White House Office of Management and Budget suggest that buyers of electric vehicles and clean-energy producers could claim tax credits worth hundreds of billions of dollars more than lawmakers had originally expected when they passed the Inflation Reduction Act.

Egg Prices Tumble

US consumers are finally getting some relief after months of soaring food inflation as egg prices have tumbled the most in 36 years for the second straight month. According to Labor Department data released Wednesday, prices for eggs fell by 11% in March. Coupled with declines in prices for some meat, poultry, and produce products, this has led to the easing of the index for food at home, which had been on the rise since September 2020.

France Seeks Buyer for Nuclear-Submarine

The French government is actively seeking a buyer for Segault SAS, a nuclear-submarine parts supplier, in order to bring a key technology into domestic hands. The current owner, Velan Inc. based in Quebec, is being acquired by U.S. company Flowserve Corp. in an all-cash transaction. Paris views this as an opportunity to acquire the France-based supplier of defense and civil nuclear technologies and place it under French ownership. The deal is being evaluated for qualification under the screening process for sensitive businesses.

Germany Proposes Cannabis Legalization

The German government has proposed the legalization of cannabis for recreational use, allowing citizens to cultivate, possess, and consume the drug. If passed, Germany would become the most populous country in the world to legalize cannabis for recreational purposes. Currently, only Canada and Uruguay, along with a few U.S. states, have permitted the commercial sale of the drug. However, Germany’s proposal does not initially include allowing cannabis to be sold in commercial premises.

India’s Retail Inflation Rises

India’s retail inflation has fallen within the central bank’s target range for the first time in three months due to a series of interest rate increases since last year that have slowed demand in the country’s third-largest economy. According to data released by the Statistics Ministry on Wednesday, the consumer price index rose by 5.66% from a year earlier. This is the lowest reading in 15 months and compares with a median forecast of a 5.70% gain in a Bloomberg survey of economists. Food prices, which make up about half of the inflation basket, moderated at 4.79%, while fuel and light increased by 8.91%. Clothing and footwear prices increased by 8.18% and housing rose by 4.96%, contributing to easing core inflationary pressures. The central bank targets inflation between 2% to 6%.