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One of the most important developments last week was the announcement of an unscheduled board meeting by the FED. Most probably, members of the regulator will discuss the steps to take in order to calm down the inflation bonanza. The main intrigue is whether manipulating rates will help in curbing CPI. After all, this inflation is largely due to supply chain disruptions and not so much to the recovery in consumption.
On the other side of the ocean, as expected, the Central Bank of Russia decided to raise the interest rate from 8.5% to 9.5%. Along with this, the regulator has left itself room for another 2-3 rate hikes in the future. The only problem is that despite the fact the country has been raising rates for a year now, so far inflation has only accelerated. And there is no guarantee that nothing will change in 2-3 months.
On the geopolitics side, French President Emmanuel Macron has said that he was able to reach an agreement with Vladimir Putin to prevent the situation around Ukraine from escalating. “I made sure that there was no deterioration or escalation. It was important for me <…> to avoid escalation and to open new perspectives. This objective of mine has been fulfilled,” French television channel BFMTV quoted Macron as saying.
The two presidents reportedly reached an “agreement” on the situation in Ukraine, and now the Kremlin is waiting for the United States to approve its provisions. Specifically, Putin and Macron agreed that Russia would no longer take “military initiatives” and Moscow also agreed to engage in a dialogue on the deployment of its armed forces.
On top of that Joe Biden’s administration in the United States reinstated some sanctions exemptions to Iran’s atomic program, as talks aimed at salvaging the languishing 2015 nuclear deal enter a critical phase. The decision does not lift US sanctions against the sale of Iranian oil on the world market, but it signals a breakthrough in negotiations on the nuclear deal.
However, the step could facilitate negotiations to reinstate the 2015 Joint Comprehensive Plan of Action on Iran’s nuclear program, but it is too early to claim that an understanding has been reached. Restoring the Iran nuclear deal in its original form and lifting sanctions on Iranian oil could increase global supply by 1.6 million b/d in the coming months.
In Canada meanwhile, truckers’ protests against Covid measures are worsening. The capital, Ottawa, is “completely out of control,” according to Mayor Jim Watson, with protesters outnumbering police officers. Authorities believe the protests pose a threat to the safety of residents. A state of emergency has been declared in the city.
The U.S. Department of Homeland Security has warned law enforcement that truckers have decided to support protests in Canada. It is noted that the truckers intend to start the actions in California in mid-February, from where the convoy will head to Washington, and drivers in Canada may join it. Meanwhile, Canadians protesting against covid restrictions have blocked the Ambassador Bridge between the United States and Canada.
Overall, it looks like 2022 will be even more eventful than its predecessor.
