Watch out for this week: India’s inflation, ‘Pie Day’, FOMC meeting

1. India Inflation

Retail inflation has been rising since September and reached 6.01% in January, with higher fuel prices fueling the inflation fire despite excise duty cuts. However, despite rising global crude oil prices, a temporary moratorium on fuel prices ahead of assembly elections in five states is likely to moderate inflation in February. Lower food prices and a fading base effect could also help, possibly bringing inflation back below the RBI’s upper limit of 6%. Data is on Monday. The inflation print in February will be the latest available data for the Monetary Policy Committee (MPC) to be held in April. However, even if inflation calms down, it will be difficult for the rate-setting panel to ignore rising price pressures due to the Ukraine crisis, especially on the crude oil front. All hopes are pinned on another round of excise duty cuts on fuel in the coming months to contain inflation.

2.FOMC meeting

Inflation has peaked in the US, reaching a 40-year high of 7.9% in February. The general consensus is that inflation isn’t just transient: investors across the board are betting on high inflation over the long term. The Ukraine crisis is only driving up energy prices further, while also creating a headwind for growth. Inflation can easily reach 9% in March.

This twin challenge – high inflation and uncertain growth – has put the Federal Reserve in a tight position ahead of Tuesday’s meeting to decide on its rate hike. Fed Chairman Jerome Powell indicated earlier this month that the panel would go ahead with rate hikes set for March. An increase of 25 basis points is expected.

After the March hike, the Fed is set to raise interest rates further if inflation doesn’t subside. Emerging markets have been nervous about impending hikes for months: If the Fed takes the plunge, it could trigger outflows from EMs like India.

3. OPEC Report

OPEC will release its monthly report on the global crude oil market on Tuesday. Recently, oil producers have been in the limelight for not ramping up production enough to meet the rebound in fuel demand with the easing of the pandemic. Oil prices have remained elevated since Russia’s invasion of Ukraine: oil prices hit their highest level in a decade. Still, the OPEC+ alliance, which also includes Russia, has decided to increase production by a modest 400,000 barrels a day in March.

Last week, the US announced formal sanctions on Russian oil imports, adding to supply concerns. The US has called for an increase in production, but OPEC recently said Russia had insufficient oil capacity to offset supply losses. Market participants would expect an increase in production to help offset the rise in oil prices. The monthly report will recalculate the projections for the year based on geopolitical realities.

4. Euro Area Inflation

From deflation to skyrocketing inflation, the euro area has seen huge price pressures in more than a year, with retail inflation rising to 5.1% in January. Upcoming data for February, which is scheduled to be released on Thursday, is likely to show a further rise in prices. Inflation rose to 5.8% earlier this month in February, according to flash inflation data released by Eurostat, the EU statistical office. The current inflation rate is already nearly three times the European Central Bank’s 2% midpoint target, and rising crude oil and food prices due to the Ukraine crisis are set to add additional pressure to prices. While the ECB has acknowledged the risks to inflation, it is widely expected to hold a trade-off due to the imminent impact of the crisis on euro area development, as well as sanctions imposed on Russia.

5. Pie Day

On Monday, number enthusiasts around the world will celebrate one of the most iconic and best-known symbols in mathematics: pi. March 14 (or 3/14 in the mm/dd system) is widely celebrated as Pi Day, as it represents 3.14, the value of pi rounded off to two decimal places. The famous physicist Albert Einstein was also born on this day.

Pi is the ratio of the circumference of a circle to its diameter, which, to the surprise of early mathematicians, does not change with the size of the circle. Over the centuries, it has found application in fields ranging from simple geometry to space exploration, and is relevant to anything spherical, spherical or elliptical. Pi is an irrational number, and its decimal places can go on forever. But in everyday use, it is rounded off to two decimal places for convenience. Nerd communities make it a math challenge to be able to remember the digits of pi to record the length. Expect some pi fun on social media on Monday.