7%-13% from February — IES

In ation’s return from the dead has brought the era of easy monetary policy to an end. The US Federal Reserve, the European Central Bank, and others are planning to shrink their balance sheets, but this is a process that will most likely unfold very slowly. In the meantime, the heavy lifting will be done the old-fashioned way: hiking short-term interest rates to rein in aggregate demand. But policymakers should be careful not to get ahead of themselves.

The latest monetary-tightening cycle has been highly synchronized. While the Fed, the ECB, and the Bank of England did not all start raising rates at the same time, they have all implemented 200-basis-point hikes since September. And they have all used similarly tough language to a rm their commitment to reining in price growth.

This uniformity is puzzling, given important di erences in the dynamics driving in ation across economies. Consider the impact of skyrocketing global energy prices. For net energy importers like Europe, this trend implies a negative terms-of-trade shock –import-price growth outpaces export-price growth. This produces immediate in ationary e ects, but, over time, it erodes real incomes and suppresses aggregate demand.

France’s Treasury estimates that real income losses, compared to pre-pandemic levels, amounted to 3% of GDP at the end of 2022, owing to the terms-of-trade e ect.

But the United States – a net energy exporter – is not facing any such shock, so the factors driving US in ation must be di erent. In their e orts to ensure price stability, central banks should account for these divergences, rather than following the same playbook. Of course, one might argue that central banks’ e orts – in particu- lar, their hawkish rhetoric – are working. In ation expectations have indeed stabilized in the eurozone, the US, and the United Kingdom. But there is reason to fear that policymakers are going too far too fast – especially in Europe, where the energy crisis is now taking a large toll on real disposable incomes.

Fast seems to be the point. Based on the ECB’s own forecasts, one can infer that it is aiming to reach the 2% in ation target in 2025. The BOE, for its part, predicts that consumer in ation will fall to 1.4% –well below the 2% target – by the fourth quarter of 2024. In the US, the Federal Open Market Committee’s median projection for personal consumption expenditure in ation is 2.5% for 2024.

These are very sharp decreases, by historical standards. When Paul Volcker became Fed Chair in the summer of 1979, the annual in ation rate exceeded 11%. At the end of 1982 – after two recessions, the second of which was brutal – he had managed to bring in ation down to 3.8%. Though expectations stabilized, in ation remained elevated, although stable, for years, averaging almost 4% in 1983-90.

Why are today’s central bankers in such a rush? Given stable in ation expectations, one might infer that policymakers fear the emergence of a new round of in ationary pressures, as pro ts and wages, supported by a relatively strong labor market, catch up to prices. But there is little evidence of wage-price spirals in Europe so far. In the eurozone, forward-looking indicators of wage development are at. Moreover, the institutional mechanisms, such as the degree of wage indexing or unionization, that may favor such spirals are weaker today than they were in the 1980s. Another possible explanation is up between seven per cent and 13 per cent with respect to petrol, diesel and Lique ed Petroleum Gas (LPG). Petrol will therefore sell at about ¢15 per litre, whilst diesel will go for over ¢17 per litre. that policy preferences have shifted over the last few decades, with lower in ation now considered to be worth a greater sacri ce in terms of economic growth. But this seems unlikely, given the crises with which all three economies – especially the eurozone – have grappled over the last 15 years, and the growth headwinds they face today.

According to the IES, the rise in domestic fuel prices, is due to the sharp depreciation of the cedi during the last two weeks and the rising international fuel prices as observed on the global S&P Platts platform.

The energy think tank noted that the increase in fuel prices would be occasioned in spite of government’s receipt of approximately 41,000 metric tonne of diesel under its “Gold for Oil” programme.

“On the basis of the rising international fuel prices as observed on the global S&P platform, linked with the local currency’s value decline against the greenback, the Institute for Energy Security (IES) estimates a 7 per cent to 13 per cent jump in the prices of Gasoline [petrol], Gasoil [diesel], and LPG over the next two weeks ending February 14, 2023”.

“The rise in domestic fuel prices would be occasioned in spite of government’s receipt of approximately 41,000 metric tonne of Gasoil under its “Gold for Oil” programme, and that consumers must be prepared to buy for instance, a litre of Gasoline [petrol] for roughly ¢15 in the coming days”, it said in statement.

The 2007-09 global nancial crisis marked the beginning of a dismal decade, particularly for Europe, at the end of which the COVID-19 pandemic upended the global economy. Since the fourth quarter of 2019, US GDP has grown by just 4.4%, but the eurozone has achieved only 2.2% growth, and the UK economy has shrunk by 0.8%. This year, the OECD expects US and eurozone GDP to grow by 0.5%, and the UK economy to contract by 0.4%.

It is hard to imagine any of these economies making it through another decade of slow growth without su ering serious losses to potential output or doing lasting damage to the most vulnerable segments of society. Such protracted economic stagnation would most likely have severe political repercussions as well, particularly in the EU and the UK. Perhaps, then, central banks are moving so fast because they believe that rapid disin ation will not carry such high costs, in terms of output and employment, as it did in the 1980s. But given all the academic evidence to the contrary, this also seems implausible. maritime resources.

In fact, monetary tightening will do more damage to output and employment when in ation is fueled by a terms-of-trade shock that erodes real income – the case in Europe today –than when excessive aggregate demand is the culprit.

The only other possible explanation for central bankers’ haste is that they know something we do not. If so, they should explain it. Otherwise, they should proceed with caution, recognizing that continued rapid monetary tightening may bring huge economic costs. It may also reap the whirlwind of a backlash which threatens central bank independence.

According to him, the mandate of the Maritime Organisation of West and Central Africa (MOWCA) is essential and e orts should be championed for its e ective and e cient operation.

“I must reiterate that; no single Member State can make signi cant strides on their own.

Areas such as maritime security, maritime safety and navigation, port and infrastructure development, environmental protection, sheries amongst others can only become e ective when approached with a coordinated and integrated e ort,” the Minister said this at the 17 Extraordinary Session of the General Assembly of MOWCA in Accra.

Mr. Asiamah who is also the chairman of MOWCA also encouraged members to focus on actions that will ensure its people bene t while tackling some deep-seated issues, including rules of procedure, nancial regulations and conditions of sta . Further, Mr. Asiamah stated that member states dependence on imports of nished goods and exports of raw materials can only be facilitated by shipping which is a major activity in maritime industry.

It is estimated that about 80percent of international trade is done via maritime space, with the minister adding that shipping remains the most-e ective way of transporting any large/bulk amount of goods over a great distance.

The Minister of Foreign A airs, Shirley Ayorkor Botchwey, who was the guest of honour indicated that the organization must begin frank discussions on current developments in Green Shipping initiatives which involve the use of alternative fuels with low or zero carbon, in place of fossil fuels -that is fast becoming the new way of shipping.

To this end, she urged Africa’s Maritime Industry to be prepared for the cost rami cations of the impending transition to cleaner fuels to Ship-owners translating to increased freight rates.

“I will urge MOWCA to consider the e ects of the market-based measures under discussion within the International Maritime Organisation on our economies. It would also be pertinent to identify possible ways to bene t from any fund arising thereof, in order to minimize the e ects of the transition on all players, particularly Least Devel- oped Countries LDCs) and Small Island Developing States (SIDS).

Dr. Paul Adalikwu, the Secretary-General of MOWCA disclosed that the organization has rmed up plans to set up the Maritime Development Bank to be located in Nigeria, of which

MOWCA’s global pro le is being ramped up through her rm and active mutually rewarding links to the global International Maritime Organisation and the emergence of a pan-African Maritime organization.

MOWCA’s objective is to serve the regional and international community for handling all maritime matters that are regional in character. MOWCA uni es 25 countries on the West and Central African shipping range.