US consumer price growth surpassed 8 per cent in March, its fastest pace since 1981 following a surge in the cost of energy and food, maintaining pressure on the Federal Reserve to take aggressive action to tackle inflation. The consumer price index increased 8.5% last month compared with a year ago, marginally above Wall Street’s expectations, the Bureau of Labor Statistics said on Tuesday. The monthly rise was 1.2%, the fastest jump since September 2005 and a sharp acceleration from the 0.8% increase recorded in February. Once volatile items such as food and energy are stripped out, “core” CPI advanced 0.3% in March. That was the slowest rise since September, but still translated to a 6.5% annual increase. It was the first inflation reading that included a full month of the impact of the war in Ukraine, which has significantly clouded the global outlook. Russia is one of the world’s largest energy exporters, and Russia and Ukraine are major suppliers of wheat and other grains. The moderation in “core” CPI prompted a rally in Treasuries and overnight funding markets, as traders scaled back their bets for the pace and size of interest rate increases this year. However, markets are still pricing a rise in the Fed’s benchmark policy rate to 2.45% by the end of 2022, down from 2.59% earlier in the day but sharply higher than the current range of 0.25% to 0.50%. The Biden administration on Monday blamed surging prices on the war, with White House press secretary Jen Psaki saying the CPI reading would be “extraordinarily elevated due to Putin’s price hike”. The Fed is now poised to raise interest rates by half a percentage point at its next policy meeting in May, double the pace of its March rate rise, as it seeks to lift its benchmark policy rate to a more “neutral” level that neither aids nor constrains growth by the end of the year. Officials forecast that rate to be roughly 2.4%, implying at least one more half-point adjustment in addition to four more quarter-point rate rises in 2022. The central bank is also set to soon begin shrinking its 9 trillion USD balance sheet, building up to as much as 95 billion USD a month over roughly three months. Brainard said that process would start as early as June and, combined with rate rises, should bring the Fed’s policy to a more neutral setting “over time”. US Treasury prices climbed on Tuesday, pushing the yield on the benchmark 10-year note down 0.06 percentage points to 2.72%. Stocks, which had initially rallied after the data were released, slipped, with the S&P 500 falling 0.3% in a volatile session.

A top Federal Reserve official has warned it is a “fantasy” to think the US central bank can bring inflation down sufficiently without raising interest rates to a level where they constrain the economy. James Bullard, president of the St Louis branch of the Fed, said the central bank needed to be more aggressive in its efforts to root out the highest inflation in four decades as he called for rates to rise to a point where they actively curtail growth. The comments from Bullard, a voting member of the policy-setting Federal Open Market Committee and one of its foremost hawks, run counter to other officials, who are broadly aligned on the need to push rates closer to a “neutral” level this year. That is the level at which rates neither fuel nor restrict economic activity and is estimated to be around 2.4 per cent. Bullard said the central bank would need to get beyond that threshold as quickly as possible this year if it wanted to bring inflation closer to the Fed’s longstanding 2% target. “There’s a bit of a fantasy, I think, in current policy in central banks,” Bullard said in an interview with the Financial Times. “Neutral is not putting downward pressure on inflation. It’s just ceasing to put upward pressure on inflation.” His comments come on the heels of new inflation data that showed consumer prices increased at an annual rate of 8.5% in March following a surge in energy and fuel costs driven by Russia’s invasion of Ukraine. “Core” inflation, which strips out volatile items such as food and energy, came in slightly lower than expected, but Bullard warned it would not come down without a concerted effort from the Fed and that the US was vulnerable to unforeseen shocks that could further stoke prices. “This [inflation] report just underscores the urgency that the Fed is behind the curve and needs to get moving,” he said. A separate report on Wednesday showed further evidence of broadening inflation as prices paid to US producers climbed 11.2% in March, the quickest pace since the year-on-year rate was first calculated in 2010. Bullard supports the Fed raising rates by half a percentage point at the next policy meeting in May, something he urged the FOMC to do at its gathering in March, when it raised them by a quarter-point.

President Emmanuel Macron has called for an EU-wide framework to cap “abusive” executive pay after anger in France over a 19.1 million EUR package for the head of carmaker Stellantis. The criticism of the award to Carlos Tavares came as Macron entered the final weekend of the French election campaign seeking to fend off far-right challenger Marine Le Pen, who also condemned the pay for the head of the Franco-Italian company. Ahead of the April 24 presidential election run-off, the issue of executive pay has crept into a campaign dominated by voter worries over high energy costs and broader cost of living problems. Unions and shareholders have opposed the payout for Tavares, formerly the head of French Peugeot maker PSA, which merged with Italy’s Fiat Chrysler last year. The Portuguese executive will collect the multimillion-euro package for 2021 despite a majority of investors voting to oppose Stellantis’s pay plan for its senior managers. Macron called Tavares’ pay package “shocking and excessive” on Friday and said a “fight” to ensure executive pay levels were not abusive should be led at EU level. “At some stage we have to lay out ceilings and bring in a governance structure at European level that makes things acceptable, otherwise at one point society will explode,” Macron told Franceinfo radio. “People can’t be struggling with the high cost of living and see these kinds of sums.” “Of course, it’s shocking,” Le Pen told BFM TV when asked about the pay package. “It’s even more shocking when it’s bosses of companies that have run into trouble. That happens quite a lot.” Long labelled as a “president of the rich” by political opponents, Macron, a former banker who came to power in 2017 on a pro-business platform, said he was in favour of wealth creation and “freedoms” for companies but said the Stellantis pay plans were “astronomical”. He said France could also look at ways to let staff benefit more from company profits through share schemes. Le Pen has campaigned heavily in recent months on issues such as food inflation and high fuel prices, which have risen further since Russia’s invasion of Ukraine. Her emphasis on the high cost of living, away from her party’s longstanding focus on immigration issues that are still core to her manifesto, has struck a chord with voters.

Billionaire Roman Abramovich is attempting to restart talks between Ukraine and Russia, which both sides say are stuck. Ukrainian central bank and finance officials will head to Washington for next week’s meetings of the International Monetary Fund and the World Bank. Shelling resumed near Kyiv and the Lviv region close to Poland saw its first known missile attack in weeks. Russia has warned the U.S. over its weapons shipments, according to a diplomatic note cited by the New York Times and the Washington Post. The U.K. said destroyed roads are hampering humanitarian aid deliveries. Ukraine’s economy may shrink by as much as half, Finance Minister Serhiy Marchenko said. The European Union and Russia are at risk of triggering a de facto embargo on Russian gas after the bloc’s lawyers drafted a preliminary finding that the mechanism President Vladimir Putin is demanding for payment in rubles would violate EU sanctions. Countries including Germany are still scrutinizing an initial EU assessment that Putin’s ruble demand would breach sanctions imposed over Russia’s invasion of Ukraine. The Netherlands has told its energy firms to refuse the new payment system in light of the EU legal analysis. If Russia follows through on its threat to cut off gas supplies to buyers that don’t comply, it poses a serious threat for the EU, which gets 40% of its gas from Russia. The bloc is scrambling to find alternative energy sources as it comes to terms with the outsize leverage Moscow has over its security, but the transition will take time. The EU is working on its sixth sanctions package, but moves to target Russian energy have been fraught given its dependence.  Germany could face a 220 billion EUR (238 billion USD) hit to output over the next two years should the gas supply be cut immediately, according to a joint forecast of economic institutes. That’s the equivalent of a 6.5% annual output cut and it could tip the country into a recession of more than 2% next year.

Elon Musk fails to convince the doubters that he will ‘save’ Twitter. If Elon Musk thought that casting himself as Twitter’s saviour would win widespread backing for his 43 billion USD hostile takeover bid, he was in for a rude awakening. The world’s richest man laid out some sweeping claims for this week’s unsolicited approach. Shareholders, he promised, would “love” the rich premium he was offering. He would bring free speech back to one of the most important social media sites. And he would overhaul the management of a company that had lost its way. With characteristic hype, he even pitched his bid as a benefit to humanity. “Civilizational risk is decreased the more we can increase the trust of Twitter as a public platform,” he said in an interview at a TED conference, hours after his approach had been revealed. On all counts, the claims have fallen largely on deaf ears. Even before Twitter’s board revealed its opposition early on Friday by adopting a poison pill takeover defence, shareholders had given their own vote of no confidence. Twitter’s shares dropped nearly 2% on news of the bid, in a sign of Wall Street’s low confidence in it succeeding. We would be pretty surprised if the Twitter board were willing to give in at 54 USD given where the stock was just six months ago. Musk’s emergence as Twitter’s biggest shareholder (a position he lost to Vanguard this week) sent the shares up 38% earlier this month on hopes he would be a catalyst for change. But his offer is still 26% below the 12-month high. If Musk’s proposal was intended as a sighting shot, then it left many investors unsure of how serious he was about following through — particularly given his incorrect claim once before to have had “funding secured” to take Tesla private. Feeding the skepticism, Musk smirked as he took the TED stage shortly after his bid, and then reopened the “funding secured” controversy by insisting he had had the money all along. He only settled a complaint from regulators, he claimed, because they had backed him into a corner where Tesla was facing bankruptcy.