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Showing posts with the label Currency Regime Shifts

CPI September 2026: Shelter Raised Core Inflation and Lowered the 3.7 Percent Headline

On October 14, 2026, the Bureau of Labor Statistics reported that the Consumer Price Index rose 3.7 percent in the 12 months through September, while the index excluding food and energy, the core rate, rose 2.6 percent after 2.4 percent through August. Shelter, the largest single block in both measures, rose 3.2 percent over the same 12 months. For anyone reading the two rates side by side, that one component pushes them in opposite directions: it lifts core from 2.0 percent to 2.6 and holds the all-items rate at 3.7 instead of 4.0, so the claim that housing is pushing inflation up is true of one number and false of the other. The figures come from the BLS Consumer Price Index news release for September 2026 and its first three tables. This post follows the shelter line through them: what the index counts as shelter, why September's monthly shelter increase of 0.4 percent is not a rent number, and how much of each 12-month rate shelter accounts for once the rounding comes off. T...
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COFER's 1.47 Point Dollar Slide: 0.12 Points Survive at Constant Exchange Rates

Official reserve managers hold about $13.10 trillion of foreign exchange, and 57.13 percent of it sits in US dollars. That second number gets read as a verdict. It is not a verdict. It is a ratio, and a ratio moves when either half of it moves, whether or not a single reserve manager decides anything. The International Monetary Fund publishes that ratio quarterly through COFER, the Currency Composition of Official Foreign Exchange Reserves. Across the last five quarters, the dollar share as first published ran 57.79, then 56.32, then 56.92, then 56.77, then 57.13. Read as a sequence of decisions, that is a violent story: a collapse, a partial recovery, a stall, a snap back. Read as arithmetic, most of it never happened. The IMF itself has said so, in plain language, in its own release notes. For the second quarter of 2025, when the published dollar share fell 1.47 percentage points, the Fund wrote that the share "would have decreased by only 0.12 percentage points (p.p.) if th...
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The Four Filters Between a Currency Depreciation and an Actual Export Gain

The Federal Reserve's nominal broad dollar index averaged 120.60 in July 2026, against 128.84 in January 2025 — a decline of roughly 6.4 percent over eighteen months on an index where January 2006 equals 100. The yen has gone the other way, averaging 162.33 per dollar in July 2026 against 158.68 in March. Two currencies, two directions, and in both cases the same reflex appears: a cheaper currency makes exports cheaper, cheaper exports sell better, so the trade balance improves. The reflex is not wrong. It is conditional, and the conditions are specific enough to check. The International Monetary Fund's own work — the most cited defence of the textbook channel — estimates that a 10 percent real effective depreciation is associated with a rise in real net exports averaging 1.5 percent of GDP. That is a real effect and it should not be waved away. But the same estimate carries a cross-country range of 0.5 to 3.1 percent of GDP, a spread of more than six to one. When the dispers...
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The Direction of a Capital Control Tells You More Than Its Announcement

A government announcing restrictions on moving money across its border is one of the few macro headlines that still produces a reflex. The reflex is to read the announcement as confirmation: reserves are depleted, the currency defence has failed, and the authorities have run out of conventional tools. That reading is frequently correct. It is also being applied to a category that no longer holds together as one thing. Since March 2022 the institution that writes the reference framework for this policy area has formally endorsed a class of capital controls imposed in the absence of any stress at all. Several advanced economies with no currency problem operate standing restrictions on foreign purchases of residential property and have done so for years. Meanwhile the crisis instrument proper — restrictions on money leaving — behaves in a way that makes the announcement date close to the least useful thing about it. The variable that carries information is not whether control...
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Three Scenarios for the 2027 PPP Benchmark Revision and What Each One Moves

Purchasing power parity is usually framed as a debating point — one ranking for people who want a developing economy to look large, another for people who want it small. That framing misses where the argument lands. Both conversion conventions are already hard-wired into machinery that allocates votes, sets borrowing terms and defines who counts as poor. A revision to the underlying price data is not a rhetorical event but a reclassification event, and the next one has a date attached. The World Bank's International Comparison Program released benchmark purchasing power parities for reference year 2021 covering 176 economies — the tenth cycle since the program began in 1968. The next benchmark uses reference year 2024, with results expected in 2027, and it will carry three payloads at once: new 2024 PPPs, revised 2021 estimates, and extrapolated figures for 2025 and 2026. Everything between benchmarks is extrapolation, built by applying relative inflation to the last benchmark. T...
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