Higher inflation and faltering growth

<p>Kia ora,</p><p>Welcome to Thursday's Economy Watch where we follow the economic events and trends that affect New Zealand.</p><p>I'm David Chaston and this is the International edition from Interest.co.nz.</p><p>Today we lead with news all signals point to high inflation and lower growth, and bond markets are scratching their collective heads.</p><p>The global economy's recovery track seems to be faltering as the combination of rising inflation and supply chain bottlenecks is undermining consumer confidence in their future buying-power, from Japan to Germany. Delta isn't helping the mood either.</p><p>In the US it is touch-and-go.</p><p>American <a href="https://www.bls.gov/news.release/cpi.nr0.htm" target="_blank"><strong>consumer price inflation</strong></a> came in at +5.4% in September, marginally higher than for August and slightly above what was expected. Core inflation - without food or energy costs - was an unchanged rise of +4.0% in the year to September. These rising costs are so far more or less keeping pace with the <a href="https://fred.stlouisfed.org/series/CES0500000011" target="_blank"><strong>weekly income gains</strong></a> of +4.6%.</p><p>It is uncertain whether the US Fed will stay patient, or now get aggressive on how it deals with inflation.</p><p>The <a href="https://www.federalreserve.gov/monetarypolicy/files/fomcminutes20210922.pdf" target="_blank"><strong>Fed minutes show</strong></a> that the central bank policy makers have plans to begin reducing their bond-buying stimulus program next month and will aim to wrap up these asset purchases entirely by the middle of 2022.</p><p>China turned in <a href="http://www.customs.gov.cn/customs/302249/zfxxgk/2799825/302274/302275/3946919/index.html" target="_blank"><strong>a very strong export result</strong></a> in September, up +28% from August and very much better than expected. It was also a record high. That led to a strong <a href="http://www.customs.gov.cn/customs/302249/zfxxgk/2799825/302274/302275/3946693/index.html" target="_blank"><st