Are easing inflations signals a mirage?

<p>Kia ora,</p><p>Welcome to Thursday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.</p><p>I'm David Chaston and this is the international edition from Interest.co.nz.</p><p>And today we lead with news central bankers are coming to realise they are just getting started in their inflation fight, and we are far from past the worst.</p><p>But first, US <a href="https://www.mba.org/news-and-research/newsroom/news/2023/02/08/mortgage-applications-increase-in-latest-mba-weekly-survey" target="_blank"><strong>mortgage applications</strong></a> rose strongly last week from the prior week in an unusual burst. That still leaves them -37% lower than year-ago levels. But mortgage interest rates were little-changed with their 30yr fixed still at 6.18% plus points.</p><p>In late-released data yesterday, the American <a href="https://www.federalreserve.gov/releases/g19/current/default.htm" target="_blank"><strong>appetite for consumer credit</strong></a> slowed unexpectedly in December, rising a tiny +US$12 mln in the month, when a small +US$25 bln was expected. Their appetite for consumer credit is unusually restrained at present, perhaps because interest rates rises are making it unattractive. This comes despite <a href="https://tradingeconomics.com/united-states/economic-optimism-index" target="_blank"><strong>a key optimism index</strong></a> improving sharply (well, getting a lot less pessimistic).</p><p>Fed officials continue to point out the upward pressure the strong US labour market is putting on inflation. One key voice, the NY Fed's John William, <a href="https://www.wsj.com/articles/transcript-q-a-with-new-york-feds-john-williams-at-wsj-cfo-network-summit-11675873943?mod=Searchresults_pos1&page=1" target="_blank"><strong>noted</strong></a> overnight that  policy interest rates were “barely into restrictive” territory at current levels. His comments are consistent with what Powell and others are saying.</p><p>The Reserve Bank of India <a href="https://rbi.org.in/Scrip