Inflation has decreased significantly from historically high levels in both the United States and Europe. However, the United States is seeing a delay in progress, as the Federal Reserve is currently anticipated to begin reducing interest rates after the European Central Bank.

In March, the annual US inflation rate, as assessed by the Personal Consumption Expenditures index, increased to 2.7% from 2.5% in February. The Federal Reserve’s objective is to maintain a long-term inflation rate of 2%.

The Consumer Price Index, another indicator of inflation in the United States, has also exhibited a similar increasing trajectory. The Consumer Price Index (CPI) increased by 3.5% in March, compared to the corresponding month in 2023. This is a rise from the 3.2% recorded in February.

Europe Is Beating Inflation. Why Can’t America Declare Victory?

Meanwhile, inside the group of 20 countries that utilize the euro as their currency, the annual consumer price inflation rate has consistently decreased since the beginning of the year. The percentage was 2.4% in March.

Market predictions suggest that the European Central Bank (ECB) is likely to begin reducing interest rates in June, which is three months ahead of the forecasted rate decrease by the Federal Reserve (Fed).

There are even signs that the Federal Reserve may take action that, until recently, seems unimaginable – increase the interest rate for borrowing. In a recent statement, Fed Governor Michelle Bowman expressed her support for a potential increase in interest rates if there is a slowdown or reversal in inflation.

What is the reason the United States has a more significant inflation issue than Europe?

Several economists contend that the disparity in inflation rates between the United States and Europe is insignificant, attributing it to a peculiar aspect of the measurement methods used in the United States.

Europe Is Beating Inflation. Why Can’t America Declare Victory?

In contrast to the European Central Bank’s preferred measure, both the Personal Consumption Expenditures (PCE) and the Consumer Price Index (CPI) take into account the expenditures associated with owning a home, which includes the potential rental income that could be earned if the property was rented out instead of being occupied by the owner.

The plan aims to monitor inflation in the real estate sector, considering the high rate of homeownership among Americans. According to Paul Donovan, the head economist at UBS Global Wealth Management, people actually need to experience these theoretical housing expenses.

The US Consumer Price Index (CPI) assigns a significantly higher weight to owner-occupiers’ housing expenses compared to the Personal Consumption Expenditures (PCE) index. Specifically, the CPI assigns a weight of 32% to these costs, while the PCE assigns a weight of 13%. In contrast, the eurozone’s primary measure of consumer prices does not assign any weight (0%) to owner-occupiers’ housing costs.

Simon MacAdam, deputy chief global economist at Capital Economics, argues that the recent discrepancies between US and eurozone inflation are magnified by this transatlantic discrepancy.

When employing an alternative metric that eliminates hypothetical housing expenses and incorporates additional modifications, MacAdam discovers that core inflation rates, excluding energy and food prices, have exhibited high similarity in the United States and Europe during the previous six months.

“Contrary to recent commentary, the United States does not have a fundamental issue of widespread and excessive price pressure,” he stated in a note last week.

Economies that are moving in different directions or diverging from one other.

If the levels of inflation are essentially comparable on both sides of the Atlantic, then why are their respective central banks planning to initiate interest rate reductions at separate moments?

In essence, as MacAdam succinctly stated, central banks would modify their monetary policies based on the specific measure of inflation they aim to control rather than relying on harmonized or adjusted measures.

However, the situation is more intricate than that. “The divergence between the two sides of the Atlantic, particularly in terms of economic growth, is significant,” stated Carsten Brzeski, the global head of macroeconomic research at ING, in an interview with CNN.

According to the International Monetary Fund, the US economy is projected to see a growth rate of 2.7% this year, while the eurozone is expected to expand by only 0.8%.

In March, US firms experienced a significant surge in hiring, with the addition of 303,000 jobs marking a historic milestone. The United States government has allocated significantly more funds than European governments in recent years to provide support for consumers and businesses throughout the pandemic, resulting in a sustained and strong level of consumer demand in the United States.

Although the initial figures on Thursday indicated a lower-than-anticipated growth rate for the US economy in the first quarter, Treasury Secretary Janet Yellen expressed to Reuters that the economy is still performing quite well.

Europe’s economy has been significantly weakened, partly due to the enduring effects of an oil crisis. Following Russia’s complete invasion of Ukraine in 2022, the prices of natural gas in Europe, which used to rely on Russia for almost 40% of its pipeline gas imports, skyrocketed to unprecedented levels.

Consequently, the eurozone experienced significantly greater annual inflation than the PCE. The two rates reached 10.6% and 7.1% in 2022, respectively.

Europe Is Beating Inflation. Why Can’t America Declare Victory?

According to Brzeski, the robustness of the US economy increases the probability of a significant resurgence of high inflation. This is causing the Federal Reserve to be more cautious than the European Central Bank in initiating interest rate reductions during the summer.

Both the United States and the eurozone are currently dealing with labor shortages. This has led firms to increase pay to attract and retain workers, which in turn is contributing to inflation in the services sector. However, in a broader sense, the demand from US consumers seems to be stronger.

“The savings ratio of US households is decreasing, indicating that people in the US are willing to use their savings for spending,” he stated. “Typically, European households tend to be more prudent.”

Davide Oneglia, the director of European and global macroeconomics at research firm TS Lombard, has a comparable perspective. “The US consumer is exhibiting a greater inclination to engage in spending due to a potentially improved outlook for their own employment situation,” he stated in an interview with CNN.

SOURCE – (CNN)

ISTANBUL (AP) — A senior Hamas leader informed The Associated Press that the Islamic extremist organization is prepared to accept a ceasefire lasting five years or more with Israel. Additionally, Hamas would disarm and transform into a political party on the condition that an independent Palestinian state be established based on the borders that existed before 1967.

Khalil al-Hayya’s remarks in a Wednesday interview occurred during a deadlock in the ongoing negotiations for a cessation of hostilities in Gaza. The proposition that Hamas would disarm seemed to be a substantial concession by the militant group that is publicly dedicated to the destruction of Israel.

Hamas Official Says Group Would Lay Down Its Arms If An Independent Palestinian State Is Established

However, it is improbable that Israel would entertain such a possibility. The Israeli government has made a firm commitment to eliminate Hamas after the devastating Oct. 7 strikes that sparked the conflict. Furthermore, the current leadership of Israel strongly opposes the establishment of a Palestinian state on the territories that Israel gained control of during the 1967 Middle East war.

Al-Hayya, a prominent Hamas official who has been involved in discussions for a ceasefire and hostage exchange on behalf of the Palestinian militants, expressed a combination of defiance and conciliation.

Al-Hayya expressed Hamas’ desire to join the Palestine Liberation Organization (PLO), led by the Fatah side, in order to establish a consolidated government for both Gaza and the West Bank during an interview with the AP in Istanbul.

He stated that Hamas would agree to the establishment of an independent Palestinian state in the West Bank and Gaza Strip, with full sovereignty, and the repatriation of Palestinian refugees in compliance with international agreements. This would be based on Israel’s borders before the 1967 war.

He stated that Should that occur, the group’s military faction would disband.

“What actions have these forces taken after gaining independence and securing their rights and state, considering the experiences of individuals who fought against occupying forces?” “They have transformed into political parties, and their defensive combat units have transformed into the national army,” he stated.

Throughout the years, Hamas has occasionally adjusted its public stance about the potential establishment of a Palestinian state alongside Israel. However, its political agenda publicly refuses to consider any other option but the complete liberation of Palestine, encompassing the territory extending from the Jordan River to the Mediterranean Sea, which includes the regions currently occupied by Israel.

Al-Hayya did not clarify if his seeming acceptance of a two-state solution would lead to a resolution of the Palestinian-Israeli issue or serve as a temporary measure toward the group’s ultimate objective of annihilating Israel.

Ophir Falk, a foreign policy adviser to Israeli Prime Minister Benjamin Netanyahu, refrained from providing a response to Al-Hayya’s remarks, categorizing him as a “prominent terrorist.” However, he stated that Hamas had violated a previous ceasefire by launching an onslaught on southern Israel on Oct. 7, resulting in the deaths of over 1,200 individuals, primarily civilians. Approximately 250 hostages were forcibly taken by militants into the enclave.

According to local health experts, Israel’s subsequent intense bombing and ground attack have resulted in the deaths of over 34,000 Palestinians, with the majority being women and children. Additionally, this has led to the displacement of almost 80% of Gaza’s population, which amounts to 2.3 million people.

“The government led by Prime Minister Netanyahu has undertaken a mission to completely eliminate Hamas’ military and governing abilities in Gaza, liberate the hostages, and guarantee that Gaza will not pose a danger to Israel and the rest of the civilized world in the coming times,” he stated. “The attainment of those objectives is assured.”

The PLO and the Fatah-led Palestinian Authority, which is the internationally recognized self-governing body that Hamas expelled from Gaza in 2007, did not respond immediately. This happened a year after Hamas won the Palestinian legislative elections. Following the Hamas takeover of Gaza, the Palestinian Authority was tasked with governing semi-autonomous areas of the Israeli-occupied West Bank.

The Palestinian Authority aspires to build a sovereign state in the West Bank, east Jerusalem, and Gaza, which Israel seized during the 1967 Mideast conflict. Although most of the world community strongly backs a two-state solution, Netanyahu’s uncompromising administration opposes it.

The ceasefire discussions in Gaza have reached an impasse after almost seven months of conflict. Israel is currently making arrangements for a military operation in the southern city of Rafah, which has become a refuge for over 1 million Palestinians.

Israel claims to have dissolved the majority of the original twenty-four Hamas battalions since the beginning of the conflict. However, it states that four battalions are still surviving and are currently located in Rafah. Israel contends that launching a Rafah attack is vital to secure a decisive triumph over Hamas.

Hamas Official Says Group Would Lay Down Its Arms If An Independent Palestinian State Is Established

Al-Hayya expressed that such a military operation would not be successful in completely eradicating Hamas. According to him, there is continuous communication between the political leadership outside of Gaza and the military leadership inside Gaza during the conflict. They consult with each other to make decisions and give directives.

The Israeli troops had only managed to incapacitate less than 20% of Hamas’ capabilities, both in terms of personnel and equipment, according to his statement. “If they are unable to completely defeat Hamas, what is the resolution?” The resolution lies in reaching an agreement.

In November, a seven-day period of temporary cessation of hostilities resulted in the liberation of over 100 captives in return for the release of 240 Palestinian detainees detained in Israel. However, negotiations for a lasting ceasefire and the liberation of the remaining captives are currently at a standstill, as both parties are accusing each other of being uncompromising. The primary participant, Qatar, has recently stated that it is thoroughly evaluating its position as a mediator.

The majority of Hamas’ prominent political figures, who were previously situated in Qatar, left the Gulf nation last week and journeyed to Turkey. In Turkey, Hamas’ political leader Ismail Haniyeh met with Turkish President Recep Tayyip Erdogan on Saturday. Al-Hayya refuted the possibility of relocating the group’s primary political office permanently and expressed Hamas’ desire for Qatar to continue serving as a mediator in the negotiations.

Israeli and U.S. officials have alleged that Hamas lacks sincerity in pursuing a compromise.

Al-Hayya refuted this claim, asserting that Hamas has indeed made compromises about the desired quantity of Palestinian detainees to be released in return for the remaining Israeli captives. According to him, the gang lacks precise information regarding the number of hostages that are now in Gaza and are still alive.

However, he stated that Hamas will not yield on its demands for a lasting cessation of hostilities and complete departure of Israeli forces, both of which Israel has refused to accept. Israel has declared its intention to persist with military operations until Hamas is decisively vanquished and will maintain a security presence in Gaza after that.

Hamas Official Says Group Would Lay Down Its Arms If An Independent Palestinian State Is Established

“Given the lack of guarantee regarding the termination of the war, I see no reason to surrender the prisoners,” stated the Hamas commander in reference to the hostages who are still being held.

Al-Hayya further insinuated that Hamas might launch an attack against Israeli or other forces that may be stationed near a floating dock, which the U.S. is hastily constructing along Gaza’s coastline to provide relief via water.“We firmly refuse any presence in Gaza that is not Palestinian, whether it be at sea or on land, and we will treat any military force in these areas, whether Israeli or from another country, as an occupying force,” he stated.

Al-Hayya stated that Hamas does not feel remorse for the Oct. 7 attacks despite the immense devastation it has inflicted upon Gaza and its inhabitants. He refuted the claim that Hamas terrorists deliberately attacked people during the assaults despite the abundance of compelling evidence suggesting otherwise. Additionally, he asserted that the operation achieved its objective of refocusing global attention on the Palestinian issue.

According to him, Israeli efforts to eliminate Hamas will ultimately prove ineffective in preventing future armed uprisings by Palestinians.

“Suppose they have eradicated Hamas.” “Have the Palestinian people disappeared?” he inquired.

SOURCE – (AP)

KYIV, Ukraine (AP) — Ukraine is currently procuring additional weaponry and ammunition from a substantial aid package provided by the United States. Simultaneously, Ukraine is taking measures to prevent the outflow of potential soldiers from the country. It has declared that men eligible for conscription will no longer be able to renew their passports while residing outside of Ukraine.

The Cabinet of Ministers announced on Wednesday that only men aged 18 to 60, who are considered physically capable of military service, will be allowed to renew their passports within Ukraine.

Ukraine Is Putting Pressure On Fighting-Age Men Outside The Country As It Tries To Replenish Forces

Since Russia’s comprehensive invasion in 2022, a significant number of Ukrainians, perhaps millions, have emigrated from the country, primarily seeking refuge in nearby European nations. According to Eurostat, the statistical organization of the European Union, there are currently 4.3 million Ukrainian individuals residing in EU member states, with 860,000 of them being adult males aged 18 or above.

The defense minister of Poland, which has a large Ukrainian diaspora, expressed readiness to assist in facilitating the transfer of those obligated to serve in the military to Ukraine. However, the minister did not provide specific details regarding the means of assistance.

Wladyslaw Kosiniak-Kamysz stated that Ukrainian citizens have responsibilities to fulfill towards their country.

There has been some criticism within Ukraine regarding the move. Ivanna Klympush-Tsyntsadze, an opposition legislator and the chair of the Parliamentary Committee for Ukraine’s European Integration, warned that refusing military-age men access to consular services could result in legitimate legal challenges at the European Court of Human Rights.

“I believe that these actions will simply compel a significant number of Ukrainians to seek alternative means of acquiring citizenship from foreign nations,” she stated.

The population of Russia, which is about 150 million, greatly exceeds that of Ukraine, which is 38 million. Additionally, Moscow has access to a significantly larger military force. Ukraine has decreased the age at which individuals can be conscripted into the military from 27 to 25 to increase the number of its armed forces.

Oleksandr Pavlichenko, the executive director of the Ukrainian Helsinki Human Rights Union, expressed that the policy constituted a breach of individual rights and was also unlikely to effectively encourage Ukrainian males to return to their own country from elsewhere.

Ukraine Is Putting Pressure On Fighting-Age Men Outside The Country As It Tries To Replenish Forces

“It is merely an emotional progression, not a legal one,” he stated. “It will not yield the desired outcomes.”

Ukraine requires additional military personnel to strengthen its forces in the southern and eastern regions, where Russia is aggressively advancing to seize territory from the outnumbered and outgunned Ukrainian troops.

The United States is providing $61 billion in fresh military assistance to Kyiv, which serves as crucial support for the armed forces of Ukraine in their ongoing conflict with Russia that has lasted for almost two years. On Wednesday, President Joe Biden enacted the assistance package into law.

On Wednesday, U.S. authorities verified that the United States discreetly delivered a quantity of long-range missiles to Ukraine last month. This was done in response to Kyiv’s urgent request for the missiles, enabling their forces to target Russian forces far away from the front lines. According to sources, Ukraine employed them for the inaugural time last week to target an airfield in Crimea that is under occupation.

The Army Tactical Missile Systems, also called ATACMs, possess a maximum operational distance of approximately 300 kilometers (equivalent to 190 miles). Additional shipments are anticipated to be dispatched to Ukraine as a component of the recently implemented U.S. assistance program.

Russia displayed a contemptuous attitude towards the probable influence of the weaponry.

“This will not fundamentally alter the result of the special military operation. We will achieve success. “However, it will result in further complications for Ukraine,” stated Dmitry Peskov, the Kremlin spokesperson.

President Volodymyr Zelensky emphasized the importance of practicality in delivering the supplies. Ukrainian forces have faced a severe shortage of artillery ammunition and air defense missiles for six months due to delays in the delivery of U.S. aid caused by disputes in Congress. The Kremlin’s forces have been able to gradually advance in certain areas of eastern Ukraine, resulting in a predominantly attritional battle.

The Ukrainian general staff stated on Thursday that the situation at the front line continues to be challenging.

According to Regional Gov. Ihor Taburets, six individuals sustained injuries in the Cherkasy region of central Ukraine on Thursday when a “high speed target” collided with a crucial infrastructure facility. According to him, a rescue mission was in progress.

Russian military deliberately attacked infrastructure in northern Ukraine by deploying a precision-guided aircraft bomb on the city of Sumy. The Regional Military Administration reported that emergency services were actively addressing the attack and are still working to determine the full extent of the strike’s impact.

According to regional Governor Oleh Syniehubov, an assault occurred near a railway station in the eastern Kharkiv region, resulting in injuries to seven individuals, as reported on Telegram.

Ukraine Is Putting Pressure On Fighting-Age Men Outside The Country As It Tries To Replenish Forces

During a visit to Kyiv, the Chancellor of the Exchequer of Britain called on all NATO member countries to raise their defense spending to 2.5% of their Gross Domestic Product (GDP) to support Ukraine and exert greater pressure on Russian President Vladimir Putin.

During his visit on Wednesday, Treasury chief Jeremy Hunt informed Zelenskyy that the United Kingdom is committed to sustaining its existing level of military assistance, amounting to approximately 3 billion pounds ($3.8 billion) in 2024, for an indefinite period of time.

The U.K. Prime Minister, Rishi Sunak, announced that his country’s defense expenditures will rise to 2.5% of GDP by 2030, up from its present level of slightly over 2%. Sunak moreover revealed 500 million pounds ($625 million) in fresh assistance for Ukraine, encompassing ammunition, trucks, boats, and 1,600 strike and air defense missiles.

SOURCE – (AP)