FirstFT: World’s central bankers call for quick action to curb inflation

The world’s top central bankers have warned that the era of low interest rates and moderate inflation has come to an end following the “massive geopolitical shock” from Russia’s invasion of Ukraine and from the coronavirus pandemic.

Speaking at the European Central Bank’s annual conference, Christine Lagarde, its president, Jay Powell, chair of the Federal Reserve, and Andrew Bailey, Bank of England governor, called for rapid action to curb inflation.

They said failing to raise interest rates quickly enough could allow high inflation to become embedded and ultimately require more drastic action by central banks to bring price growth back to more moderate levels.

“The process is highly likely to involve some pain, but the worst pain would be from failing to address this high inflation and allowing it to become persistent,” said Powell.

Speaking in Sintra, Portugal, the central bank bosses said the pandemic and the Ukraine war were reversing many of the factors that had spurred more than a decade of ultra-low inflation among most developed economies. They warned that the splintering of the global economy into competing blocs risked fracturing supply chains, reducing productivity, raising costs and reducing growth.

Do you think central bankers are taking the right approach to curb inflation? Why or why not? Tell me at firstft@ft.com. Thanks for reading FirstFT Asia. Here’s the rest of today’s news — Emily

The latest from the war in Ukraine:

• China: The Biden administration placed five Chinese companies on an export blacklist for allegedly supporting Russian military and defence companies.

• US defences: The US will significantly increase military deployments in Europe in response to Russia’s invasion of Ukraine.

• Nato: The Biden administration expressed support for Turkey’s purchase of US fighter jets after Ankara dropped a veto to Finland’s and Sweden’s Nato bids.

• Sanctions: The UK has imposed sanctions on Vladimir Potanin, one of Russia’s richest oligarchs, along with several other individuals.

• Kremenchuk attack: The shopping centre attack is likely to lead to one of the worst civilian death tolls in a single strike since Russia’s invasion of Ukraine.

Five more stories in the news

1. Mukesh Ambani prepares to hand Reliance empire to his children Asia’s richest man Mukesh Ambani has begun executing a succession plan for his oil-to-telecoms conglomerate Reliance Industries, with his twin children Akash and Isha to head the telecoms and retail businesses.

2. Hedge fund manager Jim Chanos’s next ‘big short’ The short seller, best-known for predicting the collapse of energy group Enron two decades ago, is raising several hundred-million dollars for a fund that will take short positions in US-listed real estate investment trusts, he told the Financial Times.

3. Philippines SEC orders shutdown of Rappler news website The Philippine securities watchdog has ordered the shutdown of Rappler, the media website run by Nobel laureate Maria Ressa, in a move that will mark a further blow to independent journalism in the south-east Asian country.

4. Pro-China group attacks US rare earths plant in fake social posts The pro-Chinese government group Dragonbridge impersonated environmental campaigners on social media in an effort to undermine rare earths producers in the US and Canada, according to a cyber security consultancy. Mandiant said the group used Facebook and Twitter to claim a US government-funded rare earths refinery would “expose the area to irreversible environmental damage”.

5. Japan, South Korea and US agree to closer co-operation on North Korea Leaders of the three nations met on the sidelines of the Nato summit, agreeing to deepen their joint “extended deterrence” against North Korea following deep concerns over Pyongyang’s missile tests. (Reuters)

The day ahead

Ferdinand “Bongbong” Marcos Jr takes office The son and namesake of the notorious late dictator, takes office as the Philippines’ new president.

Economic data Japan will publish its May industrial production data. In the UK, final Q1 GDP figures and a consumer trends report will become public.

Walgreens Boots Alliance earnings The pharmacy chain will be in the spotlight when it reports results today, just days after the Walgreens Boots Alliance announced it had abandoned the sale process for the Boots chain in the UK after the upheaval in credit markets resulted in bids that were below its initial expectations.

What else we’re reading

Ships going dark A new Financial Times investigation tracks vessels exporting food from Crimea, in ways that sidestep international sanctions — and potentially smuggle goods out of Ukraine. The shipments have become even more contentious after Ukrainian authorities claimed Crimean ports were being used to export grain looted from parts of the country occupied by Russian forces.

Hong Kong elite descends on Tokyo for bargain property buys Property brokerage JP Invest will fly a group of Hong Kong investors to Tokyo in August for the shopping trip of a lifetime. The group will embark on a real estate bargain hunt fuelled by the historic weakness of the yen, the unwavering policies of the Bank of Japan and $440-per-head sushi.

China’s Marxism majors prosper amid labour market woes Chinese university graduates are struggling to find work in the country’s worst labour market in years — unless they have degrees in Marxism. The one-time obscure major for students is enjoying a revival under President Xi Jinping, who has urged Chinese Communist party cadres to “remember the original mission”.

Armed robbery shocks Tefaf art fair in Maastricht There were shocking scenes at the venerable Tefaf fair in Maastricht as a man with a sledgehammer smashed the glass-lined booth of the ultra-high-end jewellers Symbolic & Chase on Tuesday morning. The offender was in a group of four well-dressed men, at least one of whom was witnessed carrying a gun, who stole unspecified items from the stand.

Open trade is at risk We have moved into a third epoch of the postwar global economic order, writes Martin Wolf. The first was in the context of the cold war. The second followed the fall of the Soviet Union. Now, in this era of disorder, we need to shore up the global commons — and less powerful countries must take the initiative.

• More on trade: None of the advanced economies really has a coherent policy combining trade with geopolitics in the Indo-Pacific, writes Alan Beattie. Premium subscribers can sign up for Alan’s weekly newsletter Trade Secrets.

NFTs

French footballer Kylian Mbappé is following fellow superstars Cristiano Ronaldo and Lionel Messi into the world of non-fungible tokens by becoming an investor in a SoftBank-backed fantasy football platform. Mbappé, 23, will also become a brand ambassador for Sorare, which operates an online game where players can create football teams based on the digital trading cards they own.