Weekly Shots: US, China, Zimbabwe & Tech News

Tightening The Monetary Policy Belt To Fight Inflation: The Case Of The US.

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In 2020, the US government and Federal Reserve embarked on large-scale fiscal and monetary policy measures to cushion the economy and agents against the adverse impact of Covid-19. On the Monetary Policy side, the Federal Reserve provided support through lowering interest rates, quantitative easing through loans, and asset purchases to increase liquidity in the market. On the Fiscal side, the government provided stimuli packages amounting to above $ 2.3 trillion and enacted several laws aimed at providing relief to businesses and individuals.


Although the measures have been relatively successful, they have resulted in upside inflation risks. The increase in economic activity and output demand met with supply-side constraints have placed upward pressure on inflation, which is currently sitting at a thirty-year high of 2%. Various monetary policy tools can be used to reduce this pressure and keep inflation stable. The monetary authorities have now proposed placing a halt to their monthly bond purchases. This measure will decrease liquidity in the market and may result in a decline in domestic output demand thereby pulling inflationary pressures down.

Another tool that can be used is the Fed policy rate, however, policymakers warn that using this tool requires caution. According to the monetary authorities, two factors need to be taken into consideration for this tool to be used: inflation and how close the labour market is to full employment.



China’s Trade Policies In Sharp Focus

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This week, the World Trade Organization (WTO) member countries met to review progress on their trade commitments as part of the countries’ agreement with the organization. The WTO's 164 member countries range from the developing to the most advanced economies. It was China’s trade policies that were met with the most criticism from fellow member countries, stating that the country’s trade policies have not been “consistent” with its WTO commitments and are biased towards state-owned entities, to name but a few.


The other points of reproval outlined by the member countries pointed to China’s alleged use of forced labour in some sectors of its economy, inadequate enforcement of intellectual property rights, and cyber theft. In addition, China has also imposed restrictions on Australian exports such as sugar, wine, beef, and coal. In response, China stated that the country’s commitment is “to deepen reform, expand, open up and grow its economy at a higher level.”


Tech News

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On Tuesday the Verge reported that Facebook Inc. will be rebranding its umbrella of companies including Facebook, Instagram, WhatsApp, and Oculus to align toward the “metaverse” that Mark Zuckerberg is building. The announcement of the new name is expected to be revealed at Facebook’s Annual Connect Conference on the 28th of October 2021.


In other tech news, Trump Media and Technology Group (TMTG) has announced that it will be taking on Twitter Inc. and Facebook Inc. with its new social platform called Truth Social. These developments come after Former President Donald Trump was kicked off both Facebook and Twitter. The company however also aims to expand into streaming services and payment services. With Facebook having been accused of knowingly amplifying division, extremism, and polarization, the “Inclusive ‘Big Tent’ Approach” announced by TMTG might be the exact unique value proposition Truth Social needs to take off.


Beitbridge Border Post: A Mockery Of The AfCFTA

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The African Continental Free Trade Area (AfCFTA) which came into effect on the 1st of January 2021 is expected to accelerate intra-African trade by eliminating tariff and non-tariff barriers as well as liberating trade in services. South Africa’s Home Affairs Minister, Aaron Motsoaledi, has said the situation at the Beitbridge border post, which is the gateway between South Africa and the rest of the continent, is making a mockery of the AfCFTA. The unending construction, inadequate parking space, slow clearance processes and unavailability of clearing agents at night, on the Zimbabwean side, has been a cause for delays in the movement of trucks. There has also been an introduction of new toll fees of US$201 for small trucks and US$344 which was not announced and to worsen matters drivers are not able to make electronic payments as they are required to pay these amounts in cash. The Zimbabwean authorities are expected to fix their systems urgently for the realisation of the AfCFTA.



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