The trouble of Covid logistics

News of the day, Wednesday, February 9

Mary Daly, a Fed’s official, has supported the interest rate hike in March. In her recent CNN interview, she pointed out the need to get inflation under control and that Fed “can't be overly aggressive and analysts can't be too slow. Inflation is expected to remain high and it’s unlikely the rate will drop below 2% by year due to supply chain bottlenecks”.

Speaking of the supply chain, the “zero-Covid” strategy of China continues to raise some policymakers’ eyebrows. Bank of Japan board member Toyoaki Nakamura said that the Chinese strict lockdown strategy might interfere with the world growth by prolonging the supply chain disruptions. The Just-in-Time logistics, pioneered in Toyota 60 years ago, undergoes dark time worldwide. The key points of JIT logistics are getting rid of excess inventory and an emphasis on agile transportation and production. Since then, it has been a gold standard of logistics, not only in car production but in any enterprise. However, with the pandemic and especially Chinese authoritarian lockdown measures, the supply chain reduces to ashes. Social distancing, lockdowns, and quarantines affect the JIT puzzle — an incredibly complex and fragile system — so its flaw in China jeopardizes the rest of the world. "Semiconductor chips will probably be in short supply throughout this year" Nakamura said.

The price of Brent crude is $91.13, WTI — $89.64, GBP/USD — 1.3572, EUR/USD — 1.1424, and gold costs $1827.75 per ounce.