With debt crises looming in the U.S. and the EU, central bankers are still hesitant to heed the advice of observers who warn (as the OECD did in a recent report), that rock-bottom interest rates have touched off problematic inflation. Which explains why the Bank of Canada’s decision this week to hold interest rates at 1% for the sixth time in a row came as little surprise. Still, the announcement marked the first time in more than a year that the Bank of Canada has hinted it would have to eventually tighten its monetary policy—a move many economists expect will occur in the fall.
Meantime, fears about how rising food costs will affect the world’s poor were stoked by a recent Oxfam report. With climate change as the primary factor, the charity predicts the average cost of major crops like maize, rice and wheat will jump between 120% and 180%. In its report, Oxfam points to Guatemala, India, Azerbaijan and East Africa as the four “food insecurity hotspots.”
In Russia, where wheat prices skyrocketed following a spate of droughts last summer, all eyes are now on the price of cucumbers, following an import ban on fresh vegetables from the EU. The ban, put in place after a deadly E. coli outbreak, will take a sizable chunk of veggies (Russia imports about $730-million worth from the EU per year) off the market, and according to economists, make it tougher for the country to hit its 7% year-end inflation target.
All of which is leading some to take a closer look at the way prices are set. On Thursday, The Guardian travelled to the Chicago Board of Trade, the world’s oldest options and futures exchange, to delve into the extent to which speculation is to blame for the rapid run-up in price—a topic that will likely be broached when the G20 agricultural ministers meet in Paris on June 22.