The Federal Reserve Bank of New York reported a decline in global supply chain pressures in February, which could lead to lower inflation levels. The bank's monthly Global Supply Chain Index showed a negative 0.26 in February, down from January's revised reading of 0.95. This is the first negative reading since August 2019.
NY Fed: February's Negative Reading Signals Decline in Supply Chain Pressures
According to the bank, the decline in supply chain pressures results from the coronavirus pandemic. It suggests that global supply chain conditions have returned to normal after temporary setbacks at the beginning of the year. Supply chain pressures have been a significant contributor to the high inflation levels seen worldwide in recent years, and reducing these pressures could help reduce price pressures.
Decline in Supply Chain Pressures Could Reduce Inflation
The report comes as China reopens its economy after extended periods of lockdown, leading to a shift in supply chain dynamics. Economists and policymakers are divided on whether this will increase or decrease inflation pressures. Still, the New York Fed attributes the reduction in supply chain pressures in February to improved European economy delivery times.