Interest rates

As Federal Reserve plans to raise interest rates, China’s central bank moves in another direction – WSJ

Have a good day. Discussing the possibility of raising the Fed’s short-term interest rate target, New York Federal Reserve Chairman John Williams said on Friday that “Given clear signs of a labor market very solid, we are approaching a decision to start this process.” The vice chairman of the Federal Open Market Committee responsible for setting rates added that he sees the target gradually increasing to about 2% over time. On Monday, the People’s Bank of China went the other way, lowering two key interest rates that would likely translate into lower benchmark lending rates, in a bid to further support a slowing economy.

Now on to today’s news and analysis.

Top news

Williams says the Fed’s next step is a gradual rate hike

New York Federal Reserve Chairman John Williams has said the U.S. central bank is getting closer to the point where it will need to raise its short-term interest rate target, but he declined to say when he would like that to happen. happen.

With the Fed accelerating the rate at which it withdraws bond-buying stimulus, “the next step in reducing the economy’s monetary accommodation will be to gradually bring the funds rate target range back feds from its current very low level back to more normal levels,” Mr. Williams said Friday during a virtual appearance.

Fed releases transcripts of 2016 policy meetings

Transcripts released by the Federal Reserve on Friday revealed the extent of officials’ debate in 2016 over how quickly interest rates should be raised after pushing them from near zero at the end of the previous year.

Sarah Bloom Raskin in her own words

If Sarah Bloom Raskin becomes the Fed’s point person for banking oversight, she might be ready to put in more effort to deal with the financial risks caused by a warming environment. Here are some examples of his political views.

Biden set to remake the Federal Reserve

American economy

Democrats face the costs of rising inflation with few options left

Democrats are trying to use their control of Congress and the White House to rein in inflation, but economists say price hikes have reached a point beyond what any political party can easily do to quickly tame them .

US retail spending plummets as Omicron and inflation soar

Sales at retail stores, online and in restaurants in the United States fell 1.9% in December, a sharp drop after record retail sales that started with a 1.8% increase in October from the prior month, the Commerce Department reported.

Texas and Arizona clawed back all jobs lost when Covid-19 hit

Texas and Arizona have joined two other states in recouping all the jobs they lost at the start of the Covid-19 pandemic, leading a trend that is expected to include another dozen states by the middle of this year.

In Battle for Workers, the humble 401(k) gets richer in 2022

Facebook parent and advisory company KPMG US is among a growing number of companies pouring more money into employees’ 401(k) retirement accounts, using another lever to attract and retain staff. .

The offices are rented, thanks to the gifts to the tenants, months of free rent

Main developments around the world

Full recovery of the global labor market could take years

According to new projections, it will be at least two years before global unemployment returns to pre-pandemic levels, with unemployment in poor countries remaining high even as labor markets in rich countries become increasingly tight. .

China seeks to cushion the blow of economic pain as momentum slows

Chinese leaders are hoping they can put a floor under the economy, which officials said grew just 4% on Monday in the fourth quarter of last year, the slowest pace since the start of the Covid recovery -19 in the second quarter of 2020.

China cuts two key rates to support slowing economy

China’s GDP grew 8.1% in 2021, economy slowed in Q4

In China, the economic watchword for 2022 is stability

China’s population stagnates, births in 2021 lowest in modern history

Overview of Financial Regulation

Credit Suisse chairman to leave after breaking Covid-19 travel rules

Credit Suisse Group AG chairman António Horta-Osório is leaving the world bank following a board investigation into his travels and personal conduct, according to people familiar with the bank.

Raskin may face a rough confirmation for banking supervision job

Sarah Bloom Raskin, chosen by President Biden to become the Fed’s chief banking regulator, could face a controversial nomination process because of her support for tougher banking rules and the use of financial regulation to make in the face of positions on climate change.

Pandemic profits begin to ebb at America’s biggest banks

Some of the forces that have pushed bank profits to new records are beginning to weaken, with JPMorgan saying the changing environment and rising costs will mean it will miss its profitability targets in the longer term. term in 2022 and possibly 2023.

Forward-looking indications

Tuesday (every hour ET)

N/A Time: Bank of Japan issues policy statement and outlook for economic activity and prices

Wednesday

8:30 am: US Department of Commerce releases December housing starts

9:15 a.m.: Bank of England’s Bailey and Cunliffe testify on financial stability report

Remark

Why Chinese central bankers are still worried

With infrastructure investment still struggling to pick up speed and consumers retrenching, it’s hard to imagine a floor for China’s overall growth without more definitive signs of a housing bottom, writes Nathaniel Taplin.

Bond Market Forecast Bad Economic News

With the best job growth in over 40 years, inflation a national obsession and the Fed preparing to raise interest rates, it’s easy to forget how different the world was before the pandemic. which could be where the United States is headed again, writes Greg Ip.

It will take time to dig this consumption hole

Disruptions caused by the Omicron variant look likely to weigh on spending for a few weeks, and it seems almost certain that the economy will grow at a much slower pace this quarter than in the fourth, writes Justin Lahart.

Banking investors must wait for the benefits of higher interest rates

Fed rate hikes are likely to provide a solid foundation for major banks, leading to higher lending revenues, and there should be a tailwind of economic growth, but a number of challenges could offset these positives. over the coming year, writes Telis Demos.

Take of Glynn: RBA and the markets clash in Clash of Wills

By James Glynn

Australian inflation data next week is expected to show the country continues to steer clear of the bonfire of rising prices that now threatens economies like the US, UK and Europe. .

If the January 25 fourth quarter consumer price index data is relatively benign, it would immediately challenge the current bet in financial markets that the Reserve Bank of Australia will raise interest rates within a few days. month. This view contrasts with the much longer timeframe of late 2023 or 2024 that the RBA has given. Read more.

Basis points

US industrial production fell 0.1% in December from November, its first decline since September, with manufacturing output down 0.3% as supply chain issues continue to affect production , the Federal Reserve said. (Dow Jones Newswires)

US consumer sentiment deteriorated in early January amid a spike in Covid-19 cases due to the Omicron variant, sending the University of Michigan’s preliminary Consumer Sentiment Index estimate plummeting from 70.6 in December to 68.8. Economists polled by The Wall Street Journal had forecast a reading of 70.0. (DJN)

U.S. import prices fell 0.2% in December, the first monthly decline since August, led by a 6% drop in oil prices, while natural gas prices fell 13 .7%, according to the Labor Department. (DJN)

U.S. businesses continued to restock at a brisk pace in November in a bid to weather strong sales, increasing manufacturing and commercial inventories 1.3% from November, the same growth rate as in October, according to Commerce Department data. (DJN)

Canadian businesses plan to raise wages over the next 12 months to attract and retain workers as labor shortages intensify, according to the Bank of Canada’s latest Quarterly Business Outlook Survey released on Monday, which likely increases pressure on the central bank to raise rates. (DJN)

Canadian factory sales rose 2.6% in November from the previous month to reach 63.07 billion seasonally adjusted Canadian dollars, the equivalent of 50.23 billion dollars, Statistics Canada announced on Monday. (DJN)

China’s central bank said it would act sooner and more forcefully to help stabilize the economy in 2022, a politically important year for China’s leaders. (DJN)

The Bank of Japan has raised its price forecast slightly due to pandemic-related supply shortages, although it still expects its 2% inflation target not to be reached for at least two months. coming years. In its quarterly outlook, the bank’s board forecast inflation to rise 1.1% in the year ending March 2023 and 1.1% the following year, up from to the previous project

 

(END) Dow Jones Newswire

January 18, 2022 08:54 ET (13:54 GMT)

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