Good day. European Central Bank President Christine Lagarde said policy makers focused on inflation during their meeting this week, but they didn't see a reason to change their policy stance for now. She also said conditions for a rate rise are unlikely to be met in the time frame expected by markets. Meanwhile, the ECB indicated, as it had previously, that it would slow the pace of its pandemic-specific asset-buying program. In the U.S., all was quiet on the central bank front ahead of the Federal Open Market Committee meeting next week. See our Fedspeak cheat sheet below to catch up on what policy makers said in recent weeks.

Now on to today's news and analysis.

Top News

ECB to Slow Asset Purchases, Keeps Rates Unchanged

The European Central Bank is likely to keep its key interest rate in negative territory for at least another year despite surging inflation in the eurozone, signaling a divergence with central banks such as the Federal Reserve that are already moving to phase out easy-money policies amid rapidly rising prices.

ECB President Christine Lagarde acknowledged that a recent rise in eurozone inflation, to 3.4% in September, would last longer than previously expected, while stressing it would be temporary. She said at a news conference that investors were wrong to expect the ECB to respond by increasing interest rates next year.

Eurozone Inflation Rises at the Fastest Pace in 13 Years

Fedspeak Cheat Sheet: What Officials Said Before November Meeting

Most Federal Reserve officials speaking recently have said they support the central bank starting to pull back on its $120 billion a month in bond-buying stimulus, making such a move likely at their Nov. 2-3 FOMC meeting.

Some policy makers also have said that they could see moving forward the timing of interest-rate increases if elevated inflation continues. However, other Fed officials have indicated they don't yet see the start of rate raises looming into view. Here is a roundup of recent comments from Fed officials ahead of next week's policy meeting.

Glynn's Take: Reserve Bank of Australia on Cusp of Policy Shift

By James Glynn

The Reserve Bank of Australia opted not to defend its yield curve control target Friday, setting the stage for a U-turn in its policy stance next week that recognizes growing global inflation risks. Read more.

U.S. Economy

U.S. Economy Slowed in Third Quarter on Delta Surge, Supply Crunch

U.S gross domestic product grew by an annualized 2% from July to September, a marked slowdown from earlier this year. It was the weakest quarter of growth since the recovery began in mid-2020.

U.S. Jobless Claims Fall to New Pandemic Low

Social-Climate Framework Fails to Ease Passage of Infrastructure Bill

The White House released a $1.85 trillion framework designed to show progress in months of social spending and climate talks that fell short of persuading progressives to quickly approve a parallel, roughly $1 trillion infrastructure bill.

Progressives Block Infrastructure Vote in Latest Display of Power

Biden Turns to Taxes on Corporations, Millionaires to Pay for Agenda

Who Could Pay More With a 15% Corporate Minimum Tax?

Biden Stock Buyback Tax: What to Know About the Latest Proposal

Key Developments Around the World

German Economy Grew at Slower-Than-Expected Pace in 3rd Quarter

Germany's gross domestic product rose by an adjusted 1.8% from the previous quarter, Destatis said. This expansion was smaller than economists' expectations of 2.1% growth in The Wall Street Journal's survey.

Natural Gas Prices Fall on Putin Order for More Russian Exports

European gas futures slid by almost 10% Thursday after Russian President Vladimir Putin said state energy giant Gazprom should pump more gas to Germany and Austria as soon as it has filled stores at home.

Migration Plunged During Pandemic; Labor Shortages Drive Rebound

The Organization for Economic Cooperation and Development said the number of migrants arriving in its mostly rich-country members declined by almost a third to 3.7 million, the largest drop since records began in 2003.

Financial Regulation Roundup

SEC Seeks Testimony From Sen. Richard Burr's Brother-in-Law

The Securities and Exchange Commission is asking a federal judge to require Sen. Richard Burr's brother-in-law to testify in an enforcement probe that examines possible insider trading by both men.

Chinese Online Broker Shares Drop After Criticism From Central Bank

A senior official at China's central bank said cross-border online brokerages operating in mainland China were acting illegally, knocking shares in U.S.-listed Futu Holdings Ltd. and Up Fintech Holding Ltd.

Evergrande Crisis All But Shuts Market for China Junk Borrowers

Junk-bond issuance by China's riskier companies has nearly ground to a halt, creating more challenges for the country's real-estate developers that need to roll over more than $40 billion in dollar debt by the end of next year.

Evergrande Averts Default Again by Making Second Late Payment

Forward Guidance

Friday (all times ET)

8:30 a.m.: U.S. Commerce Department releases September personal income and outlays

10 a.m.: University of Michigan releases final October U.S. consumer sentiment

Monday

7:50 p.m.: Bank of Japan releases Sept. 21-22 meeting minutes

11:30 p.m.: Reserve Bank of Australia releases policy statement

Research

Goldman Sachs Warns High Consumer Inflation Readings Coming

High levels of inflation will persist longer than expected, Goldman Sachs economists said Thursday in a note to clients. Auto, housing and medical insurance factors suggest year-on-year core consumer-price index inflation hitting in the mid-5% range in the first quarter of 2022, 4% next June and 3.1% at the end of next year, according to the economists. That will leave CPI running at a hotter pace relative to the personal consumption expenditures price index, which is the Federal Reserve's preferred inflation gauge. The Goldman economists see that measure reaching 4.3% at the close of this year, 3% next June and 2.15% at the end of 2022. "Fed officials look at many measures, and it increasingly appears that the full set of inflation data will look quite hot on a year-on-year basis around the middle of next year when tapering ends," the economists said, referring to the widely expected reduction of the central bank's bond-buying stimulus program, now running at $120 billion a month. "As we noted recently, this increases the risk of an earlier hike in 2022" to interest rates, the economists added.

-- Michael S. Derby

Commentary

Fed Tapering Won't Beat Inflation

Monetary-policy normalization is a good thing, but tapering isn't a panacea for surging prices, because supply-chain problems out of the central bank's control are contributing to price increases, Alexander William Salter writes.

Mr. Salter is an associate professor of economics in the Rawls College of Business at Texas Tech University and a senior fellow with the Sound Money Project.

America Has Supply-Side Problems

A better fourth-quarter GDP report won't mean that bottlenecks are finished holding the economy back, Justin Lahart writes, noting that semiconductor shortages, in particular, look as if they are going to persist into next year.

Global Chip Shortage 'Is Far From Over' as Wait Times Get Longer

Basis Points

Eurozone business and household confidence rose in October, reflected in the European Commission's economic sentiment indicator, an aggregate measure of business and consumer confidence, increasing from 117.8 in September to 118.6. Economists polled by The Wall Street Journal expected the index to come in at 116.6. (Dow Jones Newswires)

The number of houses going under contract in the U.S. declined in September after rising sharply in August, according to data from the National Association of Realtors. Its Pending Home Sales Index, a forward-looking indicator of home sales based on contract signings, fell by 2.3% in September from August and by 8% from a year earlier to 116.7. Economists polled by The Wall Street Journal expected the indicator to increase by 1% on month. (DJN)

Factory activity in the central U.S. gained momentum, according to the Federal Reserve Bank of Kansas City, whose Tenth District Manufacturing survey's composite index rose from 22 in September to 31, beating the 23.5 forecast by economists polled by The Wall Street Journal. (DJN)

U.S. mortgage rates have climbed to their highest level since early April, with the 30-year fixed-rate mortgage averaging 3.14% for the week ending Oct. 28, up five basis points from the previous week, and the 15-year fixed-rate mortgage up four basis points to an average of 2.37%, according to Freddie Mac. (MarketWatch)

South Korea's inflation is expected to have reached a near decade high in October, likely topping the 3% mark for the first time since early 2012. The median forecast from five economists polled by The Wall Street Journal is for a 3.3% on-year rise in the CPI, versus a 2.5% gain in September. The projected price growth is way above the central bank's 2% target. (DJN)

(END) Dow Jones Newswires

10-29-21 0901ET