Fed's Brainard Lends Support to Slowing Pace of Interest-Rate Rises By James Christie
Good day. Joining several other Federal Reserve officials, Fed Vice Chair Lael Brainard in remarks on Thursday suggested the U.S. central bank should consider slowing the pace of its interest rate increases at its next policy meeting to a quarter percentage point. The Fed shifted down the pace of rate rises last month, recognizing it takes time for the full effect of those increases to slow economic activity, Ms. Brainard she said during a talk at the University of Chicago. "And that logic is very applicable today," she said. New York Fed President John Williams, another senior adviser to Fed Chair Jerome Powell, also spoke on Thursday, but he declined to say what size of increase he would favor at the Fed's Jan. 31-Feb. 1 meeting. He noted, however, that "We are seeing the shifting gears of tighter monetary policy having the desired effects." Also on Thursday, Boston Fed President Susan Collins said the central bank likely will need to raise rates to just above 5% and hold them at that level for some time. "While it is promising to see the effects of higher rates starting to spread from the most interest-sensitive sectors to the broader economy, more is required to ensure a steady path toward our inflation target," she said.
Now on to today's news and analysis.
Top News Top Fed Officials See Progress on Inflation Fight
Two senior Federal Reserve officials said the central bank was making progress in its inflation fight, but it would take time to bring inflation back to the Fed's 2% target.
Fed Vice Chair Lael Brainard indicated in remarks Thursday she was supportive of slowing the pace of rate rises to a more traditional quarter percentage point at the central bank's next policy meeting, which is Jan. 31 to Feb. 1, joining a number of colleagues.
New York Fed President John Williams said at a separate event Thursday evening he was encouraged by signs interest-rate increases were having their desired effect in slowing growth and keeping consumers' and businesses' expectations of future inflation in check.
Boston Fed's Collins: Measured Approach to Rate Rises Makes Sense
Federal Reserve Bank of Boston President Susan Collins said the U.S. central bank must continue raising interest rates to battle inflation, but a more measured pace of increases makes sense as the effects of previous Fed rate moves take hold.
Consumer Prices Plateau as Inflation Slows to Prepandemic Levels
After a period of steep inflation, Americans have seen monthly price growth ease, but when will things get back to normal? The inflation benchmark, measuring price growth over a year, hit a 40-year high in June after months of sustained price increases. Since then, monthly gains have slowed. While December 2022 prices were up 6.5% from a year earlier, a Wall Street Journal analysis of Labor Department data indicates that annual growth has eased to levels that existed before the pandemic.
U.S. Economy Jobless Claims Fell by 15,000 Last Week
Initial jobless claims fell by 15,000 to a seasonally adjusted 190,000 last week, the Labor Department said. Claims are up from lows reached early in 2022, but continue to hover near prepandemic levels .
The Companies Conducting Layoffs in 2023
Smaller Share of U.S. Workers Were Union Members Last Year
The share of U.S. workers who are members of unions fell to a record low last year even though unions added more members than in any year since 2008 following elections at workplaces including Starbucks Corp. and Amazon.com Inc.
What to Expect for Tax Season 2023
The tax code changes every year, and accountants and individuals have to adjust . This year, taxpayers are facing expired Covid tax breaks, abrupt tweaks to energy tax incentives and a delay for gig-economy workers.
U.S. Begins Extraordinary Measures to Avoid Default
The Treasury Department began taking special measures to keep paying the government's bills on Thursday as the U.S. bumped up against its borrowing limit, kicking off a potentially lengthy debate in Congress over raising the debt ceiling.
What Is the U.S. Debt Ceiling and What Happens If It Isn't Raised? Key Developments Around the World Japan Core Inflation Hits 4% for First Time in Four Decades
Core inflation in Japan--a measure of consumer prices excluding volatile fresh food--reached a fresh 41-year high of 4% in December, adding to pressure on the Bank of Japan to unwind its decadelong monetary easing.
European Support Grows for Sanctioning Iran's Revolutionary Guards
The European Parliament urged member states to list Iran's Islamic Revolutionary Guard Corps as a terrorist group, a sign of growing support for new measures against Tehran as it arms Russia in Ukraine and suppresses protests at home.
Philippine President Seeking Ways to Defuse Tensions With China
The Philippines is increasing cooperation with the U.S. and developing stronger mechanisms to defuse disputes with China as it walks a fine line between the two, President Ferdinand Marcos Jr. said at the World Economic Forum in Davos.
Live Updates From the World Economic Forum Financial Regulation Roundup Finance Chiefs Hope Congress Revisits Tax Rule on R&D Expenses
Companies faced with higher taxes owing to a change in the treatment of research-and-development costs say they could pull back on investment and capital returns to shareholders if the rule isn't repealed.
New FTX Chief Says Crypto Exchange Could Restart
FTX's new chief executive, John J. Ray III, said in an interview he's looking into the possibility of reviving the bankrupt crypto exchange as he works to return money to the failed company's customers and creditors.
Crypto Lender Genesis Files for Bankruptcy
Cryptocurrency lender Genesis Global Holdco LLC and two of its lending subsidiaries filed for bankruptcy protection late Thursday night in New York, the latest domino to fall after the failure of crypto exchange FTX.
Crypto Lender Nexo Agrees to Pay $45 Million to Settle Investigations Crypto Crisis Latest: FTX, Genesis, Bitcoin Prices and More Forward Guidance Friday (all times ET)
10 a.m.: U.S. existing home sales for December
1 p.m.: Fed's Waller speaks on economic outlook to Council on Foreign Relations in New York
Monday
10 a.m.: EU flash consumer confidence indicator for January
Research December PCE Could Bolster Fed Rate Increase Case
Several categories in Wednesday's U.S. producer-price index point to strength in December core personal-consumption expenditures, Deutsche Bank economists say in a report. The PCE index is considered the Federal Reserve's preferred inflation gauge, and its December report is scheduled for release on Jan. 27. The economists say that while consumer-price index airfares fell by 3.1% last month, the analogous PPI series increased by 3.1%, implying December's core PCE month-over-month print should be about 6 basis points higher than the December core CPI increase. "Indeed, factoring in the other core PCE categories that come from the PPI, this would point towards a 0.4% monthly gain in the core PCE price index in December," the economists say. While that isn't likely to complicate the Fed's decision to downshift its interest rate campaign again in February, "it does strengthen the Fed's case for a terminal rate north of 5%," they add.
-Patrick Sheridan
Shining a Light on How Much Dictators Manipulate Their Stats
It comes as no surprise that one shouldn't necessarily trust dictatorships to put out accurate information-especially about their reportedly glorious economies-but it has traditionally been hard to say exactly how bad the problem might be, Josh Zumbrun writes . A recent paper, published in October, by the University of Chicago's Luis Martinez shines a light on the extent to which autocratic governments might be juicing their estimates of gross domestic product, the commonly used measure of an economy's size and might. Light really is the key. Satellite images can capture the amount of nighttime light a country produces, and it turns out to be a pretty reliable guide to economic growth. "As an economy expands, there are more houses, more factories, more streetlights. All of that produces light," said Dr. Martinez, a professor at the university's Harris School of Public Policy.
Commentary Liquefied Natural Gas Will Have a Less Frenzied 2023
Russia's decision to curtail pipeline gas supplies to Europe saw LNG prices soar last year. The panic-induced price spike of 2022 probably won't recur-but betting on lower prices would also be unwise , Megha Mandavia writes.
California Has a Gas-Price Mystery: Too High, But Why?
Why do Californians pay so much for gas? The retail gas price was $4.32 a gallon in December, while it was $3.09 a gallon on average elsewhere in the U.S. There are some quantifiable sources of the premium, Jinjoo Lee writes.
Basis Points Interest rates in the U.S. will likely top 5%, JPMorgan CEO Jamie Dimon told CNBC at the World Economic Forum in Davos. "I think there is a lot of underlying inflation, which won't be going away so quick," he said. (Dow Jones Newswires) Manufacturing activity in the Philadelphia area weakened in January for a fifth month in a row, highlighting the sector's increasing woes as demand wanes. The Federal Reserve Bank of Philadelphia said its index for current general activity of its Business Outlook Survey rose to minus 8.9 from minus 13.7 in December. Readings below zero signal contraction. (DJN) U.S. housing starts declined in December for a fourth consecutive month, hitting their lowest level since last July, driven by lower multi-family units. Starts fell 1.4% on month to a seasonally adjusted annual rate of 1.382 million and were 21.8% below the same month a year earlier. (DJN) Brazil's unemployment rate fell in the three months through November for the ninth consecutive month. The jobless rate slid to 8.1% in the period, the lowest level since April 2015, from 8.3% in the three months through October, and compared with 11.6% in the
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01-20-23 0717ET
