Good day. The Federal Reserve will release its postmeeting policy statement at 2 p.m. Eastern time today along with new economic and interest-rate projections. Chairman Jerome Powell will follow with a press conference at 2:30 p.m., when he could elaborate on how much progress Fed officials have made on their plans to taper, or reduce, the central bank's $120 billion in monthly bond purchases, which aim to bolster the economic recovery. Mr. Powell has promised to provide advance notice of any bond taper, and the Fed could use the policy statement to provide such an alert.
Now on to today's news and analysis.
Top News
Fed Meeting Will Focus on Taper Timetable
Federal Reserve officials will look to forge agreement Wednesday over how and when to begin reducing their large-scale bond-buying efforts, which they launched early in the pandemic to stimulate the U.S. economy.
The central bank in July gave its first signal that officials were more confident the economy was meeting their goals. Since then, senior leaders including Fed Chairman Jerome Powell have indicated they could start to reduce, or taper, those purchases this year.
Fed Faces Calls to Remove Officials Over Trades They Made
Two advocacy groups said two Federal Reserve officials who traded stocks and other investments while setting monetary policy should lose their jobs, while a former Fed adviser said one of the men should be fired and the other should take leave pending an investigation.
Derby's Take: Trading Controversy Puts Focus on Calls for Structural Changes at Fed
By Michael S. Derby
Recently disclosed market activity of two Federal Reserve regional bank leaders has not only spurred calls for new restrictions on trading by policy makers. It also renews focus on some central bank watchers' longstanding desire to change the very setup of the Fed and its banks. Read More.
Key Developments Around the World
Delta Variant Set to Slow but Not Derail Global Economic Recovery
In its latest economic outlook, the Organization for Economic Cooperation and Development lowered its growth forecasts for the global and U.S. economies in 2021, the first downgrade since December of last year, when new infections were surging.
BOJ Sticks to Ultra-Easy Monetary Policy Path
While other major central banks are moving toward scaling back their asset purchases, the Bank of Japan reiterated that it would purchase Japanese government bonds without an upper limit. It kept its target for short-term interest rates at minus 0.1% and its target for the 10-year bond yield at around zero.
Indonesia Central Bank Stands Pat
Indonesia's central bank kept its benchmark interest rate unchanged to safeguard the stability of the rupiah and support the country's economic recovery. The seven-day reverse repo rate was held at 3.50% on Tuesday in line with a Wall Street Journal poll of economists, and the overnight deposit and lending facility rates were maintained at 2.75% and 4.25%, respectively. (Dow Jones Newswires)
Sweden Central Bank Sees Key Rate Staying at Zero
Sweden's central bank said Tuesday it still expects the key repo rate to remain at 0% in the years to come, with updated forecasts showing the rate remaining unchanged throughout its forecast horizon that runs to the third quarter of 2024. The Riksbank also said it will also continue to buy securities this year, in line with earlier decisions, and expects its holdings of securities will be more or less unchanged during 2022. (DJN)
China's Regulatory Storm Risks Triggering Wider Economic Damage
China's high-profile crackdowns on property developers, technology firms and other private enterprises are starting to weigh on business activity and add to financial risks in the country, raising the potential that Beijing's campaigns could harm the broader economy.
Financial Regulation Roundup
SEC's Gensler Doesn't See Cryptocurrencies Lasting Long
Securities and Exchange Commission Chair Gary Gensler said on Tuesday he doesn't see much long-term viability for cryptocurrencies, underscoring the importance of protecting investors in the market and bringing it under regulatory oversight.
Banks Oppose Strict Basel Rules Targeting Cryptocurrencies
The biggest U.S. and European banks oppose strict new rules that would require them to set aside a dollar in capital for every dollar of bitcoin they own, a group of trade associations representing the lenders told the top global standard setter for banking regulation.
U.S. Sanctions Crypto Exchange It Links to Ransomware Criminals
The Biden administration blacklisted a Russian-owned cryptocurrency exchange for allegedly helping launder ransomware payments, an unprecedented action meant to deter future cyber-extortion attacks by disrupting their primary means of profit.
Biden Pick for CFPB Head Moves Toward Senate Confirmation
Senate Majority Leader Chuck Schumer said Tuesday he would start a process to bring Rohit Chopra's nomination to the Senate floor, which could culminate in his confirmation as head of the Consumer Financial Protection Bureau as early as next week.
Home Appraisals in Black, Latino Areas More Likely to Fall Short
About 15.4% of single-family properties in majority-Latino census tracts and 12.5% of homes in majority-Black areas appraised lower than their contracted price between 2015 and 2020, Freddie Mac researchers found. The rate in white neighborhoods was 7.4%.
Forward Guidance
Wednesday (all times ET)
Time N/A: Central Bank of Brazil releases policy statement; Bank of Japan releases policy statement
10 a.m.: National Association of Realtors releases August U.S. existing-home sales
2 p.m.: U.S. Federal Reserve releases policy statement and economic projections
2:30 p.m.: Fed's Powell holds virtual press conference
Thursday
Time N/A: South African Reserve Bank releases policy statement; Bangko Sentral ng Pilipinas releases policy statement; Central Bank of the Republic of Turkey releases policy statement
3:30 a.m.: Swiss National Bank releases policy statement
4 a.m.: Norges Bank releases interest-rate decision and monetary policy report
7 a.m.: Bank of England releases monetary policy summary and minutes
Commentary
Evergrande Is China's Economy in a Nutshell
Teetering Shenzhen property conglomerate China Evergrande is the Chinese economy in miniature, as both have operated for decades on the principle that it was worth borrowing to build, James Mackintosh writes.
What China Must Do to Contain Evergrande Fallout
Much depends on how fast Beijing can assemble a coalition of developers to assume Evergrande's contract liabilities or find another solution to avoid a disorderly asset sale and financial hit to its customers and suppliers, Nathaniel Taplin and Jacky Wong write.
Research
Roads and Transit Spending Often Based on Rosy Forecasts
Researchers have found transportation planners frequently expect more people to use their road and transit projects than ultimately do so. Yet those optimistic forecasts become part of the justification for spending millions or billions of dollars on such projects.
Basis Points
Embattled China Evergrande Group's flagship property business said it would make an interest payment on an onshore bond, giving the highly indebted conglomerate more time to work out what investors expect will be a lengthy and complicated restructuring.
Newly arriving vessels are adding to a record-breaking flotilla waiting to unload cargo, expanding a fleet off the jammed ports of Los Angeles and Long Beach that has become a stark sign of the disruptions and delays roiling global supply chains.
Mexico's economy will grow this year by 6.3%, the OECD said, raising its estimate from a previous forecast of 5% and bringing the forecast in line with that of the International Monetary Fund and above the Bank of Mexico's 6.2% estimate. (DJN)
U.S. housing starts, a measure of homebuilding, rose 3.9% in August from July to a seasonally adjusted annual rate of 1.615 million, according to the Commerce Department. Economists polled by The Wall Street Journal had expected an increase of 1% to an annual pace of 1.55 million. (DJN)
Canadian new house prices rose in August, continuing a series of gains that began during the spring of 2020, with a 0.7% increase from July, Statistics Canada said. New house prices advanced 12.2% from a year earlier. (DJN)
El Salvador President Nayib Bukele said his country purchased $6.4 million worth of bitcoin after prices of the cryptocurrency fell this month. (MarketWatch)
(END) Dow Jones Newswires
09-22-21 0849ET
