Fed Not Sold Yet on Shifting Rate Stance; Canada Inflation Cooling; RBA Gov. Says Australia CPI Won't Return to Target for Two More Years By James Christie

Good day. Minutes of the most recent policy meeting of Federal Reserve officials, released Tuesday, suggest they might be willing to keep interest rates on hold for at least the rest of the year. Since they met, none have made a strong case for lifting rates at their Dec. 12-13 meeting, though several have said it was too soon to change their view that another rate increase is more likely than a rate cut. Elsewhere, inflation in Canada again cooled in October: Consumer prices rose 3.1% from a year earlier, the slowest pace since June and well below the peak of 8.1% hit in the middle of last year. It continues an easing trend that is likely to comfort central bankers and adds weight to expectations that interest rates will hold steady in the near term as the economy shows signs of struggling. Meanwhile, in a speech to market economists today, Reserve Bank of Australia Gov. Michele Bullock said that while inflation in Australia has eased from a peak of more than 8.0% in late 2022 to around 5.5% now, it will take another two years for it to fall back to target because demand and supply are out of alignment.

Please note the Central Banking newsletter will take a break for Thanksgiving and will be back in inboxes on Monday.

Now on to today's news and analysis.

Top News The Fed Wants More Evidence Before Changing Rate Stance

Federal Reserve officials were unwilling to conclude they were done raising interest rates when they decided earlier this month to extend a pause in rate increases.

But minutes of their most recent policy meeting suggested they might be comfortable holding rates steady for at least the rest of the year.

"All participants agreed that the committee was in a position to proceed carefully," said the minutes of the Oct. 31-Nov. 1 meeting released on Tuesday. "Participants expected that the data arriving in coming months would help clarify the extent to which" a slowdown in inflation was continuing amid higher borrowing costs, the minutes said .

Pro Take: FedNow Price Tag Is More Than Half a Billion Dollars By Bob Fernandez

The Federal Reserve has put $545 million into developing its instant-payments service FedNow.

FedNow officially launched over the summer after four years of development to give customers near-instant access to their money. If widely adopted, it could make the nation's financial system run faster and help low-income workers who use payday lenders when they can't get their wages quickly. Read more .

U.S. Economy Home Sales Fell to a New 13-Year Low in October

Existing-home sales, which make up most of the housing market, decreased 4.1% in October from the prior month to a seasonally adjusted annual rate of 3.79 million, the lowest rate since August 2010, the National Association of Realtors said Tuesday. October sales fell 14.6% from a year earlier . Sales have been near 2010 levels in recent months.

IRS Delays Tax Rule for Online Sellers-Again

The IRS offered a surprise paperwork reprieve to millions of Americans as tax-filing season nears, delaying a new requirement affecting people who sell stuff on eBay, resell concert tickets, and use payment processors such as Venmo.

The Rules for Holiday Spending This Year (No. 1: Wait 'Til December)

If your goal is to score the best deals and discounts on your holiday shopping, it likely pays to hit the snooze button as well as shop with retailers that offer price-matching guarantees and use credit-card rewards successfully.

Key Developments Around the World Canada Inflation Continued to Ease in October

Consumer prices edged up 0.1% in October and rose 3.1% from a year ago. Prices advanced 3.8% on-year the month before. The slowing was largely thanks to lower prices at the pump that helped offset an acceleration in housing costs.

RBA Governor Bullock Says Hardest Part of Inflation Fight Still Ahead

The Reserve Bank of Australia's battle to tame inflation will be slow and drawn out , with the hardest part set to take place over the next two years as policy makers move to tamp down on strong "homegrown" demand.

Germany Freezes Public Spending in New Setback for Europe

Germany froze public spending for the rest of the year after a court declared the government's spending plans unconstitutional, dealing a blow to Europe's recovery and efforts to beef up its defenses and reduce carbon emissions.

U.S. to Restrict Visas of Charter Operators Flying to Nicaragua

The U.S. government said Tuesday it would impose visa restrictions on individuals running charter flights into Nicaragua, flooding the country with tens of thousands of U.S.-bound migrants, mostly from Haiti, Cuba and Africa.

Financial Regulation Roundup FDIC Chairman Martin Gruenberg Won't Oversee Misconduct Probe

The FCIC board is forming a special committee to oversee an independent review of the agency's workplace culture, the agency said, restricting the ability of the rest of the board-including the chairman-to influence the investigation.

The Big Bank With a $15 Billion Conundrum in China

Long after most other Western banking giants have exited similar positions, HSBC has held on to its roughly 19% position in Bank of Communications, an investment that dates back to 2004.

Binance Founder Changpeng Zhao Steps Down, Pleads Guilty

The chief executive of Binance stepped down and pleaded guilty to violating criminal U.S. anti-money-laundering requirements , in a deal that might preserve the global cryptocurrency exchange's ability to continue operating.

Celsius to Curtail Scope of New Company to Mining Assets

Celsius Network, the crypto company that won court approval this month to end its yearlong bankruptcy, said it plans to reduce the scope of its surviving business following its discussions with the Securities and Exchange Commission.

Forward Guidance Wednesday (all times ET)

8:30 a.m.: U.S. durable goods for October; U.S. weekly jobless claims

10 a.m.: EU ECCI flash consumer confidence indicator for November; University of Michigan final consumer survey for November

11:45 a.m.: Bank of Canada's Macklem speaks to Saint John Region Chamber of Commerce


4 a.m.: Eurozone flash PMI for November

Research Rent Inflation in Canada Hits 40-Year High on Immigration

Canadian inflation data for October indicated annual rent jumped 8.2%, or the fastest increase in over 40 years, according to National Bank Financial. Economists at the firm indicate the gap between rent inflation and headline inflation, 3.1%, is at its highest in over six decades. The reason why is a structural housing-supply imbalance, fueled by historic population growth fueled by immigration and a pre-existing shortage of residential units. NBF says there is only one housing start for every 4.2 people entering the working-age population, versus the historical ratio of one housing start for every 1.8 people. Unless Canada's Liberal government "revises its immigration quotas downward, we don't expect much relief for the 37% of Canadian households that rent," NBF economists say.

-Paul Vieira

Commentary American Shoppers Have Plenty of Dry Powder

Americans say they are worried about the economy, and there certainly are reasons to question the staying power of consumer spending. But consumer spending in the U.S. keeps growing, and it looks to keep doing so through the holidays , Justin Lahart and Jinjoo Lee write.

Basis Points U.S. economic growth eased in October as production declined, according to the Federal Reserve Bank of Chicago. Its Chicago Fed National Activity Index slipped to minus 0.49 from a revised minus 0.02 in September, with all indicating categories booking a decline. A reading below zero suggests economic activity is expanding at a slightly slower rate than its average historical trend. (Dow Jones Newswires) The National Association of Realtors is pushing for a tax credit for home sellers in the U.S., with the giant lobbying group saying that would help address the housing market's lack of inventory. NAR Chief Economist Lawrence Yun told reporters during a Tuesday conference call that the goal is to "talk with members of Congress to see if we can have some kind of tax credit for the home sellers to list their property onto the market." (MarketWatch) Zambia's central bank on Wednesday raised its key lending rate to 11% from 10% as Africa's top copper and cobalt producer seeks to tame spiralling price inflation. Central Bank Governor Denny Kalyalya said higher food and fuel prices as well as the depreciation of the local currency against the U.S. dollar have been the major drivers of inflationary pressures. The inflation rate rose to an average of 11% in the third quarter from 9.9% the previous quarter. "The decision to increase the rates was informed by the current and projected inflation moving further away from the 6-8% target band," he said. (DJN) Feedback Loop

This newsletter is compiled by James Christie in San Francisco.

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11-22-23 0715ET