Fed Quarles Warns of Prolonged High Inflation; Paycheck Protection Program May Have Worsened Inequalities, Minneapolis Fed Chief Says

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Good day. Federal Reserve Governor Randal Quarles said he expects the price hike to subside next year as supply chain disruptions subside, but added that logistical bottlenecks risked causing consumers and businesses to expect higher inflation in the future, which could force the Fed to respond by raising interest rates. . “If we still see 4% inflation … next spring, then I think we may need to reassess how quickly we would consider raising interest rates,” he said. Meanwhile, Minneapolis Fed Chairman Neel Kashkari said the paycheck protection program, backed in part by a special Fed program that has helped private banks extend loans to small businesses , may have unwittingly worsened the wealth inequalities between white and black Americans.

Now let’s move on to today’s news and analysis.

Top news

Fed official says persistent inflation could change rate outlook

A senior Federal Reserve official warned that prolonged high inflation until next spring could force the central bank to consider raising interest rates sooner than expected.

Fed Governor Randal Quarles said he still expects the price hike to subside next year as bottlenecks and supply chain disruptions take hold. fade. If the Fed were to raise rates in response to recent price spikes triggered by the economic reopening, the central bank could restrain demand at the same time that supply bottlenecks ease, Quarles said at the meeting. ‘a conference in Los Angeles. This could lead to too low inflation and employment levels.

Kashkari: Paycheck Protection Program for Underprivileged Blacks

Minneapolis Fed Chairman Neel Kashkari targeted the government’s Paycheck Protection Program, which provided forgivable loans to companies that used the money to stay in business and keep workers active when the he economy was under pressure during the pandemic.

Fed Mester Says Rate Hikes Not Imminent

Federal Reserve Bank of Cleveland President Loretta Mester said in an interview with CNBC that she thinks it is too early to start talking about a short-term interest rate hike.

American economy

US growth has slowed in recent months, Fed’s beige book says

U.S. economic growth has slowed to a modest to moderate rate this fall as businesses grapple with supply chain issues, a labor shortage and lingering fears around the Delta variant of Covid- 19, said the Federal Reserve in its Beige Book, which collects corporate anecdotes.

Democrats’ planned tax rate hikes threatened

Senate Democrats are considering dropping the central tax elements of their social policy and climate package, as a key senator continues to oppose any increase in marginal rates for businesses, high income earners or earnings in capital.

Plan a free community college that’s probably over budget

A plan that President Biden and then-President Barack Obama first introduced in 2015 as a way to increase U.S. economic competitiveness and reduce income inequality is being shelved at amid negotiations to lower the $ 3.5 trillion price tag of its social policy package.

Key developments around the world

Chinese cities take action to support housing market as prices drop

Local governments across China are scrambling to stabilize house prices as the market begins to falter amid Beijing’s drastic crackdown on the real estate sector, extending subsidies to young buyers and banning developers from offering real estate. “malicious price cuts” on new homes.

China Evergrande cancels plan to sell key unit for $ 2.6 billion

China Evergrande Group has canceled plans to sell a controlling stake in its property management unit, Evergrande Property Services Group, for the equivalent of $ 2.6 billion, a major setback in the real estate giant’s attempts to mitigate its liquidity crisis.

Chinese developers’ flaws pile up as Evergrande contagion spreads

Your cheat sheet to the United Nations Climate Conference in Glasgow

Negotiators from almost every country, financiers and environmentalists travel to Glasgow for the most important climate meeting since the Paris agreement in 2015. Here is a guide to the people, organizations and facts that will guide the discussions .

Overview of financial regulation

Republican SEC Commissioner criticizes his approach to crypto

Hester Peirce, one of the two Republicans on the SEC’s five-member committee, said the agency should do more to work with cryptocurrency companies to establish rules they can comply with.

Crypto Industry Gets Personalized Advice on Sanctions Compliance

Crypto miners fight to cut carbon emissions

Critics denounce private equity at Senate hearing

In a Senate hearing, private equity critics denounced what they called abusive practices by buyout managers, as some Democratic lawmakers seek to curb the rapidly growing industry.

Facebook fined $ 70million in UK for breach of Giphy merger

UK competition regulator fined Facebook Inc. £ 50.5million, the equivalent of $ 69.6million, alleging it breached reporting requirements during a review continuation of its plan to acquire Giphy, a supplier of moving images for use in social media.

Bitcoin price surpasses $ 66,000 and hits new high

Bitcoin traded as high as $ 66,974.77 on Wednesday, surpassing the previous high of $ 64,889 set in April, fueled by a wave of buying after the first U.S. exchange-traded fund linked to the cryptocurrency began to negotiate.

Forward-looking indications

Thursday (every hour ET)

Time N / A: Central Bank of the Republic of Turkey issues policy statement

8:30 a.m .: Richmond Fed Barkin speaks at Engage Summit in Washington

9 a.m .: Fed Waller speaks on the economy in a discussion at the Forum of Official Monetary and Financial Institutions

10 a.m .: National Association of Realtors publishes sales of existing homes in the United States in September

9 p.m .: New York Fed’s Williams speaks at China Finance 40 Forum

Friday

6:30 a.m .: Bank of Russia releases interest rate decision and medium-term forecast

10 a.m .: San Francisco Fed’s Daly speaks out on climate change risk at American Enterprise Institute event

11 a.m .: Fed’s Powell speaks at Bank for International Settlements and South African Reserve Bank virtual conference

Remark

Supply chain crisis fuels last retreat from globalization

Just as the financial crisis has pushed banks and regulators to prioritize resilience over efficiency, the supply chain crisis is likely to result in production networks that are more resistant to surprises but less able to delight consumers with always more choice at ever lower cost, writes Greg Ip.

Inflation is approaching a tipping point at the grocery store

Inflation is now so high that commodity companies feel they have no choice but to pass it on. Nestlé, Danone and Procter & Gamble all said this week that consumers can expect higher bills at the grocery store. The question is how far they can push, writes Carol Ryan.

Base points

China is doing all it can to alleviate its worst electricity shortage in two decades, reversing its earlier ambitions to cut coal use as it sets new policies to jump-start production and ease fuel imports electric.

Headline inflation in the euro area hit a 13-year high in September as soaring energy prices and faster rising costs of services pushed the annual inflation rate to 3.4%. (Dow Jones Newswires)

Annual inflation in Canada rose 4.4% in September, the fastest rise in prices in nearly two decades and slightly down from expectations of a 4.3% jump. (DJN)

South African consumer prices rose 5% in September due to sharply higher costs for transport, food and shelter. The increase marks the fifth consecutive month that annual inflation in Africa’s most developed economy is above the midpoint of its central bank’s target range of 3% to 6%, paving the way for potential increases in interest rates in the coming months. (DJN)

Norway’s trillion-dollar sovereign wealth fund, the world’s largest, returned 0.1% in the third quarter, equivalent to a gain of 31 billion crowns ($ 3.7 billion). Norges Bank Investment Management, the arm of the central bank that manages the fund, said the fund’s return was 0.25 percentage points higher than the benchmark’s return. (DJN)

 

(END) Dow Jones Newswires

October 21, 2021 08:57 ET (12:57 GMT)

Copyright (c) 2021 Dow Jones & Company, Inc.


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