Economy

Fed’s Goolsbee: ‘golden path’ includes a couple of rate hikes

Published

1 year ago

July 8, 2023

Fed's Goolsbee: 'golden path' includes a couple of rate hikes

By Ann Saphir

(Reuters) – Chicago Federal Reserve Bank president Austan Goolsbee on Friday said he does not disagree with his fellow US central bankers that rates will need to rise a couple more times this year to beat back too-high inflation.

“I haven’t seen anything that says that’s wrong – that is on the golden path” of bringing inflation down to 2% without causing a recession, Goolsbee said in an interview on CNBC. “That would be a Fed triumph and that can involve a couple of rate increases over this year.”

The Fed held its policy rate steady last month, targeting a 5%-5.25% range, but two-thirds of policymakers signaled they expect at least two more rate hikes by year’s end, given still unacceptably high inflation. Remarks from Goolsbee previously sounded more skeptical of the need for further rate hikes on top of what the Fed has already done.

A government report earlier Friday showing employers slowed hiring in June but the labor market remained tight, with unemployment ticking down to 3.6% and hourly wages rising at a 4.4% annual pace.

The report is suggestive of labor market cooling, Goolsbee said, and the full effect of the Fed’s 500 basis points of rate hikes since last March is still to come. But, he said in words that echoed those of his Fed colleagues, inflation is still too high.

“The Fed’s overriding goal right now is to get inflation down,” Goolsbee said, adding that he believes it can be done without pushing unemployment up to levels that would mean a recession.

Financial markets are pricing a Fed rate hike when policymakers next meet, in two and a half weeks.

Goolsbee said his mind is still not made up for that meeting, with key data on June inflation still to come before then.

Unlike many of his Fed colleagues who say that progress on services inflation is critical to the Fed’s inflation fight, Goolsbee said his eye is on goods prices, which pre-pandemic typically trended flat or downward. Services inflation even pre-pandemic was typically higher than the Fed’s 2% goal, he said.

“Let’s keep our eye on the goods inflation number to figure out if we’re still on the golden path or not,” he said.

Economy

Russian central bank says it needs months to make sure CPI falling before rate cuts -RBC

Published

9 months ago

December 26, 2023

Russian central bank says it needs months to make sure CPI falling before rate cuts -RBC

MOSCOW (Reuters) – Russia’s central bank will need two to three months to make sure that inflation is steadily declining before taking any decision on interest rate cuts, the bank’s governor Elvira Nabiullina told RBC media on Sunday.

The central bank raised its key interest rate by 100 basis points to 16% earlier in December, hiking for the fifth consecutive meeting in response to stubborn inflation, and suggested that its tightening cycle was nearly over.

Nabiullina said it was not yet clear when exactly the regulator would start cutting rates, however.

“We really need to make sure that inflation is steadily decreasing, that these are not one-off factors that can affect the rate of price growth in a particular month,” she said.

Nabiullina said the bank was taking into account a wide range of indicators but primarily those that “characterize the stability of inflation”.

“This will take two or three months or more – it depends on how much the wide range of indicators that characterize sustainable inflation declines,” she said.

The bank will next convene to set its benchmark rate on Feb. 16.

The governor also said the bank should have started monetary policy tightening earlier than in July, when it embarked on the rate-hiking cycle.

Economy

China identifies second set of projects in $140 billion spending plan

Published

9 months ago

December 25, 2023

China identifies second set of projects in $140 billion spending plan

© Reuters. FILE PHOTO: Workers walk past an under-construction area with completed office towers in the background, in Shenzhen’s Qianhai new district, Guangdong province, China August 25, 2023. REUTERS/David Kirton/File Photo

SHANGHAI (Reuters) – China’s top planning body said on Saturday it had identified a second batch of public investment projects, including flood control and disaster relief programmes, under a bond issuance and investment plan announced in October to boost the economy.

With the latest tranche, China has now earmarked more than 800 billion yuan of its 1 trillion yuan ($140 billion) in additional government bond issuance in the fourth quarter, as it focuses on fiscal steps to shore up the flagging economy.

The National Development and Reform Commission (NDRC) said in a statement on Saturday it had identified 9,600 projects with planned investment of more than 560 billion yuan.

China’s economy, the world’s second largest, is struggling to regain its footing post-COVID-19 as policymakers grapple with tepid consumer demand, weak exports, falling foreign investment and a deepening real estate crisis.

The 1 trillion yuan in additional bond issuance will widen China’s 2023 budget deficit ratio to around 3.8 percent from 3 percent, the state-run Xinhua news agency has said.

“Construction of the projects will improve China’s flood control system, emergency response mechanism and disaster relief capabilities, and better protect people’s lives and property, so it is very significant,” the NDRC said.

The agency said it will coordinate with other government bodies to make sure that funds are allocated speedily for investment and that high standards of quality are maintained in project construction.

($1 = 7.1315 renminbi)

Economy

Russian central bank says it needs months to make sure CPI falling before rate cuts -RBC

Published

9 months ago

December 25, 2023

Nabiullina said it was not yet clear when exactly the regulator would start cutting rates, however.

“We really need to make sure that inflation is steadily decreasing, that these are not one-off factors that can affect the rate of price growth in a particular month,” she said.

Nabiullina said the bank was taking into account a wide range of indicators but primarily those that “characterize the stability of inflation”.

“This will take two or three months or more – it depends on how much the wide range of indicators that characterize sustainable inflation declines,” she said.

The bank will next convene to set its benchmark rate on Feb. 16.

The governor also said the bank should have started monetary policy tightening earlier than in July, when it embarked on the rate-hiking cycle.