Economy
Daly: Premature to say if Fed has done enough on rates
© Reuters. FILE PHOTO: San Francisco Federal Reserve Bank President Mary Daly poses at the bank’s headquarters in San Francisco, California, U.S., July 16, 2019. REUTERS/Ann Saphir./File Photo
(Reuters) – San Francisco Federal Reserve Bank President Mary Daly on Thursday said that while recent inflation data is moving in the right direction, more progress is needed before she would feel comfortable the Fed has done enough.
“Whether we raise another time, or hold rates steady for a longer period — those things are yet to be determined,” Daly said in an interview with Yahoo Finance. “It would be premature to project what I think would happen because there’s a lot of information coming in between now and our next meeting.”
Daly spoke a couple hours after the U.S. Labor Department reported that underlying consumer price inflation moderated in July, with the core CPI, which excludes food and gas prices, rising 4.7% from a year earlier, after a 4.6% increase in June.
The Fed targets 2% inflation.
While goods inflation is receding, and newly signed lease trends signal inflation from housing will also cool, core services inflation excluding housing has so far made little progress, Daly said.
“We do need to see that come back to prepandemic levels if we’re going to be confident that we can get to 2% on a sustainable basis,” Daly said. “I’m going to need to see some traction in getting there before I feel comfortable that we’ve done enough.”
The Fed raised its policy a quarter of a percentage point last month, to a range of 5.25% to 5%, and policymakers will consider whether to raise rates further when they meet again in September, November and December.
Traders are betting they won’t.
Daly before the most recent rate hike had thought a total of two more interest-rate increases would likely be needed before year’s end, but she did not reiterate that view on Thursday.
She did note that inflation is still a key worry for people she talks with, and that volatile oil prices and worries about a possible resurgence in housing inflation were important information for her as she considers next steps. She also said the economy is slowing, but that job gains still far exceed what would be needed just to keep up with population growth.
“I was very supportive of the rate hike we took and I’m very supportive of not prematurely projecting what we’ll be doing,” she said.
She said the conversation is a “long way” from a focus on the possibility of rate cuts, though she expects it will be time for those questions next year.
© Reuters. Russian Central Bank Governor Elvira Nabiullina attends a news conference in Moscow, Russia June 14, 2019. REUTERS/Shamil Zhumatov/File Photo
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.
© 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)
© Reuters. Russian Central Bank Governor Elvira Nabiullina attends a news conference in Moscow, Russia June 14, 2019. REUTERS/Shamil Zhumatov/File Photo
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.
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