Economy
Fed Governor Waller sees signs of progress in inflation fight
UNITED STATES – Federal Reserve Governor Christopher Waller has expressed optimism about the effectiveness of the Fed’s interest rate hikes in tackling inflation. Speaking at the American Enterprise Institute Tuesday, Waller pointed to recent economic indicators that suggest a deceleration in economic activity, which could help bring inflation closer to the Fed’s 2% target.
Waller’s comments come after a series of aggressive rate hikes by the Fed, which has raised the key short-term interest rate to around 5.4% since March last year. This policy stance, the most assertive in two decades, aimed to combat the persistent high inflation that peaked at over 9% in June 2022 but has since decreased to just above 3% in October 2023.
Despite the notable decrease in inflation and stable prices month-to-month from September to October, Waller remains cautiously optimistic. He acknowledged that the October consumer price index showed no change from September, signaling a broad-based slowdown except for service prices excluding housing, which are not moderating at the same rate. Moreover, Waller pointed out that long-term Treasury yields remain high despite some loosening of financial conditions following the Fed’s decision to maintain interest rates at their 22-year peak for two consecutive meetings.
The cooling economic signs include a slowdown in consumer spending and employment, as well as retail sales and industrial production sectors. These indicators, according to Waller, are evidence of the economy’s response to the Fed’s measures. He highlighted that the annual economic growth pace, which was nearly 5% during the July-September quarter, is now showing signs of slowing.
While Waller’s growing assurance is a positive sign, he also cautioned against complacency given inflation’s resistance to subside fully. He emphasized the importance of upcoming economic data, including personal consumption expenditures, which will be critical in informing future monetary strategies.
Market forecasts suggest that there may be no change in interest rates at the upcoming Federal Open Market Committee (FOMC) meeting on December 12-13, as the central bank takes stock of the economic data and continues its efforts against rising prices. The Fed’s next moves will be closely watched as they seek to navigate the economy toward a stable inflation rate without triggering a significant downturn.
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© 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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