Economy
Fed’s Barkin: Central bank ‘nicely positioned’ amid inflation retreat
© Reuters. FILE PHOTO: Federal Reserve Bank of Richmond President Thomas Barkin poses during a break at a Dallas Fed conference on technology in Dallas, Texas, U.S., May 23, 2019. REUTERS/Ann Saphir/File Photo
By Michael S. Derby
(Reuters) -Federal Reserve Bank of Richmond President Thomas Barkin on Tuesday welcomed the retreat in inflation but refrained from saying how that affects his outlook for central bank interest rate policy next year, in an interview with Yahoo Finance.
“I think we’re nicely positioned now with a 3% inflation rate moving down, and a 3.7% unemployment rate staying relatively steady,” and whether the Fed can deliver on forecasts of rate cuts revealed at last week’s policy meeting depends on how the economy performs, Barkin said.
The official spoke in the wake of last week’s Federal Open Market Committee meeting that saw policy makers hold rates steady at between 5.25% and 5.5% and pencil in three rate cuts in 2024, amid expectations that the inflation pressures that drove aggressive rate hikes will continue to abate.
The prospect of easier monetary policy has sparked a rally in financial markets, even as a number of Fed officials, including New York Fed chief John Williams, have tried to push back on the idea rate cuts are assured.
Barkin, who will have a vote on the rate-setting Federal Open Market Committee next year, declined to say he was on board with rate cuts, but hinted he was open to them if the economy performs as expected.
“We’re making good progress on inflation,” Barkin said, adding “I think that just makes the case to balance the perspective between both sides of our mandate, inflation and employment.”
Barkin cautioned the Fed forecasts are no more than that and are not a promise for action.
“We’re not yet done with inflation. I’m hopeful the numbers will come down over the coming months,” Barkin said. “If you’re going to assume that inflation comes down nicely, then of course we’d respond appropriately,” he said, adding “I don’t assume what the data is going to do. We’ll see what happens.”
Barkin said that in terms of investor expectations of rate cuts, “one of the things I’ve learned is I don’t control markets and so they’re going to do what they’re going to do.”
© 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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