Economy
Fed meeting minutes to offer clues on future rate hike appetite
© Reuters. FILE PHOTO: An eagle tops the U.S. Federal Reserve building’s facade in Washington, July 31, 2013. REUTERS/Jonathan Ernst/File Photo
By Michael S. Derby
(Reuters) – Federal Reserve meeting minutes from the June policy gathering to be released on Wednesday are likely to show an active debate among policymakers who still on balance appear inclined to support more action to tame inflation.
The meeting minutes, due at 2 p.m. EDT (1800 GMT), will arrive after U.S. central bank officials have spent the last three weeks following the June Federal Open Market Committee meeting sketching out their policy outlooks. Key officials like Fed Chair Jerome Powell have pointed to forecasts released at that gathering indicating that a half percentage point’s more tightening this year was very much still in play.
“The committee clearly believes that there’s more work to do, that there are more rate hikes that are likely to be appropriate” at some point over the course of the year, Powell said last Wednesday in an appearance with other central bank chiefs in Portugal. “Although policy is restrictive, it’s not, it may not be restrictive enough and it has not been restrictive for long enough,” which keeps alive prospects for more increases, Powell said.
But some feel enough has been done. Atlanta Fed President Raphael Bostic said last Thursday that he believes no more rate increases are needed, noting “the data, survey results, and on-the-ground intelligence constitute a reasonable case that gradual disinflation will continue.” He added, “that will happen even if the Committee does not increase the federal funds rate.”
The minutes will describe the deliberations that allowed the Fed, after just over a year of very aggressive rate rises, to maintain its overnight target rate at between 5% and 5.25%. It stood at near zero levels in March 2022 and has risen swiftly as Fed officials have sought to tame the worst levels of inflation in decades.
The Fed held steady on June 14 in large part to take stock of the impact of the increases it has already implemented. Over recent days, some central bankers have noted that the effects of past tightening are still flowing into the economy.
The meeting minutes will also add details about what officials and their staff expect for the economy, and some are watching the central bank staff’s view with particular interest. Fed economists have been warning of recession prospects for some time and have authored a series of recent papers that have sounded cautionary notes about parts of the economy and financial system.
“The Fed staff look to be priming the Board to expect soft data,” said Tim Duy, chief U.S. economist at SGH Macro Advisors, which could tilt against the need for rate rises, if realized.
© 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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