Economy

Fed’s Goolsbee says inflation is on track to central bank’s 2% goal

Published

5 months ago

December 2, 2023

Fed's Goolsbee says inflation is on track to central bank's 2% goal

By Ann Saphir

(Reuters) -Chicago Federal Reserve President Austan Goolsbee said on Friday he believes inflation is “on track” to reaching the U.S. central bank’s 2% target, driven in coming months by what he expects to be a decline in housing inflation.

“It’s working through in the way we’ve anticipated,” Goolsbee said at an economic symposium at the regional Fed bank, adding that there is “no evidence” that inflation has stalled at 3%, as some analysts have worried. “I still think it’s on track to get to 2%,” he said.

Progress has been helped, he said, by public faith in the Fed’s determination to beat inflation, which soared to 40-year highs last year.

It has also been helped by improvements in the supply of both labor and goods, which was disrupted during the coronavirus pandemic and its aftermath, he said.

By the Fed’s preferred measure, the personal consumption expenditures price index, inflation registered 3% in October.

Meanwhile the labor market is “very strong” even as it gets into better balance, setting up the U.S. economy for a “soft landing” where inflation falls but unemployment does not surge, he said. Unemployment in October was 3.9%.

Fed Chair Jerome Powell said in separate remarks on Friday that the risks of the Fed moving too far with interest rate hikes, and slowing the economy more than necessary, have become “more balanced” with those of not moving high enough to control inflation.

Powell’s and Goolsbee’s remarks were among the last from Fed policymakers before their Dec. 12-13 policy meeting, at which the central bank is expected to leave its benchmark overnight interest rate unchanged in the 5.25%-5.50% range for the third straight time.

Chief among potential risks to the U.S. economy in the coming year is the possibility of a “meltdown” in China, Goolsbee said.

And if inflation progress stalls, or housing inflation does not improve as he forecasts, or if goods prices resurge, “we’re going to do what it takes to get inflation back to target,” he said.

Economy

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

Published

4 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

4 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

4 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.