© Reuters. FILE PHOTO: U.S. House Speaker Kevin McCarthy speaks to members of the media as the deadline to avert a government shutdown approaches on Capitol Hill in Washington, U.S., September 26, 2023. REUTERS/Leah Millis
By Moira Warburton, David Morgan
WASHINGTON (Reuters) -Republican U.S. House Speaker Kevin McCarthy on Wednesday rejected a stopgap funding bill advancing in the Senate, bringing Washington closer to its fourth partial shutdown of the U.S. government in a decade in just four days.
That would lead to the furlough of hundreds of thousands of federal workers and the suspension of a wide range of government services, from economic data releases to nutrition benefits, until Congress manages to pass a funding bill that President Joe Biden, a Democrat, would sign into law.
The Senate plan, which advanced on a wide bipartisan margin on Tuesday, would fund the government through Nov. 17, giving lawmakers more time to agree on funding levels for the full fiscal year beginning Oct. 1.
McCarthy’s House of Representatives was focusing its efforts on trying to agree on more of the 12 separate full-year funding bills, of which they have so far passed one.
“I don’t see the support in the House” for the Senate plan, McCarthy said, though the bill has the support of Senate Republicans, including Minority Leader Mitch McConnell.
“The president should step in and do something about it; otherwise the government will shut down,” McCarthy told reporters.
The House was expected to vote late into the night on amendments to specific funding bills, though even if all four of those bills were to be signed into law by Saturday, on their own they would not be enough to prevent a partial government shutdown.
Weeks ago, Biden urged Congress to pass a short-term extension of fiscal 2023 spending, along with emergency aid to help state and local governments cope with natural disasters and help Ukraine in its war against Russia. He also sought new border security funding.
The standoff has begun to attract the attention of ratings agencies, with both Moody’s (NYSE:) and Fitch warning it could damage the federal government’s credit-worthiness.
House Republicans want much tougher legislation that would stop the flow of immigrants at the U.S. southern border with Mexico and deeper spending cuts than were enacted in June.
CALL FOR BIPARTISANSHIP
Executive branch agencies were already making preparations for determining which federal workers would remain on the job — without pay until the government is funded — and which ones will be furloughed. Similar exercises were occurring in Congress as well, where thousands of legislative aides and other support workers are employed.
“Speaker McCarthy, the only way – the only way out of a shutdown is bipartisanship,” Senate Majority Leader Chuck Schumer said in a speech to the Senate.
The Senate its bill also would appropriate about $6 billion for domestic disaster responses and another $6 billion in new aid to Ukraine.
McCarthy is facing threats from hardline members of his own party who rejected a deal he negotiated with Biden in May for $1.59 trillion in discretionary spending in fiscal 2024 and approved in June, demanding instead another $120 billion in cuts.
A handful of the hardliners have also threatened to oust McCarthy from his leadership role if he passes a spending bill that requires any Democratic votes to pass.
McCarthy said House Republicans would probably bring their own stopgap measure to the floor on Friday.
It was unclear whether there will be the votes in the House to win passage of it, however.
The standoff comes four months after Washington flirted with defaulting on the nation’s more than $31 trillion in debt, a move that would have rocked financial markets worldwide.
Another downgrade of the U.S. credit rating could push borrowing costs – and the nation’s debt – even higher.
Hardline Republicans, including Donald Trump, frontrunner for the party’s 2024 presidential nomination, have dismissed the risks of a shutdown and in some cases actively pushed for one.
“My advice is buckle up — there’s turbulence ahead,” Representative Andy Ogles told reporters after attending a closed-door meeting of fellow Republicans.
Fed pivot to interest-rate cuts seen likely to start in May
© Reuters. FILE PHOTO: The Federal Reserve building is seen in Washington, U.S., January 26, 2022. REUTERS/Joshua Roberts/File Photo
By Ann Saphir
(Reuters) – A stronger-than-expected U.S. labor market won’t keep the Federal Reserve from pivoting to a series of interest-rate cuts next year, but it could take until May for it to deliver the first reduction, traders bet on Friday.
Employers added 199,000 workers to their payrolls in November, the Labor Department’s monthly jobs report showed, more than the 180,000 that economists had expected, and the unemployment rate unexpectedly fell to 3.7%, from 3.9% in October.
Hourly earnings ticked up 0.4% from a month earlier, more than expected and an acceleration from the prior month. But the labor force participation rate also rose, to 62.8%, easing the prospect that an overheated job market will short-circuit progress on the Fed’s inflation battle.
A separate report Friday showed U.S. consumer sentiment improved more than expected in December as households saw inflation pressures easing.
The U.S. central bank is expected to keep rates in the current 5.25%-5.50% range when it meets next week, leaving policy on hold since July. Traders before Friday’s jobs report had put about a 60% probability on a March start to Fed rate cuts, but after the data reduced that to just under 50%, with a first reduction seen as more likely to come in May.
Further rate cuts are priced in for the rest of 2024, with the policy rate seen ending the year in the 4%-4.25% range as the Fed adjusts borrowing costs downward not as an antidote to a weaker labor market but rather to keep pace with an expected continued cooling in inflation.
The pace of that improvement in inflation will help determine the timing of the Fed’s pivot to rate cuts, analysts said.
“We maintain our call for the Fed to start cutting rates by mid-year, but it is contingent on inflation continuing to trend lower and further weakening in economic activity,” wrote Nationwide economist Kathy Bostjancic after the report.
Fed policymakers will release their own views of where the economy, inflation, and interest rates will go next year when they wrap up their last meeting of the year on Wednesday.
US consumers’ moods brighten as inflation worries subside – UMich
© Reuters. FILE PHOTO: A person arranges groceries in El Progreso Market in the Mount Pleasant neighborhood of Washington, D.C., U.S., August 19, 2022. REUTERS/Sarah Silbiger/File Photo
(Reuters) -U.S. consumer sentiment perked up much more than expected in December, snapping four straight months of declines, as households saw inflation pressures easing, a survey showed on Friday.
The University of Michigan’s preliminary reading of its Consumer Sentiment Index shot up to 69.4, the highest since August, from November’s final reading of 61.3.
The median expectation among economists in a Reuters poll had been for the index to edge up to 62.0.
“Consumer sentiment soared 13% in December, erasing all declines from the previous four months, primarily on the basis of improvements in the expected trajectory of inflation,” survey Director Joanne Hsu said in a statement.
The survey’s preliminary gauge of current conditions rose to 74.0 from last month’s final level of 68.3, while the expectations index climbed to 66.4, the highest since July, from 56.8 in November.
Consumers’ outlook for inflation in the year ahead plunged to 3.1% – the lowest since March 2021 – from November’s final expectation of 4.5%. The 1.4 percentage point decline was the largest monthly drop in one-year inflation expectations in 22 years.
Over a five-year horizon, consumers expect inflation to average a three-month low of 2.8%, down from 3.2% in November, which had been the highest since March 2011, when it reached the same level.
Russian inflation accelerates in November, rate hike beckons
© Reuters. FILE PHOTO: People shop at a local market in the town of Rostov in the Yaroslavl Region, Russia April 15, 2023. REUTERS/Evgenia Novozhenina/File Photo
MOSCOW (Reuters) – Inflation in Russia accelerated in November, data from state statistics service Rosstat showed on Friday, cementing expectations that the central bank will hike interest rates as it meets for the final time this year on Dec. 15.
The central bank has now raised rates by 750 basis points since July, including an unscheduled emergency hike in August, under pressure from a weak rouble, tight labour market and strong consumer demand. Analysts widely expect another hike, to 16%, next week.
High interest rates are one of several irksome economic challenges facing President Vladimir Putin, who on Friday said he would run again for president next year, although none seem insurmountable thanks to Russia’s success in evading a Western oil price cap helping to drive a recovery in economic growth.
In November, annual inflation stood at 7.48% year-on-year, up from 6.69% a month earlier and just shy of analysts’ expectations of a 7.6% reading.
The data suggests that annual inflation will exceed the central bank’s expectation of year-end inflation at the upper end of the 7.0%-7.5% range, which is well above its 4% target.
On a monthly basis, the consumer price index (CPI) rose 1.11% in November after a 0.83% increase in October, the data showed, coming just below analyst forecasts of a 1.2% increase. That was the fastest monthly rise since April 2022.
In the week up to Dec. 4, consumer prices rose 0.12%, separate Rosstat data showed.
Russian households regularly cite inflation as a major concern, with many having no savings after a decade of economic crises, while rising prices dragged living standards down across the country.
Rosstat gave the following details:
RUSSIAN CPI Nov 23 Oct 23 Nov 22
Mth/mth pct change +1.11 +0.83 +0.37
– food +1.55 +1.35 +0.40
– non-food +0.53 +0.55 +0.06
– services +1.23 +0.48 +0.76
Y/Y pct change +7.48 +6.69 +11.98
Core CPI y/y pct change +6.36 +5.50 +15.06
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