Good day. The Federal Reserve heads for a tough environment as the inflationary surge threatens to become more unpredictable due to the emergence of the new variant of the Omicron coronavirus, which has prompted the central bank to discuss accelerating cuts in its asset purchase program at its mid-December meeting, President Jerome Powell said on Tuesday. In other Fed developments, President Biden is considering Richard Cordray, the first director of the Consumer Financial Protection Bureau, as the central bank’s main banking regulator, according to people familiar with the matter. His appointment to the post could provide comfort to progressive Democrats who have called on the Fed to take a tougher approach to regulating big banks and tackling the financial risks posed by climate change.

Now let’s move on to today’s news and analysis.

Top news

Powell warns high inflation justifies faster cuts in bond purchases

Federal Reserve Chairman Jerome Powell discussed at a Senate hearing the factors behind continued inflation and the risk the Omicron variant poses to the economy.

Photo: Al Drago / Bloomberg News

Federal Reserve Chairman Jerome Powell has signaled that the central bank would consider accelerating the decline in its easy money policies as it grapples with high inflation, which would open the door to an increase in prices. interest rate in the first half of next year.

He said on Tuesday that the Fed would discuss accelerating the reduction in its asset purchases at its meeting in mid-December. “The risk of higher inflation has increased,” Powell said at a hearing Tuesday morning before the Senate Banking Committee.

Global inflation set to be higher for longer, says OECD

The recovery in inflation rates around the world will be longer and sharper than expected, with a growing risk that households and businesses will get used to faster price increases, the Organization for Cooperation and Development said. economic.

The Derby Perspective: Powell Reiterates Importance Of Diversity In Boston, Dallas Fed Search

By Michael S. Derby

Federal Reserve Chairman Jerome Powell reiterated on Tuesday that two regional leadership positions at the central bank could provide an opportunity to broaden the diversity of those who help shape monetary policy. The Fed is looking for new leaders for both banks as a consensus is forming that attracting officials from diverse backgrounds, whether racial, gender, or professional, helps the central bank improve policy monetary. Read more.

American economy

Covid-19 Omicron variant threatens US and global economies

Compared to the initial wave of Covid-19 and the Delta variant this summer, Omicron’s threat to economies will likely be less severe, economists say, in part because each new strain of the virus has had a diminished economic impact. .

Gas prices put pressure on drivers’ finances

Gasoline prices in the United States have climbed about 50% in a year, with drivers paying an average of $ 3.40 per gallon for a regular vehicle, up from $ 2.27. This year’s increase is on track to be the largest percentage increase in at least a decade.

US home price growth slowed in September

The S&P CoreLogic Case-Shiller National Home Price Index, which measures average home prices in major U.S. metropolitan areas, rose 19.5% in the year ended in September, compared to 19.8% the previous month.

Credit card apps reach pandemic peak

Americans are asking for credit cards at a rate not seen since before the pandemic. Almost 27% of U.S. consumers in October said they had applied for a credit card in the past 12 months, according to the Federal Reserve Bank of New York, the highest level since 2019.

Key developments around the world

As Omicron looms supply issues, eurozone inflation hits record high

The European Union’s statistical agency said on Tuesday that consumer prices in the currency area were 4.9% higher than in November 2020, by far the fastest annual rise since records began in 1997 and more than double the ECB’s 2% target.

Indian economy hampered by weak consumer spending

India’s GDP grew 8.4% in the three months ended September, compared to a year earlier, reflecting the aftermath of a devastating spring surge of Covid-19, which set records global daily cases and deaths in a single country.

Turkish lira hits all-time high following Erdogan’s calls for rate cuts

Turkey’s currency crisis worsened after President Recep Tayyip Erdogan defended his policy of demanding lower interest rates despite rising inflation, triggering a further sell-off of the lira, which reached 13, 74 per dollar around midnight local time before rebounding slightly.

Overview of financial regulation

White House sees Cordray as the Fed’s main banking regulator

President Biden is considering Richard Cordray, the first director of the Consumer Financial Protection Bureau, to succeed Randal Quarles as the Federal Reserve’s vice president of banking supervision, according to people familiar with the matter.

Fannie Mae and Freddie Mac back nearly $ 1 million home loans

Starting next year, homebuyers in high-cost parts of the country will be able to borrow nearly $ 1 million for a government-guaranteed mortgage, reflecting the rapid appreciation in home prices in the country. nationwide.

Forward-looking indications

Wednesday (every hour ET)

9 a.m .: Bailey of the Bank of England delivers a speech at the Institute and Faculty of Actuaries

10 a.m .: Fed’s Powell testifies on Covid-19 and the Cares Act before the House Financial Services Committee

2 p.m .: Federal Reserve publishes beige report on economic conditions in the United States

Thursday

9:00 am: Panetta from the European Central Bank chairs the panel at the ECB Conference on Fiscal Policy and Governance of the Economic and Monetary Union

11:00 a.m .: Fed’s Quarles delivers a speech on his thoughts at the American Enterprise Institute event

11:30 am: Barkin of the Richmond Fed and Daly of the San Francisco Fed on the job market at the Peterson Institute for International Economics event; Atlanta Fed’s Bostic speaks live at upcoming Reuters event

Remark

Frozen factories in China are heating up a bit

China could at best experience a weak recovery in early 2022 if exports hold up and significant new political support for the economy is forthcoming, but if not, expect another slowdown in the next quarter, writes Nathaniel Taplin. .

Base points

US businesses along the Canadian border say they expect cross-border shopping and tourism to increase after nearly 20 months of suffering from Washington’s decision to ban tourists from entering the United States through border crossings terrestrials from the north.

U.S. consumer confidence fell in November to its lowest level in nine months on fears of high inflation, with the consumer confidence index falling to 109.5 from 111.6 in October, the Conference Board, a private organization. (Market observation)

Growth in business activity in the Chicago area slowed in November as new orders slowed, according to data released Tuesday by MNI Indicators, whose Chicago business barometer slipped to 61.8 for the month, its lowest level since February, down from 68.4 in October. (Dow Jones Newswires)

Canada’s gross domestic product grew at an annualized rate of 5.4% in the third quarter, according to Statistics Canada. According to economists at TD Securities, market expectations predicted an annualized increase of 3.3% during the period from July to September. (DJN)

Australia’s economy contracted in the July-September quarter as efforts to tackle the Delta variant of the Covid-19 virus forced more than half of the country into strict and prolonged shutdowns. The economy contracted 1.9% in the third quarter from the previous quarter and grew 3.9% on the year, the Australian Bureau of Statistics said on Wednesday. Economists expected a 2.5% contraction in the third quarter. (DJN)

Australia’s manufacturing sector ignored three months of Covid-related lockdowns in November, raising the manufacturing performance index of the Australian industry group by 4.4 points to 54.8. (DJN)

Brazil’s unemployment rate fell to 12.6% in the third quarter, from 13.1% revised in the three months to August and from 14.9% in the period of the previous year, households that have hired many domestic workers made redundant at the height of the coronavirus pandemic, the Brazilian Institute of Geography and Statistics said on Tuesday. (DJN)

South Africa’s unemployment rate hit a record high of 34.9% in the third quarter of 2021, as the country struggles to recover from the economic impact of the coronavirus pandemic, Statistics South Africa said. (DJN)

Bank of Japan board member Seiji Adachi said he sees a greater chance that the country’s inflation rate will rise after years of stable prices. Mr. Adachi highlighted the changes in the pricing behavior of Japanese companies and the improvement in their growth expectations. (DJN)

(END) Dow Jones Newswires

12-01-21 1000ET


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