Good day. Federal Reserve governor Christopher Waller said a
more aggressive policy response than just tapering the Fed's $120
billion a month in asset purchases "may well be warranted in 2022"
if inflation continues running high through the rest of the year.
Mr. Waller also said he supports beginning to reduce asset
purchases following its November meeting. Elsewhere, Bundesbank
chief Jens Weidmann, who has been critical of the European Central
Bank's easy-money policies, is stepping down. And The Wall Street
Journal looks at how the effects of flooding in China over the
summer provided a stark illustration of a risk nations may face by
adopting a digital currency of the kind the People's Bank of China
has in mind.
Now on to today's news and analysis.
Waller: Fed Could Bring Rate Rises Forward if Inflation Doesn't
Federal Reserve governor Christopher Waller said the central
bank could move forward the timeline for raising short-term
interest rates to restore price stability if high levels of
inflation don't start cooling soon, adding that he supports the Fed
slowing its asset buying stimulus effort starting next month.
Mr. Waller said Tuesday that when it comes to moving up what is
now a near zero federal-funds rate target range, "the pace of
continued improvement in the labor market will be gradual, and I
expect inflation will moderate, which means liftoff is still some
time off." But he also said there is some amount of flux in the
path forward for interest rate policy amid unexpectedly high
Derby's Take: Waller Flags Inflation Expectations as Key to Fed
By Michael S. Derby
The Federal Reserve's newest governor said the monetary policy
outlook depends crucially on what financial markets expect for the
future path of inflation.
In a speech Tuesday, Christopher Waller offered a clear warning
about what inflation might do to the monetary policy outlook. Mr.
Waller, who became a central bank governor late last year after
serving as research director at the St. Louis Fed, said if
currently high levels of inflation do not show clear signs of
moderation by year's end, he would move forward into next year his
expectation of central bank rate rises. Read more.
New York Housing Demand Surges After Pandemic Slowdown
New York City's housing market is undergoing a powerful rebound,
fueled by New Yorkers trading up, out-of-staters moving in, and
others looking beyond the coronavirus pandemic's aftershocks as
they place long-term bets on the city.
Biden Identifies Cuts to Social Policy and Climate Bill
Democrats accelerated efforts to strike a deal on their
social-policy and climate legislation, as President Biden
identified programs that party lawmakers could eliminate or slim
down during a flurry of meetings at the White House Tuesday.
Key Developments Around the World
Bundesbank President Jens Weidmann to Step Down
The Bundesbank said that President Jens Weidmann is leaving for
personal reasons, without elaborating. In his parting statement,
Mr. Weidmann urged his ECB colleagues "not to lose sight of
prospective inflationary dangers."
Flooding Exposed Risks in Beijing's Plan to Launch Digital
Four days before flooding in Zhengzhou, China's central bank
published an official strategy for its rollout of a digital
currency and cited success with trials so far. Then, power outages
in Zhengzhou paralyzed the digital-payment infrastructure that is
the backbone of its plan.
PBOC Keeps Loan Prime Rate Unchanged
China's central bank kept its benchmark loan prime rate
unchanged on Wednesday. The one-year LPR remained at 3.85% and
five-year LPR at 4.65%, the bank said. The last time the central
bank cut the LPR was April last year when the economy was hit by
the pandemic shock.
Xi Jinping Faces Resistance to Property-Tax Plan
Chinese President Xi Jinping has made no secret of his desire to
deflate China's property bubble. But according to people with
knowledge of government deliberations, he is facing resistance over
a measure aimed at curbing housing speculation: a nationwide
China's Magical Disappearing, Reappearing Property Tax
Is Brexit Hurting the U.K. Economy? Trade Data Flashes a
Leaving the European Union has put the U.K. outside the EU's
vast internal market of 445 million consumers and a customs
territory that is bigger still, hobbling trade just as its economy
needs all its engines firing to power out of its worst downturn in
U.K. Annual Inflation Eased in September
German Producer Prices Rise at Fastest Annual Pace in Over 46
Financial Regulation Roundup
BofA's California Partnership Roiled by Unemployment Fraud
Bank of America thought helping states such as California hand
out unemployment benefits would be good business. Then millions of
Americans lost their jobs at once.
Credit Suisse to Pay $475 Million in Mozambique Case
Credit Suisse Group agreed to pay $475 million and forgive $200
million Mozambique owes to investors in coordinated settlements
with U.S. and European authorities over loans the bank made in the
country. A subsidiary of the Swiss bank pleaded guilty to wire
fraud conspiracy charges in New York federal court Tuesday.
Credit Suisse Spied on Executives, Broke Swiss Rules, Regulator
Democrats Try to Salvage IRS Bank-Account Reporting Plan
Sens. Ron Wyden (D., Ore.) and Elizabeth Warren (D., Mass.)
outlined a scaled-back version of a tax-compliance plan on Tuesday
and attempted to defend their proposal against opposition from the
financial-services industry and Republicans.
U.S. Lawmakers Turn Spotlight on Private Equity
A group of lawmakers led by Sen. Elizabeth Warren (D., Mass.)
plans this week to reintroduce a modified version of the Stop Wall
Street Looting Act, a two-year-old proposal to rein in the
private-equity industry, according to people familiar with the
Investor-Backed Group to Analyze Companies' Climate-Change
The Transition Pathway Initiative, a research group backed by
some of the world's biggest investment firms, plans to help
investors make sense of businesses' climate-change plans by
assessing data from 10,000 companies and making the results
First Bitcoin Futures ETF Rises in Trading Debut
The first bitcoin-focused exchange-traded fund rose in its
trading debut Tuesday after getting a warm reception from
investors. The ProShares Bitcoin Strategy ETF climbed most of the
day, gaining nearly 5% to settle at $41.94. About $981 million of
shares changed hands over the session, making it the second most
highly traded ETF debut ever, according to Elisabeth Kashner,
director of ETF research at FactSet.
Wednesday (all times ET)
12 p.m.: Atlanta Fed's Bostic and Minneapolis Fed's Kashkari
speak on racism and the economy
1 p.m.: Fed's Quarles speaks on economy at Milken Institute
2 p.m.: Federal Reserve releases beige book report on U.S.
Time N/A: Central Bank of the Republic of Turkey releases policy
9 a.m.: Fed's Waller speaks on economy at Official Monetary and
Financial Institutions Forum discussion
10 a.m.: National Association of Realtors releases September
U.S. existing-home sales
9 p.m.: New York Fed's Williams speaks at China Finance 40
Standoff in Australia's Bond Market Could Redefine Rates
Bond traders have been watching the horizon for the Reserve Bank
of Australia to sail into view, its guns blazing in an attempt to
restore order to short-dated bond yields. So far there hasn't been
any display of firepower by the central bank, and anxiety is high,
James Glynn writes.
Household Brands Count the Rising Cost of Transport
No matter the mode of transport, moving goods has become more
expensive amid strong demand for consumer goods since countries
began to reopen their economies. But quirks of consumer companies'
supply chains mean they won't all be equally hit, Carol Ryan
New home prices in China fell on a monthly basis for the first
time in more than six years in September, new official data showed,
as Beijing's measures to curb housing speculation and cool the
property sector begin to bite.
China raised $4 billion from a sale of U.S. dollar bonds,
borrowing cheaply again from international investors that flocked
to its offering despite the country's slowing economic growth.
U.S. home builders started construction on homes at a
seasonally-adjusted annual rate of 1.56 million in September, a
1.6% decrease from the previous month and a 7.4% rise from a year
earlier, the U.S. Census Bureau said. (Dow Jones Newswires)
Singapore will establish standby fuel facilities for domestic
power-generating companies to draw upon, in a bid to address a
tight natural-gas market as prices of the fuel rise, the country's
Energy Market Authority said. (DJN)
Spain's economy will grow less than previously estimated this
year and next as supply-chain bottlenecks, high energy and fuel
prices and the delay in the execution of EU Recovery funds are
expected to weigh on activity, according to BBVA Research. Spanish
GDP is expected to expand 5.2% in 2021 and 5.5% in 2022, down from
6.5% and 7.0% previously forecast, the bank said. (DJN)
Brazil's 12-month inflation rate in December will come in at
9.1% as a result of gasoline retailers passing higher wholesale
costs on to consumers more rapidly than expected, according to
Roberto Secemski, an economist at Barclays. Brazil's 12-month
inflation rate rose to a more than five-year high of 10.25% in
September, pushed up by gasoline and electricity prices, and the
central bank has been raising its benchmark interest rate to try to
slow the pace of price increases. (DJN)
(END) Dow Jones Newswires
October 20, 2021 08:39 ET (12:39 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.