Good day. Federal Reserve governor Randal Quarles said he
expects higher prices to ease next year as supply-chain disruptions
fade, but added that logistics bottlenecks risk leading consumers
and businesses to expect higher inflation in the future, which
could force the Fed to respond by raising interest rates. "If we
are still seeing 4% inflation...next spring, then I think we might
have to reassess the speed with which we would be thinking about
raising interest rates," he said. Meanwhile, Minneapolis Fed
President Neel Kashkari said the Paycheck Protection Program,
supported in part by a special Fed program that helped private
banks make loans to small businesses, may have unintentionally made
wealth inequality between white and Black Americans worse.
Now on to today's news and analysis.
Fed Official Says Lingering Inflation Could Change Rate
A top Federal Reserve official warned that extended high
inflation through next spring could force the central bank to
consider raising interest rates sooner than anticipated.
Fed governor Randal Quarles said he still expects higher prices
to ease next year as bottlenecks and supply-chain disruptions fade.
If the Fed raised rates in response to recent price surges driven
by the economic reopening, the central bank could constrict demand
at the same moment that supply bottlenecks abate, Mr. Quarles said
during a conference in Los Angeles. That could lead to undesirably
low levels of inflation and employment.
Kashkari: Paycheck Protection Program Disadvantaged Blacks
Minneapolis Fed President Neel Kashkari took aim at the
government's Paycheck Protection Program, which extended forgivable
loans to firms that used the money to stay in business and keep
workers on the clock when the economy was under strain during the
Fed's Mester Says Rate Increases Aren't Imminent
Federal Reserve Bank of Cleveland President Loretta Mester said
in a CNBC interview that she believes it is too soon to start
talking about raising short-term interest rates.
U.S. Growth Slowed in Recent Months, Fed's Beige Book Says
U.S. economic growth slowed to a modest to moderate rate this
fall as companies grappled with supply-chain problems, a labor
shortage and continued fears around the Delta variant of Covid-19,
the Federal Reserve said in its beige book, which collects
anecdotes from businesses.
Democrats' Planned Tax-Rate Increases in Jeopardy
Senate Democrats are considering abandoning central tax elements
of their social policy and climate package, as a key senator
continues to oppose any rise in marginal rates for businesses,
high-income individuals or capital gains.
Plan for Free Community College Likely Out From Budget
A plan President Biden and then-President Barack Obama first
pitched in 2015 as a way to increase U.S. economic competitiveness
and decrease income inequality is being sidelined amid negotiations
to bring down his overall social-policy package's $3.5 trillion
Key Developments Around the World
Chinese Cities Move to Support Housing Market as Prices Drop
Local governments across China are moving to stabilize housing
prices as the market starts to wobble amid Beijing's forceful
clampdown on the real-estate sector, extending subsidies to younger
buyers and banning developers from offering "malicious price cuts"
on new homes.
China Evergrande Calls Off Plans to Sell Key Unit for $2.6
China Evergrande Group called off plans to sell a majority stake
in its property-management unit, Evergrande Property Services
Group, for the equivalent of $2.6 billion, a major setback in the
real-estate giant's attempts to ease its liquidity crunch.
Chinese Developer Defaults Pile Up as Evergrande Contagion
Your Cheat Sheet to the U.N. Climate Conference in Glasgow
Negotiators from nearly every country, financiers and
environmentalists are descending on Glasgow for the most important
climate meeting since the Paris agreement in 2015. Here's a guide
to the people, organizations and facts that will drive the
Financial Regulation Roundup
Republican SEC Commissioner Criticizes Its Approach to
Hester Peirce, one of two Republicans on the SEC's five-member
commission, said that the agency should be making more of an effort
to work with cryptocurrency firms to establish rules that they can
Crypto Industry Gets Tailored Guidance on Sanctions
Crypto Miners Struggle to Cut Carbon Emissions
Critics Blast Private Equity at Senate Hearing
At a Senate hearing, private-equity critics denounced what they
characterized as buyout managers' abusive practices, as some
Democratic lawmakers seek to rein in the rapidly growing
Facebook Fined $70 Million in U.K. Over Giphy Merger Breach
The U.K.'s competition regulator fined Facebook Inc. 50.5
million British pounds, equivalent to $69.6 million, alleging it
breached reporting requirements during a continuing review of its
proposed takeover of Giphy, a provider of animated images for use
in social media.
Bitcoin Price Surges Past $66,000, Reaching New High
Bitcoin traded as high as $66,974.77 on Wednesday, passing the
previous high of $64,889 set in April, powered by a wave of buying
after the first U.S. exchange-traded fund linked to the
cryptocurrency started trading.
Thursday (all times ET)
Time N/A: Central Bank of the Republic of Turkey releases policy
8:30 a.m.: Richmond Fed's Barkin speaks at Engage Summit in
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
6:30 a.m.: Bank of Russia releases interest-rate decision and
10 a.m.: San Francisco Fed's Daly speaks on climate change risk
at American Enterprise Institute event
11 a.m.: Fed's Powell speaks on panel at virtual Bank for
International Settlements-South African Reserve Bank conference
Supply-Chain Crisis Fuels Latest Retreat From Globalization
Just as the financial crisis drove banks and regulators to
prioritize resilience over efficiency, the supply-chain crisis will
likely result in production networks more resilient to surprises
but less able to delight consumers with ever more choice at ever
lower cost, Greg Ip writes.
Inflation Approaching a Tipping Point at the Grocery Store
Inflation is now so hot that staples companies feel they have no
option but to pass it on. Nestlé, Danone and Procter & Gamble
all said this week that consumers can expect higher bills at the
grocery store. The question is how far they can push, Carol Ryan
China is pulling out the stops to ease its worst power crunch in
two decades, reversing course on earlier ambitions to curb coal use
as it sets new policies to revive production and loosen imports of
the electricity-generating fuel.
Eurozone headline inflation reached a 13-year high in September
as surging energy prices and a more rapid upturn in the cost of
services lifted the annual inflation rate to 3.4%. (Dow Jones
Annual inflation in Canada advanced 4.4% in September, the
fastest increase in prices in nearly two decades and a slight beat
on expectations of a 4.3% jump. (DJN)
South African consumer prices rose 5% in September due to sharp
increases in the cost of transport, food and housing. The increase
marks the fifth consecutive month where annual inflation in
Africa's most developed economy is above the midpoint of its
central bank's target range of between 3% and 6%, setting the stage
for potential interest-rate increases in the coming months.
Norway's trillion-dollar sovereign-wealth fund, the world's
largest, returned 0.1% in the third quarter, equivalent to a gain
of 31 billion kroner ($3.7 billion). Norges Bank Investment
Management, the arm of the central bank that manages the fund, said
that the fund's return was 0.25 percentage point higher than the
return on the benchmark index. (DJN)
(END) Dow Jones Newswires
October 21, 2021 08:57 ET (12:57 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.