Powell Rejects Climate Policy Maker Role for Fed; World Bank Lowers Global Growth Outlook By James Christie
Good day. The Federal Reserve needs to stay in its lane, Chairman Jerome Powell said Tuesday, noting that the central bank shouldn't take up addressing issues not directly linked to its mandate to keep inflation low and to support a strong job market. Specifically, "We are not, and will not be, a 'climate policy maker,'" he said during a panel discussion with other central bankers in Sweden. Mr. Powell previously made the case for a much more limited role in which the Fed monitors how banks are managing an array of financial risks, including those posed by climate change. Also on Tuesday, Fed governor Michelle Bowman said the Fed still has more work to do in trying to bring down inflation, despite some signs that price pressures are easing. Meanwhile, high inflation was one of the factors cited by the World Bank for a downward revision to its forecast for the global economy. The bank now expects global growth to slow to 1.7% this year.
Now on to today's news and analysis.
Top News Powell Says Federal Reserve Will Not Become a 'Climate Policy Maker'
The Federal Reserve must avoid straying into political issues that aren't directly related to its economic-management objectives, such as climate change, in order to protect its ability to bring down inflation without interference from elected officials, Chairman Jerome Powell said Tuesday.
The central bank remains strongly committed to lowering inflation by restraining economic growth through interest-rate increases, even though doing so could fuel political blowback, he said during a panel discussion with other central bankers in Sweden on Tuesday.
Fed's Bowman: 'We Have a Lot More Work to Do' to Reduce Inflation
Federal Reserve governor Michelle Bowman in remarks said job growth will need to slow and the labor market will have to weaken somewhat for the central bank to have confidence that inflation will return to a low and stable level.
U.S. Economy Yellen Told Biden She Planned to Stay as Treasury Secretary
Janet Yellen told President Biden late last year she planned to stay on as Treasury secretary and he welcomed her decision , White House officials said, putting to rest for now speculation about whether she would remain at the department.
Oil and Gas Are Back and Booming
Thanks to a mix of events , from the Russian invasion of Ukraine to the U.S. economic recovery, fossil fuels are showing surprising resilience, despite President Biden's push to transition to clean energy.
Forget Core CPI, Market Pros Are Searching for Supercore Inflation
Policy makers and market watchers already strip out volatile components of price indexes to understand "core" inflation. These days, many are on the hunt for an even narrower measure : a supercore.
Key Developments Around the World World Bank Cuts 2023 Global Growth Projection as Inflation Persists
The World Bank said it expects global growth to slow to 1.7% in 2023 , down from an estimate of 3% growth in June, which would mark the third-weakest pace of global growth in nearly three decades.
France's Macron to Pursue Pension Overhaul Despite Resistance
French labor unions called for nationwide strikes after President Emmanuel Macron pressed ahead with his plan to overhaul the country's pension system, a decisive test of the leader's ability to enact his pro-business agenda.
Saudi Arabia Signals It Could Provide Pakistan an $11 Billion Lifeline
Saudi Arabia said Tuesday it was considering providing up to $11 billion to Pakistan, a potential lifeline that could strengthen Pakistan's hand in negotiating a restart to a stalled bailout from the International Monetary Fund.
U.S., Allies Prepare Fresh Sanctions on Russian Oil Industry
The U.S. and its allies are preparing their next round of sanctions on Russia's oil industry, aiming to cap the sales prices of Russian exports of petroleum products in a step some market watchers warn could squeeze global supply.
Impact of Geopolitical Tumult on Businesses to Continue in 2023 Financial Regulation Roundup Coinbase Crypto Exchange to Cut Nearly 1,000 Jobs
Coinbase Global Inc. said it would eliminate around 20% of its staff and enact broad cost cuts, the latest sign of pain in the cryptocurrency industry, aiming to reduce operating expenses by 25% from the previous quarter.
First Cryptocurrency Insider-Trading Case Yields 10-Month Sentence
The brother of a former Coinbase Global Inc. employee was sentenced in a New York federal court Tuesday to 10 months in prison for his role in what prosecutors called the first cryptocurrency insider-trading scheme.
Review of Nickel Blowup Calls for Changes at London Metal Exchange
The London Metal Exchange should bolster oversight of trades that take place outside its trading systems to avoid a repeat of last year's blowup in the nickel market, a review of the event said Tuesday.
Forward Guidance Thursday (all times ET)
7:30 a.m.: Philadelphia Fed's Harker speaks on economic outlook to Main Line Chamber of Commerce Economic Forecast 2023 and Annual Meeting
8:30 a.m.: U.S. consumer price index for December; U.S. weekly jobless claims
11:30 a.m.: St. Louis Fed's Bullard speaks on economic and monetary policy to Wisconsin Bankers Association Midwest Economic Forecast Forum
Friday
2 a.m.: U.K. industrial production for November; U.K. gross domestic product estimate for November
5 a.m.: EU industrial production for November
10 a.m.: University of Michigan preliminary U.S. consumer survey for January
10:20 a.m.: Philadelphia Fed's Harker speaks at Chamber of Commerce for Greater Philadelphia Economic Outlook
Research Eurozone Likely to Face Mild Recession
The eurozone economy is expected to experience a shallow recession this winter rather than a sharp downturn, Oxford Economics head of Europe economics Angel Talavera writes in a note. "The combination of favourable weather, effective policy action, and behavioural shifts by industry and consumers means the energy situation in Europe is much more positive than feared," he writes. The flip side of the better outlook is that it will likely lead to more interest rate increases by the European Central Bank despite signs inflation is about to start falling sharply, Mr. Talavera writes. He notes that, "Our concern is that most of the impact of the current tightening cycle has yet to be felt in the real economy and the ECB is risking overtightening."
-Xavier Fontdegloria
Goldman Sachs Expects Softer CPI for December
Goldman Sachs says it expects a 0.06% decline in the December headline U.S. consumer-price index due Thursday versus the flat consensus, which would lower the year-over-year CPI rate to 6.43%. The investment bank says three key components will stand out in December's CPI report. First, Goldman expects a 0.5% decline in new-car prices, reflecting a large sequential increase in auto-dealer promotional incentives. Goldman economists also expect used car prices to decline 1.6% in December. Second, Goldman economists say they expect lower oil prices to lead to a 2% pullback in CPI airfares in December. Third, Goldman expects shelter inflation to run at a slower sequential pace as rent declines for new-tenant leases start to offset the continued catch-up of continuing-tenant lease rents to market rates.
-Patrick Sheridan
Commentary Made in the U.S.A.: Natural-Gas Prices
Because natural gas is largely produced and consumed domestically, warm weather and replenished inventories are now shifting the focus back to home dynamics in the U.S., Jinjoo Lee writes.
Investors Should Keep an Eye on Japan's Kinky Yield Curve
Japanese yields matter partly because it is a very large market and partly because the cap the Bank of Japan had in place on the 10-year yield-lifted at the end of 2022-has attracted a lot of foreign speculators , James Mackintosh writes.
Basis Points U.S. wholesalers stepped up restocking supplies in November as supply chains continued to normalize, according to the Commerce Department. It said inventories of U.S. merchant wholesalers rose 1% in November on month, accelerating from October's 0.6% increase. (Dow Jones Newswires) Confidence among U.S. small business owners deteriorated in December to a six-month low as short-term expectations for sales and business conditions worsened at year-end, the National Federation of Independent Business said. Its small-business optimism index fell from 91.9 in November to 89.8, below a historical average of 98 and the lowest level since June. Economists polled by The Wall Street Journal expected the index to increase marginally to 92.0. (DJN) Inflation in Brazil slowed in December from a year earlier but still ended above the central bank's target range as food, drink and healthcare prices rose. Consumer prices increased by 0.62% from November and by 5.79% from a year earlier, the Brazilian Institute of Geography and Statistics said. In November, prices rose by 0.41% from the previous month and by 5.90% from a year earlier. (DJN) S&P said its Global Investment Manager Risk Appetite Index is still indicating a risk-averse investor mood at the start of 2023, as the index improved to negative 11 in January after sliding to negative 14 in December. (DJN) Australian retail sales rose to record levels in November, driven by consumer appetite for Black Friday sales even as interest rates continued to climb. Retail turnover rose 1.4% on a seasonally adjusted basis in November, the Australian Bureau of Statistics said. This followed a 0.4% increase in October, the smallest rise in 2022 to date. (DJN) Turkey's current-account deficit widened significantly in November compared from the previous month, according to data from the country's central bank. The country posted a current-account deficit of $3.67 billion in November compared with a revised $352 million deficit in October. (DJN) Spanish industrial production fell in November for a third consecutive month due to lower energy output, increasing the likelihood of
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01-11-23 0715ET
