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The minutes show that the Fed helped slow the pace of rate hikes; Two more candidates for Fed vice presidency

The minutes show that the Fed helped slow the pace of rate hikes; Two more Fed vice presidential candidates from James Christie

Good day. The minutes of the January 31-February 1 Federal Reserve meeting, released Wednesday, showed that nearly all attendees agreed that it was appropriate to raise interest rates by a quarter point, or 25 basis points. Additionally, Fed officials “noted that further slowing the pace of rate hikes would allow them to better assess progress in the economy … as they determine the extent of future policy tightening.” But the minutes also revealed that some officials were worried about halting or slowing down their anti-inflation campaign too soon. Meanwhile, the White House is considering two economists who served in the Obama administration, Janice Eberly and Karen Dynan, as candidates to become Fed vice chairman, succeeding Lael Brainard, who left this week to become the director of the Board. National Economics of the White House. Chicago Fed Chairman Austan Goolsbee is also in the running, but has met resistance from some Democrats who would prefer a woman or a person of color for the job, as well as some Republicans who consider him too biased for the vice president role .

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

Top News The Fed minutes show that most officials supported a quarter-point rate hike

Federal Reserve officials are signaling that a resilient US economy could lead them to raise interest rates a little higher than they had anticipated to beat off high inflation.

At their meeting earlier this month, officials agreed to slow rate hikes by raising their key federal funds rate by a quarter of a percentage point, after larger moves of half a point in December and 0.75 points in November.

The minutes of that meeting, released Wednesday, showed that most thought a slower pace provided the best way to manage the risks of raising rates too much or too little. But the minutes also revealed that some officials were worried about halting or slowing down their anti-inflation campaign too soon.

The White House is considering two economists for Fed vice chairman

Janice Eberly, left, a professor of finance at Northwestern University, and Karen Dynan, an economist at Harvard University, served as assistant secretary of the treasury for economic policy in the Obama administration.

Fed Bullard: Markets have overestimated a recession

Federal Reserve Bank of St. Louis President James Bullard said Wednesday that he believes the US economy is more resilient than many investors do. “I think the markets have overestimated a recession in the second half of 2022 and overestimated a recession in the first half of 2023 and maybe they are overestimating the chances of a recession in the second half of 2023,” Bullard said in an interview with CNBC. “We have a good chance of beating inflation in 2023,” he said, with the Fed focused on inflation and Congress focused on reducing the deficit. (Market Watch)

US Economy The US aims to create manufacturing clusters with funds from the Chips Act

The US will allocate funds from the $53 billion Chips Act to create at least two semiconductor manufacturing clusters by 2030, according to Commerce Secretary Gina Raimondo, in an effort to bring more chip manufacturing back to the US

Gas prices are poised to soar again as sanctions on Russia take effect

U.S. gasoline prices have dropped significantly since last June, when they were above $5 a gallon, but are still up about 40% from two years ago and analysts are betting they could soon rise higher. high.

Natural gas prices plummet and drills go backwards

Natural gas prices have fallen more than 65% since mid-December and this week hit their lowest level since the 2020 pandemic lockdown, leading producers to sharply cut drilling.

Biden to cut mortgage insurance costs for low-income buyers

The Biden administration will cut costs under a mortgage program for first-time and low-income buyers, an attempt to increase affordability as median home prices remain near record highs, the House said Wednesday. White.

Glynn’s take: Australia may still have a weapon in its war on inflation by James Glynn

Australia’s weak wage growth data this week kept alive the idea that the resource-rich economy may still be different from the rest of the world in its ability to fight roaring inflation.

If wages remain low, it could mean that interest rates won’t have to be raised as much as in other major economies. Australia’s secret weapon in the war on inflation is the degree to which wage increases are negotiated under collective agreements. to know more [ ability%20to%20fight%20roaring%20inflation.].

Key developments worldwide Turkey cuts rates despite risk of fueling post-earthquake inflation

Turkey’s central bank lowered its key one-week repo rate to 8.5% from 9% in a bid to cushion its struggling economy following deadly earthquakes that killed tens of thousands and caused damage to billions of dollars.

Bank of Korea resists, keeps one more rate hike option alive

South Korea’s central bank held its own after raising interest rates in seven consecutive meetings to fight inflation, trimming its 2023 growth forecast and keeping alive the possibility of another rate hike down the road.

The ECB posts an operating loss of $1.7 billion as rates hike

The ECB reported an operating loss of $1.7 billion [ for%20their%20aggressive%20stimulus%20policies.] for 2022, the first in 18 years. It is a first taste of the massive losses that central banks around the world are expected to bear in coming years as payback for their aggressive stimulus policies.

China will shake up the financial system as Xi installs key associates

Chinese leader Xi Jinping is preparing to shake up the leadership of the financial system, installing key associates to run the central bank and reviving a Communist Party body to tighten political control over financial affairs.

Russian oil is still flowing, and that’s what the West wants

Early data on Russian energy exports and prices suggest that price caps on the sale of Russian petroleum products and an EU ban on most oil imports are keeping oil flowing and global prices stable, while pinching coffers of Moscow.

The Venezuelan oil industry, reopened to investors, is the main polluter

Venezuela’s neglect and mismanagement of its oil resources reflects the challenges Western energy companies and investors seek to return to the country, which sits atop some of the world’s largest oil and gas reserves.

Financial Regulation prosecutors seek to encourage corporate confessions

Top federal prosecutors in New York have unveiled a new effort to encourage companies to voluntarily disclose wrongdoing to U.S. attorneys to receive more lenient treatment than if authorities discover misconduct.

DOE officials are holding shares related to the agency’s work despite warnings

U.S. ethics officials in recent years have warned a third of top Energy Department officials that they or their families owned stock related to the agency’s work, reminding them not to violate federal conflict-of-interest rules. .

Bankman-Fried’s public defense eschews traditional legal strategies

When faced with criminal charges, most defendants glue their mouths before trial at the insistence of their lawyers. FTX founder Sam Bankman-Fried took the opposite approach with a prominent public presence.

Breaking News on Crypto Crisis Driving Forward Thursday (all times ET)

8:30am: US Gross Domestic Product for the fourth quarter, second estimate; US weekly jobless claims

10:30am: Atlanta Fed’s Bostic in conversation with Kansas City Fed’s George at 2023 Banking Outlook Conference

2 p.m.: Daly of the San Francisco Fed in a fireside chat hosted by Handshake


Now N/A: European Central Bank’s Lagarde and Panetta at G20 finance ministers and central bank governors meeting

8:30am: US personal income and spending for January

10am: US New Home Sales for January; University of Michigan Consumer Survey for the United States for February

10:15am: Fed’s Jefferson and Cleveland Fed’s Mester on panel at 2023 US Monetary Policy Forum

11:30am: St. Louis Fed’s Bullard discusses inflation at “Credibility of Government Policies” conference

1:30pm: Fed’s Waller and Boston Fed’s Collins on panel at 2023 US Monetary Policy Forum

Research US inflation is expected to decline at a slower pace

A slowdown in the US economy and easing wage pressures should keep inflation on a downward trend, although recent data imply a slower decline than previously expected, UBS economists write in a report. They revised their core PCE projection for the four quarters of 2023 from 2.1% to 2.5% and the core CPI to 2.4% in the fourth quarter, up from 1.9% a year earlier. They add that basic goods inflation “is expected to be curbed by shortening delivery times from suppliers, rapidly falling transportation costs, falling import prices and gradually increasing vehicle inventories.” For Friday’s PCE data, economists write they expect “a very strong increase,” followed by a slowdown in CPI inflation expected in mid-March.

– Paolo Trevisani

(MORE TO FOLLOW) Dow Jones Newswires

02-23-23 0718ET

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