FirstFT: The Fed begins to “shrink” its stimulus plan


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The Fed says it will start Downscaling Its large-scale bond purchase plan of US$120 billion per month this month is an important milestone for the US economy, which is recovering from the pandemic and responding to soaring inflation.

As price pressures began to extend beyond the most sensitive industries to reopen after the pandemic, the decision culminated in months of hard debate among Fed officials on the level of support required by the world’s largest economy.

However, the announcement was almost unregistered In the financial market. Wall Street stocks climbed to record highs, while US short-term Treasury yields rose only slightly.

The lackluster market response not only reflects the Fed’s efforts to prepare investors for the “gradual reduction” of its massive stimulus measures, but also Chairman Jay Powell’s insistence that despite the widespread inflation, it is too early to consider raising interest rates. .

“It’s appropriate to be patient,” Powell said at a press conference after the Fed’s two-day meeting. The central bank said it would reduce its bond purchase program by $15 billion a month—a timetable that puts it on track. The stimulus plan will be completely withdrawn by the middle of next year.

Powell said that the U.S. economy has not yet passed the more stringent test of the next currency tightening of interest rate hikes. The Fed has stipulated that it will maintain the current level of interest rates close to zero until the maximum employment and inflation of 2% on average “over time” is achieved.

  • deeper: Colby Smith and Kate Duguid conducted a comprehensive analysis of the Fed’s latest monetary policy announcement here.

  • Comment: Robert Armstrong provided his main points in the latest version of the statement Unhedged.

Do you think the Fed is too cautious? Is inflation worse than the Fed thinks? Email me [email protected] is the rest of the news today-Gordon

There are five more stories in the news

1. Phil Murphy was re-elected as Governor of New Jersey Democratic Party Narrowly win After an unexpectedly close match, his Republican opponent Jack Ciattarelli (Jack Ciattarelli). In the results of New Jersey, Joe Biden won by 16 points in 2020, and then Democrat Terry McAuliffe defeated Republican Glenn Yankin in the Virginia governor election.

  • analyze: The results of Virginia and New Jersey-reflected in other competitions across the country-indicate “Enthusiasm gap” Lauren Fedor and James Politi wrote in Washington, between passionate Republican voters and untrained Democrats.

  • Comment: Democrats must surpass Joe Biden and Kamala Harris in 2024, Wrote Janan Ganesh.

2. Merck’s Covid pill gets the green light from the UK The UK Drug Regulatory Authority awarded today First authorization Merck’s Covid-19 antiviral pill, which is hailed by public health experts as an important new tool in the fight against the pandemic.

3. Credit Suisse cancels prime brokerage business Swiss bank Announced today After the Archegos Capital scandal resulted in a loss of $5 billion earlier this year, it will integrate its wealth management department and streamline its investment banking, and it will almost withdraw from the main brokerage business.

4. China plans to quadruple its nuclear weapons stockpile A new assessment by the Pentagon China’s nuclear weapons capabilities He said that by 2027, Beijing may have 700 deliverable warheads and will increase its inventory (currently estimated to be more than 200) to at least 1,000 by the end of this decade, which is a significant increase compared to the U.S. Department of Defense’s estimate last year. Increase.

5. The United States blacklisted Israeli spyware company NSO The company that created the software can be traced back to the phone calls of journalists and human rights activists around the world Has been added to the trade blacklist The Ministry of Commerce is responsible. NSO and Tel Aviv-based competitor Candiru are one of four companies that have joined the so-called entity list, which restricts the export of US hardware and software to these companies.

Thanks to those who voted in our poll yesterday. 87% of readers said that Facebook was right to shut down its facial recognition system.

COP26 summary

  • More than 40 countries including Poland, Vietnam and Chile pledged to withdraw coal exist New contract This may be one of the important legacy of the Glasgow gathering.

  • BlackRock CEO Larry Fink The warning states that the pressure of listed companies to pursue net-zero targets—while keeping private companies out of the spotlight—is working to ” Largest capital market arbitrage In my lifetime”.

  • Yesterday, the alliance of companies led by Mark Carney pledged to provide up to $130 trillion in private capital to achieve net zero. Lex I have already counted it and said that the promise is Too big to be trusted.

  • interview: Uganda climate activist Vanessa Nakate On Africa’s role in curbing emissions-and how she will fight back after being excluded.

  • Martin Wolf: How we share our divided world, Ask our chief economic commentatorHe said that a short answer is difficult. The longer answer is: ambitious and pragmatic.

the day before

OPEC+Conference Saudi Arabia, Russia and other oil-producing countries met today and are expected to withstand the pressure to increase production.The organization-known as OPEC+-is under pressure from consumer countries increase output Faced with rising oil prices.

Bank of England meeting Money market traders firmly believe that the Bank of England will become the first large central bank since the outbreak Raise interest rates At the end of the two-day meeting. Economists are not so sure, said Chris Giles, our economics editor. This is his preview.

income Airbnb and Pinterest will announce their third-quarter results today, the latter recently held talks with PayPal Approximately USD 45 billion acquisition. Covid-19 vaccine manufacturer Modern Also report earnings.

What are we still reading

U.S. plans to vaccinate children Encountered skeptical parents The Biden government’s rapid rollout of 28 million young children faces a huge challenge-high-level Vaccine hesitation The politicization of the Covid-19 strategy between parents and the country.

How does Europe get natural gas? Soaring prices and doubts about supply have exposed Europe’s dependence on the fuel that supports most of its economy.This charming Visual narrator It reveals the source of mainland natural gas and the cause of the energy crisis.

How much of Europe’s energy is produced in the EU and how much is imported? © FT Montage/Bloomberg

Valley VC borrows Wall Street script Sequoia, a well-known Silicon Valley venture capital firm, is trying to replicate the success of groups such as Blackstone and Pershing Square to create a “Permanent structure” Accommodate investor capital and then introduce the funds to its sub-funds.

Controlling the Battle of Metaverse: Microsoft and Facebook Whether you like Microsoft’s progressive approach or Facebook’s direct access to virtual reality, Metaverse has the potential to change the way we interact with colleagues and customers. But will workers welcome this change?

“Introducing nature into economics is not a big step” In a conversation with environmental reporter Leslie Hooker, Professor Cambridge Pata Dasgupta Said that the “violent” damage to the ecosystem is not considered in the macroeconomic forecast.

Fashion

Sam Leith details the trial of a middle-aged man Looking for socksHe wrote that a pair that is comfortable, serious and durable has become the Holy Grail.

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