Can the US inflation rate justify the Fed’s acceleration of downsizing?


Can the US inflation rate justify the Fed’s acceleration of downsizing?

Fed Chairman Jay Powell testified in the Senate on Tuesday last week that he no longer regards inflation as “temporary” and said he is open to accelerating the central bank’s ease of monetary policy during the crisis.

The November consumer price index data to be released on Friday will provide the Fed with evidence of how fast inflation is progressing and whether it is necessary to accelerate the withdrawal of government bonds purchased each month. This debate is expected to take place at the next meeting of the Central Bank’s decision-making committee on December 14-15.

“The November CPI update has greater potential and can directly affect the Fed’s course of action, although at the end of the day, it is expected that inflation data will only further prove the withdrawal of quantitative easing. [quantitative easing] According to Ian Lyngen, head of US interest rate strategy at BMO Capital Markets.

Last month’s Consumer Price Index Data Shows that consumer prices are rising at the fastest rate in three years. Prices in October rose 6.2% from October of the previous year and 0.9% month-on-month, far exceeding the 0.6% expected. Economists surveyed by Refinitiv predict a 0.7% increase in November.

Rising energy costs were one of the biggest drivers of inflation in October. The Consumer Price Index (CPI) energy index rose by 4.8% from the previous month. According to data from the U.S. Energy Information Administration, the price of gasoline for this pump dropped in November, but it was still higher than the price in October. Kate Duguid

Will UK economic growth return to pre-pandemic levels in October?

With the help of the positive momentum before the Christmas holiday, the UK economy may rebound to its lowest level before the Covid-19 epidemic in October.

Economists surveyed by Reuters expect GDP to grow by 0.5% between September and October—before global markets are shaken by the news of the Omicron coronavirus variant in late November.

Investec economist Sandra Horsfield is more optimistic than popular belief and expects an expansion of 0.7%. Horsfield said this is “mainly due to the booming service industry,” and she expects the service industry to grow by 0.9% after encouraging labor market data after the vacation program ends.

Britain’s September GDP was still 0.6% below its February 2020 level, which means that from monthly readings, new data released on Friday may show that October’s output has returned to pre-pandemic levels.

Horsfield said, “There is no doubt that the economy is moving forward again in October.” The only problem is the degree of growth. IHS Markit Purchasing Managers Index (PMI) jumped to Three-month high In October. Retail sales growth has also exceeded expectations, and consumer activity indicators such as banking transactions and retail foot traffic have also improved.

The impact of the supply chain disruption, many factories did not receive the materials needed to meet demand, is expected to put pressure on manufacturing output. But Horsfield’s forecast of a 0.5% economic contraction in October is more frustrating than the widely expected 0.1% expansion.

The data will be released before the Bank of England’s December monetary policy meeting, and some economists expect interest rates to rise by then. Horsfield said that the Omicron coronavirus variant may prevent banks from tightening policies, but “we doubt whether these GDP figures will be the case.” Valentina Rome

When will the US labor market return to normal?

The demand for workers is very large, while the number in the United States is very limited.

On Wednesday, the Department of Labor will release its October job vacancy and labor mobility survey, and Americans will have an in-depth understanding of how workers respond to this situation.

This year, a large number of workers quit their jobs, probably because they received better job opportunities. The September edition of Jolts showed that 4.4 million American workers resigned, a record high. The previous record was set in August.

Economists say that many of those who quit may already be in another role. Many people expect that as long as labor competition remains fierce and employers dig out top talent from competitors to fill vacancies, a large number of resignations may continue.

The Ministry of Labor reported on Friday that the labor force participation rate is improving but employers Only 210,000 jobs added In November-less than half of the 550,000 they expected-economists will pay close attention to whether employers can find new employees in October. The salary data released in October is strong, so the number of appointments is expected to be the same.

The timing of the report means that it may show a boost from the decline of the Delta coronavirus variant, just as the world is battling the spread of the Omicron variant. But it may also indicate that the recovery is more volatile than expected, as in last week’s employment report.

“The potential momentum in the labor market remains strong, but [November] Shows more uncertainty than expected,” said Nick Bunker, an economist at the employment website Indeed. Taylor Nicole Rogers



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