Pressure is growing on the US Federal Reserve to accelerate the winding down of its stimulus programme at its meeting later this week in the face of surging inflation, which is now at the highest level in nearly four decades.
Data released by Bureau of Labor Statistics on Friday revealed the consumer price index jumped 6.8 per cent in November from a year earlier — the fastest annual pace since 1982 and a significant pick-up from the 6.2 per cent rate in October.
There was some relief from the month-on-month figures. Prices between October and November jumped 0.8 per cent, slightly down from the previous month-on-month increase of 0.9 per cent.
Stripping out volatile items such as food and energy, core CPI climbed 0.5 per cent from October. That is roughly in line with the previous period, and pushed up the annual pace to 4.9 per cent. Last month, it registered 4.6 per cent.
President Joe Biden, who is under pressure to intervene to slow rising prices, on Friday acknowledged that inflation had been a “real bump in the road”.
Hawkishness is growing in the Democratic party ahead of midterm elections next year.
“The Fed needs to start tapering immediately and then they need to raise interest rates. Both those things can be done by March,” Jake Auchincloss, a Democrat from Massachusetts and member of the House of Representatives financial services committee, which oversees monetary policy, told the Financial Times.
Earlier this month Jay Powell, Fed chair, laid the groundwork for a more aggressive approach to tackling rising prices and scaling back its ultra-accommodative monetary policy when he said it was highly uncertain inflation would moderate next year. He also said it was time to drop the word “transitory” when talking about the inflation outlook.
Economists now expect the Fed to double the tapering pace and cease expanding the size of its balance sheet in March, setting the stage for a series of interest rate increases in 2022.
Thanks for reading FirstFT Americas. Here’s the rest of today’s news — Gordon
Five more stories in the news
1. Deaths mount after ‘unprecedented’ US tornadoes President Joe Biden declared a major federal disaster in Kentucky after tornadoes hit the state, leaving at least 80 people dead. Rescue efforts continued after what the governor of Kentucky described as the “longest and deadliest” tornado event in US history.
2. Ukraine blames Germany for ‘blocking’ Nato weapons supply Oleksii Reznikov, Ukraine’s new defence minister, has blamed Germany for blocking the supply of weaponry to Kyiv through Nato, in an interview with the Financial Times. G7 foreign ministers warned after meeting over the weekend of “massive consequences” for Russia if it invaded Ukraine.
3. SenseTime postpones Hong Kong IPO The Chinese artificial intelligence company said it would postpone its $767m initial public offering in Hong Kong after being placed on a US investment blacklist. Meanwhile, Jimmy Lai, the Hong Kong media tycoon and founder of tabloid Apple Daily, has been sentenced to 13 months in prison.
4. KKR co-chiefs could net $1bn each Joseph Bae and Scott Nuttall, the recently appointed co-chief executives of KKR, have been granted incentive stock awards that could be worth more than $1bn each if the private equity group’s stock continues to soar in the coming years.
5. Host Chris Wallace leaves Fox News Chris Wallace is leaving Fox News to join CNN’s forthcoming streaming service, marking the departure of a respected journalist from the Rupert Murdoch-controlled network beloved by US conservatives. Earlier this month Wallace had Lunch with the FT at which he was asked about primetime Fox host Tucker Carlson.
Coronavirus digest
Japanese companies have confidence in the country’s economy, according to the latest quarterly survey by the Bank of Japan. But analysts warned the BoJ’s quarterly Tankan survey was conducted before most business leaders had factored in the new Omicron coronavirus variant.
Boris Johnson warned of a “tidal wave” of Omicron cases in a national television address last night. The UK prime minister warned two vaccines were not enough protection against the new variant and urged all adults have a booster jab.
The cost of flying cargo globally has reached record levels, with prices almost doubling on crucial air freight routes as companies attempt to meet surging demand in the run-up to Christmas.
Nearly two-thirds of US companies are planning to require at least some of their workers to get vaccinated against Covid-19 regardless of whether they are legally bound to do so, according to a survey of thousands of employers. Do you agree with the US government’s vaccine mandate for companies. Vote in our poll.
The day ahead
New York mask mandate Governor Kathy Hochul announced the mandate last Friday as part of a “major action to address the winter surge” in Covid-19 cases and hospitalisations statewide, but businesses will have the option of either implementing a vaccine or mask requirement. The requirement comes into force today and will last until at least January 15.
Joe Biden travels to Kentucky The US president is set to meet storm response officials in Kentucky after more than 30 tornadoes tore through six states in the country’s south and Midwest on Friday.
US consumer inflation expectations After Friday’s CPI release today US consumer inflation expectations are revealed.
Opec monthly report The oil-producing group is set to release its monthly oil market report. Sign up for our Energy Source newsletter, delivered on Tuesdays and Thursdays, for the latest.
EU foreign ministers meet in Brussels After the G7 meeting at the weekend it is the turn of EU foreign ministers to discuss the threat of military action by Russia in Ukraine.
What else we’re reading
Inside JPMorgan’s client poaching row A battle over who gets to manage baseball player Alex Rodriguez’s wealth has exposed a bitter turf war inside JPMorgan. In a blistering 48-page legal filing one financial adviser described the rivalry between wealth management businesses within the US bank as a “shark tank”.
US’s segregated banking sector Boasting the best analytical capabilities money can buy and trillions of dollars of liquidity, the bedrock commercial lenders of the world’s biggest economy still has a blind spot: communities of colour. This is the first part of a series looking at race and the financial system.
2022’s bulls, bears and frogs Will next year be one of risk or reward? There will be good investment opportunities but they will be balanced against the danger of shocks from the pandemic, inflation and climate change. FT Money’s investment panel discuss 2022’s stock picking opportunities.
Shoplifting wave forces US retailers to bulk up security A wave of brazen, flash mob-style shoplifting has amplified pressures on retailers already feeling the strain of supply chain problems and the pandemic-induced explosion in online shopping. Now the heads of 20 retailers, including CVS, Home Depot and Target, have written to Congressional leaders urging them to act.
A blunder teaches much more than a triumph Failure is so obviously a better teacher than success that it is a cliché to mention it. Business books regularly advise that blame-free work cultures, where mistakes are acknowledged, help boost productivity and innovation, writes Pilita Clark.
Giving
From jams and jewellery to arts foundations and food activism, the second How To Spend It philanthropy issue examines all kinds of charitable action. Explore How to Give It 2021.
Source: Economy - ft.com
