Aurelia Butler

Deposits at large U.S. banks rose by $48.4 billion to $17.342.8 trillion from a week earlier, on a seasonally adjusted basis.Commercial bank lending rose by $16.9B to a seasonally adjusted $12.167T during the week, following a $26.3B increase in the prior week, the Fed data showed.Residential real estate lending rose $4.6B, commercial real estate loans increased by $4.5B from a the week earlier, while consumer loans were up $2.4B from the prior week.  More

(Reuters) – The full impact of the U.S. Federal Reserve’s interest rate hikes that began in March 2022 has still not been completely transmitted to the real economy, a former vice chairman of the central bank said on Friday.The Fed has cumulatively raised its target rate by 525 basis points to 5.25%-5.50% over the last 17 months.”I think there’s a lot more to be seen,” Alan Blinder, Fed vice chairman between 1994 and 1996, told the Reuters Global Markets Forum (GMF).”We’re talking about historically average lags from monetary policy to inflation of two to three years. So against that, if it’s three months or four months faster, that’s not a big deal, and suggests there’s still plenty to come,” Blinder added.Blinder also said core inflation tends to react to monetary policy action at a slower pace than headline inflation, and that coupled with the transmission lags means the Fed should consider pausing rates for some time from here.Inflation as measured by the Personal Consumption Expenditures (PCE) price index remains well above the Fed’s 2% target, at 3.3%, while the “core” rate, which excludes volatile food and energy prices, is 4.2%, the most recent data shows.The ‘last mile’ of bringing inflation down may prove difficult for the Fed, Blinder said, adding that the central bank won’t be “stubborn” if inflation settles somewhat above its stated 2% goal.”Once that first digit of core PCE gets to be 2%, while maybe the second digit is 2.8%, I think the Fed is going to start getting relaxed about inflation,” he said.”They may conclude that the output and employment cost of getting from 2.8% to 2% is just very high,” Blinder said, adding, however, that they “won’t come anywhere close” to publicly indicating a shift in the inflation goal.(Join GMF, a chat room hosted on Refinitiv Messenger, for live interviews: ) More

“Maintaining the (fiscal) target is super-important,” said central bank chief Roberto Campos Neto at an event hosted by business group Lide in Washington.On Thursday, President Luiz Inacio Lula da Silva’s administration submitted a bill to lawmakers envisioning a balanced budget next year.Market participants surveyed by the central bank currently anticipate a 2024 primary deficit equivalent to 0.8% of Gross Domestic Product, but Campos Neto said the provisions should improve as the government’s revenue-enhancing measures gain approval in Congress.”We need this fiscal convergence to achieve a healthier monetary convergence, which means lower interest rates for a longer period,” he said. Echoing the same sentiment, monetary policy director Gabriel Galipolo said during an event hosted by brokerage XP (NASDAQ:XP) in Sao Paulo that fiscal improvement in the country is “relevant” for bringing inflation expectations closer to official targets.Lula’s new fiscal rules constrain expense growth to a percentage of the revenue increase, he noted, so that if revenues fall short, expenditures will also be limited.The central bank kicked off an easing cycle in August with a 50-basis-point reduction, lowering its benchmark interest rate to 13.35%, after keeping it unchanged for nearly a year in an effort to curb inflation.The divided decision, with part of the bank board supporting a smaller cut, is less significant than it may appear, Galipolo said, noting that policymakers were unanimous on maintaining future reductions at 50 basis points in upcoming meetings.Campos Neto stressed that the battle against inflation continues, adding that data, including the closely monitored service prices, is showing improvement, though at a sluggish pace.He also said Brazil’s second-quarter GDP performance was “pretty good,” surpassing expectations and had positive elements, which should improve public revenues. More

Ministers are drawing up plans to help UK households with oil boilers to switch to cheaper green energy options without having to install expensive heat pumps.The government is proposing to force energy suppliers to expand the provision of renewable liquid heating fuels so households can convert their oil boilers to run on the products.Ministers have caved in to pressure from Conservative MPs after George Eustice, a former environment secretary, warned rural communities would be hit hard financially by its proposed ban on the installation of new oil boilers from 2026. Eustice had argued 1.3mn households in Great Britain are using conventional kerosene boilers rather than mains gas that were facing “their own version of London’s Ulez” in three years’ time.Ministers are consulting on the 2026 ban on new oil boilers as part of the UK push towards net zero carbon emissions by 2050.Claire Coutinho, the newly appointed energy secretary, on Friday published an amendment to the government’s energy bill that will allow ministers to place a new obligation on liquid fuel providers to supply renewable products. Coutinho’s move has headed off the threat of a rebellion by Tory MPs who would have backed a similar amendment by Eustice.A huge piece of legislation covering an array of contentious issues, the energy bill has provoked a two-pronged revolt among both environmental campaigners and net zero sceptics in the Conservative party, which the government is trying to quell.Under government proposals, homes not connected to mains gas would be banned from purchasing replacement oil boilers from 2026 and expected to fit heat pumps instead. Heat pumps are about three times more expensive than oil boilers and are “inappropriate and less effective” in many older homes, said Eustice. While installing an oil boiler starts at about £4,000, fitting a heat pump typically costs £14,000, according to the Energy Saving Trust.Eustice had campaigned for the government to support the conversion of kerosene boilers to run on renewable liquid fuels, such as hydrotreated vegetable oil, which he claimed would reduce carbon emissions by 87 per cent. He noted the conversion process costs only several hundred pounds.The government’s amendment to the energy bill will give ministers powers to require suppliers of heating fuels to provide a certain proportion of renewable products, such as hydrotreated vegetable oil. Ministers will consult on the proposal.Eustice told the Financial Times he welcomed ministers’ recognition of “the potential for renewable liquid fuels for off-grid properties” and confirmed he would back the government’s amendment.Ken Cronin, chief executive of the UK and Ireland Fuel Distributors Association, a trade body, also welcomed the amendment, saying it would “bring the cost of these fuels down for consumers”.He added that pilot projects in the UK involving 150 homes over the past two years had “successfully demonstrated . . . a solution using renewable liquid fuel as a direct replacement for kerosene”. Fuels Industry UK, which represents oil refineries and renewable fuel producers, said: “Low-carbon fuels offer a flexible and already available means to reduce carbon emissions across a range of sectors, including domestic heating.”

The Department for Energy Security and Net Zero said: “We recognise renewable fuels like hydrotreated vegetable oils could play a role in decarbonising our homes, especially as some off-grid properties are unsuitable for heat pumps.“We will be consulting to examine the potential of these products as heating fuels, and this amendment will give us the option to support their use in the future to help achieve our wider net zero ambitions.”The government has bowed to pressure from Tory MPs on several other issues relating to the energy bill. Last month 60 mostly Conservative MPs signed an amendment from former transport secretary Chris Grayling to push the government to subsidise producers of low-carbon aviation fuel.The government has added an amendment which means it will consult on options for a “revenue certainty scheme” for sustainable aviation fuel producers. More