Aurelia Butler

The Fed in July raised rates by three-quarters of a percentage point to a range of 2.25% to 2.5%, following a similar-sized hike at the June meeting, in an effort to cool price pressures that hit a 40-year high.Bullard, one of the most hawkish policy makers at the US central bank, told the Wall Street Journal in an interview published Thursday that he backed another 75 basis-point increase in September, arguing “we should continue to move expeditiously to a level of the policy rate that will put significant downward pressure on inflation.”Both Bullard and George are voters this year on the rate-setting Federal Open Market Committee, though George has sounded more dovish than Bullard in recent months after many years of being viewed as a hawk. George backed the July hike but dissented in June in favor of a smaller half-point increase, citing concern the larger move could stoke policy uncertainty. Her remarks Thursday continued to tilt dovish.“I think the case for continuing to raise rates remains strong. The question of how fast that has to happen is something my colleagues and I will continue to debate, but I think the direction is pretty clear,” she said in Independence, Missouri, on Thursday. “We have done a lot, and I think we have to be very mindful that our policy decisions often operate on a lag. We have to watch carefully how that’s coming through.”Policy makers saw the federal funds rate reaching a range of 3.25% to 3.5% this year, according to the median estimate of their June projections. The forecasts will be updated in September when the Fed next meets.Earlier on Thursday, San Francisco Fed President Mary Daly told CNN International that she was open to raising rates by 50 or 75 basis points next month and that officials would be in no hurry to reverse course next year. That pushes back against investor bets that the Fed will cut rates before the end of 2023.The officials spoke a day after the release of minutes from the July Fed policy meeting, which showed officials judged it would eventually be appropriate to slow the pace of interest-rate increases, with some advocating the Fed keep them at elevated levels for some time after increases concluded.©2022 Bloomberg L.P. More

In comments to a Kansas City economic group, George said the pace and ultimate level of future rate hikes remained a matter of debate. “To know where that stopping point is … we are going to have to be completely convinced that (inflation) number is coming down,” she said.George did not state a preference for whether the Fed should approve a third straight 75 basis point rate increase when policymakers meet next month, or a smaller half point increase – the two core options under consideration.But she made clear that the drop in inflation registered in July, while good news, was not evidence the underlying problem was fixed. Much of the decline was related to energy costs, she noted, while prices for a broad set of other services and goods continued to increase.”That is hardly comforting,” she said. And recent “abysmal” productivity numbers, which imply that workers are producing less for each dollar they are paid, could make controlling inflation that much harder, she added. More

Electricity and gas companies on Thursday urged the UK government to “immediately” top up a £400 rebate on all households’ energy bills this winter, warning that soaring prices would be “unaffordable for far too many”.Energy UK, a trade body for the electricity and gas industry, wrote to chancellor Nadhim Zahawi, warning that the non-repayable rebate was the “most straightforward, practical way to immediately provide broad support to customers ahead of Christmas”. This is despite the fact that some consumer campaigners have criticised the scheme, as the saving will go to all households, whether or not they can afford higher bills. The group added that officials should “urgently” start work on a government-backed loan scheme in time to limit energy bills next year, when the price cap — which dictates bills for 24mn households — is forecast to increase drastically again.The influential group’s intervention echoes similar warnings from individual suppliers that it was already “too late” to design new schemes to tame spiralling energy bills this autumn. Forecasts suggest the energy price cap will rise to roughly £3,600 from October 1 for a typical household, up from £1,971 at present. According to the Energy Support and Advice Group, which helps people struggling with bills, that would see households pay about 15p per kilowatt hour for gas from October 1, up from just over 7p at present. Electricity, meanwhile, would jump to nearly 54p/kWh from 28p under the current cap.Energy regulator Ofgem will announce the new level of the cap on August 26.Energy UK’s letter comes as concerns mount over the cost of living crisis. The Labour party this week accused the government of being “asleep at the wheel” as it set out proposals to freeze the price cap at its current level for six months.Liz Truss, Conservative party leadership frontrunner, has said she would temporarily scrap some green levies that are added to electricity bills but has yet to detail further measures beyond holding an emergency Budget in September if she becomes prime minister. Her rival Rishi Sunak has indicated that as premier he would use existing mechanisms to increase support for households.In the medium term, Energy UK is backing an idea first proposed by ScottishPower chief executive Keith Anderson that would see suppliers use government-backed loans to keep customers’ bills down in 2023 before recouping those costs in the next 10 to 15 years. However, some smaller suppliers said such a scheme could cost them millions of pounds in interest payments.The price cap is forecast to rise sharply again next year, with the consultancy Auxilione this week suggesting it could hit £4,650 in January and £5,456 in April. Fears over energy prices were exemplified by the resignation of an Ofgem director. Christine Farnish on Wednesday claimed the regulator had given “too much benefit to companies at the expense of consumers” when it approved changes this month to the way the price cap is calculated, adding hundreds of pounds to households’ bills.

The row over the methodological changes, which allow suppliers to recover the full costs of buying energy for their customers at this winter’s very high prices, was the latest controversy to embroil Ofgem. It has been fiercely criticised by MPs and consumer groups for compounding the energy crisis.Ofgem on Thursday risked courting further controversy when it said it would not change the way the costs of rescuing customers of failed energy suppliers were recovered from household electricity bills. Those fixed costs are at present included in “standing charges” — which also cover grid connections costs — but had been branded regressive by some campaigners, who wanted the regulator to investigate linking the charges to usage. More

Norway has increased interest rates for a second time this year to 1.75 per cent and plans a further rise next month to counter what the central bank described as “persistent global price pressures”.The central bank raised borrowing costs 0.5 percentage points on Thursday, following a similar move in June. It plans another increase next month to counter inflation, which is now at 6.8 per cent — more than three times higher than the central bank’s target of 2 per cent. “A markedly higher policy rate is needed to ease the pressures in the Norwegian economy and to bring inflation down towards the target,” said Ida Wolden Bache, governor of Norges Bank.The accelerated pace of rate rises would reduce the risk of inflation becoming entrenched at a high level, the Monetary Policy and Financial Stability Committee said in a statement on Thursday.Central banks around the world have raised rates aggressively in response to inflation, which is at multi-decade highs in several economies following a surge in global food and energy costs. Norges Bank cautioned that there was a possibility of a sharper slowdown in global growth, noting that a rise in interest rates and high inflation could cool down the housing market and household consumption. The more aggressive messaging from the central bank led analysts to change their forecasts for interest rates. “We now expect the bank to make it a hat trick of 50 basis-point hikes at the next meeting in September,” said Jack Allen-Reynolds of Capital Economics. “With price pressures looking strong, further rate increases are likely to follow.” Economists at the US bank Goldman Sachs raised their forecast for how quickly Norges Bank would increase rates in the future on Thursday, predicting it would lift its policy rate by a quarter percentage point at every meeting until it reaches 3 per cent in March 2023. Unlike other economies in North America and Europe, however, Norway’s rate rises are unlikely to trigger a recession.The country is receiving record income from oil and gas as other European countries turn to western Europe’s leading petroleum producer to fill the gap created by the loss of Russian supplies. Norway’s economy also benefits from inflows from the world’s largest sovereign wealth fund worth $1.2tn.Investors have scaled back their expectations of how far the European Central Bank will raise rates, betting it will pause its policy tightening as the eurozone faces recession this winter following squeezed supplies of Russian gas.However, ECB executive board member Isabel Schnabel indicated a likely 0.5 percentage point rise in September after a similar-sized move last month.“Even if we entered a recession, it’s quite unlikely that inflationary pressures will abate by themselves,” Schnabel told Reuters in an interview published on Thursday. “In July, we decided on a 50 basis-point hike in light of the inflation outlook. At the moment I do not think this outlook has changed fundamentally,” she said.

The US Federal Reserve has been even more aggressive, raising rates by 0.75 percentage points for the second consecutive month in July. Minutes from the rate-setting meeting, published on Wednesday, signalled that policymakers were keen to press ahead with a tightening of monetary policy.Rising US rates are also having an impact on developing nations as many commodities are priced in dollars within global markets.On Wednesday, Ghana’s central bank raised interest rates by 300 basis points to 22 per cent — the largest increase since 2002 — as it sought to tame rising inflation and the depreciation of the country’s currency. More