Aurelia Butler

WASHINGTON (Reuters) – Canadian Finance Minister Chrystia Freeland stepped well beyond economic policy at a G20 finance meeting on Friday to issue an “impassioned” warning to her Russian counterparts not to invade neighboring Ukraine, two sources familiar with her remarks said.During a contentious G20 meeting hosted by Indonesia, Freeland directly addressed Russian Finance Minister Anton Siluanov and central bank governor Elvira Nabiullina and warned them that Russia would face “crushing” sanctions in the event of an invasion.”If Ukraine is invaded, all of our economies and citizens will suffer,” Freeland told them, according to one of the sources. “The economic sanctions on Russia will be swift, they will be coordinated, they will be crushing. Like-minded countries agree on this course of action. And we are united and resolute.”Freeland’s press secretary, Adrienne Vaupshas, did not respond to a Reuters request for comment on her speech. Freeland participated in the meeting on a web link from Ottawa.The source said that Freeland, previously Canada’s foreign minister, took an opportunity to speak directly to influential Russian policy makers at a critical moment as tensions intensified on the Ukraine-Russian border, where Russia has amassed more than 100,000 troops.”Do not hurt yourselves in doing this,” Freeland said, according to the sources. “Let’s not endanger the collective here, including economically. A second source said that the Russian officials responded to Freeland’s “impassioned” speech by saying that reports on the threat of an invasion were “fake news.”G20 finance officials on Friday argued over communique language describing geopolitical risks to the global economy, deleting a reference to “current” tensions in a final statement after objections by Russia and China.The disagreements over this issue and treatment of debts for poor countries delayed the communique for hours as markets fretted over the prospect of war in Ukraine.Freeland, a fluent Russian speaker who once served as the Financial Times’ Moscow bureau chief and whose grandfather was born in Ukraine, delivered one line in Russian, according to the first source, but said in English: “You may think that for a number of us like-minded democracies here, you may think that democracies are weak. But do not doubt us and do not doubt our resolve.” More

(Reuters) -Federal Reserve officials on Friday squelched what had been rising market expectations for an aggressive initial response to 40-year-high U.S. inflation, signaling that steady interest rate hikes should be enough to do the trick.”I don’t see any compelling argument to taking a big step at the beginning,” New York Federal Reserve Bank President John Williams, the No. 2 official on the central bank’s policy-setting panel, told reporters after a speech.”I think we can steadily move up interest rates and reassess,” he said at the online event. Fed Governor Lael Brainard – President Joe Biden’s nominee to be vice chair at the Fed – said officials will likely kick off a “series of rate increases” at their upcoming meeting in March, followed by decreases in the size of the Fed’s balance sheet “in coming meetings.”Brainard, speaking at a conference in New York, did not give a specific recommendation for the coming meeting, but said recent changes in financial markets, including a rise in mortgage rates, were “consistent with” where the Fed is heading.”The market is clearly aligned with that and brought forward the changes in financing conditions in a way that’s consistent with our communications and data,” Brainard said.Investors in federal funds futures contracts last week began leaning towards the idea the Fed would raise rates a half a percentage point in March. Those expectations have now drifted back, with a quarter point hike now anticipated and six increases in total over the year.In remarks at the conference in New York, Chicago Fed President Charles Evans downplayed the thought the Fed needed to get more aggressive, even though he agreed policy was “wrong-footed” with annual consumer price increases topping 7%.He said he remained convinced inflation would ease on its own.”I see our current policy situation as likely requiring less ultimate financial restrictiveness compared with past episodes and posing a smaller risk,” Evans said at a separate New York event. “We don’t know what is on the other side of the current inflation spike… We may once again be looking at a situation where there is nothing to fear from running the economy hot.”The remarks came at the end of a tumultuous week in which traders piled into, and then backed away from, bets that the Fed would begin a round of rate hikes next month with a bigger-than-usual half-point increase. St. Louis Fed President James Bullard had fanned those expectations with a call for raising rates by a full percentage point by the Fed’s June meeting, a rate path that would require at least one half-point hike between now and then. Policymakers at the central bank have all but said they will start raising borrowing costs next month to quell inflation that has raced past their 2% target, and economists expect the Fed to kick off the longest series of rate hikes in decades.Fed Chair Jerome Powell has been publicly silent since January, so Williams’ and Brainard’s comments provide the best steer yet on the prevailing view at the Fed’s policy-setting core.Powell, however, will have a chance to shape expectations on March 2 and 3 when he gives his semiannual monetary policy update to Congress in hearings announced on Friday by the House Financial Services Committee and Senate Banking Committee.STEADILY, PREDICTABLYThe Fed should begin raising rates next month and, once rate hikes are underway, begin to “steadily and predictably” trim its $9 trillion balance sheet, Williams said. Both actions, he said, will bring demand into better balance with supply. At the same time, he said, other forces should also be bringing down inflation, with supply chains healing and consumers returning to pre-pandemic spending patterns. Williams said policymakers can speed up or slow down the pace of rate increases later as needed. A path in which the overnight federal funds rate moves to a range of 2% to 2.5% by the end of next year makes sense, he said. Williams said he expects real U.S. GDP to grow by slightly less than 3% this year and for the unemployment rate to drop to about 3.5% by the end of the year. He projects inflation as measured by the personal consumption expenditures price index to decline to about 3% and for it to fall further next year as supply challenges improve. More

Powell will deliver his regular semiannual monetary policy update to the U.S. House Financial Services Committee on March 2 and appear before the Senate Banking Committee on March 3.Both hearings will begin at 10 a.m., the committees said on Friday. Fed officials have all but promised to exit their pandemic-era zero-rate policy at their next meeting on March 15-16 to bring down inflation that has shot by the central bank’s 2% target. But it has not been clear how aggressively they will respond.Last week, St. Louis Fed President James Bullard called for a full percentage point worth of rate hikes over the next three meetings, a steeper path than the Fed has followed in decades.This week other officials have sought to signal a gentler approach, with the influential head of the New York Fed, John Williams, on Friday saying he sees little need for the central bank to go big at the start of its rate-hike cycle.Powell, who has not spoken publicly since January, may use his testimony to lay out what he feels is the consensus of the Fed’s 16 monetary policymakers, who will be weighing the risks of an upward inflation spiral against the possibility that tightening policy too hard or fast could choke off economic growth or disrupt financial markets. More