Aurelia Butler

SYDNEY (Reuters) – Australia’s top central banker on Wednesday said there were economic scenarios where interest rates could rise later this year, but it was also plausible that a hike may not come for another year or more.Answering questions after a speech on the economic outlook, Reserve Bank of Australia (RBA) Governor Philip Lowe emphasised the country had a unique opportunity to get unemployment down under 4% for the first time in 50 years and it was worth being patient on policy to achieve that. More

President Joe Biden’s administration is pushing to persuade Congress to approve the bill, which includes $52 billion to subsidize semiconductor manufacturing and research, as shortages of the key components used in autos and computers have exacerbated supply chain bottlenecks.If the procedural vote succeeds in the narrowly Democratic-controlled House, the full chamber would aim to vote on the full bill on Friday.House Speaker Nancy Pelosi last week said the 2,900-page bill, called the “America Competes” act, would “supercharge” investment in chips and boost U.S. manufacturing and research capacity, as well as advancing U.S. competitiveness and leadership.The Senate passed the U.S. Innovation and Competition Act last year, which includes $52 billion to increase U.S. semiconductor production and authorizes $190 billion to strengthen U.S. technology and research to compete with China.The House bill has key differences with the Senate version. It does not contain the $190 billion for technology and research, but does include $45 billion to support supply chain resilience and manufacturing of critical goods, industrial equipment and manufacturing technology. More

WASHINGTON (Reuters) -China has failed to meet its commitments under a two-year “Phase 1″ trade deal that expired at the end of 2021, and discussions are continuing with Beijing on the matter, Deputy U.S. Trade Representative Sarah Bianchi said on Tuesday.”You know, it is really clear that the Chinese haven’t met their commitment in Phase 1. That’s something we’re trying to address,” Bianchi told a virtual forum hosted by the Washington International Trade Association.In the deal signed by former President Donald Trump in January 2020, China pledged to increase purchases of U.S. farm and manufactured goods, energy and services by $200 billion above 2017 levels during 2020 and 2021.Through November, China had met only about 60% of that goal, according to trade data https://www.piie.com/research/piie-charts/us-china-phase-one-tracker-chinas-purchases-us-goods compiled by Peterson Institute for International Economics senior fellow Chad Bown.The deal prevented the escalation of a nearly three-year trade war between the world’s two largest economies, but left in place tariffs on hundreds of billions of dollars of imports on both sides of the Pacific.Agriculture Secretary Tom Vilsack in late January told lawmakers that China’s purchases of U.S. farm goods fell short of the Phase 1 goal by about $13 billion.The U.S. Census bureau is expected to release final 2021 trade data for goods and services on Feb. 8, which will provide specifics on the shortfall.Chinese customs data http://english.customs.gov.cn/Statics/46bdb268-260d-46a1-adde-e3cebcaf6817.html showed the country’s 2021 trade surplus with the United States surged 25% to $396.6 billion after declining for two straight years, with exports to the United States up 27% and imports of American goods rising 33%.A spokesperson for China’s Embassy in Washington said Beijing has worked to implement the Phase 1 agreement “despite the impact of COVID-19, global recession and supply chain disruptions.””We hope the U.S. can create a sound atmosphere and conditions for expanded trade with China. The two trade teams are in normal communication,” the spokesperson said in an emailed statement.STABLE RELATIONSHIPBianchi, whose portfolio includes China and Asian trade matters, did not identify steps the Biden administration is taking to hold China to its Phase 1 commitments, which also include some increased Chinese market access for U.S. agriculture, biotechnology and financial services.”It’s not our goal to escalate here. But certainly we’re looking at all the tools we have in our toolbox to make sure they’re held accountable,” Bianchi said, without providing details.Bianchi, who served as an economic adviser in the Obama administration and took office in October, said the United States was trying to foster a “stable relationship” with China, but the two countries are at a “difficult stage in the relationship.””To be super-candid, the conversations are not easy. They’re very difficult. But you know, from my perspective, what’s important is that we’re having conversations and they will be unflinchingly honest,” Bianchi said.She said USTR was emphasizing that China’s state aid to companies and non-market economic policies and practices are a “serious threat to American economic interests.”Bianchi said USTR was consulting closely with Congress on the Biden administration’s planned Indo-Pacific Economic Framework to re-engage economically with the rest of Asia, and more details would be released in coming weeks.The framework will not include improved market access for countries that sign up, Bianchi said, but said the United States will be seeking high-standard “binding commitments” from trading partners in negotiations on digital trade policies, labor rules, environmental standards and supply chain resilience. More

The tentative date for the action on all five nominees is Feb. 15, according to information from Committee chair Sherrod Brown’s office on Tuesday. When they met to consider the renomination of Fed Chair Powell and the elevation of current Fed governor Lael Brainard to the post of Fed vice chair, banking panel members from both sides of the aisle signaled a measure of support. But the three other nominees, who appear before the banking committee on Thursday, face a less certain outcome in the closely divided Senate. Any failure to get his Fed picks approved would represent a setback for Biden, whose popularity has suffered as inflation has surged, and who has said he is counting on the Fed to bring soaring prices under control. In recent days a particularly intense battle has been building over Biden’s choice for Fed vice chair of supervision, former Fed governor Sarah Raskin. As the Fed’s top regulator, she is seen as likely to have a tighter hand on Wall Street than her Trump-appointed predecessor, Randal Quarles. Republicans, led by top Senate Banking committee Republican Pat Toomey, have raised objections to what they see as her hostility to oil and gas companies. Democrats praised what they see as justified concern with the risks that climate change poses to financial stability. The U.S. Chamber of Commerce weighed in with concerns about Raskin and her calls for federal regulators to transition financing away from the fossil fuel industry, although other business leaders gave their backing..”We offer our support without reservation,” executives of more than a dozen small banks wrote the committee Tuesday, of Raskin.The partisan battle has also extended to the other nominees, who include Michigan State University’s Lisa Cook and Davidson College’s Philip Jefferson. “A breath of fresh air,” UAW union President Ray Curry said of the two Black economist nominees in an email sent Monday by Brown’s office. “Political activists,” wrote conservative columnist George Will of Cook and Raskin in an opinion piece sent around Friday by Toomey’s office. Cook, who has written extensively on the negative economic drag imposed by racial and gender inequality, would be the first non-white woman ever to hold the job of Fed governor. Jefferson, another economist whose recent work has focused on poverty, would be the fourth Black male to do so. More

(Reuters) -St. Louis Federal Reserve President James Bullard on Tuesday said he favors starting the turn to tighter U.S. monetary policy with successive rate increases at the Fed’s March, May and June meetings, before assessing whether the pace of inflation requires more aggressive steps from there.But he pushed back against the idea of kicking off the tightening cycle with a half-percentage point hike in March, noting that markets have on their own started to push up borrowing costs already, and said that how high the Fed will ultimately need to lift rates remains an “open question.””The point of this is to get (monetary policy) better positioned right now and in coming months, and then we will be able to assess, at that point, whether we need to do more or not,” during the second half of the year and into 2023, Bullard told Reuters in an interview on Twitter (NYSE:TWTR) Spaces.With investors currently anticipating five quarter point increases over the course of the year, Bullard said that “is not too bad a bet…A lot is going to depend on how inflation develops during the year.”He is not optimistic about how much inflation will fall without the Fed’s intervention. Global factors remained tilted towards higher prices, and Bullard said he thinks the U.S. economy is going to continue to grow strongly – so strong in fact he expects the unemployment rate to fall below 3% by year’s end. Though the upcoming jobs report for January may show some weakness because of the rise over the holidays in coronavirus cases, “don’t be fooled,” Bullard said. “This is quite the strong economy here and a very strong labor market.”That would be the lowest unemployment rate since the early 1950s, and likely lead to ongoing wage pressures and sustained consumer spending that could keep prices rising.TWO-YEAR MARKAs the Fed barrels toward the end of two years of near-zero interest rates, Bullard signaled that uncertainty is so high at this point the Fed may offer less guidance about the overall path of interest rates as it mulls data meeting by meeting. “We are going to be have to be more nimble, faster, better at reacting to inflation data and other developments as we go through this year,” Bullard said. “It’s going to be a more data-dependent environment.”Still, Bullard – who for months has been cajoling his colleagues to take a more aggressive stance against soaring inflation – gave somewhat of a roadmap for what he expects on policy and the economy. On trimming the Fed’s $9 trillion balance sheet, Bullard said he would like to get started in the second quarter and thinks “that the runoff can be faster than it was last time around.” Raising rates and shrinking the balance sheet are both expected to raise borrowing costs and slow growth, putting downward pressure on what’s now 40-year-high inflation. “We are cognizant of the inflation issue, we’re moving on the policy rate, but we’re also going to move on the balance sheet so we’re not that far from reaching neutral if you are willing to consider both of those,” Bullard said, referring to the interest rate that would neither speed nor slow the economy. In Bullard’s estimation that rate is between 1.75% and 2%, a bit below where many of his colleagues see it. More