Aurelia Butler

WASHINGTON (Reuters) – The U.S. House of Representatives pushed toward a Thursday vote on President Joe Biden’s $1.75 trillion domestic investment bill, despite a nonpartisan arbiter’s finding that it would add to the deficit.The Congressional Budget Office said it would increase federal budget deficits by $367 billion over 10 years, although it acknowledged that additional revenues could be generated through improved Internal Revenue Service tax collections.The CBO estimated that the new tax enforcement activities would generate a net increase in revenues of $127 billion through 2031. The White House estimates the changes will generate $400 billion in additional revenue.At least one of the moderate Democrats who had wanted to see the CBO score before voting said she accepted the White House’s math.”We put in the work and look what we got — a Build Back Better Act that’s fully paid for, reduces the deficit and helps American families,” said Representative Carolyn Bordeaux. “Now it’s time to pass it.” House Speaker Nancy Pelosi said a vote on passage would occur later on Thursday.If passed, the bill would be in addition to the more than $1 trillion infrastructure investment legislation that Biden signed into law this week.The new bill provides free preschool for all 3- and 4-year-olds, boosts coverage of home-care costs for the elderly and disabled, expands affordable housing programs and increases grants for college students. The two measures comprise the twin pillars of Biden’s domestic agenda and would be on top of the $1.9 trillion in emergency coronavirus pandemic aid that Biden and his fellow Democrats pushed through Congress in March over a wall of opposition from Republicans.”The numbers have been crunched and the technical language has been vetted and we are on the doorstep of passing this historic bill,” House Rules Committee Chairman Jim McGovern, a Democrat, said as debate of the bill began on the House floor.Republicans have vowed to withhold their support, leaving Democrats to employ a special “budget reconciliation” procedure that would allow them to ram the legislation through the Senate with a simple majority vote, instead of at least 60 votes in the 100-member chamber normally needed to advance measures.Republican Representative Guy Reschenthaler said the bill will worsen inflation and hand tax breaks to the wealthy. He labeled it “the Democrats’ big government socialist spending spree.”In addition to funding expanded social programs, the bill provides $550 billion to battle climate change. If it passes the Democratic-controlled House, it would go to the Senate for consideration, where two centrist Democratic members have threatened to hold it up. Senators are expected to amend the House bill. If so, it would have to be sent back to the House for final passage.Under the bill, an expanded child tax credit would be extended for a year, working parents would receive help paying for childcare, pre-kindergarten schooling would be available to all and seniors would receive home health care in an attempt to keep many from having to go to nursing homes.It also would significantly lower the cost of some prescription drugs, such as insulin.Democrats have a 221-213 majority in the House and can only afford to lose three Democratic votes on the bill since no Republicans are expected to vote for it.Biden pleaded for passage after sobering performances for Democrats in this month’s state elections. But some centrist Democrats interpreted the results differently, worrying that ambitious spending plans were not resonating with voters. More

The shift comes as President Joe Biden nears a decision on whether to keep Jerome Powell as Fed chair for another term, or to elevate Governor Lael Brainard to that post instead. Earlier this week Biden signaled he could make an announcement on Friday.Whoever Biden picks will face the thorny task of steering toward the Fed’s two goals, stable prices and full employment, when they appear to be increasingly in conflict. Both Powell and Brainard have said they believe the current inflation surge will subside next year as supply chains are repaired, and have argued the Fed should keep interest rates at rock bottom to give more time for the millions of Americans who lost employment or left the workforce during the pandemic to get a job if they want to. Many of their Fed colleagues have signed on to that view, but continued rising prices are challenging it. On Thursday, one of the U.S. central bank’s most reliable policy doves said he is “more open-minded” to raising interest rates next year than he was six months ago. A 2022 interest rate hike, Chicago Fed President Charles Evans said, could be appropriate if inflation continues to stick despite his expectations to the contrary.”I wouldn’t describe it as hair on fire or anything like that,” Evans told reporters after a talk. “But I would say, I have to admit, it’s gone on longer, things are not quite as clean as I was hoping for; patience is hard, and there might be a little bit of movement sooner than I’m thinking, or it could be that I’m just flat out wrong and we need to move.”Separately, Atlanta Federal Reserve President Raphael Bostic said he believes the U.S. central bank could start raising interest rates in the middle of next year, based on the jobs outlook.”Right now, our projections suggest that by the summertime of next year, the number of jobs that we have in the economy will be pretty much where we were pre-pandemic,” Bostic said in an interview with NPR’s Marketplace. “And at that point, I think it’s appropriate for us to try to normalize our interest rate policy.”Bostic previously said he was among the half of Fed policymakers who, as of September, thought a rate hike would be appropriate by next year, but his public embrace of a mid-2022 liftoff is new.At their policysetting meeting last month, Fed officials decided to begin withdrawing support for the economy by gradually reducing what had been $120 billion in monthly asset purchases down to zero by next June. Some policymakers have since called for a hawkish turn and a quicker taper so as to position the Fed for an even earlier rate hike should it be needed.Evans pushed back on that view on Thursday. “The expectation is we don’t raise rates before (the end of the taper); the expectation is we don’t adjust (the taper) unless, state-contingent, we see a big change in the data,” he said. But traders are already adjusting their expectations, with interest-rate futures now pricing in a better-than-even chance of three rate hikes before the end of next year. In September only half of the Fed’s policymakers thought they would need to begin to raise rates next year, with the other half seeing 2023 as more likely for the first rate hike.The Fed will deliver a better read on how far policymakers’ views may have shifted when it releases fresh quarterly forecasts on Dec. 15, when its next policymaking meeting wraps up. More

The Securities Daily said experts believed the next stage of tax reductions and exemptions will target small, medium and micro enterprises, especially manufacturing firms, and could involve increasing the deductions on their research expenses.Zhang Yiqun, a committee deputy chairman at the Society of Public Finance of China, was quoted by the newspaper as saying that he believed the total scale of these reductions could exceed 500 billion yuan.Last month, China’s cabinet said it would defer some taxes for manufacturing firms for three months from November due to the impact of high raw material prices and rising production cost, which amounted to a total of around 200 billion yuan for smaller firms in the manufacturing sector.($1 = 6.3851 Chinese yuan) More

Manchin’s remarks were earlier reported by The Hill. Democratic President Joe Biden said earlier this week he will likely decide by the end of this week whether to keep Powell in his post another four years or elevate Fed Governor Lael Brainard to the job.With the Senate split evenly between Democrats and Republicans, Biden has made it a practice of seeking Manchin’s support for key pieces of his economic agenda, so the Democratic senator’s view on Powell may grab some attention as investors try to gauge which way Biden is leaning. Manchin supported Powell’s nomination the first time around, but has more recently expressed worries about rising inflation and the Fed’s bond-buying program. On Wednesday, the two spoke by phone, and Manchin said the Fed chair helped him understand the U.S. central bank’s strategy.”I have not made up my mind yet,” Manchin told The Hill in remarks his spokesperson confirmed to Reuters. “But I’m just saying that it helped an awful lot having him clear up a lot of the concerns I had.” More

BENGALURU (Reuters) – The Federal Reserve will raise interest rates late next year, earlier than expected just a month ago, in a landmark shift from the emergency measures it took to backstop the U.S. economy during the COVID-19 pandemic, according to a Reuters poll.    Most respondents said the Fed should move even sooner to combat inflation, which hit a 30-year high last month and economists say it will stick above the central bank’s target until at least 2024.The shift in economists’ expectations for a first rate hike to next year from early 2023 predicted in an October survey puts them more in line with market expectations, and follows recent news U.S. inflation hit a 30-year high last month. With disrupted global supply chains and a sharply-improved job market, the Fed, like most major central banks, is expected to move sooner rather than later.The Nov. 15-18 poll predicted the Fed would raise rates by 25 basis points to 0.25-0.50% in Q4 2022, followed by two more hikes in Q1 and Q2 2023. The fed funds rate was expected to reach 1.25-1.50% by the end of 2023.But nearly two-thirds of economists, 27 of 42, who responded to an additional question on what they recommended the Fed ought to do said the Fed should raise rates earlier, by the end of September next year.”The double-whammy of a cost and wage push into prices is likely leaving the Fed uncomfortable. The risks of earlier hikes – next summer, if not before – are on the rise,” said Michelle Meyer, U.S. economist at Bank of America (NYSE:BAC) Securities.”To the extent that inflation expectations march higher over the longer run and consumers continue to react negatively to higher prices on the view that they will prove persistent, the more likely the Fed will damper the inflationary pressure with tighter monetary policy.” Reuters Poll: U.S. monetary policy outlook – https://fingfx.thomsonreuters.com/gfx/polling/lgpdwngjzvo/U.S.%20monetary%20policy%20outlook.png High inflation is a concern for central banks around the world, some of which have already raised rates or are close to doing so. The Fed, for its part, is expected to taper its $120 billion in monthly bond purchases from this month.The consensus view for change in the core personal consumption expenditures (PCE) price index, the Fed’s key inflation gauge, was predicted to stay above 4% this quarter and next, double the 2% target. It’s then forecast to slow in the second half of 2022, along with growth.Those forecasts were upgraded from last month.”The whiff of stagflation is getting stronger as shortages worsen, leading to surging prices and weaker real GDP growth. Shortages of goods and intermediate inputs will eventually ease, although not for at least six to 12 months,” said Paul Ashworth, chief North America economist at Capital Economics. “But the drop in the labour force appears to be more permanent, which suggests the pandemic could have a long-term scarring effect on potential GDP after all.”After expanding 6.7% in the second quarter on an annualized basis, U.S. economic growth was expected to have slowed to 2.0% in the third quarter before expanding 4.8% this quarter. That compared with 3.8% and 5.0% predicted in October for the third and fourth quarters, respectively.On average, the economy was expected to grow 3.9% next year, 2.6% in 2023 and 2.3% in 2024. That compared with previous forecasts of 4.0% for 2022, 2.5% for 2023 and 2.2% in 2024.While the unemployment rate was predicted to range between 3.6% and 4.3% until the end of 2023, over 55% of 39 respondents who answered another question said consumer spending in the U.S. would improve over the coming year. More

The GfK Consumer Confidence Index rose for the first time in four months to -14 in November from -17 in October which was its lowest level since an early-2021 coronavirus lockdown. A Reuters poll of economists had pointed to further deterioration this month to -18. Joe Staton, GfK’s client strategy director, said views on the economy had improved despite rising inflation and the prospect of higher interest rates although consumers were less buoyant about their personal finances. “This weakness is important as it reflects day-to-day plans to save or spend and is a strong driver of overall UK economic growth,” Staton said.”However, one highlight for both physical and virtual retail is the seven-point jump in major purchase intentions in the run-up to Black Friday and Christmas.” The rise in GfK’s measure of consumers’ propensity to make a major purchase to -3 from -10 left it 25 points higher than it was in November last year.The Bank of England has said the rise in inflation and other squeezes on household finances, including the end of emergency pandemic welfare support for many households, could slow Britain’s economic recovery from the coronavirus crisis. The BoE is due to announce on Dec. 16 whether it is raising interest rates from their all-time low after it wrong-footed many investors on Nov. 4 when it kept borrowing costs on hold despite forecasting inflation would climb to around 5%.British consumer inflation hit a 10-year high of 4.2% – more than double the BoE’s 2% target – in the 12 months to October, according to data published on Nov. 17.The GfK survey of 2,000 people was conducted between Nov. 1 and Nov. 12. More

Only 1.2% of the companies analysed by Arabesque — most of them large listed firms — reported on all 11 recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD) in 2019.Fifty-four percent of the top firms made no disclosures, it added.The TCFD was set up by the Financial Stability Board, which groups regulators, central banks and treasury officials from G20 countries, and set out recommendations in 2017 on how companies could voluntarily disclose the risks and opportunities from climate change. Investors are increasingly focusing on companies’ exposure to climate change, as U.N. climate talks ended on Saturday with a deal that for the first time targeted fossil fuels as the key driver of global warming.”We need to put action to the promises,” said Arabesque president Daniel Klier.”TCFD is the framework everyone is looking at…the quality of disclosure has to improve quite significantly.”Health and technology services companies were the worst offenders, with more than 70% making no disclosures, Arabesque’s analysis showed, while energy companies were among those giving the most information. “Industries facing most investor scrutiny are industries that are trying to do a better job,” Klier said.Regulators in markets such as Britain, the European Union, Brazil, Hong Kong, Japan, New Zealand, Singapore and Switzerland have begun using the TCFD recommendations as a basis for mandatory disclosures. The TCFD also said last month only about half of companies disclosed climate-related risks and opportunities in some form, on average covering around a third of the 11 recommended disclosures.The TCFD’s 2021 review covered more than 1,600 companies around the world.A lack of analytical tools to quantify the exposure of assets to physical climate risks is contributing to “chronic underinvestment” in climate resilience by the private sector, according to a report this week by the Coalition for Climate Resilient Investment group of institutional investors and governments with over $20 trillion in assets. More