Evelyn Reynolds

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    Fed’s Waller wants more evidence inflation is cooling before cutting interest rates

    Federal Reserve Governor Christopher Waller said Thursday he will need “at least another couple more months” of data before inflation is falling enough to warrant interest rate cuts.
    While he said he still expects the FOMC to begin lowering at some point this year, Waller said he sees “predominately upside risks” to his expectation that inflation will fall to the Fed’s 2% goal.
    The remarks are consistent with a general sentiment at the central bank that while further rate hikes are unlikely, the timing and pace of cuts is uncertain.

    Christopher Waller, governor of the US Federal Reserve, during a Fed Listens event in Washington, D.C., on Friday, Sept. 23, 2022.
    Al Drago | Bloomberg | Getty Images

    Federal Reserve Governor Christopher Waller said Thursday he will need to see more evidence that inflation is cooling before he is willing to support interest rate cuts.
    In a policy speech delivered in Minneapolis that concludes with the question, “What’s the rush?” on cutting rates, the central bank official said higher-than-expected inflation readings for January raised questions on where prices are heading and how the Fed should respond.

    “Last week’s high reading on CPI inflation may just be a bump in the road, but it also may be a warning that the considerable progress on inflation over the past year may be stalling,” Waller said in prepared remarks.
    While he said he still expects the Federal Open Market Committee to begin lowering rates at some point this year, Waller said he sees “predominately upside risks” to his expectation that inflation will fall to the Fed’s 2% goal.
    He added that there are few signs inflation will fall below 2% anytime soon based on strong 3.3% annualized growth in gross domestic product and employment, with few signs of a potential recession in sight. Waller is a permanent voting member on the FOMC.
    “That makes the decision to be patient on beginning to ease policy simpler than it might be,” Waller said. “I am going to need to see at least another couple more months of inflation data before I can judge whether January was a speed bump or a pothole.”

    The remarks are consistent with a general sentiment at the central bank that while further rate hikes are unlikely, the timing and pace of cuts is uncertain.

    The inflation data Waller referenced showed the consumer price index rose 0.3% in January and was up 3.1% from the same period a year ago, both higher than expected. Excluding food and energy, core CPI ran at a 3.9% annual pace, having risen 0.4% on the month.
    Reading through the data, Waller said it’s likely that core personal consumption expenditures prices, the Fed’s preferred inflation gauge, will reflect a 2.8% 12-month gain when released later this month.
    Such elevated readings make the case stronger for waiting, he said, noting that he will be watching data on consumer spending, employment and wages and compensation for further clues on inflation. Retail sales fell an unexpected 0.8% in January while payroll growth surged by 353,000 for the month, well above expectations.
    “I still expect it will be appropriate sometime this year to begin easing monetary policy, but the start of policy easing and number of rate cuts will depend on the incoming data,” Waller said. “The upshot is that I believe the Committee can wait a little longer to ease monetary policy.”
    Markets just a few weeks ago had been pricing in a high probability of a rate cut when the Fed next meets on March 19-20, according to fed funds futures bets gauged by the CME Group. However, that has been pared back to the June meeting, with the probability rising to about 1-in-3 that the FOMC may even wait until July.
    Earlier in the day, Fed Vice Chair Philip Jefferson was noncommittal on the pace of cuts, saying only he expects easing “later this year” without providing a timetable.
    Governor Lisa Cook also spoke and noted the progress the Fed has made in its efforts to bring down inflation without tanking the economy.
    However, while she also expects to cut this year, Cook said she “would like to have greater confidence” that inflation is on a sustainable path back to 2% before moving. More

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    2 Years Into Russia-Ukraine War, U.S. Campaign to Isolate Putin Shows Limits

    Many nations insist on not taking sides in the war in Ukraine, while China, India and Brazil are filling Russia’s coffers.The Biden administration and European allies call President Vladimir V. Putin of Russia a tyrant and a war criminal. But he enjoys a standing invitation to the halls of power in Brazil.The president of Brazil says that Ukraine and Russia are both to blame for the war that began with the Russian military’s invasion. And his nation’s purchases of Russian energy and fertilizer have soared, pumping billions of dollars into the Russian economy.The views of the president, Luiz Inácio Lula da Silva, encapsulate the global bind in which the United States and Ukraine find themselves as the war enters its third year.When Russia launched its full-scale invasion of Ukraine on Feb. 24, 2022, the Biden administration activated a diplomatic offensive that was as important as its scramble to ship weapons to the Ukrainian military. Wielding economic sanctions and calling for a collective defense of international order, the United States sought to punish Russia with economic pain and political exile. The goal was to see companies and countries cut ties with Moscow.But two years later, Mr. Putin is not nearly as isolated as U.S. officials had hoped. Russia’s inherent strength, rooted in its vast supplies of oil and natural gas, has powered a financial and political resilience that threatens to outlast Western opposition. In parts of Asia, Africa and South America, his influence is as strong as ever or even growing. And his grip on power at home appears as strong as ever.The war has undoubtedly taken a toll on Russia: It has wrecked the country’s standing with much of Europe. The International Criminal Court has issued a warrant for Mr. Putin’s arrest. The United Nations has repeatedly condemned the invasion.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Turkey ends hiking cycle after 8 months, holding key rate at 45%

    Turkey’s central bank has hiked rates by a cumulative 3,650 basis points since May 2023.
    Inflation in the country of 85 million last month jumped 6.7% from December — its biggest monthly increase since August — and rose 64.8% year-on-year.
    Economists expect a hold on the current interest rate for much of 2024, and some see inflation roughly halving by the end of the year.

    Turkish flag over a DenizBank building. Turkey is expected to head to the polls on Sunday.
    Ismail Ferdous | Bloomberg | Getty Images

    Turkey’s central bank held its key interest rate on Thursday, keeping it at 45% despite soaring inflation after eight consecutive months of hikes.
    The move was widely expected as the bank indicated in January that its 250-basis-point hikes would be its last for the year, despite inflation now at roughly 65%.

    Consumer prices in the country of 85 million last month jumped 6.7% from December — its biggest monthly jump since August — according to the Turkish central bank’s figures. They rose 64.8% year-on-year in January.
    Turkey’s key interest rate climbed by a cumulative 3,650 basis points since May 2023. The latest decision to hold rates, rather than cut them, signals consistency from the newly appointed Turkish central bank governor Fatih Karahan with the strategy of his predecessor, Hafize Erkan. Karahan took office in early February.
    Analysts viewed the accompanying press statement from the central bank as hawkish and indicating no easing of rates in the near future.
    “The Committee assesses that the current level of the policy rate will be maintained until there is a significant and sustained decline in the underlying trend of monthly inflation and until inflation expectations converge to the projected forecast range,” the bank’s statement said. “Monetary policy stance will be tightened in case a significant and persistent deterioration in inflation outlook is anticipated.”
    Economists expect a hold on the current interest rate for much of 2024, and see inflation roughly halving by the end of the year — meaning monetary easing could still be on the cards.

    “An extended interest rate pause is likely in our view over the coming months. With inflation likely to end the year at 30-35% (broadly in line with the CBRT’s forecast of 36%), there is still a possibility that the central bank starts an easing cycle before the end of the year, which many analysts are expecting,” Liam Peach, senior emerging markets economist at London-based Capital Economics, wrote in a note Thursday.
    “But our baseline view remains that interest rates will stay on hold throughout this year and that rate cuts won’t arrive until early next year.” More

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    New Freighters Could Ease Red Sea Cargo Disruptions

    Analysts and shipping executives say they expect costs to fall later this year as companies receive vessels they ordered two to three years ago.After the Houthi militia started attacking container ships in the Red Sea last year, the cost of shipping goods from Asia soared by over 300 percent, prompting fears that supply chain disruptions might once again roil the global economy.The Houthis, who are backed by Iran and control northern Yemen, continue to threaten ships, forcing many to take a much longer route around Africa’s southern tip. But there are signs that the world will probably avoid a drawn-out shipping crisis.One reason for the optimism is that a huge number of container ships, ordered two to three years ago, are entering service. Those extra vessels are expected to help shipping companies maintain regular service as their ships travel longer distances. The companies ordered the ships when the extraordinary surge in world trade that occurred during the pandemic created enormous demand for their services.“There’s a lot of available capacity out there, in ports and ships and containers,” said Brian Whitlock, a senior director and analyst at Gartner, a research firm that specializes in logistics.Shipping costs remain elevated, but some analysts expect the robust supply of new ships to push down rates later this year.Before the attacks, ships from Asia would traverse the Red Sea and the Suez Canal, which typically handles an estimated 30 percent of global container traffic, to reach European ports. Now, most go around the Cape of Good Hope, making those trips 20 to 30 percent longer, increasing fuel use and crew costs.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    What Is Your Housing Situation? We Want to Hear From You.

    A Times housing reporter wants to learn more about the pressures of rising housing costs and how they have affected your community and family.“No society can be fully understood apart from the residences of its members.”I have that quote (from “Crabgrass Frontier,” the seminal history of America’s suburbs) taped to a wall behind my desk. It summarizes why I love covering housing for The New York Times and seem never to run out of things to write about. Housing is everything. It’s where we live and raise our families. It is most people’s largest store of wealth. Whether you own, you rent, or you sleep outside, where you hang your head defines much of your existence.Over the past few decades, and especially since the pandemic, housing has gone from a symbol of American strength to an everyday crisis. Aspiring homeowners are becoming forever renters. People live in increasingly crowded households, the supply of illegal housing has surged and homeless camps have multiplied. People are fleeing expensive states for cheaper ones — which has in turn created housing problems in the cities where they end up.There have also been new opportunities: The rise of at-home offices has allowed many people to relocate to cheaper housing markets and prompted a number of families to quit their 9 to 5s and redevelop property or become landlords. In California and elsewhere, the legalization of backyard homes has inspired a number of homeowners to become developers by creating small rental units on their properties.For the past several years, I have covered virtually every aspect of America’s housing crisis, from the public officials trying to tackle it in statehouses to the people living its consequences. I write about tenants as well as landlords, developers as well as environmentalists, public housing as well as private — even an attempt to build a new city from scratch.My stories range in topic and come from around the country, but the common thread is that they are rooted in the accounts of people and the places that make them. Which is why I want to hear from you. I want to know what kinds of housing pressures you are dealing with and how they have affected your life, family, friendships and community. And I want to know what stories or topics you think need more attention. The articles I write are inspired by the stories people tell me.I read all submissions. I also always reach back out to ask more questions and make sure I’ve got my facts right before I publish anything. I won’t publish anything without your explicit permission, and I won’t use your contact information for any other purpose or share it outside the newsroom. If you would like to submit information anonymously, please visit our tips page. More

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    Fed Minutes Show Embrace of Inflation Progress but No Hurry to Cut Rates

    Minutes from the Federal Reserve’s Jan. 30-31 meeting showed policymakers thought that risks of an inflation pickup had “diminished.”Federal Reserve officials welcomed a recent inflation slowdown at their last meeting in late January but were intent on proceeding carefully as they tiptoe toward rate cuts, according to minutes from that gathering, which were released on Wednesday.Central bankers raised interest rates sharply from March 2022 to July 2023, pushing them to 5.3 percent from a starting point near zero. Those moves were meant to cool consumer and business demand, which officials hoped would weigh down rapid inflation.Now, inflation is slowing meaningfully. Consumer prices climbed 3.1 percent in the year through January, down sharply from their recent peak of 9.1 percent. But that is still faster than the pace that was normal before the pandemic, and it is above the central bank’s goal: The Fed aims for 2 percent inflation over time using a different but related metric, the Personal Consumption Expenditures index.The economy has continued to grow at a solid clip even as price growth has moderated. Hiring has remained stronger than expected, wage growth is chugging along and retail sales data have suggested that consumers are still willing to spend.That combination leaves Fed officials contemplating when — and how much — to lower interest rates. While central bankers have been clear that they do not think they need to raise borrowing costs further at a time when inflation is moderating, they have also suggested that they are in no hurry to cut rates.“There had been significant progress recently on inflation returning to the committee’s longer-run goal,” Fed officials reiterated in their freshly released minutes. Officials thought that cooler rent prices, improving labor supply and productivity gains could all help inflation to moderate further this year. Policymakers also suggested that “upside risks to inflation” had “diminished” — suggesting that they are becoming more confident that inflation is coming down sustainably.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Germany slashes 2024 growth forecast to just 0.2% as economy in ‘tricky waters,’ minister says

    Germany on Wednesday said that it was slashing its expectations for gross domestic product growth for 2024 to 0.2%, down from a 1.3% estimate previously.
    The country narrowly avoided a recession at the end of 2023 and has faced a series of economic crises.
    “The economy is in tricky waters,” Habeck said in a statement released online, according to a CNBC translation. “We are coming out of the crisis more slowly than we had hoped.”

    Robert Habeck, German Minister for Economy and Climate Protection and Vice Chancellor, is pictured during the weekly meeting of the cabinet on February 21, 2024 in Berlin, Germany.
    Florian Gaertner | Photothek | Getty Images

    Germany’s gross domestic product is now expected to grow by just 0.2% this year, as the country wades in “tricky waters,” German Economy Minister Robert Habeck said Wednesday.
    The revised GDP growth forecast is down from a previous estimate of 1.3%. Habeck said the government now anticipates German GDP to increase by 1% in 2025.

    Speaking during a news briefing, the minister attributed the revised forecast to an unstable global economic environment and to the low growth of world trade, alongside higher interest rates.
    Those issues have negatively impacted investments, especially in the construction industry, he said.
    German housebuilding is among the sectors that have been most affected by this, with developers canceling projects and order numbers declining, according to recent data. Analysts fear the sector may face further difficulties this year.
    “The economy is in tricky waters,” Habeck said in a statement released online, according to a CNBC translation. “We are coming out of the crisis more slowly than we had hoped.”
    This is despite energy costs and inflation falling and consumer spending power increasing again, he said. Habeck nevertheless maintained that Germany has proven resilient in the face of losing access to Russian seaborne crude and oil product supplies, as a result of the war in Ukraine.

    Budget crisis

    The country narrowly avoided a recession in the second half of 2023, despite its GDP declining by 0.3% in the final quarter as well as for the full-year 2023. The third-quarter GDP for 2023 was revised to reflect stagnation, however. It means the country dodged a technical recession, which is characterized by two consecutive quarters of negative growth.
    Habeck pointed to Germany’s recent budget crisis which left a 60 billion euro ($65 billion) hole in the government’s financial plans over the coming years as an additional economic challenge.
    Last year, the country’s constitutional court ruled that it was unlawful for the government to reallocate emergency debt that was taken on but not used during the Covid-19 pandemic to its current budget plans. This caused significant disruption to financial planning and forced the government to make cuts and savings.
    The biggest challenge for Germany is a lack of skilled workers, which will only intensify in the years ahead, Habeck said in remarks published Wednesday. He also said there were various structural issues which need to be addressed to “defend” the competitiveness of Germany as an industrial hub.
    Habeck also addressed the outlook for inflation, saying it is expected to fall to 2.8% throughout 2024, before returning to the 2% target range again in 2025. The harmonized consumer price index for January 2024 came in at 3.1% on an annual basis. More

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    U.S. Economy: Has an Era of Increased Productivity Returned?

    Thirty years ago, the U.S. entered an era of productivity gains that enabled healthy growth. Experts are asking if it could happen again.The last time the American economy was posting surprising economic growth numbers amid rapid wage gains and moderating inflation, Ace of Base and All-4-One topped the Billboard charts and denim overalls were in vogue.Thirty years ago, officials at the Federal Reserve were hotly debating whether the economy could continue to chug along so vigorously without spurring a pickup in inflation. And back in 1994, it turned out that it could, thanks to one key ingredient: productivity.Now, official productivity data are showing a big pickup for the first time in years. The data have been volatile since the start of the pandemic, but with the dawn of new technologies like artificial intelligence and the embrace of hybrid work setups, some economists are asking whether the recent gains might be real — and whether they can turn into a lasting boom.If the answer is yes, it would have huge implications for the U.S. economy. Improved productivity would mean that firms could create more product per worker. And a steady pickup in productivity could allow the economy to take off in a healthy way. More productive companies are able to pay better wages without having to raise prices or sacrifice profits.Several of the trends in place today have parallels with what was happening in 1994 — but the differences explain why many economists are not ready to declare a turning point just yet.The Computer Age vs. the Zoom AgeBy the end of the 1980s, computers had been around for decades but had not yet generated big gains to productivity — what has come to be known as the productivity paradox. The economist Robert Solow famously said in 1987, “You can see the computer age everywhere but in the productivity statistics.”We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More