Economy

By Jessica DiNapoli, Bernadette Christina and Toby SterlingNEW YORK (Reuters) – U.S. soda and food maker PepsiCo (NASDAQ:PEP) Inc and Dutch dairy producer FrieslandCampina N.V. have asked their suppliers to cease buying palm oil from plantation owner Astra Agro Lestari, accused by environmental groups of land and human- rights abuses.Corporate supply chains are under scrutiny as regulators and investors increasingly consider environmental and social impacts, and as consumers worry about climate change and biodiversity loss.Environmental groups last year found that Jakarta-based palm oil producer Astra Agro Lestari (AAL) did not obtain consent from local communities before claiming land, improperly disposed of waste and cleared areas leading to flooding in Indonesia. The findings spurred some major consumer products and packaged food manufacturers, which widely use palm oil, to cut ties with the agricultural company.AAL late last year said it would appoint “an independent third party to review the allegations and any other issues that may arise in relation to them,” and will publish the findings of the review, following the NGO’s report.Doritos maker PepsiCo and FrieslandCampina, which produces Friso infant formula, join companies including Tide manufacturer Procter & Gamble (NYSE:PG) Co and Nescafe owner Nestle SA (SIX:NESN) in suspending business with AAL.A PepsiCo spokesperson told Reuters the company is “engaging with suppliers who continue to source from (AAL) and have asked that they suspend the mills identified as being potentially linked to the grievance and underlying allegations.” PepsiCo does not directly source from AAL, the spokesperson said. FrieslandCampina said it started examining its relationship with AAL in the fall after receiving critical questions from an environmental nonprofit.“That motivated us to conduct a further investigation. On the basis of the findings, we asked our supplier to no longer source materials from this supplier,” a spokesperson said.Palm oil is used to create soap, provide taste and texture and keep chocolate from melting, among other purposes, according to the World Wildlife Fund.An AAL spokesperson said it had no direct commercial relationship with PepsiCo or FrieslandCampina, and the companies had not contacted them about the issue. More

Welcome to Trade Secrets. Today’s main piece is on the UK’s imminent-ish accession to the Asia-Pacific regional CPTPP deal (the Comprehensive and Progressive blah, you know the one), which has been a bit of a rough ride. But first, this week’s instalment of the transatlantic US electric vehicle tax credits saga, a drama with a classic three-act structure.SET-UP: The Biden administration, which likes “friendshoring” and says Europe is a friend, wants allies’ EV manufacturers to get US tax credits when supplying minerals for car batteries.CONFRONTATION: Congress says to be an ally you need a free trade agreement with the US: EU does not have one.RESOLUTION: Washington and Brussels sign otherwise blank piece of paper with words “TRADE AGREEMENT” written on it. Sorted.I exaggerate, but not beyond all recognition. As my DC colleague and Trade Secrets alumnus Aime Williams explains here, US and EU negotiators are writing an agreement on critical minerals, likely to be a loose statement of intent rather than anything binding. It will, however, be enough of a trade deal to unlock the EV credits while not being enough of a trade deal to have to go through Congress. Bit of a fiddle, but gets the job done. And maybe the agreement will develop some substance one day, hope springs eternal. Today’s Charted waters is on the power of global brands.The North-Atlantic-Trans-Pacific PartnershipBy multiple accounts, the UK’s application to join the 11-member CPTPP, a process that started in 2021 and is likely to reach broad agreement in the next week or two, has been a bit more bruising than London expected. Except for more or less replicating the EU preferential trade agreements (PTAs) it inherited, CPTPP was only Britain’s third substantive deal since Brexit. The first two were with Australia and New Zealand, where the UK caved to demands to open up its beef market to get them signed quickly. The UK has developed a competent (and large) cadre of civil service trade negotiators, but ministers desperate for deals to put in the post-Brexit trophy cupboard puts them in a weak bargaining position.Whatever the political impact, the UK’s long-run economic gains from joining CPTPP will be pitiful, just 0.08 per cent of gross domestic product. They’re still pretty inconsequential even if more countries in the region join (unless China gets in, but that really is a long game). Through replicating the EU PTAs, the UK already has preferential access to all the big CPTPP economies. To express economic growth in decibel form, the UK joining the deal in its current form is a cat sneezing three rooms away. Given that market access to the UK isn’t worth much to them in turn, some of the CPTPP member countries felt free to be a bit of a pain, making Britain jump through bureaucratic hoops to make sure its laws fitted CPTPP rules. Its location thousands of kilometres away from existing members (a non-specific rather than a Trans-Pacific Partnership, you might say) and its history of being an imperial power in the region might have encouraged this attitude. If the UK felt any sense of entitlement at the beginning of the joining process, it certainly didn’t by the end.One of the last outstanding issues got done last week, and seems to have involved a UK concession that might create some tricky conversations with British environmental campaigners. CPTPP member Malaysia is hopping mad about rich countries blocking its palm oil exports: the EU has a de facto ban on them and is creating new import restrictions on products linked to deforestation, a story for another newsletter. The UK, after its arguments about environmental protection were briskly rejected, apparently acceded to Malaysia’s demand it cut tariffs on palm oil to zero immediately on joining CPTPP. The UK’s anti-deforestation plans, which will appear in parallel to the final agreement, will also be less stringent than the EU’s. The UK chapter of the powerful global orangutan lobby, and I’m only half-joking describing it thus, is unlikely to be pleased.The final jigsaw piece (see also Sam Lowe on this in his excellent Most-Favoured Nation newsletter) is Canada, which like Australia and New Zealand in their bilateral deals is holding out for more beef quotas. There’s not much historical or even geopolitical sentiment in trade. Canada might be the UK’s Anglospheric cousin and a military ally in Ukraine, but that doesn’t mean much when you’ve got Alberta cattle farmers on your back. There may be more headlines in the UK media about aggrieved British farmers when the details emerge.So, a bit of a rough ride into the CPTPP for the UK and not many gains once it gets there. But is it still worth signing to try to keep the Global Britain brand alive, broaden its footprint in the world’s fastest-growing markets and so on? I’d say a pretty clear no, and that’s true for preferential deals more generally. Here’s why.As noted above, the trade and GDP gains from CPTPP membership are minimal. By contrast, the costs of leaving the EU are credibly estimated at about 5.5 per cent of GDP. If signing CPTPP even remotely prejudices the UK’s probability of rejoining the EU in coming decades and repairing some of that damage, it isn’t worth doing. Will signing the CPTPP delay the UK rejoining the EU? Of course it will, that’s one of its benefits as far as the government is concerned. UK trade minister Greg Hands said the quiet part out loud recently when he crowed that joining CPTPP would make it harder for a future Labour government to re-enter the EU customs union. It’s not an edifying statement.So there it is. The UK’s negotiators have come a long way. But it’s been a rough ride, and right from the beginning the whole political drive for Britain joining was always more about spin and taking a poison pill against rejoining the EU than it was about substance.As well as this newsletter, I write a Trade Secrets column for FT.com every Thursday. Click here to read the latest, and visit ft.com/trade-secrets to see all my columns and previous newsletters too.Charted watersAre there any winners from the global supply chain shortages, contributing to the double-digit food price inflation around the world? Yes. Discount retailers definitely. But also those producers with strong brand names, as the chart below shows.My colleagues in the Lex team have written a useful explainer. Consumer goods companies had a remarkably strong 2022 despite the sharp rise in raw material costs and the cost of living squeeze, with companies such as L’Oréal, Unilever and Diageo securing high double-digit operating margins on their sales.Maintaining brand loyalty like this costs money, but these times prove the value of such investment. There can, after all, only be one company offering the lowest price, but several businesses can secure their future by being seen as something of value to shoppers. (Jonathan Moules)Trade linksIana Dreyer at the news service Borderlex splendidly lets fly at the EU for obsessing far too much about Joe Biden’s green subsidies in general and its car industry in particular.Japan has joined the makeshift substitute for the World Trade Organization’s Appellate Body, which a bunch of governments have put together while waiting for the US to unfreeze the real one. The global food monitor from the Agricultural Market Information System says that good weather and good harvests have prevented the Ukraine war causing an international food crisis, but stocks remain tight and the risk remains high.The Dutch government, announcing new restrictions on sending semiconductor manufacturing machinery to China, denied acting under undue pressure from the US and said export controls should be co-ordinated at an EU-wide level.Trade Secrets is edited by Jonathan Moules More

LOS ANGELES (Reuters) – Emergency officials in several California counties spent Friday patrolling levies and swollen rivers as an “atmospheric river” storm drenched the already-sodden state with torrential rains, causing floods that washed out roads and prompted evacuations.The latest deluge from dense streams of Pacific moisture sweeping California’s skies soaked some mountain areas still clogged with piles of snow dumped by a recent spate of paralyzing blizzards, while bringing even more snow to higher elevations.The San Bernardino County Sheriff’s Department said it was investigating what role, if any, late-February snowstorms may have played in the demise of at least eight people, most of them elderly, found to have died alone while snowbound in their homes over the past two weeks.Residents in the town of Big Bear and nearby mountain enclaves have said their communities were ill-prepared for the severity of winter storms that local authorities called unprecedented for Southern California’s high country.The latest blast of heavy showers and gusty winds arrived Thursday night and peaked early Friday, sweeping a vast region that is home to some 26 million people, including greater Los Angeles, the San Francisco Bay area and metropolitan Sacramento.Flood watches and advisories extended from San Diego and Mexican border to the Shasta-Cascade region of northern California.The National Weather Service (NWS) reported rainfall totals ranging from 3 inches to nearly 10 inches across the region.U.S. President Joe Biden on Friday declared an emergency in California, ordering federal assistance to help state and local authorities cope with the severe weather.The storm was the product of what meteorologists call an atmospheric river, a high-altitude current of dense, subtropical moisture streaming into the West Coast from the warm Pacific waters around Hawaii.It marks the 10th such weather system to hit California since Christmas, adding to an exceptionally wet, snowy winter in a state that in recent years has been plagued far more by drought and wildfires than by severe precipitation.Among areas hardest hit on Friday were riverfront communities in central California where numerous streams engorged by runoff of rain and melting snow from surrounding mountains were transformed into raging torrents.’FULLY SATURATED’About 2,000 residents were under evacuation orders and warnings in San Luis Obispo County, as crews there spent the day monitoring levees, creeks and rivers and filling sandbags, said Rachel Monte Dion, the county’s emergency services coordinator. Some personnel spent hours in trailers watching for flooding in low-lying areas across the county, which was pummeled by heavy downpours in January, causing a levy to fail and damaging homes. “Since January, it’s been raining steadily here and so our ground is fully saturated and our creeks are full,” Dion said, adding that flooding on Friday struck parts of the coastal wine country town of Cambria and the beachfront community of Oceano.The collapse of one roadway in Paso Robles for the second time since January left a couple hundred residents outside that town cut off again, Dion said.In Santa Cruz County, another road washed out by a flooded creek near the town of Soquel left at least 400 homes in adjacent foothill and mountain communities isolated, county spokesperson Jason Hoppin said.Elsewhere in the county, communities along the swiftly rising San Lorenzo River were ordered evacuated before it reached flood stage, then receded, Hoppin said. Authorities were still keeping their eye on the Pajaro River, which drains a much larger area and thus takes longer to rise and fall, he said.Evacuation orders were issued along the Monterey County banks of that river, where “the levee is a little bit lower” than on the Santa Cruz County side, Hoppin said.On Friday morning, the weather service issued a flash-flood warning for parts of Tulare County, urging residents: “Move to higher ground now! This is an extremely dangerous and life-threatening situation.” The Tulare County sheriff has issued evacuation orders and warnings for several areas where rivers and streams had either overrun their banks, were nearing dangerously high levels or where a levee was breached. At least one bridge was reported washed out.The growing frequency and intensity of such storms amid bouts of prolonged drought are symptomatic of human-caused climate change, experts say. The swing from one extreme to another has increased the difficulty of managing California’s precious water supplies while minimizing flood and wildfire risks. More

The current projection is for a 25 bps move, with some even expecting no hike at all.That is a quick reversal in expectations after a sharp fall in weekly jobless claims and hawkish commentary from Fed Chair Jerome Powell had prompted traders to see a near 70% chance of a 50 bps rate hike. Following are rate expectations from major Wall Street Banks:Bank Current expectation Expectation before SVB crisis March hike Terminal March Terminal rate (in bps) rate hike (in bps) Goldman No hike 5.25% – 5.5% 25 5.5% – 5.75% JPM 25 5% – 5.25% 25 5% – 5.25% Citi 50 5.5% – 5.75% 50 5.5% – 5.75% BofA 25 5.25% – 5.5% 25 5.25% – 5.5% Morgan 25 5.12% 25 5.125% Stanley Barclays (LON:BARC) 50 5.5% – 5.75% 25 5.25% – 5.5% More

Investing.com — Bailouts are back. Tech bros and crypto firms breathe a sigh of relief as the Feds step in to guarantee all of the deposits at Silicon Valley Bank and Signature Bank, as well as setting up a new liquidity program to stop contagion to the wider banking sector. That hasn’t stopped other west coast banks in particular from selling off in premarket, however. The dollar plunges as markets bet that the Federal Reserve will be too scared of causing a crash to raise interest rates in March. Bond yields fall as the flight to safety outweighs any fear of future inflation. Crypto soars accordingly. And Pfizer is set to buy Seagen for $43 billion. Here’s what you need to know in financial markets on Monday, 13th March.1. Feds bail out tech brosFederal authorities bailed out depositors in Silicon Valley Bank (NASDAQ:SIVB) and Signature Bank (NASDAQ:SBNY), aiming to head off a run on the country’s second-tier regional banks.The Federal Reserve, Federal Deposit Insurance Corporation and the Treasury said they will make sure the two banks honor all of their deposits, the vast majority of which are above the $250,000 federally-insured threshold.They also set up a new instrument, named the Bank Term Funding Plan (BTFP), which will allow banks to sell Treasury bonds and other high-quality liquid assets to the Fed at par if they need to raise liquidity. The program will be back-stopped by $25B of taxpayers’ money.The move means that the banks’ clients, many of them venture capitalists and crypto platforms, will not have to carry the can for what appears to have been startlingly elementary risk management failures at the two banks.2. Banking stocks still falling despite rate freeze betsThe signs of panic at incipient financial instability caused a sharp and abrupt reassessment of the outlook for interest rates.Goldman Sachs and others said they now expect the Fed to keep rates unchanged at its meeting in March, in contrast to the consensus for a 25 basis point hike before last week’s events. The dollar fell and risk assets were broadly supported, after having fallen out of bed with a bump on Friday.However, if the Fed and the Treasury thought they had drawn a line under the fiasco, they were much mistaken. Shares in First Republic Bank (NYSE:FRC), fell 60% in premarket trade, amid bets that it will be the next domino to fall, while PacWest Bancorp (NASDAQ:PACW) stock fell 40% and Western Alliance (NYSE:WAL) fell 45%.  Banks with high concentrations of flighty corporate deposits are seen as being most at risk from concerns about liquidity, while those with more staid retail deposit bases are seen as better insulated.3. Stocks set to open mixed; Pfizer seen close to sealing Seagen dealStocks more broadly were struggling to make headway in premarket trade, with many still unsettled by the federal rescue of institutions that were largely unknown outside their respective niches until last week.By 06:30 ET (10:30 GMT), Dow Jones futures were down 34 points, or 0.1%, while S&P 500 futures were up 0.2% and Nasdaq 100 futures were up a more solid 0.6%. All three main cash indices had lost between 1% and 1.8% on Friday. European markets were more rattled, with the main benchmark indices losing over 2% each in early trading.While the focus is likely to stay on the banking sector later (HSBC (LON:HSBA) was down 4.3% after snapping up SVB’s U.K. operations for a nominal £1), other stocks in the news include Pfizer (NYSE:PFE), which finally agreed to buy Seagen (NASDAQ:SGEN) for $43B, and Novartis (NYSE:NVS), which outperformed after announcing a big new buyback program. A rumored deal to sell Qualtrics (NASDAQ:XM) to Silver Lake for $12.5B couldn’t stop SAP (ETR:SAPG) from falling nearly 3%. Boeing (NYSE:BA) is bucking the trend on hopes for a large order from Saudi Arabia.4. Crypto breathes a sigh of reliefOne asset class with an unambiguously positive reaction to the weekend’s developments was crypto. Some of the biggest depositors at the two banks that were rescued were Coinbase (NASDAQ:COIN) and USD Coin issuer Circle, both of whom stood to lose a large part of their reserves in the absence of a bailout.USD Coin – a stablecoin designed to trade at $1 – had fallen as low as 88c at the weekend, after Circle’s $3.3B exposure to Silicon Valley Bank (never a secret) became widely known. It had recovered to 98.60 by early Monday in New York, still trading at a clear discount to its notional value. Coinbase stock, meanwhile, was up 3.3% in premarket.Elsewhere, Bitcoin rose 8.5% to $22,229, while Ethereum rose 8.6% to $1,585, supported by perceptions that the Fed will be forced to stop its rate hikes.  5. Oil down on fears for the economy; OPEC+ output held up in FebruaryCrude oil prices fell, with concerns about the longer-term implications of bank failures in the U.S. counting for more than the sharp drop in the dollar, which would generally support prices.By 06:45 ET, U.S. crude futures were down 1.3% at $75.64 a barrel, while Brent was down 1.2% at $81.76 a barrel.Argus Media estimated that the total output of the OPEC+ bloc had remained steady in February, despite pressure on Russia from tightened western sanctions. More

“We appreciate the timeliness with which the U.S. authorities intervened and trust that, if necessary, European authorities will intervene with the same timeliness, assessing the implications for the conduct of monetary policy and financial stability,” the economy ministry said in a statement.Bank shares in Europe and Asia plunged on Monday as the United States’ move to guarantee the deposits of the collapsed tech-focused lender SVB failed to reassure investors that other banks remain financially sound.A government official said there was no sign of negative effects spreading to the broader Italian financial system at present, and played down Monday’s fall in bank shares as something that was to be expected.Shares of the country’s largest lenders Intesa Sanpaolo (OTC:ISNPY), UniCredit and Banco BPM fell between 5% and 7% in morning trading on the Milan bourse. More

The Bank Term Funding Program (BTFP) will offer loans with maturities of up to a year to banks, savings associations, credit unions and other eligible depository institutions.Here are some key elements of the Fed’s program:STRESS RELIEFThe Fed has raised rates from near zero a year ago to between 4.50-4.75% now to combat inflation that hit a 40-year high last year.That has undercut bond prices, including those for older-vintage Treasuries held widely by banks, which proved a major factor in Silicon Valley Bank’s inability to raise funds and contributed to its demise. Officials worry others could soon follow.”The BTFP will be an additional source of liquidity against high-quality securities, eliminating an institution’s need to quickly sell those securities in times of stress,” the Fed said in a statement on Sunday.NO HAIRCUTA key element of the program is acceptable loan collateral – including U.S. Treasuries and mortgage-backed securities among others – will be valued at “par,” meaning open-market bond values that have been impaired by a year of Fed rate hikes will not reduce what a bank may borrow from the central bank.The same collateral terms will also be available for loans drawn from the Fed’s “discount window,” its traditional lender-of-last-resort facility. Ordinarily, loan amounts were governed by the market value of the pledged collateral.”This will allow banks to fund potential deposit outflows Without crystalizing losses on depreciated securities,” Goldman Sachs (NYSE:GS) wrote Sunday after the Fed announcement.LOANS FOR A YEARLoans of up to a year in length will be available under the new facility. Borrowers may prepay the loans without penalty. Advances can be made until March 11, 2024.FIXED BORROWING COSTInterest rates will be the one-year overnight index swap (OIS) rate plus 10 basis points and will be fixed for the term of the advance on the day the advance is made.That OIS rate was quoted at about 4.9% late Sunday following the Fed’s announcement, according to Refinitiv data, down from as high as 5.6% last week before Silicon Valley’s difficulties emerged and started driving rates lower.TREASURY BACKSTOPThe loan commitments made by the Fed’s 12 regional banks will be backstopped with $25 billion from the U.S. Treasury’s Exchange Stabilization Fund. The Fed said it does not expect to have to tap those funds because the loans under the program are full recourse, meaning the central bank can seize all of the pledged collateral in the event of a failure to repay.In fact, the Fed loans are made with “recourse beyond the pledged collateral,” which takes into account the fact that the collateral may be impaired.That suggests “that the par valuation of the collateral would only become relevant if the borrowing institution lacks sufficient assets to repay the loan,” Goldman wrote.CONTAGION CONTAINMENT “One of the biggest revelations about the failure of Silicon Valley Bank to raise capital last week was the impact of the cumulative increase in interest rates over the last year on their securities portfolios,” Jefferies economists wrote after the details were released.”Because the pledged collateral is going to be valued at par, this new facility will ensure that other banks with similarly impaired hold-to-maturity portfolios will be able to easily leverage them to access liquidity, rather than have to realize significant losses and flood the markets with paper.””Monday will surely be a stressful day for many in the regional banking sector, but today’s action dramatically reduces the risk of further contagion,” they said. More

WASHINGTON (Reuters) – U.S. Federal Reserve officials meet next week again chasing persistent inflation but now balancing that against the first acute tremors from the aggressive interest rate hikes the central bank approved over the past year.The sudden failure of Silicon Valley Bank last week isn’t expected to prevent the Fed from continuing to raise interest rates at its March 21-22 meeting, with inflation still running far above the Fed’s 2% target and Fed chair Jerome Powell indicating monetary policy might need to become even more aggressive.But it could add a dose of caution to the policy debate and undermine the sense, common among officials so far, that Fed policy had not caused anything to “break” in an economy where spending and job growth have seemed immune to the impact of higher interest rates.SVB’s failure, which the Fed came to a view as a potentially systemic shock if bank depositors faced losses, prompted the Fed to announce a new bank lending facility on Sunday in an effort to maintain confidence in the system – effectively putting the Fed back in the business of emergency lending even as it tries to tighten credit overall with higher interest rates.Given the stakes that bit of dissonance seemed unavoidable, and may be accompanied by a slightly softer approach to monetary policy if risks are seen to be intensifying.”The threat of a systemic disruption in the banking system is small, but the risk of stoking financial instability may well encourage the Fed to opt for a smaller rate increase at the upcoming meeting,” Oxford Economics economist Bob Schwartz wrote on Friday after SVB was closed by regulators and as officials began examining how to respond to the largest bank failure since the 2007 to 2009 financial crisis.The upcoming Fed session was already providing a reality check of sorts, as policymakers tried to understand why the rapid rate hikes of the last year have not had more impact on the pace of price increases.The inflation rate in January actually rose, while an Atlanta Fed real-time projection as of March 8 showed gross domestic product expanding at a 2.6% annual rate, well above the economy’s roughly 2% underlying potential.Officials were poised to push the expected path of interest rates higher yet again as a result, the third time in their two-year battle against inflation that U.S. policymakers will have shifted on the fly after price increases proved to be faster, broader and more persistent than seen in their forecasts.A February jobs report released Friday showed the unemployment rate rising to 3.6%. More importantly for the Fed, monthly wage growth slowed even as the economy continued to add jobs, an outcome that leaves open whether the Fed will approve a quarter or a half point rate increase at its next meeting. By late Sunday after the day’s emergency actions, the probability of a half-point hike had diminished to below one-in-five. GRAPHIC: Fed view of 2023 policy rate (https://www.reuters.com/graphics/USA-FED/INFLATION/zdvxdxmywvx/chart.png) HIGHER END POINT?New inflation data to be released Tuesday and retail sales data on Wednesday both have the potential to push policymakers in either direction at the two-day meeting, which concludes March 22 with a new Federal Open Market Committee statement and projections issued at 2 p.m. EDT (1800 GMT), and a press conference by Powell at 2:30 p.m.While investors at this point see lower odds of a return to larger rate hikes, there is still the question of just how much higher the Fed will go overall. Powell in his remarks to Congress last week signaled the new “dot plot” of projections for the rate path beyond March would likely be higher than previously expected in order to slow inflation to the central bank’s 2% target from levels more than double that. As of December the high point for the target federal funds rate was expected by most officials to be 5.1%. In their final public comments before the beginning of a pre-meeting blackout period, Fed officials other than Powell also said they were primed for a more aggressive response if upcoming data show them losing more ground on inflation.”The ultimate level of interest rates is likely to be higher than previously anticipated,” Powell said in congressional testimony that reset expectations for where the Fed was heading, and pushing yields on U.S. Treasury bonds higher and prompting a sell-off in equity markets. At a Feb. 1 press conference, in contrast, his focus was on a “disinflationary process” he saw taking root.Developments since then have raised some doubt in investors minds if Fed officials will follow through with that, however, and much of the immediate heat on bond yields and rate expectations eased after Friday’s employment data, with the weekend’s developments in the banking sector to address the Silicon Valley Bank collapse also factoring into the reversal. STILL NIMBLE? Government reports released after Powell’s last press conference showed the central bank’s preferred measure of inflation had risen slightly to a 5.4% annual rate. Revisions to prior months also erased some of the progress policymakers had relied on when they decided to step down to quarter point rate hikes at their last session. A New York Fed study last week suggested moreover that current inflation was being driven more by persistent factors and less by cyclical or sectoral influences that might be quicker to dissipate.It is not the first time the Fed has been caught out by after-the-fact data updates. In the fall of 2021 the first release of monthly jobs reports seemed to show the job market weakening, taking some of the urgency out of discussions about when to start tightening monetary policy. By the end of the year revisions showed hundreds of thousands more jobs had been added than originally estimated.”If you are trying to be nimble, this is the risk. And Powell is trying to be nimble,” said former Fed economist John Roberts. More