Economy

WASHINGTON (Reuters) – Russia is consulting with its allies about challenging the U.S. nominee to head the World Bank, Moscow’s top representative at the bank said on Tuesday, a move that could complicate what was expected to be a smooth succession process.Russia remains a voting member of the World Bank, although the bank halted all programs in Russia and Belarus last March, citing what it called “hostilities against the people of Ukraine” following Russia’s invasion. Roman Marshavin, the World Bank executive director who represents Russia and Syria, told Reuters the “listing of potential candidates and consultations are still ongoing,” but gave no details. He said the decision would be made in Moscow.Russia’s plans were first reported by Russia’s state-owned TASS news agency. It quoted Marshavin as saying he was in discussions with other countries about possible candidates including Russian financiers and foreign economists, former heads of international organizations, as well as several ex-ministers of finance and heads of central banks.Marshavin declined to comment on the specifics of the TASS report or which other countries were involved.U.S. President Joe Biden last month nominated ex-Mastercard Chief Executive Officer Ajay Banga, 63, to replace David Malpass at the helm of the World Bank, which oversees billions of dollars in funding for developing countries.Banga, who is traveling in Africa this week, last week said he had already won support from India, Ghana and Kenya. He also got positive reviews from France and Germany at last month’s meeting of Group of 20 finance officials, and on Tuesday won the endorsement of Bangladesh.Treasury declined comment on the possible Russian challenge.While the bank will accept nominations from other countries until March 29, Biden’s nomination all but assures that Banga will fill the role. The World Bank has been headed by someone from the United States, the lender’s dominant shareholder, since its founding at the end of World War Two.A challenge from Russia or an allied country is unlikely to change the outcome, given the shareholding structure, but it could expose simmering tensions between the U.S. and Western nations and China – the bank’s third largest shareholder – over the Bank and other global financial institutions. More

Sweden: EU defence ministers meet in Stockholm as part of the Swedish presidency of the Council of the European Union.EU: Eurostat releases the eurozone’s gross domestic product in the fourth quarter of 2022.UK economic data: Researchers at KPMG and REC publish a monthly survey of the job market. The Office for National Statistics releases its estimate of the economic impact of strike action from June 2022 to last month.UK monetary policy: Bank of England Monetary Policy Committee member Swati Dhingra speaks at the Resolution Foundation in London.Financial services: Allied Irish Banks, Legal & General, Admiral Group, Hiscox and Royal London Group publish annual earnings.Other corporate earnings: German sportswear retailer Adidas and German chemical distribution group Brenntag post full-year results, while IT group Thales and media company Vivendi publish their annual earnings in France. In the UK, the Restaurant Group, Tullow Oil and construction group Galliford Try report earnings. More

In light of recent strong data, Jerome H. Powell said the Federal Reserve was likely to raise rates higher than expected.Jerome H. Powell, the Federal Reserve chair, made clear on Tuesday that the central bank is prepared to react to recent signs of economic strength by raising interest rates higher than previously expected and, if incoming data remain hot, potentially returning to a quicker pace of rate increases.Mr. Powell, in remarks before the Senate Banking Committee, also noted that the Fed’s fight against inflation was “very likely” to come at some cost to the labor market.His comments were the clearest acknowledgment yet that recent reports showing inflation remains stubborn and the job market remains resilient are likely to shake up the policy trajectory for America’s central bank.The Fed raised interest rates last year at the fastest pace since the 1980s, pushing borrowing costs above 4.5 percent, from near zero. That initially seemed to be slowing consumer and business demand and helping inflation to moderate. But a number of recent economic reports have suggested that inflation did not weaken as much as expected last year and remained faster than expected in January, while other data showed hiring remains strong and consumer spending picked up at the start of the year.While some of that momentum could have owed to mild January weather — conditions allowed for shopping trips and construction — Mr. Powell said the unexpected strength would probably require a stronger policy response from the Fed.“The process of getting inflation back down to 2 percent has a long way to go and is likely to be bumpy,” he told the committee. “The latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated.”Senator Elizabeth Warren suggested that the Fed was trying to “throw people out of work” and that millions of people stood to lose their jobs if unemployment rose as much as central bankers expected.Michael A. McCoy for The New York TimesFed officials projected in December that rates would rise to a peak of 5 to 5.25 percent, with a few penciling in a slightly higher 5.25 to 5.5 percent. Mr. Powell suggested that the peak rate would need to be adjusted by more than that, without specifying how much more.He even opened the door to faster rate increases if incoming data — which include a jobs report on Friday and a fresh inflation report due next week — remain hot. The Fed repeatedly raised rates by three-quarters of a point in 2022, but slowed to half a point in December and a quarter point in early February.The State of Jobs in the United StatesEconomists have been surprised by recent strength in the labor market, as the Federal Reserve tries to engineer a slowdown and tame inflation.Mislabeling Managers: New evidence shows that many employers are mislabeling rank-and-file workers as managers to avoid paying them overtime.Energy Sector: Solar, wind, geothermal, battery and other alternative-energy businesses are snapping up workers from fossil fuel companies, where employment has fallen.Elite Hedge Funds: As workers around the country negotiate severance packages, employees in a tiny and influential corner of Wall Street are being promised some of their biggest paydays ever.Immigration: The flow of immigrants and refugees into the United States has ramped up, helping to replenish the American labor force. But visa backlogs are still posing challenges.“If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes,” Mr. Powell said.Before his remarks, markets were heavily prepared for a quarter-point move at the Fed’s March 21-22 meeting. After his opening testimony, investors increasingly bet that the central bank would make a half-point move in March, stock prices lurched lower, and a closely watched Wall Street recession indicator pointed to a greater chance of a downturn. The S&P 500 ended the day down about 1.5 percent.While Mr. Powell predicated any decision to pick up the pace of rate increases on incoming data, even opening the door to the possibility made it clear that “it’s definitely a policy option they’re considering pretty actively,” said Michael Feroli, chief U.S. economist at J.P. Morgan.Mr. Feroli said a decision to accelerate rate moves might stoke uncertainty about what would come next: Will the Fed stick with half-point moves in May, for instance?“It raises a lot of questions,” he said.Blerina Uruci, chief U.S. economist at T. Rowe Price, previously thought the Fed would stop lifting interest rates around 5.75 percent but now thinks there is a growing chance they will rise above 6 percent, she said. She thinks that if Fed officials speed up rate increases in March, they may feel the need to keep the moves quick in May.“Otherwise, the Fed runs the risk of looking like they’re flip-flopping around,” Ms. Uruci said.While the Fed typically avoids making too much of any single month’s data, Mr. Powell signaled that recent reports had caused concern both because signs of continued momentum were broad-based and because revisions made a slowdown late in 2022 look less pronounced.“The breadth of the reversal along with revisions to the previous quarter suggests that inflationary pressures are running higher than expected at the time of our previous” meeting, Mr. Powell said.He reiterated that there were some hopeful developments: Goods inflation has slowed, and rent inflation, while high, appears poised to cool down this year.And Mr. Powell noted on Tuesday that officials knew it took time for the full effects of monetary policy to be felt, and were taking that into account as they thought about future policy.Still, he underlined that “there is little sign of disinflation thus far” in services outside of housing, which include purchases ranging from restaurant meals and travel to manicures. The Fed has been turning to that measure more and more as a signal of how strong underlying price pressures remain in the economy.“Nothing about the data suggests to me that we’ve tightened too much,” Mr. Powell said in response to lawmaker questions. “Indeed, it suggests that we still have work to do.”When the Fed raises interest rates, it slows consumer spending on big credit-based purchases like houses and cars and can dissuade businesses from expanding on borrowed money. As demand for products and demand for workers cool, wage growth eases and unemployment may even rise, further slowing consumption and causing a broader moderation in the economy.But so far, the job market has been very resilient to the Fed’s moves, with the lowest unemployment rate since 1969, rapid hiring and robust pay gains.Mr. Powell said wage growth — while it had moderated somewhat — remained too strong to be consistent with a return to 2 percent inflation. When companies are paying more, they are likely to charge more to cover their labor bills.“Strong wage growth is good for workers, but only if it is not eroded by inflation,” Mr. Powell said.Despite such explanations, some lawmakers grilled the Fed chair on Tuesday over what the central bank expected to do to the labor market with its policy adjustments.Senator Elizabeth Warren, Democrat of Massachusetts, suggested that the Fed was trying to “throw people out of work” and that millions of people stood to lose their jobs if unemployment rose as much as central bankers expected.“I would explain to people, more broadly, that inflation is extremely high, and that it is hurting the working people of this nation badly,” Mr. Powell said. “We are taking the only measures that we have to bring inflation down.”When Ms. Warren continued to press him on the Fed’s plan, Mr. Powell responded that the central bank was doing what policymakers believed was necessary.“Will working people be better off if we just walk away from our jobs and inflation remains 5, 6 percent?” Mr. Powell asked.He also underlined that the Fed does “not seek, and we don’t believe that we need to have,” a “very significant” downturn in the labor market, because there are many job openings, so it is possible that the labor market could cool quite a bit without outright job losses.“Other business cycles had quite different back stories than this one,” he said. “We’re going to have to find out whether that matters or not.”Joe Rennison More

WASHINGTON (Reuters) -The Federal Reserve will likely need to raise interest rates more than expected in response to recent strong data and is prepared to move in larger steps if the “totality” of incoming information suggests tougher measures are needed to control inflation, Fed Chair Jerome Powell told U.S. lawmakers on Tuesday.”The latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated,” the U.S. central bank chief said in his semi-annual testimony before the Senate Banking Committee.While some of that unexpected economic strength may have been due to warm weather and other seasonal effects, Powell said it may also be a sign the Fed needs to do more to temper inflation, perhaps even returning to larger rate increases than the quarter-percentage-point steps officials had been intending to use going forward.”If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes,” Powell said.The comments were Powell’s first since inflation unexpectedly jumped in January, and marked a stark acknowledgement that the “disinflationary process” he spoke of repeatedly in a Feb. 1 news conference was not unfolding smoothly.Senators responded with a broad set of questions and pointed criticism around whether the Fed was diagnosing the inflation problem correctly and if price pressures could be tamed without significant damage to economic growth and the job market.Democrats on the committee focused on the role high corporate profits may be playing in persistent inflation, with Senator Elizabeth Warren of Massachusetts charging that the Fed was “gambling with people’s lives” through rate hikes that, by the central bank’s most recent projections, would lead the unemployment rate to increase by more than a percentage point – a loss associated in the past with economic recessions.”You claim there is only one solution: Lay off millions of workers,” Warren said.”Will working people be better off if we just walk away from our jobs and inflation rebounds?” Powell retorted.”Raising interest rates certainly won’t stop business from exploiting all these crises to jack up prices,” said Senator Sherrod Brown, a Democrat from Ohio who chairs the committee.Republicans focused on whether energy policy was restricting supply and keeping prices higher than needed, and whether restrained federal spending could help the Fed’s cause.”The only way to get this sticky inflation down is to attack it at the monetary side and the fiscal side. The more we help on the fiscal side, the fewer people you will have to throw out of work,” said Senator John Kennedy, a Republican from Louisiana.”It could work out that way,” said Powell, who at a separate point in the hearing agreed with Democratic lawmakers’ assertions that lower corporate profits could help lower inflation, and with Republicans’ arguments that more energy production could help lower prices.”It’s not for us to point fingers,” the Fed chief said.’SURPRISINGLY HAWKISH’Powell’s remarks, virtually assuring that Fed officials will project a higher endpoint for the central bank’s benchmark overnight interest rate at the upcoming March 21-22 meeting, sparked a quick repricing in bond markets as investors boosted bets that the Fed would approve a half-percentage-point rate hike when they meet in two weeks.The Fed’s policy rate is currently in the 4.50%-4.75% range. As of December, officials saw that rate rising to a peak of around 5.1%, a level investors expect may move at least half a percentage point higher now. Equity markets added to initial losses and ended the day sharply lower, with the S&P 500 index dropping more than 1.5%. The U.S. dollar also rose, and yields on the 2-year Treasury climbed above 5% – the highest since 2007.Powell’s statement was “surprisingly hawkish,” said Michael Brown, a market analyst with TraderX in London. With a 50-basis-point rate hike now in play, Brown said a strong monthly jobs report on Friday would likely lead to “calls for a 6% terminal rate,” nearly a percentage point higher than Fed officials had projected as of December. The March 10 release of the Labor Department’s jobs report for February and an inflation report next week were cited by Powell as important in shaping what the Fed does at its next meeting.Powell will testify again on Wednesday before the U.S. House of Representatives Financial Services Committee.’LONG WAY TO GO’The hearing and Powell’s testimony honed in on an issue that is now at the center of the Fed’s discussions as officials try to determine whether recent data will prove to be a “blip,” or end up signaling that inflation remains stickier than thought and warrants a tougher response from the Fed. In his testimony, Powell noted that much of the impact of the central bank’s monetary policy may still be in the pipeline, with the labor market still sustaining a 3.4% unemployment rate not seen since 1969, and strong wage gains.While Powell said he thought the Fed’s 2% inflation target could still be met without dealing a major blow to the U.S. labor market, he acknowledged on Tuesday that “there will very likely be some softening in labor market conditions.” How much remains unclear, but Powell said the focus will remain more squarely on how inflation behaves.Inflation has fallen since Powell’s last appearances before Congress. After topping out at an annual rate of 9.1% in June, the Consumer Price Index dropped to 6.4% in January; the separate Personal Consumption Expenditures price index, which the Fed uses as the basis for its 2% target, peaked at 7% in June and had fallen to 5.4% as of January.But that remains too high, Powell said.”The process of getting inflation back down to 2% has a long way to go and is likely to be bumpy,” Powell said, adding later in the hearing that “the social costs of failure are very, very high.” More

The president’s plan targets Americans earning more than $400,000 a year in an attempt to increase the program’s solvency by 25 years.WASHINGTON — President Biden, as part of his budget set for release on Thursday, will propose raising and expanding a tax on Americans earning more than $400,000 as part of a series of efforts to extend the solvency of Medicare by a quarter-century.In spotlighting his Medicare plans, Mr. Biden is seeking to sharpen a contrast with Republicans and cast himself as a protector of cherished retirement programs — both for his likely re-election campaign and for a looming congressional battle with House conservatives who are demanding steep cuts in federal spending in order to raise the nation’s borrowing limit.The early release of the Medicare proposals, detailed in a White House fact sheet on Tuesday, also underscored the degree to which Mr. Biden has fully embraced the political upside of taxing high earners. That is the case even though administration officials have conceded there is little chance those tax increases will pass Congress.The proposals would affect the so-called net investment income tax, which was enacted to help offset the cost of former President Barack Obama’s signature health care law. They would increase the tax rate to 5 percent from 3.8 percent for people earning above $400,000 a year and expand the income subject to it. Independent estimates from the Urban-Brookings Tax Policy Center and the Committee for a Responsible Federal Budget suggest the changes could raise at least $350 billion, and possibly as much as $600 billion over the course of a decade. White House estimates are even higher: $700 billion in net new revenue over a decade, all from high earners.Mr. Biden is also proposing new cost savings for the government stemming from more aggressive negotiation over prescription drug prices. Those plans are almost certain to be rejected by Republicans, who won control of the House in November and roundly oppose both tax increases and Mr. Biden’s efforts to reduce pharmaceutical prices through regulation.The president’s emphasis on so-called entitlement programs is part of a sustained effort to claim a high ground with voters on both Medicare and Social Security and put Republicans in a difficult position as he clashes with conservatives on spending, taxes and debt.Health Care in the United StatesInsulin Prices: After years of mounting pressure, the drugmaker Eli Lilly said that it would significantly reduce the prices of several of its lifesaving insulin products.The Cost of Miracle Drugs: A wave of innovative medicines promise to cure devastating diseases. But when prices are too high, patients have to hunt for other ways to pay.Medicare: The Biden administration announced a rule targeting Medicare private plans that overcharge the federal government. The change strengthens the ability to audit plans and recover overpayments.‘Hospital at Home’ Movement: In a time of strained capacity, some medical institutions are figuring out how to create an inpatient level of care outside of hospitals.Medicare’s trustees estimate its hospital trust fund will be insolvent by 2028 without congressional action.Many Republicans have long supported cuts to the programs or raising their retirement ages to shore up the program’s finances and reduce federal spending. But others, aware of the potential voter backlash from touching popular programs, have grown wary of embracing the types of changes to the programs that were part of the Republican mainstream a decade ago. Former President Donald J. Trump vowed to protect both Social Security and Medicare and has urged Republicans to follow suit.Speaker Kevin McCarthy recently said he would not seek cuts to the programs in discussions with Mr. Biden over raising the debt limit, though more conservative members of his party are still pushing for reductions.“This debate over entitlements tied to the need to raise the federal debt ceiling has tied the party in knots,” said Larry Levitt, an executive vice president at the Kaiser Family Foundation, a health research group. “And I think President Biden is happy to engage in this debate and put forward proposals to sustain Medicare without cutting benefits or eligibility.”.css-1v2n82w{max-width:600px;width:calc(100% – 40px);margin-top:20px;margin-bottom:25px;height:auto;margin-left:auto;margin-right:auto;font-family:nyt-franklin;color:var(–color-content-secondary,#363636);}@media only screen and (max-width:480px){.css-1v2n82w{margin-left:20px;margin-right:20px;}}@media only screen and (min-width:1024px){.css-1v2n82w{width:600px;}}.css-161d8zr{width:40px;margin-bottom:18px;text-align:left;margin-left:0;color:var(–color-content-primary,#121212);border:1px solid var(–color-content-primary,#121212);}@media only screen and (max-width:480px){.css-161d8zr{width:30px;margin-bottom:15px;}}.css-tjtq43{line-height:25px;}@media only screen and (max-width:480px){.css-tjtq43{line-height:24px;}}.css-x1k33h{font-family:nyt-cheltenham;font-size:19px;font-weight:700;line-height:25px;}.css-1hvpcve{font-size:17px;font-weight:300;line-height:25px;}.css-1hvpcve em{font-style:italic;}.css-1hvpcve strong{font-weight:bold;}.css-1hvpcve a{font-weight:500;color:var(–color-content-secondary,#363636);}.css-1c013uz{margin-top:18px;margin-bottom:22px;}@media only screen and (max-width:480px){.css-1c013uz{font-size:14px;margin-top:15px;margin-bottom:20px;}}.css-1c013uz a{color:var(–color-signal-editorial,#326891);-webkit-text-decoration:underline;text-decoration:underline;font-weight:500;font-size:16px;}@media only screen and (max-width:480px){.css-1c013uz a{font-size:13px;}}.css-1c013uz a:hover{-webkit-text-decoration:none;text-decoration:none;}How Times reporters cover politics. We rely on our journalists to be independent observers. So while Times staff members may vote, they are not allowed to endorse or campaign for candidates or political causes. This includes participating in marches or rallies in support of a movement or giving money to, or raising money for, any political candidate or election cause.Learn more about our process.Mr. Biden has refused to negotiate with Republicans over the debt limit, though he has said he is willing to discuss fiscal policy more broadly. He repeatedly attacked Republicans on Social Security and Medicare, vowing not to cut the programs and piling on when Republican lawmakers declared them off the table in budget talks.The president’s budget plan seeks to further that message, in part by employing accounting maneuvers to make Medicare appear more solvent by directly dedicating more federal revenues to its trust fund. The budget will dictate that both the new tax increases and the savings from spending on prescription drugs would be used to increase the trust fund that finances Medicare’s hospital benefits. It will also propose transferring the existing revenue stream from the net investment tax to feed Medicare’s trust fund.The White House anticipates that together the changes would total about $1.5 trillion over the next decade, ensuring the fund can pay Medicare’s hospital bills for an additional 25 years. The finances for the part of Medicare that pays for doctor’s visits, which is also projected to grow substantially in coming years, would be unaffected.“The budget I am releasing this week will make the Medicare trust fund solvent beyond 2050 without cutting a penny in benefits,” Mr. Biden wrote in an opinion piece for The New York Times on Tuesday. “In fact, we can get better value, making sure Americans receive better care for the money they pay into Medicare.”For the first time this year, Medicare will begin regulating the price of prescription drugs, using new powers Congress gave it in the Inflation Reduction Act, the tax, health and climate bill Mr. Biden signed late last summer. The president’s budget highlights the substantial savings that the reforms are expected to generate over time.The legislation allows Medicare to regulate the price of certain expensive drugs that have been on the market for several years. It also limits the amount all drugmakers can raise prices each year. Those reforms would save Medicare about $160 billion over a decade, according to the Congressional Budget Office.The changes to prescription drug prices accompanied changes to Medicare’s benefit that will also lower the costs of expensive drugs for its beneficiaries, by capping the total amount they can be asked to pay in a year for all their medicines and by limiting co-payments on insulin to $35 a month.Mr. Biden will propose expanding the drug negotiations by allowing the government to negotiate over a broader universe of medications. The White House estimates that those changes and other tweaks to the drug negotiation provision would save the government an additional $200 billion over 10 years, which it seeks to direct to the Medicare trust fund.The United States pays more than double the drug prices of other developed countries. But lowering those prices is projected to cause less investment in new drug technology. The Congressional Budget Office estimated that the drug price reforms that passed last year will mean about 13 fewer drugs in the next 30 years, about a 1 percent reduction. The budget proposal would likely have a larger effect.Democrats cheered the proposals. Senator Ron Wyden of Oregon, who chairs the finance committee, called them “proof positive that Medicare’s guarantee of quality health care for older Americans can be secured for the next generation without raising the eligibility age, cutting benefits or handing over the program to big insurance companies.”Mr. Biden did not propose other major new policies to reduce Medicare’s spending on health care in the coming years, according to the fact sheet. His proposal, like his previous budgets, omits a series of policies meant to reduce waste that were featured in budgets offered by Mr. Trump and Mr. Obama. The largest categories of Medicare spending — payments to doctors and hospitals — would be unchanged.Republicans are unlikely to go along. They have tried to overturn the entire Inflation Reduction Act, including the drug negotiations, which some members of the party say will hamper innovation in the pharmaceutical industry. They have also sought to roll back Mr. Biden’s tax increases on corporations and high earners.Mr. Biden’s plans drew mixed reactions from budget-focused groups in Washington on Tuesday. The Committee for a Responsible Federal Budget said it would “strongly support” the proposals but had reservations over shifting revenues from the government’s general fund to the Medicare trust fund. The National Taxpayers Union, which supports lower taxes and less federal spending, called those shifts “a gimmick, not a real reform.” More

NEW YORK (Reuters) – The U.S. Federal Reserve could raise interest rates to 6% and keep them there for an extended period of time to fight inflation, said Rick Rieder, chief investment officer of global fixed income at BlackRock (NYSE:BLK), the world’s largest asset manager.Federal Reserve Chair Jerome Powell told U.S. lawmakers on Tuesday that the U.S. central bank could become more aggressive in its rate hike path following recent strong economic data. “We think there’s a reasonable chance that the Fed will have to bring the Fed Funds rate to 6%, and then keep it there for an extended period to slow the economy and get inflation down to near 2%,” Rieder said in a note on Tuesday.The Fed’s policy rate is currently in the 4.50%-4.75% range.As of December, officials saw that rate rising to a peak of around 5.1%, a level investors expect may move at least half a percentage point higher now.Goldman Sachs (NYSE:GS) said in a note on Tuesday that it had raised its forecast for the so-called terminal rate by 25 basis points to a range of 5.5%-5.75%.Bets on the Federal Reserve more aggressively hiking rates have gained more traction in money markets in recent weeks, after a string of economic data showing a tight job market and inflation remaining high. That data revived fears the Fed may resort once again to the same super-sized interest rate hikes that hammered stocks and bonds last year.Traders had largely expected the central bank to raise rates by 25 basis points at its next rate-setting meeting on March 21 to 22, but after Powell’s remarks on Tuesday Fed funds futures were pricing in a 50 basis points hike, CME Group (NASDAQ:CME) data showed. More

NEW YORK (Reuters) – Billionaire investor Ken Griffin, the founder of Citadel and Citadel Securities, said on Tuesday the Federal Reserve needs more consistency of communication in order to tame inflation and that the setup for a recession is unfolding.”If I could tell one thing to the (Fed) chairman, I would tell him to say less. I would just write a message: we’re going to put the inflation genie back in the bottle,” Griffin said in a televised interview with Bloomberg.Earlier on Tuesday, Fed chair Jerome Powell said the Fed will likely need to raise interest rates more than expected to control inflation. Previously, some market participants have at some points read Fed official’s speeches as less hawkish.”I really believe consistency of messaging is so important because part of how the Fed gets the job done is the perception of the American public that they can get the job done,” Griffin said. He believes the Fed will increase interest rates to around 5.5% to tame inflation.Still, the billionaire said the setup for a recession is unfolding, as late this year or next year the “pandemic orgy” of spending will come to an end.Griffin expressed some concerns about the impact of a long debate about the debt ceiling until a final deal is made, but said common ground will be reached. “I do think it’ll be market volatility that will drive that compromise.”He said Citadel is currently negotiating an enterprise-wide license to use artificial intellengence tool ChatGPT to help its developers write better code, translate software between languages and analyze information. More

(Reuters) – A look at the day ahead in Asian markets from Jamie McGeever.To slightly mangle Bruce Springsteen’s “Born To Run”: the market’s jammed with broken heroes on a last chance Powell drive; everybody’s out on the run tonight, and there’s no place left to hide. There certainly appears to be no place left to hide from higher U.S. interest rates, bond yields and a stronger dollar following Fed Chair Jerome Powell’s testimony to the Senate Banking Committee on Tuesday.Investors had generally expected Powell to strike a hawkish tone, so the scale of price adjustment across financial markets after he opened the door to higher and possibly faster rate increases was even more staggering.Asian markets will feel the aftershocks when they open on Wednesday, with Japanese current account data the only major economic data point on the calendar that could potentially influence the yen. The tone, however, will be set by Tuesday’s seismic market moves, some of which bear repeating: the dollar jumped 1.2%, its best day since November; the two-year Treasury yield hit 5% for the first time since 2007; the 2s/10s yield curve inversion reached 100 basis points for the first time since 1981.Graphic: US 2-year yield https://fingfx.thomsonreuters.com/gfx/mkt/zjvqjygygpx/US2Y.pngGraphic: US 2s/10s yield curve https://fingfx.thomsonreuters.com/gfx/mkt/dwpkdznzyvm/USCURVE.jpg The implied peak Fed rate is now 5.65%, traders now reckon a 50 bps rate hike from the Fed later this month is twice as likely as a quarter-point increase. Given all that, it is maybe surprising that Wall Street’s three main indexes ‘only’ fell between 1% and 1.5%.Powell’s hawkishness contrasted with Bank of England policymaker Catherine Mann, who said sterling could be vulnerable to more aggressive policy moves from other central banks, especially the Reserve Bank of Australia (RBA).The RBA raised rates by 25 bps as expected on Tuesday to 3.60%, the highest in more than a decade. But its dovish outlook caught markets flat-footed, and the Australian dollar plunged 2%. Unsurprisingly, sterling and the Aussie dollar were easily the worst-performing major currencies on the day, but the greenback is sure to flex its muscles against Asian currencies on Wednesday.As all-consuming as Powell’s remarks were, investors in Asia will also be keeping a close eye on news from China and signs that relations with the U.S. are deteriorating further. Trade activity fell in February, reflecting weak global and domestic demand, but trade with Russia boomed. Asked if China and Russia would abandon the U.S. dollar and euro for bilateral trade, Foreign Minister Qin Gang said countries should use whatever currency was efficient, safe and credible. Qin said currencies should not be the “trump card” for unilateral sanctions, or disguise for “bullying or coercion,” and warned Washington to stop suppression or risk ‘conflict’. Here are three key developments that could provide more direction to markets on Wednesday:- Fed Chair Jerome Powell testimony to House Financial Services Committee- Fed’s Barkin speaks- Japan current account (January) (By Jamie McGeever; Editing by Josie Kao) More