Economy

As central bankers from around the world descend on Jackson Hole, Wyoming, for the first in-person annual conference since 2019, Federal Reserve chair Jay Powell will face something that was largely absent during the past two virtual meetings: a tough crowd.Celebrated two years ago for rescuing the global economy and financial system from a catastrophic pandemic-induced crash, the US central bank has since faltered, initially misdiagnosing what has become the most acute inflation problem in four decades and then being forced to play catch-up.As a result, Powell, who was reappointed to a second term in November, is under immense pressure to execute a historically difficult task: fine-tune monetary policy to safeguard the Fed’s inflation-fighting credentials without causing more job losses than necessary. “This is not a great period for the Fed right now, not just because the challenges are tremendous, but I think the Fed has also made some missteps,” said Ellen Meade, who served as a senior adviser to the central bank’s board of governors until 2021.“Powell wants to do the right thing, and he’s not out there to make a mistake,” said Meade, who is now a professor at Duke University. “But if he loses this one, this is the whole ball game.”The Fed has already embarked on the most aggressive campaign to raise interest rates since 1981 and is expected to take further action throughout at least the second half of 2022. Central banks across advanced and emerging economies have followed suit, grappling with their own inflation surges exacerbated by Russia’s invasion of Ukraine.But former officials and economists warn that another big test of the Fed’s credibility will emerge in the next phase of tightening, when inflation has not yet slowed sufficiently but the economy starts to flash more obvious signs of weakness. Jay Powell, left, with the then Bank of England governor Mark Carney at the Jackson Hole economic symposium in 2019 © Amber Baesler/APPowell, whose legacy will depend in large part on the outcome, must build consensus across what is likely to become a more divided central bank.The Fed’s predicament stems from its early assessment that the consumer price surge triggered by supply chain disruption and trillions of dollars of pandemic-related fiscal stimulus was temporary. It was a view shared by most but not all economists to begin with, and one that Powell devoted the entirety of last year’s Jackson Hole speech to supporting.Distorted data had concealed the strength of the labour market, which is now one of the tightest in history.Viewing inflation through a “transitory” lens — a term Powell officially abandoned in November — laid the basis for a series of policy blunders that led to the Fed expanding its balance sheet long after additional support was no longer necessary. It also waited until March before raising rates.“We should have recognised last fall that this was a time to slip monetary policy on to the correct path,” said Randy Quarles, the Fed’s former vice-chair for supervision who left in late 2021. “Had we responded earlier, inflation would not have reached the level it is at now.”The central bank was too wedded to the idea that “you can’t step on the gas and the brake pedal at the same time”, said Quarles, meaning officials felt obliged to hold off raising rates until they had stopped hoovering up Treasuries and agency mortgage-backed securities. Others thought the Fed should have started to “taper” its bond purchases sooner. Quarles, who now foresees the federal funds rate rising as high as 4 per cent and a “short and shallow” recession next year, said an interest rate increase as early as November would have been appropriate.

Powell also admitted last month that the guidance the central bank had provided in late 2020, in which it laid out the economic milestones that needed to be reached before it would stop easing policy, was too inflexible for an environment of such extreme uncertainty.“I don’t think that that has materially changed the situation, but I have to admit, I don’t think I would do that again,” he said.Heading into this year’s Jackson Hole conference, economists say the Fed has tried to correct many of its earlier mistakes, having “front-loaded” its interest rate increases and raised the benchmark policy rate from near-zero to a target range of 2.25 per cent to 2.50 per cent in just four months.Most officials now expect rates to rise by at least another percentage point by the end of the year, with a third consecutive 0.75 percentage point rate increase under consideration for the September meeting. But concerns linger about the Fed’s resolve to continue squeezing the economy if unemployment climbs higher than expected. The other risk is that inflation is far harder to root out than is currently anticipated. The fear is a redux of the 1970s, when the Fed oscillated between raising rates to stem price pressures and cutting them to prop up growth, failing to get inflation under control in the process. The central bank then had to slam on the brakes more forcefully, causing a far worse economic contraction than otherwise would have been the case.“The bigger risk is that they reverse course too soon, not that they tighten for too long,” said Charles Plosser, who served as president of the Philadelphia Fed from 2006 to 2015. “The concern has to be, will they stick to their guns? Will they provide enough of a slowdown to actually bring inflation down, keep it down and restore the Fed’s credibility?”

While the Fed has framed its commitment to price stability as “unconditional”, officials — unlike most Wall Street economists — maintain that a recession is not a foregone conclusion.At their most recent policy meeting, they also discussed nascent signs the economy is cooling and the risks of being heavy-handed with tightening, fanning fears that a more divided Fed will back off its inflation fight prematurely.On Friday, Powell is set to underscore the central bank’s commitment to do what is needed to combat inflation, even if it determines it may soon be appropriate for the Fed to start implementing smaller rate rises.“The Fed at this point cannot lose control of the narrative,” said Claudia Sahm, founder of Sahm Consulting and a former Fed economist. “They need to make really clear that they understand what the stakes are [and] what the potential very negative consequences of the path that they have set themselves on are.” More

Banks have waited years for higher interest rates to revive their fortunes. But in the UK, where markets predict interest rates will hit 4 per cent by May, taxpayers could end up contributing via the Bank of England.This would play badly with voters during a cost of living crisis. The government and the BoE might therefore stop paying interest to banks on the so-called “reserves” created during quantitative easing.QE converted long-term government liabilities into overnight borrowing. The BoE bought £847bn of gilts, financed with the new “interest-paying reserves”. The interest paid by the central bank has been at a lower rate than the coupon payments it receives on the gilts. That has allowed it to hand the Treasury a cumulative profit of £123bn to the end of April. But once interest rates rise above 2 per cent, that cash flow will turn negative. The left-of-centre think-tank New Economics Foundation has put the UK bill at up to £57bn over the next three years. The UK is in a tight spot because its vast amount of index-linked debt, nearly a quarter of the whole, is forecast to more than triple debt interest spending to £83bn in the two years to next April. A further sustained one percentage point increase in interest rates and inflation would cost an additional £18.6bn the following year. Going back to paying no interest on reserves would help ease the pain. The dire state of public finances will make it tempting for the government to rewrite the rules so the reserves — or at least a big part of them — carry no interest. Advocates point out that paying no interest on reserves was the norm before the financial crisis. Even so, the rule change would be equivalent to imposing higher tax on banks. The obscure nature of the implicit levy will appeal to politicians who like to find ways to pluck feathers from geese with minimal hissing. It is a subtler way of transferring money from banks to the government than Spain’s €1.5bn annual windfall tax. Hungary has imposed a similar levyPoliticians would not care that saddling commercial banks with a non-interest-bearing asset would make them even less attractive to investors. But they should weigh up the totality of disadvantages. Making commercial banks less competitive would increase flows to shadow banks. That would create new risks to financial stability. More

Investing.com — Europe’s energy crisis is becoming an industrial crisis. The U.S. releases revised second quarter GDP figures and – more up-to-date – weekly jobless claims. China’s government tops up its stimulus package and Nvidia is hit by a new reduction to its sales guidance. Here’s what you need to know in financial markets on Thursday, 25th August.1. Europe’s energy crisis won’t endEurope’s energy crisis is turning into an industrial crisis. Last week, some of the biggest zinc and aluminum smelters on the continent shut down due to high power prices. This week, the latest surge in gas prices has forced fertilizer makers in Norway, the U.K., and Poland to idle capacity, unable to pass those prices on to their farming customer base.A shortage of fertilizers threatens to put downward pressure on crop yields next year, which will keep food prices higher than they would have been otherwise.Benchmark European gas prices topped 300 euros a megawatt-hour earlier Thursday. At those levels, Germany – Europe’s largest economy – would have to spend over 8% of its GDP to sustain its gas habit. German GDP eked out a 0.1% gain in the second quarter but Ifo’s monthly business survey confirmed it’s on track for a drop of around 0.5% in the current quarter.To make matters worse, Électricité de France (EPA:EDF) said it would have to delay the restart of several reactors which have been closed for maintenance this year, prolonging the squeeze on electricity prices.2. Jobless claims, GDP revision due; Bostic warns of possible 75 bp hikeThe U.S. will release revised figures for second quarter gross domestic product at 08:30 ET, with analysts expecting a small upward revision that will do little to change the broader narrative of an economy being deliberately slowed down by tighter monetary policy. The price components of the data are likewise too far in the past to affect the current outlook meaningfully.Of more interest will be the weekly jobless claims numbers, whose surprising strength last week supported arguments that the economy can withstand higher interest rates easily enough.The market remains focused on Federal Reserve Chair Jerome Powell’s keynote speech at Jackson Hole on Friday, amid expectations that the next interest rate hike will be only 50 basis points, after two successive 75 bp hikes. Atlanta Fed President Raphael Bostic, however, told The Wall Street Journal in an interview that a 75 basis point increase may be appropriate if the economic data stay strong.3. Stocks set to build on modest gains; Nvidia hit by sales warningU.S. stock markets are set to open higher again, building on Wednesday’s moderate gains, helped by the positive outlook from software group Snowflake (NYSE:SNOW) late on Thursday. Enterprise software makers tend to be seen as proxies for business investment, which appears to be holding up better than feared. Workday (NASDAQ:WDAY), another company in that segment, reports after hours.By 06:15 ET (10:15 GMT), Dow Jones futures were up 86 points, or 0.3%, while S&P 500 futures were up 0.5% and Nasdaq 100 futures were up 0.6%.The Nasdaq’s bounce was all the more conspicuous given the disappointment from chipmaker Nvidia (NASDAQ:NVDA), which again cut its outlook on Thursday due largely to the slowdown in demand for gaming chips. Nvidia expects sales in the current quarter to be down 17% on the year.Elsewhere, discount stores Dollar Tree (NASDAQ:DLTR) and Dollar General (NYSE:DG) will report results, casting light on how much pressure inflation is putting on them and their customers.4. China stimulates, Korea tightensThe Chinese government topped up its economic stimulus to 1 trillion yuan (around $150 billion), trying to restore an economy ravaged by drought and COVID-19 restrictions.The 19-point plan released by the State Council focused largely on debt-financed infrastructure spending, a strategy that has shown diminishing returns as the real estate sector buckles under its enormous debt load. Chinese stocks reacted with modest gains, while Chinese bond yields rose, pulling the yuan up from the two-year low that it hit against the dollar on Wednesday.China is heading in the opposite direction on policy to most of the rest of the world. Elsewhere overnight, the Bank of Korea raised its key rate again, by 25 basis points to 2.5%. The won, which fell to a 13-year low against the dollar on Tuesday, strengthened by 0.4%.5. Oil lifted by China measures, U.S. inventoriesCrude oil prices touched a three-week high overnight as the Chinese stimulus package lent support to the global demand outlook. Prices were also supported after the U.S. government confirmed a bigger than expected drop in crude inventories last week.The usual seasonal bid from the approach of the U.S. hurricane season is also starting to loom.By 06:30 ET, U.S. crude futures were up 0.1% at $94.98 a barrel, while Brent crude was up 0.3% at $101.52 a barrel. Natural gas futures, which were driven to 14-year highs earlier this week by LNG demand from Europe, eased a little further to +6%. More

JACKSON, Wyo. (Reuters) – Climate activists will stage a series of colorful protests at the Federal Reserve’s annual Jackson Hole central banking conference that starts Thursday, intent on pressing the Fed to address climate change and move the U.S. economy away from fossil fuels.”Our presence will remind the Fed that real people are suffering from the real-life economic impacts of the climate crisis, and that this very real human cost has to be reflected in the Fed’s actions going forward,” said Emily Park, an organizer with climate group 350.org. Central bankers from around the world attending this year’s Jackson Hole Economic Symposium are expected to discuss academic papers and challenges around policy constraints as they tackle high inflation. It unclear how much attention will be on climate risks.The climate activists’ demands include faster action on requiring banks to measure their natural disaster vulnerabilities and potential disruptions related to the green energy transition. But the demands also extend beyond what Fed policymakers say are their mandates, like requiring banks that lend to oil and gas companies to tie up more capital to safeguard against losses if the transition away from fossil fuels is more disruptive than anticipated.Park said she hopes the actions – which include people holding signs calling for a Fossil Free Fed along the road from Jackson Airport to Grand Teton National Park where the meeting takes place – will impress on Fed Chair Jerome Powell and fellow policymakers the need to focus on environmental threats.The Fed has long shied from wading into climate matters, a hot-button U.S. political issue. It was the last major central bank, for instance, to join the Network for Greening the Financial System. Peers like the Bank of England and European Central Bank perform annual climate stress tests on the banks in their jurisdictions.It has instead focused on understanding the risks climate change and the transition away from fossil fuels poses to the economy. But the Fed has largely ruled out a more aggressive role in driving investment toward green energy, as the European Central Bank has begun to do, and as activists would like. That is in line with many Republican members of Congress who balk at the central bank taking an active role in mitigating climate risks. Activists and some Democrats feel such a stance should at least be under consideration. The Fed is accountable to Congress. The Fed has two internal groups and has partnered with U.S. regulators to research potential vulnerabilities in the banking sector and the larger financial system.Powell has also indicated the Fed is exploring how banks can cope with climate risks like rising temperatures and weather disasters, including developing climate stress scenarios already in use by other central banks. Any focus on climate will work with the Fed’s mandates to achieve maximum employment and price stability, Powell has said. More

(Reuters) – Federal Reserve Bank of Atlanta President Raphael Bostic said he hasn’t decided if the Fed should increase interest rates by 50 basis points or 75 basis points at its policy meeting next month, the Wall Street Journal reported.Bostic told the Journal the U.S. central bank still has some way to go on raising interest rates this year and it was too soon to say the inflation surge had peaked. (https://on.wsj.com/3Cu2ssm) More

Welcome back to Free Lunch — and I hope readers who took a summer break have returned well-rested and braced for what is going to be an economically challenging (northern) winter. Give a hand to my colleagues Claire Jones and Chris Cook who kept the newsletter going with a series of stellar pieces. If you were away too, do look them up now. Claire wrote about how the Federal Reserve’s tightening forces the hand of other central banks and how many prices that drove the rise in inflation are now falling — but not fast enough. Chris, meanwhile, lamented UK politicians’ misguided temptation to use the public sector wage bill as an inflation management tool. Their reading recommendations were cracking as well.I spent the summer largely tuned out of the news, but one thing was impossible to miss: the ever-louder discussion on energy prices. That is as it should be. How energy prices behave is at the core of our politics as well as our economic prospects. In fact, I think we may even now not quite appreciate how special energy prices are in terms of their behaviour and their effects. So here are four reflections that have emerged while I have had time to think slowly.The first is to grasp the sheer scale of the energy price rise. European gas prices are about 10 times their average level in the past decade. As my colleague David Sheppard has pointed out, the daily swings in the price can now be as big as the entire price used to be. The price of electricity has risen almost as dramatically in much of Europe.If we fully grasp these magnitudes, it is difficult to suggest that central banks should somehow have kept inflation low and are therefore guilty of mistakes in allowing price growth to get so high. If the price of energy goes up 1,000 per cent, what would it mean for overall inflation to stay near the central banks’ 2 per cent targets? In a basic arithmetical sense, other prices would have to collapse by a lot to offset such an increase.Here is an illustration: suppose energy prices account for 10 per cent of the normal price index. (This is just to make the arithmetics easy. The actual share of energy in the US index is 9.2 per cent, and in the eurozone it is 9.5 per cent.) If they double, the rest of the index has to fall almost 9 per cent. If they triple, other prices have to fall 20 per cent in the aggregate.Central banks have a lot of power, but making most prices fall 20 per cent or more in a year or so may be beyond their ability even if they were determined to try. And considering that most of what we do and produce uses energy, this would require the costs of other inputs into production — in particular, profits and wages — to fall even more significantly. In the context of extreme price rises for some goods, to think today’s high year-on-year inflation rates prove that central banks erred 12 to 18 months ago is to say that central banks should have so firmly arrested the recovery and kept economies so long in recession as to bring about abysmal offsetting negative price changes elsewhere.The second is the strange nature of energy cost curves, especially for electric power. When the weather is right, renewable power generation has a marginal cost of zero. When capacity is insufficient, that marginal cost rises sharply. Fossil fuel cost structures are similar, if less dramatic — upfront capital costs are high but variable extraction costs are relatively low. But again only until you reach capacity, after which squeezing an extra unit of energy out of a limited number of wells, pipelines or tankers rapidly drives up costs. In the jargon, the supply curve starts very flat or “elastic” then becomes very steep or “inelastic”. Since last year President Vladimir Putin has been forcing us from the flat to the vertical part of the curve by withdrawing Russia’s energy supply (largely in the form of natural gas). Third, energy demand, too, can behave inelastically if users cannot or do not know how to economise on energy use as prices rise. In Germany, for example, it is a widespread view that it is technically unfeasible to reduce gas use by industry much without breaking vital links in industrial supply chains.What this means is that the marginal tail often wags the aggregate dog: small changes in volume can have an outsize effect on the price across the entire market. As one European energy policymaker put it to me, that is precisely what Putin is taking advantage of. It is within his power to reduce energy supplies enough to drive 10-fold increases in price. The result is not just that Russia is raking it in (as are other energy exporters such as Norway) while other European countries are bleeding money. It is also that energy users everywhere pay much more than the average cost of generating power or extracting fossil fuels. That is obviously hard to justify politically. It is also hard to justify economically, if valuable economic activity that is perfectly viable at average energy generation costs collapses because of the much higher market prices.It is imperative, therefore, to beat Putin at his own game, which means to make our own demand more elastic and overall smaller. This depends on our physical ability to economise on energy and substitute between power sources and uses. We are finding out what this ability is, as Chris Giles’s excellent comment on Europe’s handling of the gas crisis shows. It also depends on policy. That is why it is so important to support energy users with grants and support schemes rather than trying to subsidise or cap prices below market-clearing levels.Fourth, what will happen next? The correct policy depends enormously on whether the extreme energy prices of today are temporary or set to stay for several years. If they are temporary, monetary policy should prepare for the disinflationary shock about to come, and fiscal policy should just help tide over households and businesses. If they are permanent, central banks must prevent an inflationary spiral, and governments must help restructure their economies to be less energy-intensive.What seems certain is that big price swings are likely to continue. That includes downward swings, and we need to be as prepared for a sudden drop in energy prices as for continued increases. In the short run, gas may turn out to be less scarce than we now fear. Some observers point out that on current trends, Germany can fill its gas storage fully and use it to supply demand through the winter even if the Russian gas taps are turned off completely. If gas prices were to fall, so would electricity prices. Besides, it is not so long since the biggest energy problem was how ample wind power in Germany would sometimes bring electricity prices below zero. We should not rule out those times coming back. Consider three things. First, the current scaled-up ambition for renewable energy generation. Second, the evidence that substitution and efficiency drives are both possible and are at present taking place. Third, the bizarre confluence of bad luck: on top of the war and Putin’s energy extortion, we have had weak wind last year, drought-depleted hydropower reservoirs this year, low water transport levels hindering coal barges in Germany, outages in French nuclear plants and fire damage to US gas liquefaction capacity. It is as if it had all been planned to happen at the same time.But unlikely as it was for all these misfortunes to happen at once, it is even more unlikely that they should all persist together. If they largely return to normal, electricity supply rises and demand is curtailed by smarter consumer behaviour, the cost structure that drives current price extremes could work in reverse.Put all these things together, and the one certainty is that governments will have to become and remain much more involved in shaping the structure of the energy economy. Not just in terms of fiscal support, but in terms of managing the consequences of extreme volatility. Encouraging investment may require ample guarantees if prices hit zero more often than expected. An inevitable quid pro quo will be heavier taxation of energy price windfalls. Throw in the need for greater grid investment and co-ordination between countries and the public and private sector in preparing for a shift to a renewables-based energy system, and the contours of an energy system permanently shaped by politics — and the other way round — become clear. Helen Thompson’s observations of the energy structures driving the world’s political economy are must-reads. While I don’t always share her conclusions, the headline of her recent opinion piece in the FT nails it: “An energy reckoning looms for the west”. About time too.Other readablesIt was Ukraine’s independence day yesterday, and six months since Vladimir Putin’s assault on the country. I wrote a piece in May on how western leaders must communicate to their voters to prevent “Ukraine fatigue”; this is at least as important today.Experts from the Royal United Services Institute examined Russian military equipment used in Ukraine. Their conclusion: “The preponderance of foreign-made components inside these systems reveals that Russia’s war machine is heavily reliant on imports of sophisticated microelectronics to operate effectively.” The FT’s editorial column is right to predict that sanctions on western technology exports will be “crippling over time” for Russia.While I was on holiday, the German governing coalition agreed its approach to reforming the EU fiscal rules.Talking about that holiday — my Great Electric Road Trip from London to Norway and back seems to have been smoother than my colleague John Thornhill’s electric drives through France, which he described in a frustrated column earlier this year. But I share his desire for better navigation to electric vehicle chargers and a single app to rule them all.The Jackson Hole summer camp for the world’s most powerful central bankers starts today. Programmes and papers should be posted here once the gatekeepers of the hosts at the Kansas City Fed deem the time ready.Some good news from the National Bureau of Economic Research: it seems that in the US green jobs are most likely to be created in areas that stand to suffer most from the decline of the fossil fuel economy. That should create political opportunities to build support for moving people into green jobs.Nikkei’s Cheng Ting-Fang and Lauly Li have produced an entrancing deep dive into the complex supply chain of the microchip industry.Numbers newsAlmost half of the EU is in drought. More

HONG KONG/SHANGHAI (Reuters) – Some of China’s state-backed financial institutions are pushing back on Beijing’s calls to support the embattled property sector due to concerns about the impact of such exposure on their balance sheets, seven people with knowledge of the matter said.Without explicit financial backstop from Beijing, senior executives at some of the institutions are wary of engaging with cash-strapped developers and later dealing with potential losses of their own, said two of the sources.Signing off on financial support to struggling developers has become a concern as employees are increasingly held accountable by authorities for poor lending and investment decisions, said the two sources.China’s property sector, which accounts for about a quarter of the economy, has been lurching from crisis to crisis since the summer of 2020 as a result of regulators stepping in to cut excess leverage in the sector, which led some developers to default on their debts and struggle to complete projects.Property investment, home sales and new construction are plummeting as the troubles scare off potential buyers.Last week, Reuters reported, citing sources, that China’s banking regulator was scrutinising property sector loans at some local and foreign lenders to assess systemic risks, as the real estate sector’s debt crisis worsens.The reluctance of some Chinese lenders shows the challenges and limited options for Beijing to help revive the sector.Chinese authorities have held multiple closed-door meetings in recent weeks during which banks and other financial institutions including securities companies were encouraged to support fundraising by developers, the two sources said.Although the People’s Bank of China (PBOC) has been nudging state-backed financial firms to support fundraising by stronger developers, it has so far refrained from issuing specific orders, according two separate sources.Officials at two state banks and three state-backed asset managers said they have been trimming their holdings of property bonds since early this year despite several rounds of regulatory “window guidance” – verbal instructions from regulators to mainly Chinese companies – they received to support the sector.All the sources declined to be identified for this story due to the sensitivity of the matter.The PBOC and the China Banking and Insurance Regulatory Commission (CBIRC) did not respond to Reuters requests for comment. MARKET PESSIMISMWhile banks rapidly expanding loan exposure to developers would be a moral hazard for Beijing which unveiled policies to rein in ballooning leverage two years ago, authorities this year have guided strong builders to also issue onshore bonds to restore normalcy in fundraising activities.Loans granted by Chinese banks to developers in July dropped 36.8% on year, while capital raised from offshore bond markets plunged 200%, according to Reuters calculations of the National Bureau of Statistics (NBS) data.Onshore bond issuance in July, however, rose 4.2% from June to 32 billion yuan, according to researcher CRIC. Top issuers during the month were mostly state-owned or backed developers, including China Vanke and China Jinmao.The issuance of onshore bonds is expected to rise — stock prices of developers and some of their bonds rebounded last week after media reported that Beijing would guarantee new onshore bond issues by a few, better-quality private firms.As part of that move, Longfor Group Holdings on Tuesday announced the launch of an up to 1.5 billion yuan ($218.54 million) bond offering. And there are expected to be more in the coming days. Chinese financial firms are typically major subscribers to these new offerings by local companies. This time, however, some of them are not looking to buy new notes even from developers that have relatively better balance sheets.”We can’t afford riding out the volatility before maturity. It will mess up our books,” said a credit analyst with a Shanghai-based and state-backed asset manager, talking about interest in new bonds from developers. “Analysis does not work any more, because pessimism has grabbed the market … anything related to property is a no-go,” said the credit analyst, who declined to be identified as they are not allowed to speak to the media. Longfor declined to comment. Huarong Asset Management Company, one of China’s four large state-owned bad loan managers, has been tasked with looking at some stalled property projects, but has passed over many, said an official involved in those decisions. “We need to have some comfort that we’ll get repaid at least some of our funds,” the official said, adding that the banking sector regulator would be visiting their offices this month to assess property risks.Huarong did not respond to requests for comment.Some developers are also finding that state reassurances on stabilising the sector don’t necessarily translate into more bank funding, as they scramble to finish apartment construction to placate homebuyers threatening to stop paying mortgages.An industry source close to developers said issuing bonds now was not easy as it’s hard to find buyers and many investors were trying to sell their holdings. Banks also may not have enough purchase quota for all the issuers, the source added.($1 = 6.8636 Chinese yuan renminbi) More

The most anticipated economic event of the summer is set to happen on Friday, when Jerome H. Powell, the Federal Reserve chair, provides an update on the economic outlook that could detail how the central bank is thinking about inflation and the path ahead for interest rates.Mr. Powell’s speech at the Federal Reserve Bank of Kansas City’s annual conference near Jackson, Wyo., is always closely watched. But it is getting special scrutiny this year as investors grasp for any hint at what might come next for the Fed, which has been raising rates rapidly in its campaign to tamp down the fastest rate of inflation in 40 years. Markets are trying to guess when the central bank, which raised rates by an unusually quick three-quarters of a percentage point at each of its last two meetings, will slow down.Inflation has shown some early signs of moderating, which could point toward a less aggressive Fed policy path. But prices are still increasing at more than three times the pace the Fed aims for, creating a pressing challenge for consumers who are struggling to afford day-to-day necessities like rent and food as wages fail to keep up.As officials weigh both glimmers of hope and a still-worrying pace of inflation, they are attempting to achieve a delicate balancing act. The Fed is trying to avoid restricting the economy so much that it plunges the United States into an unnecessary recession, while restraining it enough to bring price increases fully and firmly back under control.Mr. Powell has historically used his remarks at the conference, colloquially called Jackson Hole for the area where it is held, to detail big ideas. He laid out a new framework for monetary policy at the gathering in 2020 and in 2021 provided reasons — which have since failed to pan out — for why inflation might fade.Inflation F.A.Q.Card 1 of 5Inflation F.A.Q.What is inflation? More