June 13 (Reuters) –
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Today in Washington ————————————————————- This Diary is filed daily. Indicates new events ————————————————————- MONDAY, JUNE 13 ** WASHINGTON DC – (VIA PRE-RECORDED VIDEO) Federal Reserve Vice Chair Lael Brainard discusses the Community Reinvestment Act before the National Community Reinvestment Coalition (NCRC): Just Economy Conference 2022. – 1800 GMT ** BRUSSELS – Participation by ECB vice-president Luis de Guindos in Vice-Governors of Arab Central Banks and Monetary Authorities’ meeting on “The Challenges of enhancing financial stability in the recovery phase from the Corona pandemic” organized by the Arab Monetary Fund – 1100 GMT. BRUSSELS – Belgium central bank issues economic growth forecasts for the euro zone’s sixth largest economy with ECB Governing Council member Pierre Wunsch – 0800 GMT TUESDAY, JUNE 14 ** BRUSSELS – Pre-recorded video speech by ECB Board member Elizabeth McCaul at the 26th Annual Global ABS Conference – 1445 GMT. PARIS – Speech by ECB board member Isabel Schnabel on euro area bond market fragmentation to the graduates of the Master Program in Money, Banking, Finance and Insurance of the Panthéon-Sorbonne University – 1700 GMT. FLORENCE, Italy – Speech by ECB bank supervisor Anneli Tuominen at Annual Conference organized by the European University Institute’s Florence School of Banking & Finance in Florence, Italy – 1115 GMT LONDON – Charlotte Gerken, Executive Director, Insurance at Bank of England is a Keynote speaker at the J.P. Morgan European Insurance Conference – 0800 GMT. WASHINGTON, D.C. – U.S. Federal Reserve’s Federal Open Market Committee (FOMC) starts its two-day meeting on interest rates (to June 15) WEDNESDAY, JUNE 15 BRUSSELS – Introductory statement by ECB board member Fabio Panetta at hearing on the digital euro before the Committee on Economic and Monetary Affairs (ECON) of the European Parliament in Brussels, Belgium – 1315 GMT LONDON – Participation by ECB President Christine Lagarde in conversation with José Viñals hosted by Baroness Minouche Shafik, London School of Economics, in London, United Kingdom – 1620 GMT ROME – Bundesbank President Joachim Nagel, De Nederlandsche Bank President Klaas Knot and Bank of Spain Governor Pablo Hernandez de Cos speak at the Young Factor conference in Milan. STOCKHOLM – Deputy Governor of the Swedish National Bank Deputy Governor Henry Ohlsson discusses on Monetary policy and inflation in times of war – 1600 GMT WASHINGTON, D.C. – U.S. Federal Reserve’s Federal Open Market Committee (FOMC) announces its decision on interest rates followed by statement – 1800 GMT WASHINGTON, D.C. – U.S. Federal Reserve chairperson holds a news conference – 1830 GMT THURSDAY, JUNE 16 ** MILAN, Italy – Participation by ECB vice-president Luis de Guindos at the International Conference “Young Factor, a dialog between young people, economy and finance” organized by Osservatorio Giovani-Editori – 0830 GMT. ** LUXEMBOURG – Participation by ECB President Christine Lagarde and ECB, Member of the Executive Board, Fabio Panetta in Eurogroup meeting in Luxembourg. BRUSSELS – Speech by ECB board member Fabio Panetta followed by a Q&A at the European Payments Council’s 20th anniversary event in Brussels, Belgium – 0750 GMT LUXEMBOURG – Euro zone finance ministers meet on ERM2, digital euro, fiscal rules reform, banking union – 1300 GMT. BERN – Swiss National Bank (SNB) Financial Stability Report 2022 – 0430 GMT BERN – Swiss National Bank (SNB) Monetary policy assessment with news conference – 0730 GMT LONDON – Bank of England announces rate decision and publishes the minutes of the meeting, after the rate decision – 1100 GMT TOKYO – Bank of Japan holds Monetary Policy Meeting (to June 17) FRIDAY, JUNE 17 ** BRUSSELS – European Union finance ministers meet in Luxembourg to discuss various topics, including whether to approve recovery fund money being allocated to Poland after funds were held up over rule of law issues – 0830 GMT. ** LUXEMBOURG – Participation by ECB vice-president Luis de Guindos in ECOFIN meeting in Luxembourg. ** WASHINGTON DC – Federal Reserve Chair Jerome Powell gives welcome remarks before the Inaugural Conference on the International Roles of the U.S. Dollar, in Washington – 1245 GMT. STOCKHOLM – Riksbank general council meeting – 1100 GMT. SATURDAY, JUNE 18 ** DALLAS, United States – Federal Reserve Board Governor Christopher Waller speaks on “Monetary Policy Since the Pandemic” before the Society for Computational Economics 28th Annual Conference: “Computing in Economics and Finance,” in Dallas. – 2040 GMT MONDAY, JUNE 20 ** BRUSSELS – Introductory statement by ECB President Christine Lagarde at the Hearing before the Committee on Economic and Monetary Affairs of the European Parliament in Brussels, Belgium – 1300 GMT ** FANO,Italy – Participation by ECB board member Fabio Panetta in on-stage interview with Federico Fubini at Passaggi Festival della Saggistica in Fano, Italy – 1700 GMT ** LONDON – Speech by ECB chief economist Lane at Society of Professional Economists’ (SPE) 2022 Annual Dinner in London, UK – 1930 GMT SANTANDER, Spain – Spain´s economy minister Nadia Calvino speak at summer course on Sustainability and digitalization – 0830 GMT TUESDAY, JUNE 21 BERLIN – German Finance Minister Christian Lindner speaks at the Day of Industry organized by the German Federation of Industry (BDI) followed by a panel talk with guests including Bundesbank executive board member Sabine Mauderer. – 1030 GMT HELSINKI – ECB policymaker and Finnish central bank chief Olli Rehn will hold a news conference in Helsinki to comment on Finland’s economic outlook and the European Central Bank’s rate policy. – 0800 GMT AMSTERDAM – Deputy Governor of the Swedish National Bank Cecilia Skingsley will participate in a conversation on digital currencies during the 6th Annual Macroprudential Conference, jointly organized by De Nederlandsche Bank, Sveriges Riksbank and Deutsche Bundesbank – 1000 GMT PHILADELPHIA – Federal Reserve Bank of Philadelphia issues Nonmanufacturing Business Outlook Survey for June – 1230 GMT. STOCKHOLM – Riksbank executive board meeting – 0700 GMT TOKYO – Bank of Japan releases Minutes of Monetary Policy Meeting held on Apr. 27 and 28 – 2350 GMT WEDNESDAY, JUNE 22 ** FRANKFURT – Opening keynote speech on “Tackling the climate and environmental crises – the roles of banks and supervisors” followed by a Q&A session by Elderson at 10th Annual Conference on Bank Steering & Bank Management (Gesamtbanksteuerung) of Frankfurt School of Finance & Management in Frankfurt, Germany – 0735 GMT WASHINGTON DC – Federal Reserve Chair Jerome Powell delivers semi-annual monetary policy testimony before the Senate Banking Committee. PHILADELPHIA – Federal Reserve Bank of Philadelphia President Patrick Harker (in Philadelphia) and Federal Reserve Bank of Richmond President Thomas Barkin (virtual from Richmond) participate in macroeconomic outlook discussion before the Macroeconomic Policy to Foster Equality: Symposium with the Federal Reserve Bank of Philadelphia and the Official Monetary and Financial Institutions Forum. – 1730 GMT TORONTO, Canada – Fireside chat by Carolyn Rogers, Senior Deputy Governor of the Bank of Canada, on “Growth and Risk – The future of the Canadian economy” – 1440 GMT. SANTANDER, Spain – European Central Bank’s vice-president, Luis de Guindos, to deliver speech at economy summer course on sustainability and digitalization – 0700 GMT CEDAR RAPIDS, United States – Federal Reserve Bank of Chicago President Charles Evans speaks on current economic conditions and monetary policy before the Corridor Business Journal Mid-Year Economic Review, in Cedar Rapids, Iowa – 1650 GMT. VILNIUS – Bank of Lithuania holds non-monetary policy meeting of the ECB Governing Council in Frankfurt BERLIN – Governing Council of the ECB holds non-monetary policy meeting in Frankfurt THURSDAY, JUNE 23 ** BRUSSELS – Opening speech by ECB bank supervisor Andrea Enria at SRB and ECB Joint Conference – “The test of time: Banking Union a decade on” in Brussels, Belgium – 1230 GMT OSLO – Norway Central Bank holds announcement of the Executive Board’s interest rate decision and publication of Monetary Policy followed by press conference – 0830 GMT BERLIN – General Council meeting of the ECB in Frankfurt. FRIDAY, JUNE 24 ** FRANKFURT – Fireside chat by ECB bank supervisor Edouard Fernandez-Bollo at the AFME/OMFIF 2nd Annual European Financial Integration Conference in Frankfurt, Germany – 1010 GMT ZURICH – Philip Lowe, Governor of the Reserve Bank of Australia, participates in a panel at the UBS Panel discussion Global Monetary Policy Challenges – 1130 GMT SANTANDER, Spain – Bank of Spain Governor Pablo Hernández de Cos in charge of the closing session for Santander economy summer course on sustainability and digitalization – 1030 GMT BERGEN, Norway – Norway Central Bank Governor Ida Wolden Bache gives a lecture for the regional network West in Bergen – 0800 GMT. SUNDAY, JUNE 26 TOKYO – Bank of Japan to release summary of opinions from board members at its Jun. 16-17 policy meeting – 2350 GMT MONDAY, JUNE 27 LISBON – Governor of the Swedish National Bank Stefan Ingves will participate in the European Central Bank Forum on Central Banking (to June 29) TUESDAY, JUNE 28 LISBON – Deputy Governor of the Swedish National Bank Cecilia Skingsley will participate in a panel discussion at the ECB Forum on Central Banking on digital currencies and the digital euro project – 1100 GMT WASHINGTON DC – Federal Reserve issues annual benchmark revisions and new seasonal factors to its industrial production and capacity use data from 1972 through latest release period. WEDNESDAY, JUNE 29 SINTRA, Portugal – Chair of Federal Reserve of U.S Jay Powell, ECB President Christine Lagarde, BOE Governor Andrew Bailey and BIS General Manager Augustin Carstens speak at the ECB Forum on Central Banking – 1230 GMT SINTRA, PORTUGAL – Federal Reserve Bank of Cleveland President Loretta Mester participates in “Panel 2: The role of inflation expectations in monetary policymaking” before the European Central Bank Forum on Central Banking, in Sintra, Portugal. – 1030 GMT STOCKHOLM – Riksbank holds monetary policy meeting 3 – 0700 GMT. THURSDAY, JUNE 30 STOCKHOLM – Swedish Central Bank announces interest rate decision. June 2022 Monetary policy report will be published – 0730 GMT.
TUESDAY, JULY 5
LONDON – Bank of England publishes Financial Stability Report July 2022 – 0930 GMT.
WEDNESDAY, JULY 6 WASHINGTON DC – Federal Open Market Committee issues minutes from its meeting of June 14-15, 2022. – 1800 GMT
BERLIN – Governing Council of the ECB holds non-monetary policy meeting in Frankfurt
MONDAY, JULY 11
STOCKHOLM – Swedish Central Bank minutes from the Executive Board’s monetary policy discussion on 29 June 2022 will be published – 0730 GMT TUESDAY, JULY 12 BRUSSELS – European Union finance ministers will set the irrevocable exchange rate at which Croatia will convert its kuna currency into euros when it adopts the singe currency on Jan 1, 2023. WEDNESDAY, JULY 13 OTTAWA – Bank of Canada Governor Tiff Macklem and Senior Deputy Governor Carolyn Rogers hold a press conference to discuss the contents of the Monetary Policy Report – 1500 GMT. WASHINGTON, D.C. – Federal Reserve issues the Beige Book of economic condition – 1800 GMT
OTTAWA – Bank of Canada key policy interest rate announcement and Monetary Policy Report – 1400 GMT.
WELLINGTON – Reserve Bank of New Zealand holds Monetary Policy Review – 0200 GMT.
WEDNESDAY, JULY 20
TOKYO – Bank of Japan holds Monetary Policy Meeting (to July 21)
THURSDAY, JULY 21
BERLIN – Press conference following the Governing Council meeting of the ECB in Frankfurt – 1230 GMT
BERLIN – Governing Council of the ECB holds monetary policy meeting in Frankfurt
MONDAY, JULY 25
TOKYO – Bank of Japan releases Minutes of Monetary Policy Meeting held on Jun. 16 and 17 – 2350 GMT
TUESDAY, JULY 26 PHILADELPHIA – Federal Reserve Bank of Philadelphia issues Nonmanufacturing Business Outlook Survey for July. – 1230 GMT WASHINGTON, D.C. – U.S. Federal Reserve’s Federal Open Market Committee (FOMC) starts its two-day meeting on interest rates (to July 27)
WEDNESDAY, JULY 27
WASHINGTON, D.C. – U.S. Federal Reserve’s Federal Open Market Committee (FOMC) announces its decision on interest rates followed by statement – 1800 GMT
WASHINGTON, D.C. – U.S. Federal Reserve chairperson holds a news conference
THURSDAY, JULY 28
TOKYO – Bank of Japan to release summary of opinions from board members at its Jul. 20-21 policy meeting – 2350 GMT THURSDAY, AUGUST 4 LONDON – Bank of England to publish Monetary Policy Report – 1100 GMT. LONDON – Bank of England announces rate decision and publishes the minutes of the meeting, after the rate decision – 1100 GMT. WEDNESDAY, AUGUST 17 WELLINGTON – Reserve Bank of New Zealand holds Monetary Policy Statement and Media Conference – 0200 GMT. THURSDAY, AUGUST 18 OSLO – Norway Central Bank announces interest rate decision – 0800 GMT. —————————————————————- NOTE: The inclusion of items in this diary does not necessarily mean that Reuters will file a story based on the event. For technical issues, please contact Thomson Reuters Customer Support (TRCS) at https://customers.reuters.com/kccontactus/telephone.aspx
US inflation and consumer spending cooled in December – Al Jazeera English
The Federal Reserve’s preferred inflation gauge eased further in December, and consumer spending fell – the latest evidence that the Fed’s series of interest rate rises are slowing the economy.
Friday’s report from the US Department of Commerce showed that prices rose 5 percent last month from a year earlier, down from a 5.5 percent year-over-year increase in November. It was the third straight drop.
Consumer spending fell 0.2 percent from November to December and was revised lower to show a drop of 0.1 percent from October to November. Last year’s holiday sales were sluggish for many retailers, and the overall spending figures for the final two months of 2022 were the weakest in two years.
The pullback in consumer spending will likely be welcomed by Fed officials, who are seeking to cool the economy by making lending increasingly expensive. A slower pace of spending could boost their confidence that inflation is steadily easing. Still, the decline in year-over-year inflation matched the Fed’s outlook and is not likely to alter expectations that it will raise its key rate by a quarter-point next week.
On a monthly basis, inflation ticked up just 0.1 percent from November to December for a second straight month. Energy prices plunged 5.1 percent, and the overall cost of goods also fell.
“Core” prices, which exclude volatile food and energy costs, rose 0.3 percent from November to December and 4.4 percent from a year earlier. The year-over-year figure was down from 4.7 percent in November, though still well above the Fed’s 2 percent target.
Falling prices for oil, gas, copper, lumber, wheat and other commodities, along with the unclogging of supply chains, have helped slow the retail costs of cars, furniture and clothes, among other items.
Price increases, though, have remained persistently high for some goods and services, including eggs, which skyrocketed 60 percent last month compared with a year ago. Egg prices rose 11.1 percent just in December, inflated by an outbreak of avian flu that has led to a culling of herds and higher feed costs.
Car rental prices have also soared nearly 27 percent from a year ago and rose 1.6 percent just in December.
But for many other items, inflation is easing. Coffee prices, though up nearly 14 percent in the past year, rose just 0.2 percent last month. And the cost of clothes and shoes rose just 3 percent in the past year and 0.3 percent last month.
Friday’s figures are separate from the better-known inflation data that comes from the consumer price index. The CPI, which was released earlier this month, has also shown a steady deceleration.
“The latest data offer the first tangible signs that the economy’s main engine is slowing,” said Oren Klachkin, lead US economist at Oxford Economics, referring to consumers, whose spending accounts for about 70 percent of economic activity.
The Fed has been seeking to slow spending, growth and the surging prices that have bedevilled the nation for nearly two years. Its key rate, which affects many consumer and business loans, is now in a range of 4.25 percent to 4.5 percent, up from near zero last March. Though inflation has been decelerating, most economists said they think the Fed’s harsh medicine will tip the economy into a recession sometime this year.
“We continue to see the US economy experiencing a mild recession this year,” said Lydia Boussour, senior economist at EY Parthenon.
Low levels of unemployment
A recession typically causes widespread layoffs and higher unemployment. But for now, US employers are adding workers, and the unemployment rate remains at a half-century low of 3.5 percent.
Should job losses, which are occurring at many finance and tech companies, drive up unemployment, a recession could eventually be declared by a group of economists at the National Bureau of Economic Research, a nonprofit that officially determines when recessions occur. The economists at the NBER typically make such an announcement well after a recession has actually begun.
For now, the number of people seeking unemployment benefits – a proxy for layoffs – declined last week to 186,000, a very low level historically. And Walmart, the nation’s largest employer, said it would raise its minimum wage, from $12 to $14 an hour, to help it keep and attract workers.
The Fed is in an increasingly delicate position. Chairman Jerome Powell has emphasised that the central bank planned to keep boosting its key rate and to keep it elevated, potentially until the end of the year. Yet that policy may become untenable if a sharp recession takes hold.
On Thursday, the government reported that the economy grew at a healthy clip in the final three months of last year but with much of the expansion driven by one-time factors: Companies restocked their depleted inventories as supply chain snarls unravelled, and the nation’s trade deficit shrank.
By contrast, consumer spending in the October-December quarter as a whole weakened from the previous quarter, and business investment dropped off sharply. Overall, the economy expanded at a 2.9 percent annual rate in the October-December quarter, down slightly from a 3.2 percent pace in the previous quarter.
If consumers remain less willing to boost their spending, companies’ profit margins will shrink, and many may cut expenses. That trend could lead eventually to waves of layoffs. Economists at Bank of America have forecast that the economy will grow slightly in the first three months of this year – but then shrink in the following three quarters.
More frugal consumers would threaten to send the economy into a recession. But they can also help reduce inflation. Companies cannot keep raising prices if Americans will not pay the higher prices.
Last week, the Federal Reserve’s beige book, a gathering of anecdotal reports from businesses around the country, said, “Many retailers noted increased difficulty in passing through cost increases, suggesting greater price sensitivity on the part of consumers.”
Your Weekend Reading: Nobody Knows Where the US Economy Will Land – Bloomberg
The US Economy Slows Down
The Federal Reserve must be pleased with the top-line numbers in Thursday’s fourth-quarter GDP report, which showed the U.S. economy grew by a solid 2.9% while its preferred price index slowed to 3.2%. But drill down, and the economy looks to be losing momentum.
Maybe the best news from the report is that consumer spending continued to increase at a steady 2.1% and contributed about half of the GDP growth. It appears that rising interest rates haven’t yet caused consumers to pull back, though the December retail sales report showed a sharp drop in spending and could augur a slowdown.
The shift in spending toward services that began as lockdowns eased continued. Services contributed 1.16% to the consumption increase, with motor vehicle and parts chipping in 0.20%. End-of-year discounts may have moved forward purchases, and auto analysts are forecasting weak growth this year.
Businesses also restocked inventories as supply chains eased, which accounted for 1.46% of the GDP growth. Net exports also added 0.56%. But neither is likely to be sustained going forward. The other big lift to GDP came from government spending, which increased 3.7% and contributed 0.64%. Most of this was transfer payments and salaries rather than defense or public works.
The biggest cause for concern was the 6.7% fall in fixed private investment. Much of that was housing (-26.7%), owing to the sharp increase in interest rates. What the Fed giveth, it now taketh away. Capital expenditures also fell 3.7%, which signals that businesses are getting nervous and spending less on equipment that can boost worker productivity.
Intellectual property investment is holding up better, but research and development declined last quarter. One culprit may be last year’s expiration of the immediate expensing for R&D. The pullback in business investment amid higher interest rates and economic uncertainty has been evident in the ISM purchasing managers index for some time.
The economy can’t live on consumption alone, and the sharp decline in the savings rate—2.9% in the fourth quarter compared to 7.3% a year earlier—suggests that consumers may be running up credit cards to make ends meet or take the vacation they couldn’t during the pandemic. But as savings decline, so may consumer spending.
Perhaps the best news for the Fed is that real disposable personal income grew 3.3% as the personal consumption expenditure price index eased to 3.2%, down from 4.3% in the third quarter and 7.5% in the first. This suggests that its monetary medicine may be starting to work, and it might not have to raise interest rates as high as some expected a few months ago.
Recent job and unemployment claim reports also indicate that the labor market is holding up well, even as many large companies announce layoffs. Small businesses are still hiring, and China’s abandonment of zero-Covid policies will help global growth.
The biggest risks to the U.S. economy other than higher interest rates this year are probably the tax increases in the Inflation Reduction Act and a regulatory onslaught that are compounding business uncertainty. President Biden has a growing economy, and let’s hope he can keep it.
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