With the Omicron variant adding to the already high levels of uncertainty, the OECD in December raised its 2022 inflation forecast for the G20 to 4.4%, up from a September forecast of 3.9%.
Economic activity grew at a moderate pace from early October to mid-November, but some parts of the country reported constrained growth, despite strong demand due to supply chain disruptions and labor shortages, according to the Federal Reserve’s eighth Beige Book release of the year.
Federal Reserve Chairman Jerome Powell told members of the Senate Banking Committee today that “the banking system is strong,” and that while “there are some issues to address in the capital markets, I wouldn’t say they rise to the level of grave systemic importance.” He did flag cyber risk as a key threat to financial stability.
Paycheck Protection Program lending helped to soften the effects of the pandemic-related recession on state-level employment growth, and had “significant” benefits overall, the Federal Reserve Bank of Cleveland concluded in a new research brief last week.
Federal Open Market Committee members said that they see the current elevated level of inflation as transitory but that it could take longer to subside than they had previously assessed.
Federal Reserve Governor Christopher Waller today said that rapid improvement in the labor market and “deteriorating inflation data” have pushed him toward favoring a faster pace of asset purchase tapering.
The Treasury Department’s Office of Financial Research flagged cybersecurity and macroeconomic risk as top areas of concern as the cost of cyberattacks continues to rise and uncertainty about COVID-19 and the economic outlook persists.
Headline inflation surged to 6.2% in October, yet the federal funds rate remains near-zero. As a result, the real interest rate in the U.S. (the difference between inflation and the nominal rates set by central banks) is at its lowest level in decades, -5.97%.
With millions of microchips needed annually to equip smart chip payment cards, the American Bankers Association today told the Commerce Department that a “whole-of-government approach” is needed to weather the expected shortages in the global chip supply.
Federal Reserve Vice Chairman Richard Clarida today acknowledged that the growth of inflation in personal consumption expenditures is “much more than a ‘moderate’ overshoot” beyond the Fed’s 2% target.