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Main Central Banks Transferring at Totally different Speeds to Confront Inflation; Financial institution of Mexico Lifts Charges Once more

Nice day. The Federal Reserve, the Bank of England and the European Central Bank have embarked on different policy paths this week, underscoring how the central banks’ plans to phase out multi-billion dollar stimulus policies and aim for higher interest rates are developing at different speeds around the world with large economies that are with face an incomplete recovery while inflationary pressures mount. Meanwhile, the Bank of Mexico hiked rates again on Thursday, only this time it raised its overnight money target by half a percentage point to 5.5% after having raised it by quarter points at its previous four meetings. Latin American competitors Brazil and Chile have also hiked interest rates faster in response to rising inflation. In addition, the Japanese central bank has kept its monetary policy extremely loose earlier today and expressed minimal concern about inflation.

Now for today’s news and analysis.

Top news

Europe’s leading central banks on different courses in view of inflation

Europe’s leading central banks embarked on different policy paths the day after the Federal Reserve paved the way for rate hikes in 2022 due to the coronavirus.

The Bank of England was the first of the world’s major central banks to raise its key interest rate since the pandemic began, while the European Central Bank said it would phase out an emergency bond-buying program while stepping up other stimulus measures around Jan. to keep the eurozone recovery on track.

Bank of Mexico accelerates rate hikes

The Bank of Mexico accelerated the pace of rate hikes on Thursday after inflation hit more than 20-year highs, prompting the bank to raise its inflation forecast. The bank’s board of governors voted 4 to 1 to raise the overnight target to 5.5%.

The economic outlook for 2022 with SF Fed President Mary Daly

Mary Daly, President of the Federal Reserve Bank of San Francisco, answers your questions at 1 p.m. ET today about the US economic outlook and steps the Fed has taken to contain the economic impact of the Covid-19 pandemic and reduce inflation fight. Sign up here.

US economy

The number of unemployment claims rose last week but has remained low for almost decades

Initial jobless claims, a proxy for layoffs, rose from a revised 188,000 – the lowest in 52 years – by 18,000 in the week ended December 11, to 206,000 the week before, the Labor Department said. The number of new applications for unemployment benefits fell steadily over the course of the year.

White House boosts trucker recruitment campaign

The Biden government on Thursday unveiled a plan aimed at increasing the number of commercial truckers by making certification easier and faster for them in the coming months, as part of a broader push to tackle supply chain bottlenecks .

Inflation is near a 40-year high. This is what it looks like

The upward pressure on prices is expanding beyond goods and services directly affected by the Covid-19 pandemic. The price increases for fuel, cars, groceries, clothing, and medical supplies vary widely. Take a look at the snapshot of the journal.

Important developments around the world

Japan’s central bank avoids a worsening trend and points to a lack of inflation

The Bank of Japan kept its short-term rate target at minus 0.1% and said it would continue to lower the yield on 10-year Japanese government bonds to around zero, well below the US, where corresponding government bonds are yielding above 1.4%. .

Mexico says planned US tax breaks will boost migration

A proposal before the US Senate to give Americans who buy US-built electric vehicles tax credits threatens to harm Mexican industry and encourage illegal immigration to the US, Mexican Economy Secretary Tatiana Clouthier said.

Investors hunt for Evergrande bonds amid a default

Some asset managers bought bonds from China Evergrande Group when the developer defaulted and prices hit record lows.

Summary of the Financial Regulation

Biden Administration Investigates Companies That “Buy Now, Pay Later”

Just in time for Christmas: an initial regulatory investigation of its kind by the Consumer Financial Protection Bureau into “buy now, pay later” installment payments that are often offered to online shoppers.

HSBC has imposed $ 85 million on lax money laundering controls

HSBC Holdings PLC was fined £ 63.9 million, the equivalent of $ 85 million, for inadequate anti-money laundering controls the London bank used to monitor hundreds of millions of dollars in transactions.

US is under pressure to sanction Myanmar’s lucrative energy industry

As the Myanmar military escalates its war on its adversaries, the US and other countries face increasing pressure from lawmakers and human rights defenders to take action against an industry that is the country’s single largest source of foreign money.

UK fines GAM, fund manager who invested in Greensill loans

The UK’s Financial Conduct Authority has fined Swiss asset manager GAM Holding AG and one of its former Star bond fund managers for a conflict of interest to settle a longstanding case related to the company’s investments in Greensill Capital-generated loans.

Foresight

Friday (all times ET)

Time N / A: Bank of Japan issues policy statement

1 p.m .: Waller of the Fed delivers a speech on the economic outlook at the Forecasters Club of New York event

Tuesday

6:50 p.m .: Bank of Japan publishes minutes of meetings from October 27th to 28th

research

Think Tank report says the Fed’s new rate is still pretty numb

As restrictive as the Fed’s outlook may seem after the Fed’s Open Market Committee meeting this week, it’s historically not, says Joseph Gagnon, senior researcher at the Peterson Institute for International Economics. “The FOMC continues to forecast historically low interest rates,” he wrote in a report on Wednesday. With the median projection of the federal funds rate of 2.1% by the end of 2024, the Fed’s expected path is only where officials see inflation at the time, Gagnon wrote. He added that “that would mean a very low real or inflation-adjusted interest rate of 0% for a year in which the FOMC predicts continued solid growth and very low unemployment.” In other words, even with the interest rate hikes expected by the Fed, the central bank does not see that its monetary policy stance is holding back economic activity.

– Michael S. Derby

comment

The risk to the markets is not higher interest rates, but lower payroll targets

After months of worrying about central banks becoming restrictive in the markets, the markets decided they could handle higher interest rates, but the real danger is that inflation will drive officials’ recent ambitions for a tighter labor market reduced, writes Jon Sindreu. Just a day after the Federal Reserve signaled that it could hike rates three times over the next year, equity markets in both the UK and the euro zone saw new gains.

The US economy is cheering off-season

There could be signs that home builders and manufacturers struggling to meet demand due to supply chain issues and hiring difficulties weren’t seeing their typical slowdowns in November, writes Justin Lahart.

Basis points

US industrial production rose 0.5% month-on-month, seasonally adjusted, in November and slowed from an upwardly revised 1.7% increase in October that followed weather-related disruptions in September, the Federal Reserve said. (Dow Jones Newswires)

The Federal Reserve Bank of Philadelphia announced that its regional business activity measure fell from 39.0 in November to 15.4 this month. According to a survey by the Wall Street Journal, economists expected a value of 30.0. Readings above zero indicate an improvement in conditions. (DJN)

According to a survey by the Federal Reserve Bank of Kansas City, the growth of factory activity in the central US in December compared to the previous month held its pace. The composite index of the 10th manufacturing district survey was unchanged this month, signaling expansion. Economists polled by the Wall Street Journal expected an index of 25. (DJN)

U.S. private sector economic growth remained strong this month as service sector activity spiked on strong demand while manufacturing supply chain lags eased, data from IHS Markit’s survey of purchasing managers showed. The US composite output index fell from 57.2 in November to a three-month low of 56.9. Values ​​above 50 indicate growth, so the index points to a strong increase in business activity in the private sector, albeit at a slower pace than at the beginning of the year. (DJN)

U.S. new construction rose in November after two months of decline, according to the Department of Commerce, as home starts rose 11.8% month-over-month and 8.3% year-over-year to a seasonally adjusted annual rate of 1.68 million. (DJN)

Car registrations in the European Union declined in November and this year fell for the fifth month in a row, the Association of European Automobile Manufacturers announced on Friday. New car registrations fell by 20.5% month-on-month to 713,346 vehicles, the association, also known as ACEA, said. (DJN)

The German producer price index for industrial products rose in November by 19.2% compared to the previous year, announced the Federal Statistical Office Destatis on Friday. This is the highest increase over the previous year since November 1951, said Destatis. (DJN)

(FOLLOW MORE) Dow Jones Newswires

Dec 17, 2021 9:17 AM ET (2:17 PM GMT)

Copyright (c) 2021 Dow Jones & Company, Inc.

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