Fed Chair Powell to warn Congress that inflation pressures could last longer than expected

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CNBC 27 September, 2021 - 05:27pm 16 views

Gold Stuck at Mid-$1,700, But Ekes Out Gain for 2nd Day in Row By Investing.com

Investing.com 27 September, 2021 - 01:45pm

Investing.com - Gold remained buried in mid-$1,700 territory on Monday, although a slight retreat in the dollar helped longs in the yellow metal book an anemic second straight day of gains after a torrid time through most of September.

At the current rate, gold is on track to finish the month down 3.7% — its worst finish since June’s 7% drop. Yet, with all sorts of speculation over the Federal Reserve’s impending stimulus taper, its fortune could change for the better.

U.S. gold futures’ most active contract, December, settled up 30 cents, or 0.02%, at $1,752 per ounce on New York’s Comex.

“Gold is making small gains at the start of the week after once again finding support around $1,740 late last week,” said Craig Erlam, analyst at online trading platform OANDA. “The Fed's insistence that tapering is still the aim this year and a couple more dots suggesting a rate hike late next year could be on the cards dealt a heavy blow to gold prices last week and the outlook remains challenging if policymakers don't change course.”

Charles Evan, president of the Chicago chapter of the Fed, ​​said on Monday the central bank should be more worried about an unsupportive economy not generating consistent inflation in the coming years than current short-term price pressures,

John Williams, who is New York Fed President, said separately on Monday that he expected inflation, now trending above 2%, to moderate by next year. Williams also said he expected the economy to grow by between 5.5% to 6% this year.

By Gina Lee Investing.com – Gold was up on Tuesday morning in Asia. However, a strengthening dollar and rising U.S. Treasury yields capped the yellow metal’s gains, and investors...

By Yuka Obayashi TOKYO (Reuters) -Oil markets rose on Tuesday, reversing earlier losses and extending their rally into a sixth session, amid continued concerns over tight supply...

By Gina Lee Investing.com – Oil was up Tuesday morning in Asia but eased after a five-day rally. Investors took profits as fears that higher prices that could weaken fuel demand...

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NY Fed's Williams says tapering of asset purchases may soon be warranted

Reuters 27 September, 2021 - 11:09am

It is clear there has been “substantial further progress” toward the Fed’s goal for inflation and there has also been “very good progress” toward maximum employment, Williams said in remarks delivered during a virtual event organized by the Economic Club of New York. He was referring to the threshold policymakers set for reducing the central bank’s bond purchases from the current pace of $120 billion a month.

“Assuming the economy continues to improve as I anticipate, a moderation in the pace of asset purchases may soon be warranted,” Williams said, echoing the policy statement central bank officials issued after last week’s meeting.

While some policymakers, including Cleveland Fed Bank President Loretta Mester and Kansas City Fed President Esther George, say the standard for tapering bond purchases has been met, some officials have said they would like to see continued jobs growth.

Fed Chair Jerome Powell said after the conclusion of last week’s meeting that the economy is one “decent” monthly jobs report short of meeting the threshold for tapering and the Fed will likely begin to do so in November.

Williams said he projects the economy will grow by between 5.5% to 6% this year and for inflation to come back down to 2% next year.

He expects the U.S. labor market to see strong growth over the next year or so. While the benefits of fiscal aid may fade as those programs end, Williams said savings that some households accumulated during the pandemic may help to support consumer spending going into next year.

He said it will be some time before the U.S. economy meets the requirements necessary for the central bank to lift interest rates from near zero levels, pointing to uncertainty in the outlook and the need for continued jobs growth.

“There is still a long way to go before reaching maximum employment,” Williams said. “And over time it should become clearer whether we have reached 2% inflation on a sustained basis.”

Reporting by Jonnelle Marte; Editing by Chizu Nomiyama and Andrea Ricci

Our Standards: The Thomson Reuters Trust Principles.

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Chicago Fed’s Evans says he’s more worried about too little inflation than too much

MarketWatch 27 September, 2021 - 07:01am

“I’m more uneasy about us not generating enough inflation in 2023 and 2024 than the possibility that we will be living with too much,” Evans said, in a speech to the National Association for Business Economics.

The Fed’s favorite inflation measure, the personal-consumption expenditure index, was running at a 4.2% annual rate in July.

Evans, a voting member of the Fed’s interest-rate committee this year, noted that the Fed’s new policy framework aims for 2% inflation and will allow for periods of overshooting. It is designed to get the public to expect that inflation will average 2% over the long term.

Evans said he doesn’t think the recent spike of inflation satisfies this new criterion.

Economists viewed the Fed as shifting to a more hawkish stance at monetary-policy makers’ meeting last week, with the central bankers signaling they will start tapering asset purchases in November and penciling in the first rate hike for next year.

Evans said that it was likely that the tapering would start soon but added that decisions about the path of interest rates “seem much less clear to me.”

Evans seemed to come out against such a quick tightening, warning that the Fed shouldn’t try to engineer “a quick, deliberate retreat to 2%.”

In remarks to reporters after his speech, Evans said he expects the Fed to hike its benchmark policy rate only once in 2023 followed by a very gentle incline.

Evans told reporters that he expects the 10-year yield to move higher, calling it a “good thing.”

“We looking at a very strong economy — except for labor shortages — and we’re looking for those to work their way out,” Evans said.

To convince investors that the Fed is serious about keeping inflation near its target, Evans suggested that the Fed should consider formally aiming for inflation “close to, but above, 2%.”

Many economists have been pressing for the central bank to raise its inflation target above the 2% level.

Evans is now the longest serving regional Fed president after the abrupt, earlier-than-expected retirement of Boston Fed President Eric Rosengren announced Monday amid questions about his stock trading.

A federal judge has approved the unconditional release of John Hinckley Jr., the man who shot and wounded President Ronald Reagan in 1981, his attorney told NPR.

Greg Robb is a senior reporter for MarketWatch in Washington. Follow him on Twitter @grobb2000.

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