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Fed Minutes Could Show Higher Bar for Rate Cuts as Inflation Lingers
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The Federal Reserve will release the minutes of its January meeting this afternoon, offering investors a detailed look at how close—or far—policymakers believe they are from cutting interest rates again. Crucial to that pivot is the path of inflation; Chicago Fed President Austan Goolsbee continued to express his view that policymakers could make several more rate cuts if inflation shows it is headed back to the Fed’s 2% target. Meanwhile, across the pond, European Central Bank President Christine Lagarde hasn’t made a decision on whether to serve out her full term, which ends in October 2027, according to a spokesperson for the institution. Finally, the Reserve Bank of New Zealand left interest rates unchanged at its monetary policy meeting and said it expected inflation to retreat soon and for economic recovery to gather pace in the year ahead.
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Fed Minutes Could Show Higher Bar for Rate Cuts as Inflation Lingers
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Photo: Saul Loeb/Agence France-Presse/Getty Images
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When Federal Reserve officials met in late January, they left the federal-funds rate unchanged at 3.5% to 3.75%, pausing after three interest-rate cuts late last year. Since then, economic data have complicated the outlook. Inflation remains above the Fed’s 2% target and employment has somewhat stabilized. Growth, meanwhile, appears solid.
The minutes of the Fed's January meeting, set to be released at 2 p.m. ET, are expected to show a central bank that believes policy is sufficiently restrictive for now and is in no hurry to ease further. That is a shift from late 2025, when concerns about a weakening labor market helped justify rate cuts. (Barron's)
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Fed’s Goolsbee Says Future Rate Cuts Depend on Inflation Progress
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With regard to the tariff impact, Chicago Fed President Austan Goolsbee said his hope is that the price increases are temporary. If tariff-related price increases are transitory and inflation seems to be coming down to the Fed’s 2% target, he said there is room for several more interest-rate cuts.
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The AI Boom Isn’t a Reason to Cut Rates, Says Fed’s Barr
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The White House has argued that a surge in productivity driven by artificial intelligence will give the Federal Reserve room to lower interest rates without stoking inflation. Fed governor Michael Barr doesn’t see it that way.
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In a speech on Tuesday at the New York Association for Business Economics, Barr said that even if AI ultimately lifts growth, it is unlikely to justify easier monetary policy any time soon. If the technology meaningfully boosts long-run productivity, he said, it could actually push so-called equilibrium interest rates higher. (Barron's)
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ECB’s Lagarde Hasn’t Taken Any Decision on Term
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“President Lagarde is totally focused on her mission and has not taken any decision regarding the end of her term,” the spokesperson said Wednesday.
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RBNZ Leaves Interest Rates on Hold, Expects Inflation to Soften
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The Reserve Bank of New Zealand held its official cash rate at 2.25%, as expected. While the outlook for the economy is brightening, most economists expect the RBNZ to delay raising interest rates until the second half of this year as unemployment remains elevated.
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New York Manufacturing Activity Expands Modestly
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Factory activity in New York state continued to grow this month, albeit at a slightly slower pace than in January, with firms remaining optimistic as capital spending plans reached a multiyear high.
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Mamdani Warns Nearly 10% Property-Tax Boost if No Tax on Wealthy
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Mayor Zohran Mamdani proposed raising New York City property taxes by nearly 10%, having failed so far to persuade New York Gov. Kathy Hochul to increase taxes on corporations and the wealthy.
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Billionaires’ Low Taxes Are Becoming a Problem for the Economy
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There is a risk is that the U.S. economy becomes increasingly dependent on a narrow group of very rich households, whose spending is tied to the performance of the stock market. This could mean the entire economy pays a steep price in the next market correction
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Land Grab for Data Centers Is One More Obstacle to Essential Housing
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The rapid growth of artificial intelligence and the surge in construction of the large data centers it requires are emerging as another potential contributor to America’s housing shortage.
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Resilient Oil Production Is a Boon to Trump. How Long Will It Last?
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Remote monitoring and other feats of technology that have become mainstream are among the clues that help explain why U.S. oil production has—thus far—defied predictions that it would decline in conjunction with the lowest crude prices since the pandemic.
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8:30 a.m.: New Residential Construction - Housing Starts and Building Permits
9 a.m.: Johnson Redbook Retail Sales Index
9:15 a.m.: Industrial Production and Capacity Utilization
1 p.m.: Federal Reserve Vice Chair Michelle Bowman speaks at Exchequer Club of Washington D.C. event
2 p.m.: Federal Open Market Committee meeting minutes published
4 p.m.: Treasury International Capital Data
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8:30 a.m.: Advance Economic Indicators Report
8:30 a.m.: U.S. International Trade in Goods & Services
8:30 a.m.: Philadelphia Fed Business Outlook Survey
8:30 a.m.: Unemployment Insurance Weekly Claims Report - Initial Claims
10 a.m.: Pending Home Sales Index
5:15 p.m.: Federal Reserve Bank of San Francisco President Mary Daly conversation with Goldman Sachs Vice Chairman and former Federal Reserve Bank of Dallas President Rob Kaplan
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Consumer price pressures in Canada eased slightly in the first month of the year as prices at the pump fell sharply. The consumer-price index rose 2.3% from a year earlier in January, Statistics Canada said Tuesday.
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The U.K’s rate of inflation slowed in January, furthering the chances of a rate cut by the Bank of England when policymakers next meet in March.
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Japan is planning roughly $36 billion in U.S. investments spanning critical minerals, oil and gas infrastructure and power generation as part of a $550 billion strategic trade and investment agreement, according to Commerce Department officials.
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WSJ Pro Central Banking brings you central banking news, analysis and insights from WSJ’s global team of reporters and editors. This newsletter was compiled by markets reporter Vicky Ge Huang in New York. Send your tips, suggestions and feedback to vicky.huang@wsj.com.
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