Good day. It could be quite a while before the Federal Reserve considers raising interest rates again, as several forces have weighed on U.S. and global inflation for years and appear unlikely to reverse soon. The U.S. economy has been gaining some momentum in recent weeks, according to the Fed's beige book report and new readings on gross domestic product and consumer spending. And Dallas Fed President Robert Kaplan discussed his outlook for the economy in a WSJ interview.

Now on to today’s news and analysis.

Fed chief Jerome Powell recently set a high bar for raising interest rates, one that looks unlikely to be met for a long while. “We would need to see a really significant move-up in inflation that’s persistent before we would consider raising rates,” Mr. Powell said in October. Even without a precise definition of significant or persistent, this standard appears out of reach through at least next year, given recent inflation trends and the Fed’s shifting understanding of the economy. 

U.S. businesses have seen continued growth in economic activity, wages and prices during recent weeks, and they maintain a generally positive outlook, the Federal Reserve said Wednesday. The economy expanded modestly from October through mid-November, the Fed said in its periodic report of anecdotes from business contacts around the country. That appeared to be an improvement from the previous so-called beige book report, released in mid-October, when the Fed described growth as slight to modest.

The Reserve Bank of Australia has the proof it needs to justify its fourth cash rate cut this year at its December policy meeting Tuesday, but has instead signaled that it wants to sift the economic tea leaves a little longer.

Delaying the rate cut ignores a key juncture for the economy and an opportunity to remedy one of the big issues plaguing the country—a stubborn downturn in consumer spending. Read More.

The U.S. economic expansion remained on solid ground as it entered the fourth quarter, although some signs pointed to weaker consumer spending this holiday season. An initial snapshot of the year-end trends emerged Wednesday when the Commerce Department, in separate reports, said household spending picked up in October and orders for long-lasting factory goods rose—both positive signs for growth.

• Spending Picks Up, While Inflation Remains Soft

From 2003 to 2015, the U.S. trade surplus in services such as medical care, higher education, royalties and payments processing nearly sextupled to $263.3 billion. Growth has since stalled, however. Some of the softness in service exports likely reflects cyclical factors, such as a strong dollar or slowing foreign economies. But economists also point to other forces—some political, others more tectonic—that are weighing on exports while prompting American consumers and firms to buy more foreign services.

In an article published Sunday, People’s Bank of China Gov. Yi Gang said the central bank won’t resort to “competitive” quantitative easing, even if interest rates in other major economies approach zero.

• Bank of Mexico Cuts Economic Growth Forecasts
• Mexico’s President Urges Quick U.S. Ratification of Trade Deal

• Canada Economy Slowed in Third Quarter

The New York Stock Exchange has submitted a proposal with the SEC that would allow companies going public through a direct listing to raise capital. The move would open up another pathway for companies to raise money in the public markets, allowing companies, not just existing shareholders, to sell shares through a direct listing.

Credit unions, long seen as a humdrum corner of consumer finance, are going toe-to-toe with the biggest financial institutions. Credit unions’ assets have grown at nearly twice the pace of banks’ over the past decade, and the cooperatives are buying small banks in record numbers. One recently partnered with Google on its plans to create a checking account.

Swedish state broadcaster SVT said Wednesday that about 194 clients at Skandinaviska Enskilda Banken are suspected of using the bank to launder money through Swedish and Baltic accounts, with around 475 million Swedish kronor ($49.4 million) linked to the Magnitsky case.

Nearly $50 million was swiped from a South Korean cryptocurrency exchange, the industry’s latest setback as it struggles with problems still plaguing cryptocurrencies and the venues where investors trade them.

9 a.m.: ECB’s Lagarde speaks at European Parliament in Brussels
10:30 p.m.: Reserve Bank of Australia releases policy statement

"Don’t rule out another bumpy New Year’s Eve in the funding markets," writes the Journal's Telis Demos. Last month, "investors were updated on the latest assessments of systemic importance at major banks. Based on those scores, which are calculated by regulators based on data reported by banks, some of the nation’s biggest banks are heading into year-end potentially needing to scale back activity such as lending even more sharply than this time last year," when repo rates surged. Mr. Demos says that "the market could be caught off guard, as it was in September, by just how much liquidity is needed in the face of overlapping regulations and any unexpected market shocks that happen to come along."

• The New York Fed added $88.45 billion in temporary liquidity to the financial system Friday. On Wednesday, the day before Thanksgiving, it added $108.95 billion.
• In Wisconsin, a key swing state, President Trump’s trade policies have hurt manufacturing and farming, but the unemployment rate remains low.
• Retailers are staffing stores differently in an effort to meet new competitive challenges, as well as attract workers and control payroll costs amid the tightest labor market in decades.
• President Trump’s plan to expand apprenticeships into more vocations risks creating a rift with construction workers he is courting for support in next year’s election.
• An 1,800-mile pipeline is set to begin delivering Russian natural gas to China on Monday. The $55 billion channel is a feat of energy infrastructure—and political engineering.
• The eurozone’s annual rate of inflation rebounded in November after two straight months of decline, but remained well below the European Central Bank’s target.
• Stocks have soared beyond most analysts’ expectations this year. Wall Street strategists say not to count on a repeat performance in 2020.
• India’s economy slowed for the sixth quarter in a row, a decline that is particularly weighing on the rural regions where most Indians live.
• U.K. consumer credit growth accelerated to an annual rate of 6.1% in October from 5.9% in September but remained below its post-financial-crisis peak of 10.9% in November 2016, the Bank of England said. (Dow Jones Newswires) 
• South Korea’s inflation accelerated at a slower-than-expected pace in November, staying still far below the 2% target. The benchmark consumer-price index gained 0.2% in November. 
• Coffee prices have risen more than 20% in recent weeks, lifted by signs of shrinking production in Latin America.

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