|
|
Fed's Daly Says New Policy Framework Can Combat Inequality; NY Fed Finds Consumers More Upbeat; Bank of Korea Stands Pat
|
|
|
|
|
|
|
|
Good day. The Federal Reserve’s commitment not to raise interest rates until the U.S. economy reaches full employment and inflation is on track to hit or exceed 2% could help reduce economic inequality, San Francisco Fed President Mary Daly said. The New York Fed, meanwhile, said its survey of consumer expectations for September found U.S. consumers in a better mood. Elsewhere, the central banks of South Korea and Singapore held policy steady.
Now on to today’s news and analysis.
|
|
|
|
SF Fed's Daly: New Fed Framework Can Lower Economic Inequality
|
|
|
|
San Francisco Fed President Mary Daly in the text of a speech says ‘inequities have compounded over generations.’ PHOTO: DAVID PAUL MORRIS/BLOOMBERG NEWS
|
|
|
|
The Federal Reserve’s newly upgraded policy-making framework could be an important tool in reducing economic inequality, Federal Reserve Bank of San Francisco President Mary Daly said Tuesday. “Systemic biases related to race, ethnicity, gender, and class have led to unequal access to education, jobs, income, and wealth,” Ms. Daly also said in the text of a speech. She said the Fed’s most powerful tool to help close these gaps is its new commitment not to raise interest rates until the economy reaches full employment and inflation is on track to hit or exceed the bank’s 2% target.
|
|
|
|
New York Fed Survey Finds Improving Consumer Mood in September
|
|
|
The Federal Reserve Bank of New York said its September Survey of Consumer Expectations found “improvements in labor market and spending expectations, as well as less pessimistic views about households’ expected financial situation.”
|
|
|
Senate to Vote on New Funding for Small Businesses Next Week
|
|
|
Senate Majority Leader Mitch McConnell said the Senate would vote on a narrow relief bill next week, setting up a potential showdown with Democrats who have pushed for an agreement on a broader aid package.
|
|
|
JPMorgan, Citigroup Signal That Economy Isn’t Out of the Woods
|
|
|
The banks’ third-quarter results show businesses and consumers held up surprisingly well in the months since the pandemic plunged the U.S. into recession. But the leaders of both banks warned that the economy isn’t out of the woods.
|
|
|
OPEC Says U.S. Oil Production Recovering Faster Than Expected
|
|
|
The U.S. energy industry is recovering more quickly than previously expected, OPEC said Tuesday, adding that production from outside the cartel is now seen falling by 2.4 million barrels a day, or 3.6% from last year’s levels.
|
|
|
|
|
Key Developments Around the World
|
|
|
Bank of Korea Keeps Rate Unchanged at Record Low
|
|
|
South Korea’s central bank kept its policy rate unchanged at a record low of 0.5% Wednesday, as expected. The country’s economy is forecast to contract this year at a rate that would be its weakest performance in more than two decades.
|
|
|
Singapore Central Bank Keeps Currency Policy Unchanged
|
|
|
The Monetary Authority of Singapore said it will keep a 0% per annum rate of appreciation on its policy band. While the economy is likely to recover in 2021 and there is a receding risk of disinflation, underlying growth momentum will probably be weak and the negative output gap will narrow slowly, the central bank said.
|
|
|
Poloz: Fiscal Policy Should Be Main Driver for Canada's Recovery
|
|
|
Former Bank of Canada governor Stephen Poloz said fiscal policy should be the main driver of Canada's economic recovery. Mr. Poloz, whose seven-year term as governor ended in June, told BNN Bloomberg that monetary policy is close to its limit and fiscal policy will have to play a leading role. The BOC has already cut its key interest rate to 0.25%, which officials consider the lowest effective level, and began quantitative easing. "Monetary policy, basically, has done most of what it can deliver," Mr. Poloz said. "At this stage, fiscal policy is the primary tool." (Dow Jones Newswires)
|
|
IMF: Potential ‘Major Resilience Test’ for Global Financial System
|
|
|
Huge government spending and other steps to boost coronavirus-stricken economies have limited immediate risks to global financial stability while fueling a debt buildup that could spell trouble later, the International Monetary Fund said Tuesday.
|
|
|
India Turns to Economic Overhaul as Growth Prospects Slide
|
|
|
With India facing an economic crisis brought on by the coronavirus pandemic, Prime Minister Narendra Modi is looking to deregulation as the cure, with changes pushed through in recent weeks by his Bharatiya Janata Party affecting everything from factory floors to farming.
|
|
|
IMF: China Growth Limits Global Economic Damage From Pandemic
|
|
|
The global economic collapse caused by the coronavirus won’t be as severe as estimated earlier, the International Monetary Fund predicted, thanks to strong government intervention world-wide and a swift recovery in China, the only major economy to grow this year.
|
|
|
|
|
|
|
Newsmakers Live: Q&A With Mary Daly
|
|
|
|
San Francisco Fed chief Mary Daly will answer questions on the economic outlook and steps the central bank has taken to cushion the shock posed by the pandemic. She will take questions in an interview moderated by Nick Timiraos, WSJ’s chief economics correspondent. Sign up here to be notified when the Oct. 15 event begins and to submit questions in advance.
|
|
|
|
|
Financial Regulation Roundup
|
|
|
Capital Group Boosts Stake in Deutsche Bank
|
|
|
U.S. investor Capital Group Cos. has raised its stake in Deutsche Bank AG, sounding a rare note of confidence in prospects for the troubled European banking sector. Capital Group now owns 7.35% of Deutsche Bank, a stake worth nearly €1.2 billion, equivalent to $1.4 billion.
|
|
|
An Unpopular IPO Rule Hands Chinese Banks Big Windfalls
|
|
|
When China rolled out its own Nasdaq-style listings venue last year, the country’s regulators forced investment banks to buy stocks in the companies they took public. That unusual requirement for banks to eat their own cooking is now paying off big time.
|
|
|
|
|
|
|
|
8 a.m.: European Central Bank’s Lane gives speech at SUERF online conference
8:30 a.m.: U.S. Labor Department releases September PPI
8:35 a.m.: Richmond Fed’s Barkin speaks at virtual West Virginia Economic Outlook Conference
9 a.m.: Bank of England’s Haldane speaks online at business summit
9 a.m.: Fed’s Clarida speaks on economy and monetary policy at virtual Institute of International Finance meeting
9:25 a.m.: European Central Bank’s Enria speaks on panel at Systemic Risk Council webinar
10:30 a.m.: Bank of Canada’s Lane speaks on webinar panel
10:30 a.m.: Fed’s Quarles speaks on financial stability at Systemic Risk Council Webinar
2 p.m.: Richmond Fed’s Barkin speaks at Economic Club of New York virtual event
2 p.m.: Dallas Fed’s Kaplan speaks on “The Road Ahead for Central Banks” at Hoover Institution virtual event
3 p.m.: Fed’s Quarles speaks on financial regulation at Hoover Institution virtual event
6 p.m.: Dallas Fed’s Kaplan speaks online on economy and monetary policy
|
|
|
|
|
9 a.m.: Bank of England’s Cunliffe speaks on Covid-19 lessons for macroprudential policy at Peterson Institute for International Economics virtual event
9:45 a.m: Bank of Canada’s Lane speaks on online panel at central bank payments conference
11 a.m.: Fed’s Quarles speaks on the Covid-19 response at virtual Institute of International Finance meeting
12 p.m.: San Francisco Fed’s Daly speaks in online Wall Street Journal discussion
12 p.m.: European Central Bank’s Lagarde speaks in online CNBC debate on the economy during IMF/World Bank meetings
5 p.m.: Minneapolis Fed’s Kashkari speaks on economy at virtual New York University event
|
|
|
|
Fitch Ratings: Disputed U.S. Election Could Trigger Credit Downgrade
|
|
|
The full faith and credit of the United States has been under pressure at various points in recent years because of political battles over borrowing limits and now there is a new threat to U.S. creditworthiness: Next month’s election. In a note Monday, Fitch Ratings said the upcoming election, where President Trump has equivocated over whether he would accept a peaceful transfer of power should he lose while alleging, without evidence, potential election fraud, is a concern. “Strong governance is essential to 'AAA' sovereigns, which are characterized by well-understood rules and processes for the transfer of power that are broadly accepted and executed,” the firm said, adding it would view a departure from this principle “negatively” in considering its U.S. rating. A disputed election could reverberate after the election, too: “The potential for a disputed election
result reflects deepening political polarization, which could affect the next administration's policy making scope and how it approaches public policy decision-making on key issues.” While Fitch's warning is a new one for the U.S., it's unclear whether a downgrade would mean much. Massive borrowing by the U.S. and high deficit levels have failed to play their traditional role of pushing up borrowing costs, which are holding at rock bottom levels.
—Michael S. Derby
|
|
|
|
Abandoned City Offices Are Still a Safer Property Bet
|
|
|
"As long as worries about catching Covid-19 keep commuters off buses and trains, city skyscrapers will remain empty. If remote working really takes hold, though, the owners of out-of-town offices may have more to worry about," Carol Ryan writes for Heard on the Street. "Even if big corporations do shrink their offices, they will arguably still want to be in city centres for client meetings and close to transport hubs for the swelling ranks of part-time commuters."
|
|
|
|
|
-
Americans receiving Social Security will see a 1.3% increase in benefits next year, the federal government said Tuesday, translating into a $20 boost in retirees’ average monthly benefit.
-
Small-business owners' confidence in the U.S. economy increased further in September and broadly reached pre-pandemic levels, according to the National Federation of Independent Business, whose NFIB Small Business Optimism Index rose to 104.0 from August’s 100.2 and above the historical 46-year average. (Dow Jones Newswires)
-
German economic expectations plummeted in October after rising in the last two months, the ZEW economic research institute said Tuesday, noting its measure of economic expectations dropped to 56.1 from 77.4 in September. (DJN)
-
German consumer prices in September fell 0.2% on month and on year measured by national standards, and by 0.4% on month and on year in EU-harmonized standards, Destatis said. (DJN)
|
|
|
|
|
This newsletter is compiled by James Christie in San Francisco and Ed Ballard in London.
Send us your tips, suggestions and feedback. Write to:
Jon Hilsenrath, Michael Derby, Nell Henderson, Nick Timiraos, Jason Douglas, Paul Hannon, Harriet Torry, Kate Davidson, David Harrison, Kim Mackrael, Tom Fairless, Megumi Fujikawa, Michael Maloney, Paul Kiernan, James Glynn
Follow us on Twitter:
@WSJCentralBanks, @NHendersonWSJ, @michaelsderby, @NickTimiraos, @PaulHannon29, @wsj_douglasj, @HarrietTorry, @KateDavidson, @d_harrison, @kimmackrael, @TomFairless, @megumifujikawa, @mikemaloneyny, @pkwsj, @JamesGlynnWSJ
|
|
