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Fed Mounts Closed-Door Fight Against DOJ Subpoenas
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The Federal Reserve is waging a behind-closed-doors legal challenge to a pair of subpoenas issued as part of U.S. Attorney Jeanine Pirro’s criminal investigation into Fed Chair Jerome Powell, according to people familiar with the matter. As that legal battle ensues, Fed governor Stephen Miran turned his attention to the central bank's policy stance: he said in a Fox Business interview Thursday that the Fed needs to cut rates by about a percentage point this year. Meanwhile, markets will get their next hint on where prices are headed when wholesale inflation data is released Friday.
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Fed Mounts Closed-Door Fight Against Justice Department Subpoenas
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Photo: Aaron Schwartz/Bloomberg News
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U.S. Attorney Jeanine Pirro, a longtime ally of President Trump, opened a probe into Federal Reserve Chair Jerome Powell to examine whether he gave false testimony to Congress last summer about the central bank’s building-renovation project.
The move prompted an unprecedented public response from Powell, who in a Jan. 11 video statement said the investigation was a pretext for President Trump’s continuing campaign to pressure the Fed to lower interest rates and end the independence of the central bank.
The Fed, in sealed proceedings, is asking a judge to quash the subpoenas, which could reduce or eliminate its obligation to respond. Its specific legal arguments couldn’t immediately be learned. It isn’t uncommon, especially in high-profile investigations, for a subpoena recipient to challenge prosecutors’ demands as being overly broad or seeking information protected by legal privilege.
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Fed’s Miran Says Four Cuts Are Appropriate This Year
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Federal Reserve governor Stephen Miran said Thursday: “Four cuts I think are appropriate,” adding “I’d rather get them sooner than later.” With regard to private credit, Miran said he hasn’t seen anything yet that would make him worried from a macroeconomic perspective. He added a lot of the growth in private credit ties back to overregulation in banks.
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January’s Wholesale Inflation Will Help Flesh Out the Fed’s Preferred Price Gauge
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The Bureau of Labor Statistics is set to publish the producer price index for total final demand at 8:30 a.m. ET. Economists expected that solid price pressures remained in the pipeline in January, though not as strong as in December. That could signal that the Federal Reserve’s preferred inflation gauge will remain sticky, possibly stalling momentum for further interest-rate cuts. Economists surveyed by FactSet expect that wholesale inflation rose 0.3% in January. That’s a cooldown from the 0.5% monthly pace in December, but still a relatively firm monthly print. The annual rate is expected to be 2.6%, a pullback from December’s 3% increase. (Barron's)
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Mortgage Rates Fall Below 6% for the First Time Since 2022
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Mortgage rates fell below 6% this week for the first time in more than three years, welcome news for waves of house hunters heading into the busy spring home-buying season.
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Key Developments Around the World
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China Moves to Tame Yuan Rally by Slashing Shorting Costs
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China’s central bank has started taking steps to check the yuan’s recent advance, dusting off an old playbook that would reduce the cost of betting against the currency. The People’s Bank of China announced it would slash the risk reserve requirement ratio for financial institutions conducting foreign-exchange forward trading to zero from 20%, a move that effectively makes purchasing the dollar cheaper.
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Tokyo CPI Slows Below BOJ Target But Rate-Hike Path Seems Intact
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U.K. Consumer Mood Darkens Amid Lingering Cost-Of-Living Squeeze
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U.K. consumer sentiment fell unexpectedly in February as cost-of-living pressures continue to weigh on households.
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OPEC+ Expected to Resume Output Hikes at Sunday Meeting
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The Organization of the Petroleum Exporting Countries and its allies meet Sunday with a familiar dilemma: add barrels to the market or continue holding back against a fragile geopolitical backdrop.
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Tech Has Never Caused a Job Apocalypse. Don’t Bet on It Now.
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It was only a matter of time before the AI apocalypse theory went mainstream, writes Greg Ip for The Wall Street Journal. Last weekend, a sensational report posited a future in which AI unleashes enough disruption and job destruction to bring on a deep recession and financial crisis. In response, the entire stock market sold off.
AI disruption makes news almost daily. On Thursday, payments company Block said it was laying off 4,000 employees, 40% of its workforce, because AI has “changed what it means to build and run a company,” founder Jack Dorsey told shareholders. “Within the next year, I believe the majority of companies will reach the same conclusion.”
Is this just the beginning? No one should dismiss any scenario, even the most dystopian, with high conviction. Certainly not journalists, whose way of life is in AI’s crosshairs.
But I keep stumbling over one small problem with the doomsday vision: It requires a breakdown in how the market economy functions. Nothing like it has happened in the U.S. before, and there is no evidence it is happening now. Read more.
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8:30 a.m.: PPI
9:45 a.m.: Chicago Business Barometer - ISM-Chicago Business Survey - Chicago PMI
3 p.m.: Agricultural Prices
3:30 p.m.: U.S. President Donald Trump delivers remarks at The Port of Corpus Christi
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9:45 a.m.: US Manufacturing PMI
10 a.m.: ISM Report On Business Manufacturing PMI
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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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