|
Central Bankers as Environmental Guardians; What Inflation Means for Economic Inequality
|
|
|
|
|
|
Good day. Wary of expanding its mandate, the Federal Reserve is proceeding cautiously into climate change matters. By contrast, the Bank of England’s remit now explicitly includes environmental sustainability. The Journal's Simon Clark takes a look at how central banks around the world are focusing on regulating financial companies with climate concerns in mind ahead of a major conference next month of central bankers and regulators. Meanwhile, Fed and Biden administration policies aimed in part at helping to reduce economic inequality might be increasing it.
Now on to today’s news and analysis.
|
|
|
Central Banks Jump Into Climate-Change Policy Fray
|
|
|
Some central banks are debating whether to support renewable-energy companies by loosening capital requirements for loans banks extend to them.
PHOTO: OWEN HUMPHREYS/PA WIRE/ZUMA PRESS
|
|
|
Central banks, the most powerful financial institutions in the world, want to become the guardians of the environment as well, and the banks that are deepest into the issue are trying to limit climate change by steering their financial systems away from fossil fuels. The Bank of England’s remit, for instance, now explicitly includes environmental sustainability as well as maintaining price stability.
|
|
Inequality Would Widen if U.S. Policies Spur Sustained Inflation
|
|
In recent months, inflationary pressures have caused the cost of living to rise faster than paychecks, meaning a paycheck hasn’t been going as far as it did before. Economists describe inflation as a regressive tax—meaning it hits low-income workers hardest. “I don’t see anything good happening from an economic inequality perspective,” said Karen Petrou, a financial analyst and author of “Engine of Inequality,” a critique of Fed policy. “Most American households are living hand to mouth.”
|
|
|
|
Derby's Take: Dallas Fed Offers Different Take on Consumer-Level Inflation
|
|
|
|
|
|
Separating signal from noise in inflation data is one of the Federal Reserve’s biggest challenges as the U.S. economy reopens, and the Dallas Fed has some suggestions on how to go about it. Read more.
|
|
|
Key Developments Around the World
|
|
|
U.S. Shoppers Continued Stimulus-Fueled Spending in April
|
|
Shoppers extended stimulus-induced spending in April, maintaining a level of retail sales from the prior month with increased expenditures on autos and dining out. Retail sales—a measure of purchases at stores, at restaurants and online—overall were unchanged last month from March, keeping spending at the same pace set by March’s upwardly revised 10.7% advance, which was influenced by government-stimulus money for most households.
|
|
|
|
China’s Economic Recovery Slowed in April
|
|
China’s economic activity grew at a slower pace in April as retail sales missed expectations, complicating the picture of a steady and balanced recovery in the world’s second-largest economy.
|
|
|
Swiss Central Bank Bought Li Auto, XPeng, Zoom, a Marijuana Stock
|
|
The Swiss National Bank recently made big changes in its stock portfolio, Barron's reports. It initiated a position in Chinese electric-vehicle firm Li Auto, and raised its holdings in XPeng, another Chinese EV company. The bank also bought more shares of videoconferencing firm Zoom Video Communications, and increased its stake in Tilray, a marijuana grower.
|
|
|
Financial Regulation Roundup
|
|
|
Banks Are Making Credit Cards and Auto Loans Easier to Get
|
|
Credit cards, auto loans and other personal loans are all getting easier to come by, more than a year into a pandemic that spooked lenders and caused them to tighten lending standards significantly.
|
|
|
U.K. Launches Fraud Probe Into Greensill-Linked Steel Firm GFG
|
|
Britain’s Serious Fraud Office is investigating suspected fraud and money laundering at metals magnate Sanjeev Gupta’s GFG Alliance, as well as its financing arrangements with bankrupt lender Greensill Capital.
|
|
|
Biden’s Tax Enforcement Target of $700 Billion Won’t Be Easy
|
|
The Biden administration’s search for a bipartisan deal to finance about $4 trillion in infrastructure spending, family benefits and other priorities is leading lawmakers to focus on tax enforcement.
|
|
|
|
|
10:05 a.m.: Fed’s Clarida, Atlanta Fed’s Bostic speak at virtual Atlanta Fed Financial Markets Conference
10:15 a.m.: Bank of England’s Tenreyro speaks at Banque de France, Toulouse School of Economics virtual event
11:30 a.m.: Bank of England’s Vlieghe speaks on panel at virtual conference on challenges facing central banks
12:30 p.m.: Bank of England’s Haldane speaks at Institute for History and Policy and University of Southampton virtual event on “histories, cultures and challenges”
6 p.m.: Dallas Fed’s Kaplan speaks at virtual town hall sponsored by his bank
|
|
|
8:30 a.m.: U.S. Commerce Department releases April housing starts
10 a.m.: European Central Bank’s Lagarde speaks at Generation Euro Students' Awards event
11 a.m.: Dallas Fed’s Kaplan speaks at virtual Atlanta Fed Financial Markets Conference
|
|
|
New York Fed: Wealthy Households to Lead Post-Pandemic Spending
|
|
Rich Americans drove spending cutbacks last year and are likely to propel a rebound in spending as the economy emerges from the coronavirus pandemic, according to a report from the Federal Reserve Bank of New York. The report says high-income households spent more on goods and services that got cut back during the pandemic relative to other households, and because wealthy households suffered fewer job losses, they are now primed to resume spending. “We expect high-income households to drive an important part of the recovery in aggregate consumption going forward, through a resumption in pandemic-constrained expenditures,” the report says, adding it is uncertain what the wealthy will buy and how quickly
they will swing into action.
—Michael S. Derby
|
|
|
Even Short-Term Inflation Will Test the Federal Reserve
|
|
So long as the Fed expects inflation to come back down and investors and workers have faith, it is under no pressure to move, but the danger is that high inflation shakes that faith, James Mackintosh writes.
|
|
|
Retail Doesn’t Need Therapy
|
|
For sales to merely be flat after a surge like March’s is somewhat remarkable, and sales seem likely to resume climbing as people’s comfort in returning to some of their pre-pandemic activities builds, Justin Lahart writes.
|
|
|
Are Fannie and Freddie Ready for the Next Housing Crash?
|
|
Fannie Mae and Freddie Mac—the government-sponsored enterprises that own or guarantee half the $12 trillion U.S. mortgage market—lack the capital to survive the next downturn in home prices, Mark A. Calabria, director of the Federal Housing Finance Agency, writes for the WSJ opinion page.
|
|
|
|
-
Consumer sentiment in the U.S. weakened in early May as inflation expectations rose. The University of Michigan’s preliminary estimate of its consumer sentiment index fell from 88.3 in April to 82.8. Economists polled by WSJ had forecast a reading of 90.1. (Dow Jones Newswires)
-
Investors are driving up shares of energy and materials companies in an otherwise rocky month for the stock market, betting that inflation will accompany swift economic growth.
-
Companies across industries from finance to retail to technology are finding many workers lack the necessary skills to address modern business challenges.
-
Thailand's economy contracted in the first quarter of 2021 as the Covid-19 pandemic continued to weigh on consumption. Gross domestic product fell 2.6% in the January-March period from a year earlier compared with a 4.2% drop the previous quarter. (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
|
|