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Fed’s Beige Book Sees a Stable Economy Still Facing Challenges; Private-Market Risks in Focus
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Early 2026 data have painted an economy on steady footing, but with risks from stubborn inflation, a job market that has slowed and heightened uncertainty about economic policy. Most of those themes were on full display in the latest edition of the Federal Reserve's Beige Book. Meanwhile, SEC Chair Paul Atkins on Wednesday reiterated his commitment to opening private markets to more ordinary people, but Wall Street’s top regulator cautioned that the expansion must be balanced with investor protections as concerns about the asset class mount. Bank of Canada Gov. Tiff Macklem also flagged the risks of private credit, calling on global authorities to step up surveillance of lending by nonbank players to minimize risks to financial stability.
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Fed’s Beige Book Sees a Stable Economy Still Facing Challenges
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Photo: Andrew Harnik/Getty Images
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The Beige Book is a hefty collection of nationwide economic anecdotes published by the Federal Reserve before each central-bank policy meeting. The new edition—published Wednesday, ahead of the Fed's March 18 decision—draws on surveys done by the Fed’s 12 regional reserve banks through Feb. 23. This means it doesn’t fully capture some of the latest developments, such as the Supreme Court’s ruling overturning some of President Trump’s tariffs, which came on Feb. 20, or the recent Middle East conflict. Here are some major takeaways from the February Beige Book.
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SEC's Atkins Stresses ‘Guardrails’ for Investors in Private Markets
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The SEC’s goal is “embracing growth and innovation across all asset classes while protecting investors through guardrails that guide proper investment into these private assets,” Securities and Exchange Commission Chair Paul Atkins said, speaking at a panel discussion organized by the regulator.
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The Trump administration wants to open private-markets investments such as private equity and venture capital to more ordinary investors, who in the past have been excluded due to concerns about the illiquidity and risks of these investments.
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Bank of Canada Gov: Regulators Must Catch Up on Private-Credit Risk
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Stronger banking regulations introduced following the 2008-09 financial crisis have shifted riskier activities to nonbank participants such as hedge funds, pension funds and asset managers, diversifying risk and improving access to financing, Bank of Canada Gov. Tiff Macklem said.
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“But risks have not disappeared—they’ve migrated,” Macklem said, adding that “our global surveillance and regulatory frameworks haven’t kept pace with the change.” “Risks may be growing faster than our ability to understand and mitigate them,” he said. “Economic uncertainty is already high—we cannot afford to add financial instability to the mix,” he said.
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ECB Could Change Policy Stance If Iran War Drags, De Guindos Says
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An extended war in the Middle East could push up inflation expectations and prompt a change in the European Central Bank’s policy stance, its vice president said Thursday. “The outlook of the European economy now is clearly shaped by what is happening now in the Middle East,” Luis de Guindos said at a conference in Brussels.
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Key Developments Around the World
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China Signals New Era of Slower Economic Growth
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China signaled that the world’s second-largest economy is entering an era of slower expansion, setting a target for gross domestic product growth of between 4.5% and 5% this year. It is the lowest target set since at least the 1990s and follows three years in which officials called for growth of “around 5%.”
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Malaysia Holds Interest Rate Steady as Global Risks Rise
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Southeast Asia Authorities on Alert for Economic Impact of Iran Crisis
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Strait of Hormuz: The Oil Bottleneck Threatening the Global Economy
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President Trump’s promise to protect the Strait of Hormuz with naval escorts and provide government-backed marine insurance underscores the urgent need to restore flows of energy from the Middle East before soaring prices rip through the world economy.
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Trump Urges Swift Passage of Crypto Bill Over Banks’ Objections
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Revolut Applies for U.S. Bank License in Expansion Push
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7:30 a.m.: Challenger Job-Cut Report
8:30 a.m.: Preliminary Productivity and Costs
8:30 a.m.: Import & Export Price Indexes
8:30 a.m.: Unemployment Insurance Weekly Claims Report - Initial Claims
11 a.m.: Global Services PMI
12 p.m.: Monthly U.S. Retail Chain Store Sales Index
1:15 p.m.: Federal Reserve Vice Chair Michelle Bowman speaks at New York Bankers Association event
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8:30 a.m.: Advance Monthly Sales for Retail & Food Services
8:30 a.m.: U.S. Employment Report
10 a.m.: ABA Economic Advisory Committee economic forecast
1:30 p.m.: Federal Reserve Bank of Boston President Susan Collins speaks at Springfield Regional Chamber Outlook 2026 event
3 p.m.: Consumer Credit
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Dollar's Recent Recovery Could Prove Temporary
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The dollar's recent recovery could prove short-lived as the U.S.-Iran conflict will probably last weeks rather than months, MUFG Bank's Lee Hardman says in a note. "If this proves correct, dollar strength is likely to peak in the near term before reversing from the second quarter onwards." The conflict has boosted oil prices and the dollar due to America's energy independence and the reduced prospect of further Federal Reserve interest-rate cuts. Provided energy prices ease, the Fed has scope to cut rates in the second half of 2026, Hardman says, Furthermore U.S policy uncertainty is likely to remain elevated, he says. — Renae Dyer
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Labor productivity for Canadian businesses continued to fluctuate into the end of last year, slipping slightly in the final quarter as economic activity pulled back.
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Eurozone retail sales fell unexpectedly in January despite a rise in consumer confidence at the start of the year, pointing to fragility in household sentiment even before this week’s surge in energy prices.
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Industrial production in France rebounded in January, helped by a bump in transport output, continuing a resilient trend despite a dip at the end of 2025.
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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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