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Powell Won’t Leave. The Fed Won’t Cut. Warsh Will Have to Deal With Both.
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- Jerome Powell announced he will remain on the Federal Reserve board as a governor after stepping down as chair, breaking a 75-year precedent.
- Three regional Fed presidents publicly dissented from signaling rate cuts, warning incoming Chair Kevin Warsh of unlikely cuts amid inflation.
- Kevin Warsh’s nomination as Fed chair advanced, but he faces a divided committee amid questions over whether the era of the chair-driven Fed is waning.
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Powell to Remain on Fed Board, Citing Legal Pressure From Trump
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- Federal Reserve Chair Jerome Powell will remain on the central bank’s board after his chairmanship ends next month, citing legal attacks from the Trump administration.
- The Federal Reserve held its benchmark federal-funds rate steady, but four of 12 members dissented on the policy statement.
- Powell’s decision departs from decades of precedent and complicates the handoff to his successor, Kevin Warsh, amid new inflation hazards.
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Bank of Canada Holds Policy Rate Steady, Expects Inflation to Peak in April
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- The Bank of Canada kept its policy interest rate unchanged at 2.25% and signaled it may remain near this level if the economy evolves as forecast.
- The central bank forecasts inflation to peak at 3% in April, then slow to 2.5% in June, returning to 2% by early 2027.
- Gov. Tiff Macklem said the bank may cut the policy rate if the U.S. imposes significant new trade restrictions on Canada.
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Brazil’s Central Bank Cuts Rates, Leaves Next Move Unclear Citing War
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- Brazil’s central bank cut its Selic benchmark lending rate to 14.5% from 14.75%.
- The monetary authority indicated that its future rate decisions remain unclear due to the Iran war.
- Consumer prices in Brazil rose 4.4% in the 12 months through mid-April, accelerating from 3.9% in the prior period.
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Eurozone Economy Slows in First Quarter on Energy Shock
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- The eurozone economy weakened in the first quarter, with GDP growing 0.1%, as the Middle East conflict delays a hoped-for recovery.
- The European Union spent an extra 27 billion euros on energy imports due to higher prices since the first strikes on Iran at the end of February.
- Eurozone inflation rose to 3.0% in April, its highest since September 2023, while consumer confidence sank to a December 2022 low.
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China’s Factory Activity Holds Up Despite Middle East Disruptions
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- China’s official manufacturing purchasing managers index edged down to 50.3 in April, beating expectations and suggesting limited pressure from energy prices.
- The nonmanufacturing PMI, covering service and construction activity, declined to 49.4 in April, falling into contractionary territory.
- China’s Politburo signaled no major policy easing, with Nomura economists believing Beijing will focus on existing policies.
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U.S. Housing Starts Rose in March
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- Housing starts rose 10.8% in March to 1.502 million, exceeding economists’ expectations of 1.40 million.
- Residential permits decreased 10.8% in March to 1.372 million, falling short of economists’ 1.39 million expectation.
- Housing starts fell 3.0% in February to 1.356 million, while residential permits rose to 1.538 million that month.
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March Durable-Goods Orders Beat Forecasts
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- Orders for durable goods grew in March, breaking a three-month streak of declines, the Commerce Department said.
- New orders rose by 0.8% to $318.9 billion in March, exceeding analyst expectations of a smaller 0.2% increase.
- Excluding transportation equipment, durable-goods orders increased by 0.9%.
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Insurers’ $1 Trillion Buildup in Private Credit Is Leaving Regulators in the Dust
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- Of the about $6 trillion in invested assets held by life and annuity companies, nearly $1 trillion is now in private-credit investments, according to A.M. Best.
- The Treasury Department plans meetings with state insurance regulators about the private loans piling up in insurers’ portfolios.
- Last year the National Association of Insurance Commissioners pulled a report revealing that the ratings on insurers’ private-credit investments were routinely inflated.
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WSJ Pro Central Banking brings you news and analysis from a global team of reporters and editors at The Wall Street Journal and Dow Jones Newswires. Send your tips, suggestions and feedback to service@dowjones.com. An artificial-intelligence tool created these summaries, which are based on the text of the article and checked by an editor. Read more about how we use artificial intelligence in our journalism.
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