FOMC Minutes Show Concern About Moving Too Quickly to Ease Policy

FOMC Minutes Show Concern About Moving Too Quickly to Ease Policy By James Christie

Good day. Since last July, Federal Reserve officials have held the benchmark federal-funds rate at a range between 5.25% and 5.5% as inflation has eased. Still, a rate cut is unlikely at their March meeting, Chair Jerome Powell said after officials met last month. On Wednesday, the Fed released minutes of January's Federal Open Market Committee meeting. They revealed concern among officials regarding cutting interest rates too soon and allowing price pressures to grow entrenched. Officials also cited risks that the slowdown in inflation might stall or reverse if consumer spending was stronger than anticipated, or if borrowing costs declined and other financial conditions were unduly easy.

Now on to today's news and analysis.

Top News Fed Minutes Show Unease Over Premature Cuts

More Federal Reserve officials signaled concern at their meeting last month with cutting interest rates too soon and allowing price pressures to grow entrenched as opposed to the risks of holding rates too high for too long.

"Most participants noted the risks of moving too quickly to ease the stance of policy," said the minutes of the Jan. 30-31 meeting, released Wednesday with a customary three-week delay. Only two officials pointed to the risks "associated with maintaining an overly restrictive stance for too long."

Minutes of the Fed's Jan. 30-31 monetary-policy meeting U.S. Economy Home Sales Likely Rebounded in January

Sales of previously owned homes, which make up most of the housing market, will likely show an increase in January , economists said, following a drop last year to the lowest level in nearly three decades.

Half of College Grads Are Working Jobs That Don't Use Their Degrees

Roughly half of college graduates end up in jobs where their degrees aren't needed , and that underemployment has lasting implications for workers' earnings and career paths, according to a new study tracking career paths.

U.S. to Invest Billions to Replace China-Made Cranes at Nation's Ports

The Biden administration plans to invest billions in the domestic manufacturing of cargo cranes, seeking to counter fears that the use of China-built cranes with advanced software at U.S. ports poses a potential national security risk .

Key Developments Around the World Cheap Chinese Goods Are Becoming a Costly Problem for Hong Kong

Hong Kong residents are increasingly hopping across the border to the city of Shenzhen, where they load up on goods at big-box stores. Hong Kong business owners, unable to compete on price, are feeling the squeeze .

Vital Aid Fails to Reach Gazans as Security Void Grows

Humanitarian aid deliveries in the Gaza Strip have slowed to a trickle , as security across the embattled enclave deteriorates, leaving 2.2 million Palestinians faced with spreading famine, disease and desperation.

Turkey Ends Hiking Cycle, as New Governor Holds Course

The Turkish Central Bank's policy committee decided to keep its benchmark interest rate at 45.0% , ending a cycle of successive hefty rate increases begun last June, as it suggested it would do at last month's meeting.

Financial Regulation Roundup China Slowdown Deals $3 Billion Blow to HSBC

Banking giant HSBC said it lost $153 million in the final three months of last year, its first quarterly loss since late 2019. The main reason: a big write-down of its stake in Bank of Communications, one of China's largest lenders.

China Quant Fund Suspended as Regulators Tighten Grip on Trading

China's two major stock exchanges have slapped a three-day ban on quant fund Ningbo Lingjun Investment Management Partnership, the latest move by regulators ramping up trading scrutiny as they look to boost a sluggish market.

Crypto Tycoon Should Be Extradited to U.S., Montenegro Court Rules

Disgraced cryptocurrency entrepreneur Do Kwon should be extradited to the U.S. to face trial on fraud charges , rather than to his native South Korea, a court in the tiny Balkan country of Montenegro has ruled.

Forward Guidance Thursday (all times ET)

8:30 a.m.: U.S. weekly jobless claims; Chicago Fed National Activity Index

10 a.m.: U.S. existing home sales for January; Fed's Jefferson speaks at the Peterson Institute for International Economics, Washington D.C.

3:15 p.m.: Philadelphia Fed's Harker speaks at 2024 Lyons Center for Economic Education and Entrepreneurship, University of Delaware

5 p.m.: Minneapolis Fed's Kashkari speaks on panel at Northside Economic Opportunity Network; Fed's Cook speaks at Annual Conference of Julis-Rabinowitz Center for Public Policy & Finance

7:35 p.m.: Fed's Waller speaks to Notre Dame Club of Minnesota and University of St. Thomas Finding Forward Speaker Series

Friday

Time N/A: ECB's Lagarde and Cipollone at Eurogroup meeting in Ghent, Belgium; ECB's Lagarde in Eurogroup press conference in Ghent

4 a.m.: ECB consumer expectations survey

4:20 a.m.: ECB's Schnabel speaks at Bocconi University in Milan

8 a.m.: ECB's Schnabel at Forum Analysis in Milan

Research New York Fed Says Firms Report Cost Pressures Eased

Price pressures have moderated and businesses in the New York-Northern New Jersey region expect inflation to slow further, Federal Reserve Bank of New York researchers Jaison Abel and Richard Deitz write in a report about the institution's February business surveys. Respondents reported a decrease in average costs and a slowdown in wage increases. Firms are also reducing the pace of price increases. Additionally, they expect further moderation. "This is welcome news: though inflation remains elevated, much progress has been made over the past year and more progress is expected in the year ahead," Abel and Deitz write.

-Paulo Trevisani

Commentary China's Metal Demand Takes a Different Shape

The realization that China's property bust is beginning to look semi-permanent isn't welcome for big miners, but the country is building more of other metal-intense things like electric vehicles, Megha Mandavia writes.

Goldman's Chief Economist Has Nailed Big Calls. Here's His Next One.

In 2008, Jan Hatzius, Goldman Sachs's chief economist, correctly warned that mortgage defaults could cause a severe recession. Today he is one of the most closely followed economists on Wall Street and in Washington, Greg Ip writes.

Basis Points The European Commission's flash consumer confidence indicator, published Wednesday, rose to minus 15.5 from minus 16.1 in January, a slightly higher increase than expected by economists, according to a poll compiled by The Wall Street Journal. (DJN) The U.K. reported a smaller-than-expected budget surplus in January, closing some of the headroom for Treasury chief Jeremy Hunt to offer tax cuts at the Spring Budget next month. On a measure of government net borrowing, excluding public-sector banks, the U.K. ran a surplus of 16.7 billion pounds ($21.08 billion), compared with a GBP7.5 billion surplus in the same month a year earlier, the Office for National Statistics said. Economists polled by The Wall Street Journal expected a GBP18.5 billion surplus. (DJN) Chinese officials have approved more than $17 billion in loans for a "white list" of real-estate projects , offering fresh signs that Beijing is moving forward to prop up the country's sluggish property market. Power generated from renewable sources of energy is setting new records in the U.S. and is expected to keep growing as wind and solar become the preferred options to replace coal power generation over natural gas. Nearly a quarter of U.S. electricity demand was supplied by renewable sources in 2023 and just under 9% of total energy used came from green sources, according to a new report from BloombergNEF. Thailand and Indonesia are unveiling fresh incentives to spur the adoption of electric vehicles , part of efforts to curb the use of fossil fuels and drive growing EV industries in the Southeast Asian nations. South Korea's central bank held its policy rate steady at a 15-year high as widely expected, and signaled that a policy pivot toward easing may not come anytime soon. Australia's economy is proving to be more resilient than expected with business-activity readings for February hitting their highest level in 10 months . Feedback Loop

This newsletter is compiled by James Christie in San Francisco.

Send us your tips, suggestions and feedback. Write to:

James Christie , Perry Cleveland-Peck [mailto:perry.cleveland-peck@wsj.com], Nihad Ahmed , Michael Maloney

This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

02-22-24 0716ET