The Fed's Waiting Game By Hardika Singh
For investors, the big question hanging over this week's meeting of the Federal Reserve is whether it will wait a little longer to cut interest rates because of recent, firm inflation readings. The Fed, though, has a different preoccupation: If it waits too long, will it inadvertently cause a recession? Meanwhile, the Bank of Japan said it would end negative interest rates after an eight-year experiment, symbolizing a broader shift away from unorthodox monetary easing. Now on to today's news and analysis.
Top News The Fed Is Playing a Waiting Game on Rate Cuts. The Rules Are Starting to Change.
Fed officials won't put recession risk front and center this week . Yet that risk is likely to drive its thinking over the remainder of the year, leaving it on track to cut rates at some point. The central bank will keep its benchmark interest-rate target at a range of 5.25% to 5.5%, a 23-year high, when their two-day meeting ends Wednesday. The focus will be on its latest interest rate and economic projections.
Global Era of Negative Interest Rates Ends as Japan Goes to Zero
The world's nearly 12-year experiment with negative interest rates is over now that the last holdout, the Bank of Japan, has moved its key policy rate back to at least zero .
Of the many unusual measures central bankers took over the past decade and a half, negative rates were among the most controversial, with uncertain benefits and potential risks.
The experiment's bottom line: Negative rates weren't enough by themselves to pull economies out of a funk or lift inflation toward central banks' 2% targets. It took Covid-19 and the war in Ukraine to accomplish that.
RBA Keeps Rates Steady, Says All Policy Options Remain on the Table
The Reserve Bank of Australia said Tuesday that it still can't rule out the possibility that interest rates will need to be raised further, adding that inflation remains too high and is expected to remain elevated for some time yet. The RBA left its official cash rate on hold at 4.35% at its policy meeting. The decision was widely expected by economists.
U.S. Economy Once America's Hottest Housing Market, Austin Is Running in Reverse
The Sunbelt city that came to symbolize the pandemic housing boom is now leading a national property cool-down. Home prices and apartment rents in Austin, Texas, have fallen more than anywhere else in the country, after a period of overbuilding and a slowdown in job and population growth.
Financial Regulation Roundup Stephanie Cohen Is Latest Senior Goldman Executive to Depart
Stephanie Cohen, one of the most senior executives at Goldman Sachs, is joining an exodus of top female talent from the Wall Street firm.
Forward Guidance Tuesday (all times ET)
8:30 a.m.: Canada consumer-price index
8:30 a.m.: U.S. housing starts
Wednesday
4:45 a.m.: ECB's Lagarde speaks at "The ECB and Its Watchers" conference
1:30 p.m.: Bank of Canada summary of monetary policy deliberations
2:00 p.m.: Federal Reserve interest rate decision and economic projections
2:30 p.m.: Fed's Powell post-meeting press conference
Research AT1 Bonds Offer Attractive Opportunity to Invest in Quality Banks
Additional Tier 1 (AT1) bonds trade at a good level and provide investors an opportunity to "access those quality banks that have worked hard to improve their financial stability since the great financial crisis," Pierre Verle, head of credit at Carmignac, says in a note. The bonds have recovered from the decline that followed the total write down of Credit Suisse AT1s in March 2023, and their spreads trade at the same level as in February 2023, Verle says. AT1 bonds are a risky form of bank debt that absorb losses if a bank gets into financial distress. - Miriam Mukuru
Basis Points Imports are surging into Southern California to start the year. The ports of Los Angeles and Long Beach in February handled 738,614 import containers, measured in 20-foot equivalent units, a jump of 46% over February 2023. That marks an acceleration from a 21% year-over-year increase in January. - Paul Berger China Evergrande Group faces a potential fine of more than half a billion dollars, after Chinese regulators found its most important subsidiary had fraudulently boosted sales and profit in the years before the property company's spectacular collapse. - Rebecca Feng Feedback Loop
This newsletter is compiled by Hardika Singh in New York.
Send us your tips, suggestions and feedback. Write to:
[hardika.singh@wsj.com]
This article is a text version of a Wall Street Journal newsletter published earlier today.
(END) Dow Jones Newswires
03-19-24 0716ET
