More Fed Rate Increases Likely in Coming Months, Powell Says; Goolsbee Uncertain About Rate Vote; Bank of England Raises Key Rate

More Fed Rate Increases Likely in Coming Months, Powell Says; Goolsbee Uncertain About Rate Vote; Bank of England Raises Key Rate By James Christie

Good day. Federal Reserve Chair Jerome Powell told lawmakers on Wednesday that more interest-rate increases are likely on their way, but probably at a slower pace. His comments reflect how Fed officials are concerned their past rate increases, together with recent banking-industry stresses, risk triggering a sharper-than-anticipated economic slowdown. They are trying to balance that against the risk that the U.S. economy proves more resilient than expected and inflation stays too high. Separately, Chicago Fed President Austan Goolsbee said Wednesday that it was too soon to say whether rates would need to rise further. "We are in this weird, foggy environment where it is hard to figure out where the road is," he said in an interview at The Wall Street Journal's Global Food Forum in Chicago. And amid a flurry of central bank rate decisions today the Bank of England raised its key interest rate by half a percentage point, Turkey's central bank raised rates to 15% and Norway surprised markets by raising its key policy rate more than expected.

Now on to today's news and analysis.

Top News Fed's Powell Says Interest-Rate Pause Is Expected to Be Temporary

Federal Reserve Chairman Jerome Powell said the central bank was likely to raise interest rates in the coming months but more slowly than previously .

Fed officials left rates unchanged last week after lifting them at 10 straight policy meetings to combat inflation. But investors, consumers and borrowers shouldn't think they were done, Powell told the House Financial Services Committee on Wednesday.

"Given how far we've come, it may make sense to move rates higher but to do so at a more moderate pace," Powell said.

Goolsbee Not Certain What Fed's Next Move Should Be

Chicago Fed President Austan Goolsbee said Wednesday at The Wall Street Journal's Global Food Forum that he doesn't know how he will vote on a potential interest-rate increase at the Federal Reserve's next meeting in July.

Lawrence Lindsey Sees Fed Continuing Rate Increases Into 2024

Former Federal Reserve governor Lawrence Lindsey said Wednesday the central bank will keep raising interest rates until they reach the 6% level sometime in 2024. "Something like a six-handle is what it has to be," given the slow progress on inflation, Lindsey said during an interview on CNBC. "Core inflation is moderating only if you put a microscope on it," Lindsey said, adding that "until the markets say 'Ouch,' the Fed has not likely done its job." (MarketWatch)

Bank of Canada Believed Evidence Warranted Immediate Rate Rise

Bank of Canada officials believed there was enough evidence to trigger fears that inflation wasn't on a downward trend, warranting a surprise interest-rate increase to cool consumption, according to minutes of their deliberations this month. The central bank on June 7 ended a four-month pause on rate increases and lifted its benchmark interest rate by a quarter-point to 4.75%, a 22-year high. In its June 7 statement, the central bank said the rate rise was due to stronger-than-expected consumer spending and mounting worries that inflation could get stuck at elevated levels. According to the minutes, senior officials said the data showed consumer spending was stronger and more broad-based than anticipated. Three straight months of price increases for Canada's existing home-sale market suggested additional momentum in demand, the minutes added, likely setting the stage for faster second-quarter growth than the Bank of Canada had forecast. (Dow Jones Newswires)

U.S. Economy Vacant Offices Are Piling Up in Silicon Valley

Silicon Valley companies are dumping office space at an accelerating pace , as tech leaders such as Google and Facebook parent Meta Platforms close locations and reassess their commitments to the workplace.

Biden's Trade Challenge: Kicking the China Dependency Habit

China has many sources of geopolitical leverage, from its military to its vast market. Potentially, the most potent and least appreciated is the choke-point position it has built in global supply chains , Greg Ip writes.

Key Developments Around the World Bank of England Outpaces Peers With Half Percentage Point Rate

The Bank of England raised its key interest rate by half a percentage point Thursday, a more aggressive rate rise than its peers as it seeks to curb the highest inflation rate in the Group of Seven wealthy countries.

Norway Central Bank Raises Key Rate by Half Percentage Point

Norway's central bank surprised markets Thursday by raising its key policy rate more than expected as it fights to dampen stubbornly high inflation. Norges Bank increased its key policy rate by 50 basis points to 3.75%, said that another increase is likely in August and lifted its rate path to imply a higher peak rate in this cycle.

Dow Jones Newswires

From Wall Street to the Toughest Job in Turkey

Incoming Turkish Central Bank Governor Hafize Gaye Erkan inherits spiraling inflation and a critical shortage of foreign currency . The situation threatens economic stability in a country that is a member of NATO and the G-20.

Turkish Central Bank Raises Interest Rates in Reversal for Erdogan

Turkey's central bank raised interest rates to 15% on Thursday in the first increase in rates since 2021, part of a policy correction by the country's new economic leaders. The bank raised the country's benchmark interest rate, the one-week repo rate, to 15% from 8.5%, the low it reached under the previous central bank governor.

Dow Jones Newswires

European Business Confidence in China Falls to Record Low

Almost two-thirds of respondents in a European Union Chamber of Commerce in China poll said business became harder over the past year , up 4 percentage points from the previous year and the lowest since the surveys began.

Brazil Central Bank Cools Hopes for Rate Cut in August

Brazil's central bank left its benchmark interest rate unchanged , softening its tone regarding its efforts to slow inflation while indicating it might not start cutting rates as soon as markets had expected. The bank's monetary policy committee, or Copom, left its key Selic rate at 13.75%, where it has stood since August after a series of rate increases aimed at slowing inflation.

Modi's Vision for India Rests On Six Giant Companies

Prime Minister Narendra Modi says this is India's decade. That claim rests heavily on a handful of dominant conglomerates increasingly aligned with his priorities and with the ability to raise vast sums of capital.

U.S. Offers India Drones, Jet Engines to Lure It From Russia West Looks for More Ways to Help Fund Ukraine's Reconstruction

The U.S. and U.K. on Wednesday offered new funds to help Ukraine rebuild its economy after Russia's invasion, joining the EU in a broad effort to harness money from other countries, private investors and even frozen Russian assets.

Swiss National Bank Raises Rate to 1.75%, Signals More to Come

The Swiss National Bank raised interest rates as expected on Thursday, and said it wouldn't rule out further hikes in an effort to combat persistent inflationary pressures. The central bank raised its key policy rate by 0.25 percentage points to 1.75%, from 1.5% previously, matching expectations from economists polled by The Wall Street Journal. It was the institution's first rate hike since March.

Dow Jones Newswires

Global Investors Flood Into Japan, Making Some People Nervous

Foreign investors have bought a net $39 billion of Japanese stocks since the start of April, helping the benchmark Nikkei 225 index rise almost 30% this year and bringing it back to levels it last traded at over 30 years ago.

Financial Regulation Roundup New EU Sanctions Target Russia Loopholes

The EU agreed to set up a new sanctions regime that slaps export bans on third countries for helping Russia sidestep Western restrictions, one of several measures meant to tighten economic pressure on Moscow, diplomats said.

On Wall Street, Lawyers Make More Than Bankers Now

While bankers used to make multiples of what lawyers did, the lawyers have been zooming ahead , thanks to stagnant banker pay for all but the very top performers and changing dynamics at law firms.

Forward Guidance Thursday (all times ET)

8:30 a.m.: U.S. weekly jobless claims

9:55 a.m.: Fed's Bowman speaks at Fed Listens event hosted by Cleveland Fed

10 a.m.: Eurozone flash consumer confidence indicator for June; U.S. existing-home sales for May; Fed's Bowman and Cleveland Fed's Mester speak at Cleveland Fed Policy Summit; Fed's Powell testifies before Senate Banking Committee

Friday

4 a.m.: Eurozone flash PMI for June

5:15 a.m.: St. Louis Fed's Bullard speaks at Central Bank of Ireland and International Journal of Central Banking Research Conference

6:45 a.m.: ECB's Panetta in panel discussion on future of crypto at the 22nd BIS Annual Conference on central banks

8 a.m.: Atlanta Fed's Bostic in armchair discussion at University of Georgia Terry College of Business CFO Roundtable

1:40 p.m.: Cleveland Fed's Mester speaks at Cleveland Fed Policy Summit

Research Canadian Retail Sales Add to Case for Another Rate Increase

(MORE TO FOLLOW) Dow Jones Newswires

06-22-23 0728ET