opinions

Federal Reserve officials have spent the past two months getting investors acclimatized to their plans to slow economic growth and combat inflation by raising interest rates in half-percentage-point increments until price pressures cool.This coming week’s policy meeting will show whether officials are still comfortable with that approach in light of reports Friday that inflation sizzled in May, hitting a new 40-year high, and that consumers’ longer-term inflation expectations rose to a new 14-year high. The survey measure…

The Federal Reserve appears to be moving toward a more precise understanding of just how potent the bond buying part of its monetary policy regime is. And based on a new Fed paper and comments by some officials, the effect of the purchases is pretty modest relative to what the central bank can accomplish by changing its federal-funds interest rate target. The Federal Reserve appears to be moving toward a more precise understanding of just how potent the bond buying part of its monetary…

One of the reasons inflation got out of control in the 1970s is that policy makers had heterodox theories about its cause, such as powerful corporations and unions. You can hear echoes today when President Biden proposes combating inflation through toughened antitrust enforcement, higher corporate taxes and more domestic production. These factors aren’t why inflation is over 8% and they offer little prospect of fixing it. So, if Mr. Biden had the last word on inflation, you might worry the U.S. was about to repeat the…

As geopolitical tensions rise, Western governments have urged international companies to shift more business to friendly countries. Some critics think that could split the global economy into hostile camps, hurting growth and worsening inflation. Advocates think “friend-shoring,” as the trend is nicknamed, can protect access to vital raw materials and components, drawing on lessons learned during the Covid-19 pandemic that saw shortages of semiconductors and some other components threaten vital industries. But…

The prospect of losses on the Federal Reserve’s holdings of securities is a real issue for U.S. taxpayers, a former top central bank staffer wrote in a research note Wednesday. Bill Nelson, who now works as chief economist for the Bank Policy Institute industry group, was responding to a report released by the New York Fed on Tuesday. In that report, the bank said the Fed likely suffered paper losses on bonds it owned this year and that those paper losses could be substantial over time depending on how…

The Federal Reserve’s plans to raise interest rates aggressively to combat high inflation could have an overlooked and uncomfortable side effect for the central bank: capital losses.The potential for losses hinges on obscure monetary plumbing. The Fed’s $9 trillion portfolio, sometimes called a balance sheet, is full of mostly interest-bearing assets—Treasury and mortgage-backed securities—with an average yield of 2.3%. On the other side of the ledger—the liability side of the Fed’s balance sheet—are bank deposits held at…

Bungie CEO Pete Parsons has affirmed tweets made by the studio’s senior community manager, stating that Bungie will continue to be politically outspoken after being acquired by Sony. Senior community manager Dylan Gafner tweeted yesterday (May 17): “I admit, I’m just a CM in the grand scheme, but I’m confident in the following: We are, and will continue to be, Bungie. There will never be a “muzzle” big enough to stop us from standing up for what’s right” (via PC Gamer). Parsons replied with a simple “Yes.” Yes. — pete…

Despite signals of economic trouble in the U.S., such as soaring inflation, falling stock prices and wavering consumer confidence, one important indicator is flashing American strength: the dollar.Even as the Dow tumbles, The Wall Street Journal’s dollar index has risen 8% this year. Against China’s yuan, the dollar is up 7%, with much of it in just the past month. Against Japan’s yen it’s up 12% and against Switzerland’s franc it’s up 10%. The currency move has important economic implications. A strong national currency…

As aggressive as the path for U.S. monetary policy tightening appears right now, one Federal Reserve governor doesn’t believe the central bank faces a world as ugly as when it last confronted inflation this high. Because of that, the Fed doesn’t need to take the same steps as it did under former leader Paul Volcker, when he took extremely aggressive action to kill inflation, which in turn caused an extremely deep recession, Fed governor Christopher Waller said in a public appearance Tuesday.…

HONG KONG—As inflation soars around the world, the world’s second-largest economy has kept it at bay.Consumer prices in China increased just 1.5% in March from a year earlier, after rising 0.9% in 2021 from the year before.By contrast, the U.S. annual inflation rate was 8.5% in March and 7.5% in 2021, the steepest since 1982. In the eurozone, annual inflation reached a record 7.5% in April. Some 71% of 109 emerging and developing economies experienced 5% or higher inflation in 2021, twice as large as at the end of 2020,…