GMT+8 At 20:30 on Wednesday (October 13), the September CPI data released by the United States rose, which strengthened the Fed's November announcement to reduce its will to purchase debt. As of press time, spot gold plummeted by nearly 11 U.S. dollars to 1,764.34 U.S. dollars per ounce; the U.S. dollar index jumped 14 points to 94.47.
Specific data show that the annual rate of CPI in the United States rose to 5.40% in September, 0.1 percentage points higher than the previous value and expected value; the annual rate of core CPI in September remained unchanged at 4%, which is also in line with expectations.
The increase in the US CPI in September exceeded expectations, highlighting the persistence of inflationary pressures in the economy. Unprecedented shipping challenges, material shortages, high commodity prices, and rising wages are all driving up the costs for manufacturers.
As the U.S. economy reopened, Americans had accumulated at least $2.5 trillion in excess savings during the pandemic and began to release, and consumer spending was strong. The surge in demand has led to a surge in inflation, and the continued supply bottleneck will cause prices to rise much higher than the 2% average inflation target set by the Fed. The surge in energy prices intensifies inflation doubts and arouses people's concern that the Fed may need to go faster than expected. A bet on a rate hike.
Consumers pay for high oil prices
Since October last year, US oil prices have risen by approximately $1.10 per gallon. Moody's Analytics Chief Economist Zandi said that for every penny increase in the cost of a gallon of gasoline, American consumers would lose $1 billion; an increase of $1 would cost US$100 billion.
Joe LaVorgna, chief economist for the Americas at Natixis, said that two persistent problems make inflation likely to continue to rise in the coming months. One is that supply chain disruptions have led to very low stocks of certain commodities, and the other is due to higher energy prices. The soaring oil and natural gas prices are relatively new factors that change the outlook for inflation.
Bruce Kasman, chief economist at JPMorgan Chase, said: “Surprising oil prices tend to get you into trouble, mainly driven by insufficient supply, and often destructive factors, which are more extensive in dragging down potential growth.” He added, This is not the time we warn of a recession, but the time you have to worry that it will harm growth in a substantial way. "
Anwiti Bahuguna, director of multi-asset strategy at Columbia Threadneedle, said: "We expect GDP growth to be in the range of 4% to 6%... But if oil prices double, or even triple, it will have a bad effect and lead to negative growth."
FED officials believe that the economy has "healed"
Overnight, three Fed policy makers, including Fed Vice Chairman Clarida, said that the US economy has recovered enough to start scaling back its asset purchase program. Most Fed policymakers continue to say that inflationary pressures will prove to be short-lived.
Clarida: Upside inflation is temporary
Clarida, Vice Chairman of the Federal Reserve, said at a first-up event held by the Institute of International Finance (IIF): “I personally believe that we have exceeded the standard of'making substantial further progress' in terms of stabilizing prices. We are promoting employment. It has almost reached the standard."
Clarida said that the economy has strengthened and "conditions in the labor market continue to improve." He also pointed out that the decision makers agreed at the last meeting that “it may be necessary soon” to reduce the scale of debt purchases, and may end debt purchases in the middle of next year, although the pandemic continues to put pressure on the employment participation rate.
The number of job vacancies in the United States decreased in August, but still exceeded 10 million, which is a very high level. Due to the tight labor supply, the number of voluntary resignations surged to a record high in August, hindering employment growth. In September, 194,000 non-agricultural jobs were added, which was far below the expectations of many economists.
Clarida's latest optimistic assessment may echo the mood of Fed Chairman Powell. Powell has previously stated that he only needs to see a "decent" September U.S. employment report to be ready to start reducing bond purchases in November.
Clarida also said: "The biggest unknown at the moment is how long it will take for the supply chain bottlenecks to be eliminated, but it is expected that they will subside, and I do not expect stagflation in the medium term. The inflation risk is upward, but the upward movement can be temporary. , Inflation expectations are stable, and wage increases have not contributed to the worrying price spiral."
Bostic: The sooner the policy is tightened, the better
Atlanta Fed President Bostic said: "I think progress has been made, and the sooner we take action, the better... The financial market now has sufficient liquidity to minimize the detriment of the market or the economy from curtailing debt purchases. The possibility of impact. I think the economy actually has a lot of positive momentum."
Bostic emphasized that it will take more than a year for the central bank to raise interest rates from close to zero. He predicts that high inflation will not persist, nor will it cause lasting damage to the economy, so that it will not make people question our policy stance on interest rates.
Brad: The economy is still in good shape
St. Louis Federal Reserve Chairman Brad said on Tuesday (October 12) that he supports the Fed starting to reduce the pace of asset purchases next month and end the plan next spring to raise interest rates if necessary to keep inflation down.
In an interview with CNBC, Brad said: “The argument that inflation naturally fades is reasonable, but I only want to give this scenario a 50% possibility.” He added that he hopes to keep inflation high or otherwise for the next few months. Be prepared for the possibility of further gains. "I just want to be prepared in case we have to act in advance so that we can take action next spring or summer as a last resort."
Brad also said that such a move does not have to be at the expense of labor market gains. Although the recent surge in new crown cases has slowed growth in the last quarter, the economy is still in "good condition." He expects that economic growth will rebound in the fourth quarter of this year and the first quarter of next year, and the unemployment rate is expected to fall below 4%, and reach the level before the outbreak of the new crown in the spring.
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