Goolsbee, Harker Sound Cautious on Rate Hikes; Bank of Canada Expected to Hold Rates Steady

Goolsbee, Harker Sound Cautious on Rate Hikes; Bank of Canada Expected to Hold Rates Steady By Michael Maloney

Good day. The leaders of the Chicago and Philadelphia Federal Reserve banks signaled caution on further interest-rate increases in appearances Tuesday, while the New York Fed president stressed that inflation remains too high. Elsewhere, profit and dividend payouts surged last year at the Federal Home Loan Bank system as the Fed raised interest rates. And outside the U.S., the Bank of England named a new monetary policy committee member, and the Bank of Canada is expected to hold rates steady later today.

Now on to today's news and analysis.

Top News Chicago and Philadelphia Fed Chiefs Sound Cautious on Rate Hikes

Potential fault lines surfaced on Tuesday over whether the Fed should proceed with interest-rate increases next month as it studies the fallout from banking-sector stresses triggered by the collapse of two midsize banks in March. Remarks from the Chicago Fed's Austan Goolsbee and the Philadelphia Fed's Patrick Harker didn't include explicit support for further rate increases. Separately, New York Fed leader John Williams pointed to Fed projections of a higher policy rate as he discussed persistently high inflation.

Pro Take: Federal Home Loan Bank Dividends Hit $1.4 Billion in 2022 as Review Examines Its Mission By Bob Fernandez

Banks flocked to the Federal Home Loan Bank system for low-cost loans last year as the Federal Reserve boosted interest rates, leading to soaring profit at the 11-bank organization as well as $1.4 billion in dividends paid to its shareholder financial institutions.

The payouts came as the FHLB faces a federal review of its mission and operations, and as some critics say more of its profit-as well as the government-sponsored entity's overall focus-should be directed toward its historic mission of boosting homeownership. Read more .

U.S. Economy Bank Volatility to Cut U.S. Economic Growth, IMF Says

Tighter bank lending prompted by the recent failure of two midsize American banks will slow U.S. economic growth this year, the International Monetary Fund estimated, warning that rising interest rates pose a threat to the global financial system.

IMF Says Banking Troubles Create Headwinds for Global Economy Inflation Report to Show Whether Prices Eased Again in March

A report for March will show whether consumers got additional relief from high inflation as the Federal Reserve continued its campaign to slow rapid price increases.

Houston Apartment Owner Loses 3,200 Units to Foreclosure

An apartment-building investor lost four Houston complexes to foreclosure last week, the latest sign that surging interest rates are beginning to upend the multitrillion-dollar rental-housing market.

Key Developments Around the World Bank of Canada Expected to Hold Rates

Economists widely expect the Bank of Canada on Wednesday to keep its main interest rate unchanged for a second straight decision, as inflation continues to cool, and surveys of businesses and households suggest a slowdown is in the cards.

Megan Greene to Succeed Silvana Tenreyro at Bank of England

The Bank of England said Megan Greene will replace Silvana Tenreyro as an external member, for a three-year term starting in July, MarketWatch reports . Ms. Greene is currently global chief economist at Kroll and according to the central bank "has a broad understanding of financial markets internationally and significant experience of advising leaders on the potential impacts of global macroeconomic developments." Ms. Tenreyro, one of the most dovish monetary policy committee voters, has been on the central bank since July 2017.

Is Russia's Economy Growing or Shrinking?

Russia's economy is slated to grow 1% this year, according to JPMorgan Chase. Or shrink 2.5%, if you ask the Organization for Economic Cooperation and Development. Those two figures bookend forecasts from a handful of companies and organizations, illustrating the challenge economists face in surveying Russia's economic conditions.

China in Talks for Compromise on Poor Country Debt

China is negotiating a compromise plan with other major creditors that could help break a logjam in multibillion-dollar debt-relief talks for struggling developing nations, people familiar with the talks said.

China Is Facing a Moment of Truth About Its Low Retirement Age

China has one of the lowest retirement ages among major economies. Under a policy unchanged since the 1950s, it allows women to retire as early as at age 50 and men at 60. Now, local governments are running out of money just as a wave of retirees hits. That is leaving Beijing with little choice but to ask people to work longer -a move economists say is long overdue but one still likely to meet with resistance.

Financial Regulation Roundup Ernst & Young Halts Breakup Plan After Revolt by U.S. Leaders

Ernst & Young has axed its plan for a split of its auditing and consulting arms, marking a dramatic and costly retreat from a proposal that was meant to reshape the accounting profession but ended amid bitter infighting at the firm.

Theranos Founder Holmes's Bid to Stay Out of Prison Is Denied

The federal judge who oversaw the criminal-fraud trial of Theranos founder Elizabeth Holmes denied her request to stay out of prison while she appeals her guilty verdict.

Former Outcome Health Executives Found Guilty of Fraud

A federal jury convicted three former executives of the once-highflying startup Outcome Health on charges that they ran a billion-dollar scheme that defrauded customers including pharmaceutical companies such as Novo Nordisk and investors including Goldman Sachs Group.

Forward Guidance Wednesday (all times ET)

8:30 a.m.: U.S. consumer-price index for March

9 a.m.: Richmond Fed's Barkin speaks at Investing in Rural America conference; Bank of England's Bailey speaks at Peterson Institute for International Economics

9:30 a.m.: ECB's de Guindos at Asociacion para el Progreso de Dirección event in Madrid

10 a.m.: Bank of Canada interest-0rate decision

11 a.m.: Bank of Canada interest-rate decision press conference

2 p.m.: Federal Open Market Committee minutes for March 21-22 meeting

2:15 p.m.: Banque de France's Villeroy de Galhau speaks at Peterson Institute for International Economics

3:15 p.m.: Bank of England's Bailey speaks at International Monetary Fund Governor Talks

Thursday

4:30 a.m.: Bank of England's bank liabilities and credit conditions surveys

8:30 a.m.: U.S. producer-price index for March; U.S. weekly jobless claims

9 a.m.: Talk with Bank of Canada Gov. Macklem during the IMF-World Bank Spring Meetings

2 p.m.: IMF debate on global economy with IMF Managing Director Georgieva and Bundesbank President Nagel; Bank of England's Pill speaks at Market News International Connect Video Conference on the economy and monetary policy

Basis Points Brazil's inflation slowed in March from the previous month and from a year earlier after the cost of diesel fuel and household goods declined in the month. Dow Jones Newswires) Mexican industrial production rose in February from the previous month, led by increased mining output while construction and manufacturing activity fell. (DJN) The Monetary Authority of Singapore may tighten policy again at its semiannual review due this Friday, as high inflation concerns still likely outweigh slowing economic growth worries, according to nine of 14 economists surveyed by The Wall Street Journal. (DJN) Australia's banking sector, a month since the start of a series of bank collapses in the U.S. and Europe, remains largely immune and there are few if any signs that financial conditions across the economy have tightened, Michele Bullock, Deputy Governor of the Reserve Bank of Australia, said Wednesday. (DJN) Australian consumer confidence continues to show signs of a recovery, supported by the Reserve Bank of Australia's decision this month to announce a pause in interest rate increases. (DJN) Retail sales in the eurozone fell in February, reversing its rise in the first month of 2023, showing household spending continues to come under pressure from high inflation and rising interest rates. (DJN) U.K. property sales have recovered to prepandemic levels for the first time since September's so-called mini-budget, according to new data published Wednesday from Rightmove PLC. (DJN) Feedback Loop

This newsletter was compiled by Michael Maloney in New York and Perry Cleveland-Peck in Barcelona.

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

James Christie , Jon Hilsenrath , Nell Henderson , Nick Timiraos , Kim Mackrael , Tom Fairless , Megumi Fujikawa , Perry Cleveland-Peck [mailto:[e-mail]], Nihad Ahmed , Michael Maloney , Paul Kiernan

Follow us on Twitter:

@WSJCentralBanks , @NHendersonWSJ , @NickTimiraos , @PaulHannon29 , @kimmackrael , @TomFairless , @megumifujikawa , @JamesGlynnWSJ , @cleveland_peck

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

(END) Dow Jones Newswires

04-12-23 0715ET