Austan Goolsbee Talks Fed Policy; Bank of Canada Worried Inflation May Reheat; Australia Central Bank Policy Reversal Could Be Abrupt By Michael Maloney

Good day. Chicago Fed President Austan Goolsbee discussed why "all things are on the table" when it comes to interest rates and why he thinks there is still a risk of recession, in WSJ's Take On the Week podcast. Meanwhile, Bank of Canada officials believed interest rates had started to markedly slow economic activity but remained worried that upside risks-such as high shelter costs and elevated wage gains-could thwart efforts to reach 2% inflation, according to the minutes of central-bank deliberations ahead of the Dec. 6 rate decision. And Katie Dean, of AustralianSuper, told the WSJ's James Glynn that the deflationary environment driving the Federal Reserve and the European Central Bank toward interest-rate cuts early has the potential to manifest in Australia sooner than expected.

Now on to today's news and analysis.

Top News Austan Goolsbee Says 'All Things Are on the Table' on Rate Policy

Chicago Fed President Austan Goolsbee thinks the Federal Reserve may need to change course if inflation continues falling toward its 2% target rate. Goolsbee joined WSJ's Take On the Week to discuss why Fed policy makers should be prepared to cut rates if inflation continues on its current path and why he says it may be time for the central bank to shift its focus from inflation to the slowing U.S. labor market.

Bank of Canada Officials Fretted Over Upside Risks to Inflation

Bank of Canada policy makers were concerned about inflation related to shelter, according to minutes of deliberations leading up to their decision to leave the bank's main interest rate unchanged earlier this month. Meanwhile, officials said that despite a softening labor market, annual wage gains in the 4% to 5% range "would not be consistent with achieving price stability, particularly given weak productivity." ( Dow Jones Newswires via MarketWatch )

RBA Could Get Swamped as Rates Tumble Globally Next Year

Interest rates in Australia could fall sharply next year as inflation retreats worldwide, prompting major central banks to ease policy swiftly and dragging the Reserve Bank of Australia along with them. That is the view of Katie Dean, who manages the fixed-interest allocation of AustralianSuper's $210 billion investment fund.

U.S. Economy Home Sales Ticked Up in November After 5 Months of Declines

Existing-home sales increased 0.8% in November from the prior month, the National Association of Realtors said. November sales fell 7.3% from a year earlier. Existing-home sales for the full year in 2023 are on track to be the lowest since at least 2011. Affordability has improved slightly recently, as mortgage rates have declined for seven consecutive weeks and fell below 7% last week. That could spur more home-buying activity in early 2024.

Video: WSJ's Dion Rabouin on the Housing Report Heard on the Street: Housing Heats Back Up U.S. Mortgage Rates Fall to Five-Month Low (MarketWatch) Midsize Cities Struggle With Snowballing Homelessness

Midsize cities like Grand Rapids, Mich., are testing out new ways to handle unhoused populations that have surged since the pandemic , as a record spike in the nation's homelessness numbers has grown far beyond expensive coastal areas with entrenched homelessness problems.

Biden Administration Explores Raising Tariffs on Chinese EVs

The Biden administration is discussing raising tariffs on some Chinese goods , including electric vehicles, in an attempt to bolster the U.S. clean-energy industry against cheaper Chinese exports, people familiar with the matter said.

Wells Fargo Workers in Albuquerque Vote to Form Union

Wells Fargo employees are forming the first union inside a major U.S. lender since the dawn of the modern megabank. The union will cover just a handful of employees but it amounts to a new frontier for the resurgent labor movement.

Americans Spending Less on Gifts, More on Everything Else

Americans are spending more this holiday season, but not on presents that go under the tree. People are shelling out much more on dining, entertainment and tickets, Bank of America's card data shows.

Key Developments Around the World Turkey's Central Bank Raises Key Interest Rate, Signals Peak Is Near

Turkey's central bank on Thursday raised its key interest rate for the seventh consecutive time, but slowed the pace of the rise, signaling that monetary tightness was close to the rate required to slow inflation. The central bank raised the country's benchmark interest rate, the one-week repo rate, to 42.5% from 40%, matching expectations from a consensus of economists polled by FactSet. It came after Turkish inflation edged up in November to 62% from 61% in October, having continued to rise through the summer. The bank said the level of domestic demand, stickiness in services inflation, and geopolitical risks continues to keep inflation pressures alive. However, recent indicators have also suggested that domestic demand continues to ease as monetary tightening impacts the economy more clearly, it added. (Dow Jones Newswires)

Bank Indonesia Keeps Benchmark Rate Unchanged

Indonesia's central bank stood pat at its December policy meeting, holding its benchmark seven-day reverse repo rate at 6.00% on Thursday, as it continues to focus on keeping the rupiah stable and inflation under control.

EU Strikes Deal to Curb Public Debt

European Union governments have agreed on new rules to curb budget deficits and debt , drawing a line under years of freewheeling spending during the Covid-19 pandemic and the Ukraine war.

U.S. Makes a New Attempt to Stifle Russian Oil Trade

The U.S. stepped up enforcement of sanctions on Russian energy, targeting upstart trading companies that have kept a gusher of oil income flowing to the Kremlin. Blocking sanctions were imposed on three trading firms.

Russia's Economy Has a Surprising Problem: A Property Bubble

To placate a war-weary population, Russia has doled out billions of dollars of cheap loans for its citizens to buy new homes. That money is now creating an economic headache that few predicted: a fast-building housing bubble .

Financial Regulation Roundup Court Vacates SEC's New Rule on Stock-Buyback Disclosures

A conservative appeals court formally killed the Securities and Exchange Commission's plan to provide investors with more information about public companies' stock buybacks, saying the regulator failed to conduct a proper cost-benefit analysis.

FASB Won't Consider Changes in Securities Accounting

The FASB declined to consider any changes to how companies account for held-to-maturity securities, a debate revived in the wake of the failures this spring of banks with significant related unrealized losses.

Burned Investors Ask 'Where Were the Auditors?'

One of the country's most influential courts has asked the nation's top securities regulator for its views on an uncomfortable subject : whether audit reports by outside accounting firms actually matter.

U.K. to Overhaul Stock-Listing Rules to Boost London vs. New York

The U.K. plans to remove a key obstacle for companies pursuing big deals, in the latest bid to halt a trend of corporations moving their listings to the U.S.: Shareholder approval for "significant transactions" will no longer be needed.

How One Man Stole People's iPhones and Looted Their Savings

Thieves are stealing iPhones, passcodes and thousands of dollars from their victims' bank accounts. The WSJ's Joanna Stern sat down with a convicted thief in a high-security prison to find how -and how you can protect yourself.

Forward Guidance Thursday (all times ET)

8:30 a.m.: U.S. gross domestic product, third estimate for third quarter; U.S. weekly jobless claims; Philadelphia Fed Manufacturing Survey

11 a.m.: ECB's Lane in policy panel at Economics Winter Workshop of Central Bank of Ireland

Friday

2 a.m.: U.K. gross domestic product, second estimate for third quarter

8:30 a.m.: U.S. income, spending and personal-consumption expenditures price index for November; U.S. durable goods for November; Canada gross domestic product for October

10 a.m.: University of Michigan consumer survey, final for December; U.S. new-home sales for November

Research Wage Gains Should Relieve Stress From Canadian Mortgage Renewals

Moderate income gains should help most Canadian mortgage holders avoid severe financial stress when they renew their home loans at sharply higher rates, according to Bank of Canada research. Absent income growth, the median borrower may need to dedicate up to 4% more of their pretax income to mortgage payments by the end of 2027, the report said Wednesday. "However, for some borrowers, income growth could mitigate the impact of higher interest rates on debt serviceability." ( Dow Jones Newswires via MarketWatch )

Basis Points U.S. consumer confidence jumped in December to a five-month high of 110 in a fresh sign of optimism about the economy, a new survey showed. The closely followed index climbed from a revised 101 in November, the Conference Board said. ( MarketWatch ) U.S. stocks pulled back Wednesday, pausing a rally that sent the Dow Jones Industrial Average to record highs. U.S. crude oil and gasoline inventories rose last week as refineries increased their capacity use and U.S. crude output reached a record level, according to data released Wednesday by the U.S. Energy Information Administration Confidence in France's industrial sector edged up this month , when business displayed a more upbeat mood on production, offering hope for a boost to the eurozone's second-largest economy at the end of the year. Sentiment rose to 100 in December from 99 in November in a survey conducted by national statistics agency Insee South Korea will police 'shrinkflation' at grocers. Starting next year, the country will require companies to disclose on their packages and websites when grocery items drop in volume, but not price. To ensure firms comply, South Korea is establishing a

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12-21-23 0716ET