Rising Prices and Delivery Issues Take Toll on the Fed and Big Banks
The Federal Reserve's ability to maintain stable prices depends on the public's faith in its ability to deliver. After more than a year of interest rate hikes and attempts to cool the economy, prices are still rising at a rate well above the Fed's 2% goal and the public is becoming increasingly weary. Market movements have become increasingly disconnected from Fed messaging, and JPMorgan Chase CEO Jamie Dimon recently expressed his doubt in the central bank's ability to control inflation.
It is anticipated by analysts that the core PCE for January, when food and energy figures are excluded, will go up 0.4% from December and by 4.3% compared to the same time last year. January's reading was slightly higher than December's, though the yearly figure was lower. Fed officials are highly aware of this problem and warned that an insufficiently restrictive policy stance could lead to prolonged inflationary pressures where people start to expect inflation to remain high.
The Fed's preferred measure of inflation is PCE inflation, and it is something to keep an eye The possibility of a larger rate hike of a half percentage point in March could be heightened if the incoming data is higher than anticipated. Dimon added that he expects that interest rates could possibly remain higher for longer, and that it may take the Fed a while to return to its goal of 2% inflation.
Bloomberg reports that Wells Fargo has laid off over 500 mortgage bankers due to the current downturn in the real estate market. A report revealed that the layoffs announced on Tuesday included a few bankers who had loan volumes in excess of $100 million in the preceding year. Wells Fargo confirmed to CNN that the company has had layoffs across its home lending business in response to significant decreases in mortgage volume in the broader market environment.
On Thursday, shares of Domino's plummeted by almost 12%, following the company's acknowledgement of some delivery problems. CEO Russell Weiner wrote in a statement discussing fourth quarter results Thursday that they experienced significant pressure on their US delivery business in 2022. Sandeep Reddy, CFO, reported a 6.6% decrease in deliveries to stores open for at least a year during an analyst call compared to the same period last year. The executives stated that inflation is high, resulting in customers not considering the delivery fees (set by local stores) as being worth paying.
0. “Morning context: Why today's report on inflation could make or break the US economy” WRAL TechWire, 24 Feb. 2023, https://wraltechwire.com/2023/02/24/morning-context-why-todays-report-on-inflation-could-make-or-break-the-us-economy
1. “Why today's inflation report is so important -” KTEN, 22 Feb. 2023, https://www.kten.com/story/48444249/why-todays-inflation-report-is-so-important
2. “Why today's inflation report is so important” CNN, 24 Feb. 2023, https://www.cnn.com/2023/02/24/investing/premarket-stocks-trading/index.html
Leave a Comment
You must be logged in to post a comment.