Finishing the Fed's Inflation Fight Will Come Down to Housing By Hardika Singh

Analysts are wondering if the housing slowdown will (finally) materialize this year. Meanwhile, the White House is preparing to announce higher levies on a range of Chinese goods. And the Commodity Futures Trading Commission advanced a plan that would ban contracts on political elections and sports matches. Read on for this news and more.

Top News Stubbornly High Rents Prevent Fed From Finishing Inflation Fight

Stalled inflation this year hasn't yet derailed the Federal Reserve's plans to eventually cut interest rates. That's because it expects a slowdown in housing costs to eventually drag inflation close to its 2% target.

The problem: It has been waiting for that slowdown for 1 1/2 years now, and it still hasn't arrived .

U.S. Economy Biden to Quadruple Tariffs on Chinese EVs

The Biden administration is preparing to raise tariffs on clean-energy goods from China in the coming days, with the levy on Chinese electric vehicles set to roughly quadruple, according to people familiar with the matter.

Financial Regulation CFTC Wants to Ban Trades Tied to Elections, Sports and Awards Contests

Regulators advanced a plan to ban derivatives contracts based on political elections, athletic competitions and awards contests, in a bid to clarify the boundaries between gambling and financial markets.

Forward Guidance Tuesday (all times ET)

8:30 a.m.: U.S. producer-price index for April

Research Dollar Expected to Weaken as QT Paths Diverge

Quantitative tightening is expected to end relatively soon in the U.S. and Canada, continue at its current pace in the U.K. and Australia and accelerate in the euro area, Bank of America economists say in a report. They say global central banks reduced their aggregate balance sheet size by $3 trillion between June 2022 and the end of 2023 roughly at the same time, but now, as QT paths diverge, the U.S. dollar "is likely to become increasingly abundant relative to currencies of central banks that are expected to continue QT." - Paulo Trevisani

Basis Points The cost pressures squeezing small businesses-and their need to pass along those higher charges-help explain why inflation has been so stubborn . - Ruth Simon A surge in Canadian employment last month shows the dip in March was a blip and suggests the Bank of Canada will wait until July to cut, rather than moving in June as expected, Capital Economics' Stephen Brown reckons. With 90,400 jobs added in April, far more than expected, the six-month average gain picks up to 33,000 from 22,000. - Robb Stewart What election? In the midst of what many expect to be the most toxic presidential campaign in modern history, American businesses are going to extraordinary lengths to stay off the political radar. Some CEOs are privately drawing up plans to tell employees not to expect comments on political matters in all-hands sessions. Others are reconsidering common election initiatives, such as get-out-the-vote drives, fearing those could be viewed in the current moment as partisan. A number of companies are also taking a harder line on workplace activism after long tolerating dissent. - Chip Cutter and Ray A. Smith New Zealand Inflation expectations continued to tumble , greatly easing pressure on the Reserve Bank of New Zealand to further raise interest rates. - James Glynn Note to readers

An item under U.S. Economy in Friday's newsletter was garbled. Here is the correct wording:

What CFOs Are Saying About Higher-for-Longer Rates

Finance chiefs began the year expecting the Federal Reserve would cut interest rates, with some anticipating a trim as early as March. Instead, CFOs are reworking their plans and settling in for rates to remain airborne for a while.

About Us

WSJ Pro Central Banking brings you central banking news, analysis and insights from WSJ's global team of reporters and editors. This newsletter was compiled by markets reporter Hardika Singh in New York. Send your tips, suggestions and feedback to [hardika.singh@wsj.com].

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


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05-13-24 0715ET