<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/11/zCBPA-LZ-820x461.jpg" alt="" class="wp-image-428995" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/11/zCBPA-LZ-820x461.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/zCBPA-LZ-300x169.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/zCBPA-LZ-160x90.jpg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/zCBPA-LZ-768x432.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/zCBPA-LZ-1536x864.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/zCBPA-LZ.jpg 1920w" sizes="(max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Photo: via CNBC</figcaption></figure>



Inflation was flat in October from the previous month, providing a hopeful sign that stubbornly high prices are easing their grip on the U.S. economy.



The consumer price index, which measures a broad basket of commonly used goods and services, increased 3.2% from a year ago despite being unchanged for the month, according to seasonally adjusted numbers from the Labor Department on Tuesday. Economists surveyed by Dow Jones had been looking for respective readings of 0.1% and 3.3%.



Headline CPI had increased 0.4% in September.



Excluding volatile food and energy prices, core CPI increased 0.2% and 4%, against the forecast of 0.3% and 4.1%. The annual level was the lowest in two years, though still well above the Federal Reserve’s 2% target.



Markets spiked on the news. Futures tied to the Dow Jones Industrial Average were up 300 points as Treasury yields fell sharply. Traders also took any potential Fed interest rate hikes almost completely off the table, according to CME Group data.



“The Fed looks smart for effectively ending its tightening cycle as inflation continues to slow.&nbsp;Yields are down significantly as the last of investors not convinced the Fed is done are likely throwing in the towel,” said Bryce Doty, portfolio manager at Sit Fixed Income Advisors.



The flat reading on headline CPI came as energy prices declined 2.5% for the month, offsetting a 0.3% increase in the food index.



Shelter costs, a key component in the index, rose 0.3% in October, half the gain in September as the year-over-year increase eased to 6.7%. Within the category, owners equivalent rent, which gauges what property owners could command for rent, increased 0.4%.



Vehicle costs, which had been a key inflation component during the spike in 2021-22, fell on the month. New vehicle prices declined 0.1%, while used vehicle prices were off 0.8% and were down 7.1% from a year ago.



Airfares, another closely watched component, declined 0.9% and are off 13.2% annually. Motor vehicle insurance, however, saw a 1.9% increase and was up 19.2% from a year ago.



The report comes as markets are closely watching the Fed for its next steps in a battle against persistent inflation that began in March 2022. The central bank ultimately increased its key borrowing rate 11 times for a total of 5.25 percentage points.



While markets overwhelmingly believe the Fed is done tightening monetary policy, the data of late has sent conflicting signals.



Nonfarm payrolls in October increased by just 150,000, indicating the labor market finally is showing signs that it is reacting to Fed efforts to correct a supply-demand imbalance that has been a contributing inflation factor.



Labor costs have been increasing at a much slower pace over the past year and a half as productivity has been on the rise this year.



Real average hourly earnings — adjusted for inflation — increased 0.2% on a monthly basis in October but were up just 0.8% from a year ago, according to a separate Labor Department release.



More broadly speaking, gross domestic product surged in the third quarter, rising at a 4.9% annualized pace, though most economists expect the growth rate to slow considerably.



However, other indicators show that consumer inflation expectations are still rising, the likely product of a spike in gasoline prices and uncertainty caused by the wars in Ukraine and Gaza.



Fed Chair Jerome Powell last week added to market anxiety when he said he and his fellow policymakers remain unconvinced that they’ve done enough to get inflation back down to a 2% annual rate and won’t hesitate to raise rates if more progress isn’t made.



“Despite the deceleration, the Fed will likely continue to speak hawkishly and will keep warning investors not to be complacent about the Fed’s resolve to get inflation down to the long-run 2% target,” said Jeffrey Roach, chief economist at LPL Financial.



Even if the Fed is done hiking, there’s more uncertainty over how long it will keep benchmark rates at their highest level in some 22 years.

zCBPA-LZ

U.S. inflation was flat in October from the prior month, core CPI hits two-year low

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="462" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107229932-1682347932426-gettyimages-1401566574-_02a9324-820x462.jpeg" alt="" class="wp-image-428969" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107229932-1682347932426-gettyimages-1401566574-_02a9324-820x462.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107229932-1682347932426-gettyimages-1401566574-_02a9324-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107229932-1682347932426-gettyimages-1401566574-_02a9324-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107229932-1682347932426-gettyimages-1401566574-_02a9324-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107229932-1682347932426-gettyimages-1401566574-_02a9324.jpeg 929w" sizes="(max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">New York city skyline Alexander Spatari | Moment | Getty Images</figcaption></figure>



Goldman Sachs predicts the global economy will top expectations in 2024, driven by strong income growth and confidence that the worst of rate hikes is already over.



The investment bank forecasts the world economy to expand 2.6% next year on an annual average basis, above the 2.1% consensus forecast of economists polled by Bloomberg. The U.S. is expected to outpace other developed markets again with estimated growth of 2.1%, Goldman said.



Goldman also believes that the bulk of the drag from monetary and fiscal tightening policies is over.



To curtail rising inflation, the U.S. Federal Reserve started its aggressive rate hike campaign in March 2022 as inflation climbed to its highest levels in 40 years. Last Thursday, Fed Chair Jerome Powell said he is “not confident” the Fed has done enough to tackle inflation, and suggested that more rate hikes may be necessary.



Goldman said policymakers in developed markets are unlikely to cut interest rates before the second half of 2024 unless economic growth comes in weaker than estimated.



The bank noted inflation has also continued to cool across G10 and emerging market economies, and is expected to ease further.



“Our economists forecast this year’s decline in inflation to continue in 2024: sequential core inflation is predicted to fall from 3% now to an average 2-2.5% range across the G10 (excluding Japan),” the report stated.



<h2 class="wp-block-heading" id="h-global-factory-activity"><a></a>Global factory activity</h2>



The investment bank also expects global factory activity to recover from a recent slump as headwinds are set to dissipate this year. Goldman noted global manufacturing activity has been weighed down by a weaker-than-expected rebound in Chinese manufacturing and the European energy crisis, as well as an inventory cycle that had to correct for overbuilding last year.



Global production has been in a slump for most of the year. S&amp;P Global’s gauge of worldwide manufacturing activity came in at 49.1 in September. A reading below 50 indicates a contraction in activity. Additionally, China’s Caixin/S&amp;P Global manufacturing PMI fell to 49.5 in October from 50.6 in September, marking the first contraction since July.



Manufacturing activity should recover somewhat in 2024 from a subdued 2023 pace, Goldman economists led by chief economist Jan Hatzius said, especially as “spending patterns normalize, gas-intensive European production&nbsp;finds a trough, and inventories-to-GDP ratios stabilize.”



<h2 class="wp-block-heading"><a></a>Big economies to avoid recession</h2>



Rising real income also contributed to Goldman’s positive growth outlook.



“Our economists have a positive outlook for real disposable income growth at a time of much lower headline inflation and still-strong labor markets,” Goldman wrote in a release based on the report. While they hold the view that U.S. real income growth is set to slow from its strong 2023 pace of 4%, it is still purported to support consumption and GDP growth of at least 2%.



“We continue to see only limited recession risk and reaffirm our 15% U.S. recession probability,” Hatzius continued in the outlook report, owed in part to the real disposable income growth.



In September, the bank had cut their forecast for a U.S. recession from 20% to 15% on the basis of cooling inflation and a resilient labor market.



While rate hikes and fiscal policy will still continue to weigh on the growth across G10 economies, Hatzius is confident that the worst of that “drag” is already over.



“Both the Euro area and the UK are expected to have a meaningful acceleration in real income growth — to around 2% by end-2024 — as the gas shock following Russia’s invasion of Ukraine fades,” the economists also noted.

107229932-1682347932426-gettyimages-1401566574-_02a9324

World economy to perform better than expected in 2024, says Goldman Sachs

How The U.S. Lost Thousands Of High-Skilled Workers To Canada

Is the U.K. space industry about to take off?

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="462" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107309632-1696164614298-gettyimages-1699382269-President_Biden_Spends_Saturday_At_The_White_House_As_Government_Shutdown_Looms-820x462.jpeg" alt="" class="wp-image-428937" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107309632-1696164614298-gettyimages-1699382269-President_Biden_Spends_Saturday_At_The_White_House_As_Government_Shutdown_Looms-820x462.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107309632-1696164614298-gettyimages-1699382269-President_Biden_Spends_Saturday_At_The_White_House_As_Government_Shutdown_Looms-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107309632-1696164614298-gettyimages-1699382269-President_Biden_Spends_Saturday_At_The_White_House_As_Government_Shutdown_Looms-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107309632-1696164614298-gettyimages-1699382269-President_Biden_Spends_Saturday_At_The_White_House_As_Government_Shutdown_Looms-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107309632-1696164614298-gettyimages-1699382269-President_Biden_Spends_Saturday_At_The_White_House_As_Government_Shutdown_Looms.jpeg 929w" sizes="(max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">The White House is seen at dusk on September 30, 2023 in Washington, DC. Samuel Corum | Getty Images</figcaption></figure>



Moody’s Investors Service on Friday lowered its ratings outlook on the United States’ government to negative from stable, pointing to rising risks to the nation’s fiscal strength.



The ratings agency has affirmed the long-term issuer and senior unsecured ratings of the U.S. at Aaa.



“In the context of higher interest rates, without effective fiscal policy measures to reduce government spending or increase revenues,” the agency said. “Moody’s expects that the US’ fiscal deficits will remain very large, significantly weakening debt affordability.”



Brinkmanship in Washington has also been a contributing factor, Moody’s said.



“Continued political polarization within US Congress raises the risk that successive governments will not be able to reach consensus on a fiscal plan to slow the decline in debt affordability,” the ratings agency said.



As far as keeping the nation’s ratings at Aaa, Moody’s said that it expects the U.S. to “retain its exceptional economic strength.” “Further positive growth surprises over the medium term could at least slow the deterioration in debt affordability,” the agency said.



“While the statement by Moody’s maintains the United States’ Aaa rating, we disagree with the shift to a negative outlook,” said Deputy Secretary of the Treasury Wally Adeyemo in a statement. “The American economy remains strong, and Treasury securities are the world’s preeminent safe and liquid asset.”



Moody’s move to cut its outlook arrives as Congress faces the looming threat of a government shutdown once more. For now, the government is funded through Nov. 17, but lawmakers in Washington remain at loggerheads over a bill ahead of the deadline.



Newly elected House Speaker Mike Johnson (R-La.) has indicated that he will release a Republican government funding plan on Saturday, a move that would permit members time to read it before an expected Tuesday vote on the measure.



But his plan to fund certain parts of the government through Dec. 7, and other parts through Jan. 19, known as a laddered continuing resolution, or CR, is dead on arrival in the White House and in the Democratic-controlled Senate.



“Moody’s decision to change the U.S. outlook is yet another consequence of Congressional Republican extremism and dysfunction,” White House press secretary Karine Jean-Pierre said in a statement.



Back in August, Fitch cut the U.S. long-term foreign currency issuer default rating to AA+ from AAA, citing “expected fiscal deterioration over the next three years,” as well as an erosion of governance and a growing debt burden.



Feuding in Washington was also an issue. “The repeated debt-limit political standoffs and last-minute resolutions have eroded confidence in fiscal management,” Fitch said at the time.

107309632-1696164614298-gettyimages-1699382269-President_Biden_Spends_Saturday_At_The_White_House_As_Government_Shutdown_Looms

Moody’s cuts U.S. outlook to negative, citing deficits and political polarization

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/11/GettyImages-138943787-820x547.jpg" alt="" class="wp-image-428933" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/11/GettyImages-138943787-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/GettyImages-138943787-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/GettyImages-138943787-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/GettyImages-138943787-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/GettyImages-138943787-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/GettyImages-138943787-scaled.jpg 2048w" sizes="(max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">WASHINGTON, DC &#8211; FEBRUARY 14: (AFP OUT) U.S. Vice President Joe Biden (R) and Chinese Vice President Xi Jinping talk during an expanded bilateral meeting with other U.S. and Chinese officials in the Roosevelt Room at the White House February 14, 2012 in Washington, DC. While in Washington, Vice President Xi will meet with Biden, President Barack Obama and other senior Administration officials to discuss a broad range of bilateral, regional, and global issues. (Photo by Chip Somodevilla/Getty Images)</figcaption></figure>



U.S.-China relations, marred in the past year by a series of inflection points, have reached one of the most tense periods perhaps since 1972, when the two nations established diplomatic ties.



A Chinese spy balloon. Close encounters in both the air and the Taiwan Strait. Diplomatic spats over the theft of technology, hacking and trade. A drought of military-to-military talks. Even the lapse of a panda agreement.



All point to worsening relations that will hang over next week’s meeting between President Joe Biden and China’s President Xi Jinping, their first in-person meeting in about a year, and the first time since 2017 that Xi has stepped foot on American soil.



But experts and U.S. officials caution not to expect markedly improved relations post-meeting.



“We should probably keep a pretty low bar in terms of tangible outcomes and deliverables,” said Colleen Cottle, deputy director of the Global China Hub at the Atlantic Council. “This is a meeting that’s probably much more about symbolism and showing a commitment among both leaders to maintain high-level communications and keep communications flowing over the course of the next year.”



Senior U.S. administration officials detailed a handful of agenda items during a briefing with reporters. The leaders are expected to discuss hot-button issues including military communications, human rights and the South China Sea, an official said.



“We’re not talking about a long list of outcomes or deliverables,” a senior administration official told reporters. “The goals here really are about managing the competition, preventing the downside risk of conflict and ensuring channels of communication are open.”



Neither the U.S. nor China appears to be gearing up for a significantly positive swing in relations, experts said.



“I think the administration here is quite clear and sober about the likely outcomes of the meeting,” said Jude Blanchette, a China expert at the Center for Strategic and International Studies during the think tank’s press briefing. “They’ve been working hard to lower expectations. I think you’re seeing something similar on the Chinese side.”



Despite low expectations, the meeting could pave the way for future discussions about solutions to issues that impact both countries, said Thomas Fingar, a China expert at Stanford University and former chairman of the National Intelligence Council. He cautioned against the idea that a summit’s purpose is to solve some “critical, otherwise insoluble problem. It doesn’t work that way very often.”



He explained that in China’s political system, lower-level officials often need explicit clearance from the top.



“For there really to be movement for lower levels of the system to engage in specifics, it needs a refreshed endorsement from Xi,” Fingar said.



The meeting itself, though anticipated, was not formally announced by the White House until Friday. Even in recent days, Chinese officials were hesitant to confirm that Xi would attend the meeting with Biden. In a press briefing on Wednesday, China’s foreign ministry spokesperson Wang Wenbin said it “won’t be&nbsp;plain sailing to San Francisco, nor can we leave it to autopilot to get us there.”



Similarly, when White House press secretary Karine Jean-Pierre was asked during a briefing on Wednesday whether the meeting was “locked in,” she said, “I just don’t have anything confirmed.”



When announcing the meeting, Jean-Pierre said in a statement that the leaders would discuss “issues in the U.S.-PRC bilateral relationship, the continued importance of maintaining open lines of communication, and a range of regional and global issues,” using the abbreviation for the People’s Republic of China.



“I don’t think there’s any indication that things are going to improve between the two sides,” said Oriana Skylar Mastro, a China expert at the American Enterprise Institute. She added that neither country is willing to make “any significant concessions” or policy changes “that would be necessary to put the relationship on a different track.”



There are potential areas to move the needle on U.S.-China relations, experts say. NBC News also previously reported that the U.S. is hoping to announce a commitment from China to cut down on fentanyl coming into the U.S., as well as improve military communications.



Military-to-military communications are intended to cut down on the risk of unintended conflict.



It comes at a time when a historic number of U.S. warplanes have been intercepted by China. There were more than 180 incidents of Chinese aircraft intercepting U.S. planes since the fall of 2021, said Ely Ratner, the assistant secretary of defense for Indo-Pacific security affairs, in a Defense Department release. Ratner said that is higher than the number of incidents that took place the decade before that.



An interception has been deadly in the past. In 2001, a U.S. military plane collided with a Chinese fighter jet over the South China Sea, killing the Chinese pilot. The Chinese government held the American crew for over a week.



“We’ve raised the importance of (military-to-military) channels in nearly every conversation we’ve had with the Chinese,” a senior administration official said in the press briefing. “This is absolutely critical. And when we’re talking about managing risks, about avoiding conflict, this is exactly the sort of communication we need to be having both at senior levels of our two militaries, but also operator to operator.”



The Biden-Xi meeting comes just weeks after China announced that Li Shangfu would no longer serve as defense minister. Li has been sanctioned by the U.S., and experts say his removal could open the door to better relations on military communication.



A defense minister who has not been sanctioned by the U.S. could make it easier to resume military-to-military talks, said David Sacks, a fellow at the Council on Foreign Relations.



The Chinese position during Li’s tenure had been, “Why would he talk if he’s under U.S. sanctions? Remove the sanctions, and then we can have a dialogue,” Sacks said. “And so now, presumably his successor will not be under those sanctions, and therefore you don’t have that impediment towards resuming mil-mil dialogue.”



Biden and Xi’s meeting also comes in the lead-up to Taiwan’s 2024 presidential election in January, followed by the U.S. election. Taiwan is a self-ruling democracy that China claims as its own. U.S. policy maintains that Washington does not support Taiwan’s independence, though there is a policy of strategic ambiguity over how the U.S. would respond if China were to invade the island.



Experts say that during the meeting Biden may warn Xi against interfering in Taiwan’s election, “also to give whoever the winner of the election is an opportunity to put forward a proposal for cross-strait dialogue,” Sacks said.



When a senior administration official was asked during the briefing about how the Taiwanese election may come up in the Biden-Xi meeting, the officials emphasized U.S. opposition to any potential Chinese interference.



“We’ve been clear publicly and privately that interference in the Taiwan election is something we’re extremely concerned about,” a senior administration official said. “And of course, we’ll plan on delivering that message again.”

Vice President Biden Holds Bilateral Meeting With Chinese Vice President Xi Jinping

As Biden and Xi gear up for a high-stakes meeting, experts have low expectations

What’s Wrong With U.S. Cash

How Elon Musk’s Starlink Is Bringing In Billions For SpaceX

Is The Golden Age Of Remote Work Over?

Could resumes soon be a thing of the past?

Indians splurge on festival celebrated by more than a billion people worldwide

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107304015-1695236207011-gettyimages-1677964220-AFP_33VU6J4-820x461.jpeg" alt="" class="wp-image-428898" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107304015-1695236207011-gettyimages-1677964220-AFP_33VU6J4-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107304015-1695236207011-gettyimages-1677964220-AFP_33VU6J4-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107304015-1695236207011-gettyimages-1677964220-AFP_33VU6J4-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107304015-1695236207011-gettyimages-1677964220-AFP_33VU6J4-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107304015-1695236207011-gettyimages-1677964220-AFP_33VU6J4-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107304015-1695236207011-gettyimages-1677964220-AFP_33VU6J4.jpeg 1600w" sizes="(max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Photo: via CNBC</figcaption></figure>



Federal Reserve Chairman Jerome Powell said Thursday that he and his fellow policymakers are encouraged by the slowing pace of inflation but are unsure whether they’ve done enough to keep the momentum going.



Speaking a little more than a week after the central bank voted to hold benchmark policy rates steady, Powell said in remarks for an International Monetary Fund audience in Washington, D.C., that more work could be ahead in the battle against high prices.



“The Federal Open Market Committee is committed to achieving a stance of monetary policy that is sufficiently restrictive to bring inflation down to 2 percent over time; we are not confident that we have achieved such a stance,” he said in his prepared speech.



For the second time in recent weeks, a public address from Powell was interrupted by climate protesters. He briefly left the stage before resuming.



The speech comes with inflation still well above the Fed’s long-standing goal but also considerably below its peak levels in the first half of 2022. In a series of 11 rate hikes that constituted the most aggressive policy tightening since the early 1980s, the committee took its benchmark rate from near zero to a target range of 5.25%-5.5%.



Those increases have coincided with the Fed’s preferred inflation gauge, the core personal consumption expenditures price index, to fall to an annual rate of 3.7%, from 5.3% in February 2022. The more widely followed consumer price index peaked above 9% in June of last year.



Powell said that inflation is “well above” where the Fed would like to see it while describing policy as “significantly restrictive.”



“My colleagues and I are gratified by this progress but expect that the process of getting inflation sustainably down to 2 percent has a long way to go,” he said. “We will keep at this until we succeed,” he later added, saying the Fed is focused on whether rates need to go higher and how long they need to stay elevated.



Stocks headed lower after the speech, with the Dow Jones Industrial Average down close to 200 points. Treasury yields lurched higher after declining for most of the past three weeks, propelled up in large part after a poorly received 30-year bond auction.



“Chairman Powell issued a warning to investors too giddy on the prospect of rate cuts next year,” said Jeffrey Roach, chief economist at LPL Financial. “The Fed will be true to its mandate and hike further should inflation reaccelerate.”



As he has in recent speeches, Powell stressed that the Fed nevertheless can be cautious as the risks between doing too much and too little have come into closer balance. He said the Fed is attuned to the rise in Treasury yields.



“If it becomes appropriate to tighten policy further, we will not hesitate to do so,” he said. “We will continue to move carefully, however, allowing us to address both the risk of being misled by a few good months of data, and the risk of overtightening.”



“Monetary policy is generally working the way we think it should work” Powell said during a discussion following his speech.



Markets are largely convinced the Fed is through hiking rates.



Futures pricing, according to the CME Group, indicates less than a 10% probability that the FOMC will approve a final rate hike at its Dec. 12-13 meeting, even though committee members in September penciled in an additional quarter percentage point rise before the end of the year.



Traders anticipate the Fed will start cutting next year, probably around June.



Powell noted the progress the economy has made. Gross domestic product accelerated at a “quite strong” 4.9% annualized pace in the third quarter, though Powell said the expectation is for growth to “moderate in coming quarters.” He described the economy as “just remarkable” in 2023 in the face of a broad consensus that a recession was inevitable.



Unemployment remains low, though the jobless rate has risen half a percentage point this year, a move commonly associated with recessions.



But Powell noted that the Fed is “attentive” that stronger-than-expected growth could undermine the fight against inflation and “warrant a response from monetary policy.”



He also pointed out that improvements in supply chains have helped ease inflation pressures, but “it is not clear how much more will be achieved by additional supply-side improvements. Going forward, it may be that a greater share of the progress in reducing inflation will have to come from tight monetary policy restraining the growth of aggregate demand.”



The remarks are part of a broader presentation he is giving to the Jacques Polak Annual Research Conference. One broad policy topic he addressed was the challenge posed by keeping rates anchored near zero, where they were before the inflation surge. Powell said it is “too soon” to say whether zero-rate challenges are “a thing of the past.”

107304015-1695236207011-gettyimages-1677964220-AFP_33VU6J4

Powell says Fed is ‘not confident’ it has done enough to bring inflation down

Russia-Israel’s relationship in 60 seconds

How Arm Powers Chips By Apple

How Arm Powers Chips By Apple, Amazon, Google And More

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="462" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107275996-1690265782638-gettyimages-1568546745-vcg111446786977-820x462.jpeg" alt="" class="wp-image-428864" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107275996-1690265782638-gettyimages-1568546745-vcg111446786977-820x462.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107275996-1690265782638-gettyimages-1568546745-vcg111446786977-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107275996-1690265782638-gettyimages-1568546745-vcg111446786977-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107275996-1690265782638-gettyimages-1568546745-vcg111446786977-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107275996-1690265782638-gettyimages-1568546745-vcg111446786977.jpeg 929w" sizes="(max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">An employee works on the assembly line of LED lighting products in China. Vcg | Visual China Group | Getty Images</figcaption></figure>



China’s consumer prices fell in October, as the world’s second-largest economy struggled with an uneven post-Covid recovery.



Data from China’s National Bureau of Statistics on Thursday showed October consumer price index shrank 0.2% year-on-year, more than the 0.1% decline expected by economists polled by Reuters.



This comes after China’s CPI was unexpectedly flat in September, highlighting the need for further policy support.



Producer prices declined 2.6%, slightly smaller than an expected decline of 2.7% and has been in negative territory for the 13th straight month. China’s PPI was at 2.5% in September, showing factory deflationary pressures remained.



“China is still in a deflationary environment. The domestic demand remains sluggish,” said Zhiwei Zhang, president and chief economist of Pinpoint Asset Management.



Beijing has provided targeted policy support even as recent data suggested growth has remained sluggish. Further hurting consumer confidence is an ongoing debt crisis in two of China’s largest real estate developers. China’s property sector makes up about 30% of its economy.



“With the budget deficit rising and the property developers potentially gaining support from the government, domestic demand will likely improve next year,” Zhang said.



Investors will now be tracking this year’s Singles Day shopping festival, which ends on Nov. 11, to gauge the strength of Chinese consumption.



But excitement about the shopping festival has waned.



“I think this year’s Singles Day sale has not been living up to expectations,” Hao Hong, partner and chief economist at Grow Investment Group told CNBC’s “Squawk Box Asia.”



“Ever since last year, people have stopped spending a lot of money on the Singles Day sale, so it is going to be a muted sales year,” Hong said.

107275996-1690265782638-gettyimages-1568546745-vcg111446786977

China’s consumer prices swing to declines in October

What is happening with China’s real estate industry? #Shorts

CNBC

U.S. inflation was flat in October from the prior month, core CPI hits two-year low

World economy to perform better than expected in 2024, says Goldman Sachs

How The U.S. Lost Thousands Of High-Skilled Workers To Canada

Is the U.K. space industry about to take off?

Moody’s cuts U.S. outlook to negative, citing deficits and political polarization

As Biden and Xi gear up for a high-stakes meeting, experts have low expectations

What’s Wrong With U.S. Cash

How Elon Musk’s Starlink Is Bringing In Billions For SpaceX

Is The Golden Age Of Remote Work Over?

Could resumes soon be a thing of the past?

Indians splurge on festival celebrated by more than a billion people worldwide

Powell says Fed is ‘not confident’ it has done enough to bring inflation down

Russia-Israel’s relationship in 60 seconds

How Arm Powers Chips By Apple, Amazon, Google And More

China’s consumer prices swing to declines in October

What is happening with China’s real estate industry? #Shorts

Is ultra-processed food bad for you?

News Tips

Advertise With Us

CNBC

U.S. inflation was flat in October from the prior month, core CPI hits two-year low

World economy to perform better than expected in 2024, says Goldman Sachs

How The U.S. Lost Thousands Of High-Skilled Workers To Canada

Is the U.K. space industry about to take off?

Moody’s cuts U.S. outlook to negative, citing deficits and political polarization

As Biden and Xi gear up for a high-stakes meeting, experts have low expectations

What’s Wrong With U.S. Cash

How Elon Musk’s Starlink Is Bringing In Billions For SpaceX

Is The Golden Age Of Remote Work Over?

Could resumes soon be a thing of the past?

Indians splurge on festival celebrated by more than a billion people worldwide

Powell says Fed is ‘not confident’ it has done enough to bring inflation down

Russia-Israel’s relationship in 60 seconds

How Arm Powers Chips By Apple, Amazon, Google And More

China’s consumer prices swing to declines in October

What is happening with China’s real estate industry? #Shorts

Is ultra-processed food bad for you?

News Tips

Advertise With Us

Newsletters