Equity week ahead: The Fed’s job is getting tougher

Raising rates while ensuring the economy continues to expand is the latest challenge facing Federal Reserve officials who have spent the past two years grappling with coronavirus shutdowns and the worst labor market shock in history.

Federal Reserve Chairman Jerome Powell has warned that the war could increase inflation and cause households to cut back on spending. But he also noted that the conflict did not change the central bank’s thinking on interest rates.

“To ensure the economy continues to expand and avoid a recession, I think it’s important to normalize interest rates,” Mark Zandi, chief economist at Moody’s Analytics, told the House Financial Services Committee on Tuesday.

Almost all investors expect the Federal Reserve to raise interest rates by 0.25 percentage points at its meeting on Wednesday, according to FedWatch CME أداة. This would be the first rate increase since late 2018, but not the super-half point hike that was on the table before the Russian invasion.

“The key thing for low- and middle-income families is to avoid stagnation,” Zandi said.

This is easier said than done. Goldman Sachs (p) Economists said last week that the chance of a recession in the US next year has risen up to 35%. The investment bank sees little or no growth during the first three months of 2022.

Low-income families that are already struggling with higher prices will be hit hard by the downturn.

The trend of pandemic inflation began with products and services that have been associated with increased demand and disruption to the supply chain, such as automobiles. But the high prices quickly spread throughout the economy. The Bureau of Labor Statistics reported Thursday that in the year to February, US consumer prices rose 7.9% without seasonal adjustments. It was the largest increase since January 1982.

With food prices And soon the price of gas rises, the Fed has no choice but to act.

McDonald’s transformed Russia. Now the country is abandoned

When McDonald’s first opened its doors in Moscow, it was a big deal.

Winter was dead – January 31, 1990 – but people still came out in droves, My CNN business associate Danielle Weiner Brunner told me. CNN’s beloved TV footage shows lines creeping outside, and throngs of people inside, trying to use Big Macs for the first time.

The location of Pushkin Square was enormous, with a capacity of hundreds of people. It was the largest McDonald’s restaurant in the world at that time. In most respects, it looked like any other McDonald’s of the era. But there was the hammer and sickle flag under the golden arches and a cosmopolitan theme inside, displaying a model of Big Ben in London in the dining room.

McDonald’s arrival in Moscow was more than a Big Mac and fries, noted Dara Goldstein, Wilcox B. and Harriet M. The most notable example of the work of glasnost was the attempt of Soviet President Mikhail Gorbychev to open his collapsing country to international relations.

“There was an obvious crack in the Iron Curtain,” she said. “It was very symbolic in terms of the changes that were happening.” After about two years, the Soviet Union will collapse.

After opening this first place, McDonald’s expanded its reach within the country. As of last week, there were about 850 sites operating in Russia.

But the Russian invasion of Ukraine prompted McDonald’s to change course, at least temporarily. On Tuesday, the company announced it would temporarily halt operations at those restaurants, following similar decisions by other Western companies and pressure from critics.

For Goldstein, this moment is merely symbolic, but much less hopeful.

“If the opening of McDonald’s in 1990 symbolized the beginning of a new era in Soviet life, an era of greater freedoms, then the current exit of the company represented not just the closure of business, but society as a whole,” she said.

next one

Monday: Eurogroup finance ministers meeting

Tuesday: US producer price index; OPEC report

Wednesday: Federal Reserve rate decision; US retail sales earnings from BMW, Lennar and Williams-Sonoma; The International Energy Agency’s monthly report

Thursday: housing beginnings in the United States; US initial claims; Earnings from Dollar General, FedEx and GameStop; Bank of England interest rate decision; Inflation in the European Union

Friday: US existing home sales; Bank of Japan interest rate decision

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