Daily Market Insight

The supply chain imbalances and higher demand currently leading to higher inflation are transitory and the U.S. Federal Reserve has the tools to respond if inflation remains elevated for longer than anticipated, Fed Vice Chair for Supervision Randal Quarles said on Monday.

U.S. President Joe Biden on Saturday withdrew his threat to veto a $1.2 trillion bipartisan infrastructure bill unless a separate Democratic spending plan also passes Congress, saying that was never his intent.

Hours after President Joe Biden declared "We have a deal" to renew the infrastructure of the United States, the Senate's top Republican lashed out at plans to follow the $1.2 trillion bipartisan bill with another measure funding what Democrats call "human infrastructure.

A period of high inflation in the United States may last longer than anticipated, two U.S. Federal Reserve officials said on Wednesday, prompting one to pull forward his views on when the central bank should start raising interest rates.

Federal Reserve Chair Jerome Powell on Tuesday reaffirmed the U.S. central bank's intent to encourage a "broad and inclusive" recovery of the job market, and not to raise interest rates too quickly based only on the fear of coming inflation.

The U.S. economy continues to show "sustained improvement" from the impact of the coronavirus pandemic and ongoing job market gains, but inflation has "increased notably in recent months," Jerome Powell said. In his remarks, which were released by the Fed late Monday afternoon, Powell said he regards the current jump in inflation, in fact, as likely to fade.

The coming reduction in the Federal Reserve's bond purchases may bear little resemblance to the "automatic pilot" tapering exercise the U.S. central bank conducted seven years ago, as officials grapple with volatile data - on inflation in particular - during the rebound from the COVID-19 pandemic, a Fed official said on Friday.

The European Central Bank can hopefully reduce emergency stimulus soon and should not transfer the extraordinary flexibility of its crisis-fighting measures to its more standard tools, German central bank chief Jens Weidmann told.

New projections saw a majority of 11 Fed officials pencil in at least two quarter-point interest rate increases for 2023.

The Federal Reserve is not expected to take any policy actions after its two-day meeting this week, but it is likely to signal that it is thinking about them.