Evening Report | January 4, 2023
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Minutes show FOMC worried about market ‘misperception’ from slowing rate increase... All officials at the Dec. 13-14 Federal Open Market Committee meeting agreed the U.S. central bank should slow the pace of its aggressive interest rate increases to limit the risks to economic growth. But policymakers remained focused on controlling the pace of price increases, and worried about any “misperception” in financial markets that their commitment to fighting inflation was in any way waning.
Officials acknowledged they had made “significant progress” over the past year in raising rates enough to bring inflation down. As a result, the central bank now needed to balance its fight against rising prices with the risks of slowing the economy too much and “potentially placing the largest burdens on the most vulnerable groups” through higher-than-necessary unemployment.
“Most participants emphasized the need to retain flexibility and optionality when moving policy to a more restrictive stance," the minutes said, indicating policymakers may be prepared to further scale back the rate increase at the Jan. 31-Feb. 1 meeting, but also remained open to an even higher than anticipated “terminal” rate if high inflation persists.
“No participants anticipated that it would be appropriate to begin reducing the federal funds rate target in 2023,” the minutes stated.
Ukraine sees speeding up inspections as key to Black Sea grain deal... Ukraine’s efforts to increase exports under the Black Sea grain deal with Russia are currently focused on securing faster inspections of ships rather than including more ports in the initiative, a senior Ukrainian official said on Wednesday. Kyiv accuses Russia of slowing down inspections, causing weeks of delays for ships and reducing the supply of Ukrainian grain to foreign markets. Russia has denied slowing down the process.
“Ukraine focuses on normalizing inspections rather than opening new ports,” the senior Ukrainian official told Reuters. “Why open the port of Mykolaiv if at the current rate of exports we can close half of the ports of Odesa, which are already open?”
Ukraine’s infrastructure ministry said on Tuesday 94 vessels were waiting for inspection in the Bosphorus, including 69 empty ships for loading and 25 which had already been loaded with agricultural products. Vessels are waiting for an average of more than a month, the ministry said.
XI wants China to get closer to Brazil... On Monday, Chinese leader Xi Jinping congratulated Luiz Inácio Lula da Silva on being sworn in as President of Brazil. Xi dispatched Vice President Wang Qishan to attend the inauguration ceremony and hand-deliver his congratulatory letter to Lula. Xi said he wants to take the China/Brazil comprehensive strategic partnership “to a higher level from a strategic and long-term perspective, so as to better benefit the two countries and two peoples.”
Lula signaled he’s on board, saying: “China is our biggest trading partner, and we can further expand relations between our countries.”
U.S., Taiwan to hold trade negotiations... The confab is under the U.S./Taiwan Initiative on 21st-Century Trade in Taipei, Taiwan, Jan. 14-17, the Office of the U.S. Trade Representative (USTR) announced Tuesday. Assistant USTR Terry McMartin will lead the U.S. team along with representatives from other U.S. government agencies and will meet with talks taking place under the auspices of the American Institute In Taiwan and the Taipei Economic and Cultural Representative Office in the U.S.
Energy Department is scaling up ‘agrivoltaics’ projects to grow clean energy and food... Since 2015 the department has been researching the emerging field that seeks to implement innovations in both solar technology and farming techniques at the same time, on the same plot of land. The goal is to meet U.S. climate goals, while reducing conflicts with farmers and providing benefits to local communities, said Michele Boyd, a program manager in the department’s Solar Energy Technologies Office who leads the agrivoltaics portfolio, according to Bloomberg.
While spurring concerns from some communities, the solar land grab has created an opportunity for farmers facing volatile fertilizer prices and growing uncertainty around the world following Russia’s invasion of Ukraine.
The goal now is to gather data and best practices to deploy the sites to farms across the country, widening the scope of land for solar developers and providing farmers with another revenue stream, Boyd said.
The Energy Department in December announced $8 million for six research projects that intend to assess issues like soil health, grazing methods, and outreach to minority farmers.
Solar energy is a major part of the Biden administration’s plan to achieve net-zero emissions from the power sector by 2035. Solar could provide 40% of U.S. electric generation by 2035, up from about 3% of the country’s power supply in 2021, according to the Energy Department. But just one megawatt of ground-mounted installations — which can power on average roughly 173 U.S. homes — requires three to 10 acres. The Energy Department estimates utility-scale solar installations are expected to span between 4 million and 11 million acres of land by 2050, translating to potentially more land than Maryland, Delaware and Washington, D.C., combined.
China lashes out at traveler restrictions... China is lashing out at the U.S., Canada, France, Australia, South Korea and other nations for “discriminatory” Covid restrictions on travelers departing from China, saying the requirements amount to “political manipulation” as travel demand surges in the country after green lighting outbound travel for citizens. The virus remains politically sensitive for Beijing, as the dismantling of its strict zero-Covid policies have been followed by a surge in infections.
“We believe that some countries’ entry restrictions targeting only China lack scientific basis and some excessive markets are unacceptable,” Foreign Ministry spokesperson Mao Ning said. “We firmly oppose attempts to manipulate Covid prevention and control measures to achieve political goals, and China will take corresponding measures based on the principle of reciprocity in different situations.”
White House antitrust chief stepping down... Tim Wu is stepping down from his role as special assistant for competition and technology policy to President Joe Biden. Wu plans to return to teaching at Columbia University following his final day in the White House today. Bharat Ramamurti, the deputy director of the National Economic Council, will oversee the White House’s efforts on competition and tech.
