Bank of Canada Sets Data-Dependent Course; IMF Official Briefs WSJ on Global Economic Outlook for Next Year

Bank of Canada Sets Data-Dependent Course; IMF Official Briefs WSJ on Global Economic Outlook for Next Year By James Christie

Good day. Comments from Bank of Canada Deputy Gov. Sharon Kozicki yesterday highlight the challenge facing developed-world central banks. After racing to push interest rates higher to douse the biggest price increases in decades, officials are now deliberating on when to either slow down or end their tightening campaigns. "We will be very data-dependent in evaluating that," Ms. Kozicki said, adding that Bank of Canada officials will be looking for further evidence that previous rate rises are working to slow demand, and assessing how inflation and inflation expectations are responding. Meanwhile, Gita Gopinath, first deputy managing director of the International Monetary Fund, told Greg Ip, The Wall Street Journal's chief economics commentator, that the economic outlook has darkened noticeably in China. You can find a link to edited excerpts of their conversation below.

Now on to today's news and analysis.

Top News BOC's Kozicki: Policy Decisions Will Be More Data-Dependent

OTTAWA-A senior Bank of Canada official said Thursday that the central bank is prepared to lift rates further in the event demand and inflation fail to slow as expected, though additional increases aren't a given.

A day after the central bank lifted its target for the overnight rate by a half-percentage point, to 4.25%, Deputy Gov. Sharon Kozicki said the Bank of Canada has shifted from deciding how much to raise interest rates to deciding whether further rate increases are required .

How Global Economy Is Shaping Up for 2023, According IMF Official

Facing inflation, higher interest rates and the lingering threat of Covid, where are economies heading-and what steps should governments be taking to help? Gita Gopinath, first deputy managing director of the IMF, weighs in.

U.S. Economy U.S. Jobless Claims Rise Slightly in Tight Labor Market

Initial jobless claims, a proxy for layoffs, rose by 4,000 to a seasonally adjusted 230,000 last week, the Labor Department said Thursday. That was near the 2019 weekly average of around 218,000 when the labor market was also robust.

Gas Prices Fall Below Last Year's Average

The U.S. average for regular unleaded gasoline has declined to $3.32 a gallon, falling below its average of $3.36 from last year, according to GasBuddy data. That is down about 35% from its peak of about $5 earlier in the year.

White House Grants Pension Bailout for Truckers, Warehouse Workers

The $36 billion in taxpayer aid announced Thursday will prevent threatened cuts to the pension checks of 350,000 truck drivers, warehouse workers and others, according to a document provided by the White House.

Key Developments Around the World Inflation Slowed in China as Lockdowns Spread

Inflation in China slowed sharply in November as widespread Covid-19 lockdowns battered spending, emphasizing the economic cost of a stringent Covid strategy that the government has now begun to relax.

China's Xi to Meet Arab Leaders in Milestone for Middle East Ties China Braces for Deadly Covid Wave After Loosening Controls U.K. Braces for Biggest Strikes in Years Over the Holiday Period

The U.K. is set to face some of the worst strikes in at least a decade, raising fears that a "winter of discontent" will hit the country as workers push for bigger pay raises amid double-digit inflation and a gloomy economic outlook.

Peru's New President Faces Same Turmoil That Ousted Predecessor

The country's first female president, Dina Boluarte, will face a fractured Congress that has clashed with the executive branch in recent years as lawmakers with little political ideology pursue their own personal interests.

Argentina Binges on World Cup to Forget Soaring Inflation and Unrest

Like many Argentines, Natalie Acosta is struggling to buy food amid one of the world's highest inflation rates. But for the last two weeks, she has focused instead on Argentina's do-or-die games at the World Cup.

Financial Regulation Roundup Banks Should Be Wary of Crypto, Top U.S. Regulator Says

Banks should take a cautious approach to digital asset markets, including discussing any new plans with regulators, a top U.S. banking authority said, pointing to ongoing turmoil among crypto firms.

SEC Wants More Information From Companies About Crypto Exposure

In a notice posted to its website, the SEC said companies may have disclosure obligations related to the direct or indirect impact that recent crypto bankruptcies may have had on their businesses.

Quebec Shuns Bitcoin Mining in Bid to Conserve Power

Government-owned utility Hydro-Quebec asked a provincial regulator last month to reallocate 270 megawatts of energy , equivalent to the energy consumed by roughly 97,000 households, that it had set aside for crypto mining.

Forward Guidance Friday (all times ET)

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

10 a.m.: University of Michigan preliminary consumer survey for December; U.S. wholesale trade for October

3:10 p.m.: ECB's McCaul in session on 'Greek Banking Sector - Growth and Development Outlook' at 24th Invest in Greece Forum of Capital Link in New York

Monday

2 a.m.: U.K. industrial production and gross domestic product estimate for October

3:40 p.m.: Bank of Canada's Macklem in fireside chat with Business Council of British Columbia

Research Fed Unlikely to Turn Dovish Even If Pace of Rate Increases Slows

The Federal Reserve is expected to raise interest rates by 50 basis points next week, but that shouldn't be seen as a shift toward a more dovish policy stance, DWS U.S. economist Christian Scherrmann writes in a report. "Inflation remains far too high, labor markets too strong and supply and demand too imbalanced for the Fed to relax its guard," he says. The Fed's updated projections are likely to reflect a slowing economy, but also the willingness to accept lower growth and higher interest rates in 2023, Mr. Scherrmann adds, noting that "The Fed's dot-plot will likely show a peak rate of slightly above 5% while growth for next year might be downgraded to less than 0.5%."

-Xavier Fontdegloria

Commentary India's Outlook Is Surprisingly Bright

Resilient economic growth gives India's central bank leeway to tackle inflation without worrying about a steep slowdown, particularly with Brent oil down about $40 a barrel from its midsummer highs, Megha Mandavia writes.

Basis Points The average rate on a U.S. 30-year fixed mortgage fell to 6.33% this week from 6.49% a week ago and 7.08% four weeks ago, according to Freddie Mac, marking the first time mortgage rates have fallen for four straight weeks in over a year. Mexico's inflation slowed in November as lower energy and fresh produce costs kept a lid on overall consumer prices. The consumer price index rose 0.58% last month and the 12-month inflation rate fell from 8.41% in October to 7.8%, the lowest annual rate since May, the National Statistics Institute said. (Dow Jones Newswires) Retail sales in Brazil rose in October as purchases of furniture, appliances, office materials and electronics increased from the previous month. Sales increased by a seasonally adjusted 0.4% in the month and by 2.7% from a year earlier, the Brazilian Institute of Geography and Statistics said. In September, sales climbed by a revised 1.2% in the month and by 3.2% from a year earlier. (DJN) Australia will impose caps on domestic prices for coal and gas in an attempt to bring down soaring power bills, Prime Minister Anthony Albanese said Friday. (DJN) South Korea's truck drivers, under pressure from the government to return to work, have ended a weekslong strike over wage demands that had disrupted economic activity and supply chains in one of Asia's major export hubs. South Korea's current-account surplus narrowed to $0.88 billion in October from $1.58 billion in September. The country recorded a seasonally-adjusted current-account deficit of $0.97 billion. (DJN) Norway's year-on-year core inflation in November fell to 5.7% from 5.9%, while the market and The Wall Street Journal consensus had been for a print of 6.0%, though Norges Bank had forecast 5.0%. (DJN) Feedback Loop

This newsletter is compiled by James Christie in San Francisco.

Send us your tips, suggestions and feedback. Write to:

James Christie , Jon Hilsenrath , Michael S. Derby , Nell Henderson , Nick Timiraos , Kim Mackrael , Tom Fairless , Megumi Fujikawa , Perry Cleveland-Peck [mailto:[e-mail]], Michael Maloney , Paul Kiernan

Follow us on Twitter:

@WSJCentralBanks , @NHendersonWSJ , @michaelsderby , @NickTimiraos , @PaulHannon29 , @kimmackrael , @TomFairless , @megumifujikawa , @JamesGlynnWSJ , @cleveland_peck

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

(END) Dow Jones Newswires

12-09-22 0715ET