Fed Officials Offer Clues on Future Policy Moves

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What's Happening Today

Ahead of the release of the Consumer Price Index (CPI) for the month of December on Thursday, policymakers from the Federal Reserve have offered clues about the direction of the central bank. This morning, Fed Chair Jerome Powell spoke in Sweden, saying that bringing down inflation might involve moves that are "not popular," referencing the bank's rate hikes.

San Francisco Fed President Mary Daly suggested in an interview this week that slower rate increases might be a good idea, but that the Fed would need to continue boosting rates "until the job is well and truly done."

Investors are holding their breath. They remain concerned that the central bank might be raising rates too far and too fast in its inflation fight, potentially slowing the U.S. economy down too much and sending us on a path to recession. Thursday's CPI report will provide further clues to investors. Big declines in inflation would boost optimism that the Fed won't be as aggressive going forward, while a report that misses economist expectations could signal that the bank might hand us even more rate hikes.

With our central bank here and other banks abroad raising rates to fight inflation, global economic growth is set to slow sharply, the World Bank said today. It now forecasts global growth to slow to 1.7% this year, a big drop from the 3% gross domestic product (GDP) growth estimates the bank made in June. That's the weakest forecast in three decades, outside of global recessions. Here in the U.S., the World Bank forecasts GDP to grow by 0.5%.

- Kristin

What's Happening Today

Fed Chair Powell: Bringing Down Inflation Requires 'Measures That Are Not Popular' (CNN Business)

World Bank Cuts 2023 Global Growth Projection as Inflation Persists (The Wall Street Journal)

Biden Administration Proposes New Student Loan Repayment Plan That Could Cut Some Payments in Half (CNBC)

Study: 70% of Crypto Trades on Unlicensed Exchanges Are Fake (The Balance)

How Do I Save for Retirement if My Employer Doesn't Offer a 401(k)? (The Balance)

Do I Need a Financial Advisor? (The Balance)

How Much Diversification Is Enough? (The Balance)

Term of the Day

World Bank

The World Bank is an international organization that helps emerging market countries to reduce poverty. Its first goal is to end extreme poverty. It wants no more than 3% of people to live on $1.90 a day or less by 2030. Its second goal is to promote shared prosperity. It wants to improve the incomes of the bottom 40% of the population in each country. Since 1947, the World Bank has funded more than 12,000 projects.

The World Bank is not a bank in the conventional sense of the word. Instead, it consists of two organizations. One is the International Bank for Reconstruction and Development, which provides loans, credit, and grants. The second is the International Development Association, which provides low- or no-interest loans and grants to low-income countries.

Off the Charts

The real rate of U.S. GDP growth in the third quarter of 2022 was 3.2%, up from a 0.6% decline in the second quarter. Real GDP is a measurement of economic output that accounts for the effects of inflation or deflation. An update on fourth-quarter GDP will be due on Jan. 26. The GDP growth rate measures how healthy the economy is. When the number is positive, the economy is growing.