Reports

“Western sanctions on the Russian energy sector have reduced Russian revenues but have also created costs for the sanctioning nations. Fortunately for the EU, Europe has had a fairly mild winter, which has reduced the costs associated with boycotting Russian gas. In addition, the recently imposed price cap on Russian seaborne oil exports has been…

“As borrower-level delinquency rates approach or surpass pre-COVID norms, many look to the historical culprit: the labor market. However, employment and income gaps are not likely triggers for this recent trend. The Bureau of Labor Statistics reported that there were just under 6 million unemployed in the fourth quarter of 2022, roughly unchanged from the previous…

“Our model appears to fit the data well, and the baseline specification is able to explain more than 50 percent of future movements in CPI shelter. Past changes in CPI shelter, past changes in market rents, and the difference between market rents and CPI shelter each play a role in predicting future CPI shelter. We…

“The US Federal Reserve has been raising interest rates to restore price stability and to bring balance to the labor market. The demand for new hires is exceeding the supply of available workers in the US, as the unemployment rate has fallen to its lowest level in over 50 years, and this has contributed to higher…

“We have proposed a new empirical measure of funding liquidity creation by banks and argued that bank lending and the funding liquidity banks create are not constrained by deposit availability. We have also provided evidence of higher lending and funding liquidity creation by banks when their cash deposits are falling. Rather than deposits, it is…

Interest Rates “In CBO’s projections, the Federal Reserve further increases the target range for the federal funds rate in early 2023 to reduce inflationary pressures in the economy. That rate is projected to fall in 2024, as inflation slows and unemployment rises. The interest rate on 10-year Treasury notes, however, remains at 3.8 percent from…

“In sum, a decline in gasoline prices when inflation is high can have an outsized effect in lowering consumer inflation expectations, as it did late last year. However, no further relief at the pump is expected in 2023. If gasoline prices remain relatively stable through 2023, as expected in January 2023, they are unlikely to…

“The Federal Open Market Committee (FOMC) has increased the target range for the federal funds rate by 4.50 percentage points since March 16, 2022. In tightening the stance of monetary policy, the FOMC balances the risk of inflation remaining persistently high if the economy continues to run “hot” against the risk of unemployment rising as the…