Bostic Ready to Act, Inflation Woes, U.K. Spending: Eco Day

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Welcome to Tuesday, Americas. Here’s the latest news and analysis from Bloomberg Economics to help you start the day:

• Federal Reserve Bank of Atlanta President Raphael Bostic said the central bank may need to raise interest rates as early as March and start reducing its balance sheet “fairly soon” after liftoff to contain surging inflation
  • The Fed will again turn attention to balance-sheet normalization at upcoming meetings -- and this time will be different, according to Bloomberg Economics
  • Meanwhile, Chair Jerome Powell said Monday the central bank will prevent higher inflation from becoming entrenched while cautioning that the post-pandemic economy may look different than the previous expansion
• Things are about to get worse -- but after that, they should steadily get better. That’s roughly how economists envisage the path of U.S. inflation in the year ahead
  • Higher inflation and a lack of qualified labor pose the biggest headwinds for U.S. small businesses, according to the latest monthly survey by the National Federation of Independent Business
• In Europe, New Bundesbank President Joachim Nagel warned in his first speech on the job that inflation may remain elevated for longer than currently expected, urging his colleagues at the European Central Bank to be vigilant
• U.K. retail sales jumped in December as consumers splashed out on Christmas items including clothes and jewelry, defying a surge in coronavirus infections
• China’s testing of workers and truckers in Shenzhen is spurring concern that the delivery of goods to and from the world’s fourth-biggest container port is slowing

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