Fed Minutes, Worker Shortage, Japan’s Inflation Risk: Eco Day

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

• Investors gauging the likely timing of the Federal Reserve’s first interest-rate hike and its kick-off for shrinking a balance sheet now at a record $8.8 trillion will get fresh clues today, with minutes of policy makers’ meeting last month
  • The Senate Banking Committee will hold separate hearings next week for Jerome Powell on his nomination to a second term as Fed chair and for Lael Brainard’s elevation to vice chair
• Bosses in the U.S. are desperate for new hires to meet surging demand, driving wages up and giving inflation-wary officials at the Fed something else to monitor. In many industries, worker shortages will likely persist for years -- or even decades -- after Covid-19 is gone
• The bond market has wasted little time pushing Treasury yields sharply higher in the early days of 2022, underscoring concern that elevated inflation will spur more aggressive monetary-policy tightening
• A wave of new Covid-19 restrictions over the holidays hasn’t blunted market bets that the Bank of Canada will start raising interest rates early this year
• Some Bank of Japan officials say it’s likely the central bank will discuss the possible ditching of a long-held view that price risks are mainly on the downward side at a policy meeting this month, according to people familiar with the matter
• China’s economic growth may have slowed to the weakest in a year and a half in the fourth quarter, with the latest Covid-19 outbreak in December hitting consumption, according to China International Capital Corp
• Italian inflation reached its quickest in more than a decade as surging energy costs continued to drive prices higher
  • Mario Draghi may be eyeing the presidential palace in Rome, and his departure from the prime minister’s office could create more pressure than Italy’s or the wider euro area’s recovery can handle

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