Omicron Challenges, Powell & Yellen Hearings, Inflation: Eco Day

(Bloomberg) -- Sign up for the New Economy Daily newsletter, follow us @economics and subscribe to our podcast.

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

• The advent of the omicron variant of the coronavirus risks posing new challenges for central bankers
• Senate Banking Committee hears from Federal Reserve Chair Jerome Powell and Treasury Secretary Janet Yellen in the first of two days of congressional oversight hearings
  • Powell will no doubt be asked to respond to comments in the prepared testimony on the risks posed by the omicron variant
  • Yellen, meanwhile, will likely emphasize the need to address the debt ceiling. Some kind of stopgap funding bill is needed this week to avoid the start of government shutdowns
• The Senate Banking Committee is considering hearings as early as December on the nominations of Powell for a second term and the elevation of Lael Brainard to become vice chair
• U.S. consumer watchdog started a probe whether logjams are fueling inflation
• The European Central Bank got a sharp reminder of those challenges as inflation in the currency bloc surged to a record for the era of the single currency and exceeded all forecasts
  • In France, the euro area’s second largest economy, the inflation rate wasn’t as high but is still the quickest pace in more than a decade
  • Bloomberg Economics doesn’t expect the headline data will alter the ECB’s assessment of underlying price pressures
• In Germany, the new government’s attempt to reinvent the economy may be thwarted by the coalition only taking small steps to loosen strict limits on borrowing
  • There’s better news in the short term for the country’s job market as unemployment extended its decline in November with businesses adding staff to work off a backlog in orders
• In the U.K., inflation is also the hot topic with as a survey showing businesses expect to increase their prices in response to rising wage costs and supply-chain difficulties
• Turkey’s economy may have zoomed ahead of most peers, but it is also under threat from soaring inflation and a slump in the lira
• The Bank of Russia will consider an increase in its key rate of as much as 100 basis points at its next meeting on Dec. 17 as inflation continues to run at double its target, Governor Elvira Nabiullina said
• In China, Bloomberg Economics says the threat of the omicron variant is more about inflation than growth
  • China’s factory sentiment improved in November after a power crunch subsided and price pressures eased, helping to underpin an economy that’s being hit by a property slump

©2021 Bloomberg L.P.