The Day at a Glance | November 15 2022

*It’s appropriate to carry out more moderate interest rate increases: Lael Brainard, Vice-President of the FED.

*Economic weakness continues in China: Retail sales receded during October (-0.5% annual), industrial production slowed down (5%).

*GDP logged 2.1% annual growth in Europe in the 3Q22.

*Inflation for producers in the United States increased less than expected in October (0.2% m/m; 8% y/y).

*It´s likely that the ECB will continue increasing rates above 2%: Francois Villeroy, member of the ECB.

*German investor confidence increased with hopes of a decrease in inflation: ZEW.

*China seeks high-tech cooperation in G-7 Summit with South Korea.

*The global population reached 8 billion: UN.

Economic environment

Slower pace. Vice-President of the Federal Reserve, Lael Brainard, pointed out in an event held in Washington that she believes it would be appropriate to start slowing down interest rate increases in the next monetary policy meeting. She even acknowledged that she would back a 50bp increase in the Open Market Committee´s next meeting. However, she stressed that the FED must still maintain increases, even though the central bank has already carried out the most aggressive rate hikes. Brainard expects the rate increases that have already been carried out up to now to have a delayed effect, which is why she favors a more cautious stance and a more moderate pace in interest rate increases – this would allow the FED to ensure inflation will return to the central bank´s 2% target. Despite the slower pace, Brainard didn’t discard increasing rates to a terminally higher level than what markets currently expect; although this will depend on economic data. The Vice-President of the FED said that the most recent inflationary data was “calming” as it showed signs of moderation in underlying inflation, which points towards the right direction, and wages aren’t creating inflationary pressures that could suggest any derailing at the moment. Lastly, she said that it´ll be important to seek a balance between monetary policy and avoid too harsh of an impact on growth as interest rate increases continue; even though she reiterated the FED´s priority to contain inflation.