We're not going to get a big inflation surge here, says Ironsides' Barry Knapp
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Bloomberg
an hour ago
- Bloomberg
New Zealand Inflation Accelerates Less Than Forecast to 2.7%
New Zealand inflation accelerated less than economists forecast in the second quarter, even as it pushed toward the top of the Reserve Bank's 1-3% target band. The Consumers Price Index climbed 2.7% from a year earlier, quickening from 2.5% in the first quarter, Statistics New Zealand said Monday in Wellington. Economists expected 2.8%. Prices advanced 0.5% from the first three months of the year, less than the 0.6% estimate.
The Hill
4 hours ago
- The Hill
What a GOP bill banning central digital currency means for consumer banking
A proposed GOP ban on a central bank digital currency (CBDC) could pump the brakes on grand visions to reshape electronic payment access around the Federal Reserve. Republican lawmakers pushed the ban through the House on Thursday over concerns the government could use a CBDC to surveil Americans' financial transactions. The banking industry has also lobbied against the currency, arguing the public already has sufficient access to easily usable and safe digital money. 'Nobody yet knows whether a CBDC is a good idea or not,' Rep. Jim Himes (D-Conn.), who has pushed for the government to explore a CBDC, said following the House's vote. 'There is potential for abuse and corruption, but also for extraordinary modernization that could serve unbanked communities, support the primacy of the U.S. dollar, and much more,' he added. Fed floated idea in 2022 white paper In 2022, the Federal Reserve issued a study of CBDCs that outlined their risks and benefits. 'All options for private digital money, including stablecoins and other cryptocurrencies, require mechanisms to reduce liquidity risk and credit risk. But all these mechanisms are imperfect,' the report notes. A traditional bank account is backed by the Federal Deposit Insurance Corporation, which guarantees individual deposits up to $250,000 in the event a bank fails. But there are also riskier forms of digital financial services. In 2024, a financial technology company called Synapse collapsed and left customers unable to access some $265 million in deposits. A CBDC, backed with the full faith and credit of the U.S. government, would be the safest possible digital asset. The Fed paper said that a CBDC could make cross-border payments easier and potentially improve access to banking for low-income households. A 2022 study by Himes, the Connecticut Democrat, proposed that CBDCs could be used for depositing paychecks or even be integrated into federal programs like Social Security. A more ambitious version of a CBDC could allow Americans to hold digital dollars at a bank account with the Fed, enabling them to make digital payments without an account at a traditional bank. That could, as the Fed paper noted, 'fundamentally change the structure of the U.S. financial system, altering the roles and responsibilities of the private sector and the central bank.' A government-backed digital dollar — especially one that could bear interest — could also drive consumers away from traditional commercial bank accounts. A CBDC still would require significant study, from the impacts on the banking system to the technology that it would run on. A hypothetical CBDC could use existing technology, or it could be distributed on a blockchain, similar to how Bitcoin and other cryptocurrencies are issued. In 2022, former Federal Reserve Vice Chair Lael Brainard estimated that it would take ' a long time ' — at least five years, she said — to launch a digital currency if Congress decided to do so. Fed Chair Jerome Powell said in February that the bank would not develop a CBDC under his tenure. His term expires in May 2026. The bill, which now heads to the Senate, would bar the Fed from directly or indirectly issuing a CBDC or studying the issue. Other federal agencies are already barred from studying a CBDC due to a January executive order from President Trump. Republicans cite privacy concerns Privacy is the biggest concern about CBDCs aired by Republican lawmakers. House Majority Whip Tom Emmer (R-Minn.), who led the CBDC ban through the House, said on the floor that a digital dollar would be tantamount to government surveillance. 'It is government-controlled programmable money that, if designed without the privacy protections of cash, this could give the federal government the ability to surveil and restrict Americans' transactions and monitor every aspect of our daily lives,' he said. In contrast to cash, which is essentially untraceable, a CBDC would likely leave a digital record of some form. If the government pursued a CBDC, it would have to balance concerns about privacy with safeguards to curb its use in money laundering or other illegal activities. Many lawmakers have cited China's digital yuan as a worrying example. Tech and China experts, as reported by WIRED, have raised concerns that the Chinese government could use its digital currency to track individual transactions or otherwise scoop up tranches of consumer data. Other Republicans have issued starker warnings about CBDCs. 'CBDC is an existential threat to Western civilization,' Rep. Warren Davidson (R-Ohio) wrote on the social platform X. Banking, crypto lobbies strongly oppose Banking and cryptocurrency lobbying groups are staunchly against a centrally issued digital currency. In a letter to Emmer in April, the American Banking Association argued that Americans already had sufficient access to digital payments. Alongside other digital transfer systems pioneered in the private sector, the Fed launched FedNow, an instant payment system that can operate 24/7, in 2023. Banks have to opt in to using the service, whose major clients include JPMorganChase and Wells Fargo. More broadly, the bank lobby argued that a CBDC would undercut the role banks play in the country's economic system. 'For example, a CBDC would be an advantaged competitor to retail bank deposits that would move money away from banks and into accounts at the Federal Reserve, severely limiting the ability of commercial banks to make loans that power economic growth in communities across the country,' the group wrote. A CBDC could also dampen hopes that cryptocurrencies like Bitcoin or privately developed stablecoins — cryptocurrencies whose value is pegged to a reference asset like the U.S. dollar — could become the primary form of digital money. 'You wouldn't need stablecoins; you wouldn't need cryptocurrencies, if you had a digital U.S. currency,' Powell said at a congressional hearing in 2021. 'I think that's one of the stronger arguments in its favor.'
The Hill
4 hours ago
- The Hill
Himes: White House warning of ‘massive market reaction' if Trump fires Powell
Rep. Jim Himes (D-Conn.) said Sunday that a White House insider is warning President Trump of a 'massive market reaction' if he fires Federal Reserve Chair Jerome Powell. 'I mean, what happens if there's a tweet that says the Fed chair is gone?' CBS's Margaret Brennan asked Himes on 'Face the Nation.' 'Well, interestingly, inside the White House — and I don't know who it is — my guess is, it's maybe the Treasury secretary — is saying — and this is a very difficult thing to say to a person like Donald Trump — that, if you fire the Fed chair, either illegally, which they're happy to do, or because you trump up some baloney-like charge associated with a renovation of the headquarters, there is going to be a massive market reaction, because you cannot lie to the capital markets,' Himes responded. Trump has recently grasped on to the Federal Reserve's multibillion-dollar makeover as a possible way to finally oust Powell. The president has for months criticized Powell over the Fed's decision not to cut interest rates, a move partly based on uncertainty surrounding Trump's tariffs. Trump has stated his desire to remove Powell, whom he appointed during his last term in the White House. Senate Republicans have recently warned Trump that it would be a large mistake to go forward on his threat to fire Powell, saying it would probably send a 'shock wave' through the financial markets and rattle the larger economy. Republican senators, including those who are strong supporters of the president, have warned that any action to oust Powell would jeopardize the Fed's independence, which could erode investors' confidence in American monetary policy and creditworthiness. 'I do not believe a president, any president, has the authority to fire the Federal Reserve chair,' Sen. John Kennedy (R-La.) said previously.
