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Chicago Fed's Goolsbee, Atlanta Fed's Bostic see case for patience before cutting interest ratesChicago Fed president Austan Goolsbee and Atlanta Fed president Raphael Bostic on Wednesday both said they'd prefer to gain more clarity around the impact tariffs have on inflation before determining whether to cut rates.Goolsbee said he's waiting to see whether tariff-induced inflation could prove persistent. Likening tariffs to "throwing dirt in the air," Goolsbee said he's trying to figure out whether inflation and employment are still moving toward their goals of 2% and maximum employment, respectively."If you start seeing prices go up and you start seeing employment go down, because tariffs, in my view, are a stagflationary shock, it makes both sides of the mandate go bad at the same time, and that's the worst position that a central bank could be in because there's not an obvious answer of what you do," Goolsbee said at an event in Springfield, Ill.Goolsbee cautioned that if we get more data like the latest Consumer Price Index report, which showed "core" inflation — which excludes volatile food and energy prices — rising on account of higher goods and services prices, that would be concerning."Services are not tied to the tariffs," he said. "Everyone is hoping that's just a blip. There's noise in the data. If you start to get multiple months where the components suggest that the impact of tariff inflation is not staying in its lane, that would be more of a concern.”Core inflation rose 3.1% over the prior year in July and rose 0.3% from the prior month, the most in six months.Speaking at a luncheon in Alabama on Wednesday, Bostic noted that a 4.2% unemployment rate remains historically low, suggesting the balance of risks remains tilted toward inflation. In other words, with inflation above the Fed's target and tariff impacts uncertain, there remains a case for the Fed to wait.July's jobs data, which showed a slowdown in hiring and sharp downward revisions to prior months, raises the possibility that "maybe the risks [between inflation and employment] are more imbalanced and we should be thinking about our ability to be patient as much less than it was before," Bostic said.In July, the US economy added 73,000 jobs, while job gains for May and June were slashed by a total of 258,000 due to revisions. This brought the three-month average payroll gain down to a mere 35,000.As of Wednesday, markets were pricing in a near certainty that the Fed will cut rates in September. Since the central bank's July 31 decision to leave rates unchanged, some Fed officials have called for the Fed to act next month.(...)
China Mulls Asking Firms Run by Central Government to Buy HomesResidential buildings in Beijing.Photographer: Andrea Verdelli/Bloomberg China is preparing to mobilize companies owned by the central government to purchase unsold homes from distressed property developers, according to people familiar with the matter. Regulators are planning to ask state-owned enterprises and bad debt managers, including China Cinda Asset Management Co., to help clear the housing glut, and the firms will be allowed to tap funding earmarked for the program. The plan aims to speed up the clearance of China's excess inventory and ease the financial burden of troubled developers, but its impact may be limited by the firms' own stretched finances, according to people familiar with the matter.China is preparing to mobilize companies owned by the central government in Beijing to purchase unsold homes from distressed property developers, following the limited success of a previous initiative that relied on local governments, according to people familiar with the matter.Regulators are planning to ask some of the biggest state-owned enterprises and bad debt managers including China Cinda Asset Management Co. to help clear the housing glut, said the people, asking not to be identified discussing a private matter. The firms will be allowed to tap 300 billion yuan ($41.8 billion) of funding that the central bank earmarked for the program last year, one of the people said.The renewed effort, which is still under discussion, could help speed up the clearance of China’s 408 million square meters of excess inventory - larger than the size of Detroit - and ease the financial burden of the troubled developers. Officials are also considering scrapping a price cap for the program, in a bid to accelerate the process and improve the economics of the plan for both developers and state buyers, people familiar said in March.The housing ministry and Cinda didn’t immediately respond to requests for comment. While the move to enlist bad-debt managers might help improve sentiment, the impact may be limited by the firms’ own stretched finances. The plan comes as China’s property sector hits a new low with the delisting of China Evergrande Group and new-home sales by the 100 largest developers falling more than 20% for two consecutive months.The People’s Bank of China launched a nationwide relending program in May 2024 to help local state-owned companies buy unsold homes, and said a few months later it will ramp up the initiative. There are about 60 million unsold apartments in the country, which will take more than four years to sell without government aid, Bloomberg Economics estimated in May last year.However, progress has been slow with less than 6% of the announced loans approved so far, according to a Bloomberg Intelligence report early this month. Acceleration of the program might be unlikely given a mismatch in the locations of unsold homes and demand for affordable housing, the report said.When China’s property sector started falling into distress more than four years ago, Beijing sought help from bad-debt managers. Regulators told firms including Huarong Asset Management Co. and Cinda to participate in the restructuring of weak developers, acquire stalled property projects and buy soured loans.Then, in early 2023, the PBOC channeled 80 billion yuan of loans through these bad banks to selected developers at an annual interest rate of 1.75%, while encouraging the bad banks to match that amount with funds from their own reserves, people said at the time.However, few projects have actually been implemented under the policy, and its effect has been lackluster. The four largest bad-debt managers themselves were grappling with souring loans after over-extending during China’s real estate boom. China’s efforts to put a floor under the years-long real estate slump have underwhelmed as domestic demand and the job market remain weak.Regulators have also yet to offer more drastic stimulus. Chinese President Xi Jinping called for the acceleration of a “new model” for property development at the Central Urban Work Conference last month, promoting a more balanced approach to urban planning and renovation — while falling short of some investors’ expectations for more aggressive measures.The country’s home sales extended their slump in July as declining prices failed to attract buyers. Analysts including those from UBS Group AG have delayed expectations of China’s property recovery to mid-to-late 2026.