The Bank of Russia unexpectedly maintained its key interest rate at a record-high 21% , defying analysts’ expectations of another significant hike as inflation remains stubbornly elevated. The decision marks a shift toward a more measured approach in balancing economic growth and price stability. Key Details Inflation Concerns: Annual inflation climbed to 8.9% in November, well above the central bank’s 4% target , with inflation expectations reaching 13.9% in December. Policy Rationale: The central bank cited the significant tightening of monetary conditions after October’s 200-basis point hike as sufficient to resume disinflationary processes. Governor Elvira Nabiullina emphasized avoiding both economic overheating and severe slowdowns. Economic Overheating: Elevated government spending on the war in Ukraine and social programs, coupled with labor shortages and rising wages, have fueled strong domestic demand, exacerbating price pressures...
As the U.S. faces the possibility of a government shutdown after midnight Friday, key government functions hang in the balance. The debate centers around a spending package rejected by Republican lawmakers, following pressure from Elon Musk, Vivek Ramaswamy, and President-elect Donald Trump’s "Department of Government Efficiency" (DOGE).
Key Impacts of a Potential Shutdown
1. Holiday Travel Chaos
- Air-traffic controllers and TSA agents would continue working without pay, potentially causing:
- Longer security lines as seen during the 2018 shutdown.
- Delays at major airports like New York’s LaGuardia.
2. Stock Market and IPOs
- IPO Freeze: The Securities and Exchange Commission (SEC) would furlough over 90% of its staff, halting initial public offerings and reducing market oversight.
- Stock Market: Historically, shutdowns have been seen as noise by investors. For example, the S&P 500 Index (SPX) gained during the four most recent shutdowns lasting five days or more.
3. Social Security and Medicare
- Checks Continue: Social Security checks would still be issued.
- Services Halted: Verification and card issuance would stop, though disruptions like the 1990s Medicare delays are less likely.
4. Economic Growth
- According to Goldman Sachs, a shutdown could:
- Reduce GDP growth by 0.15 percentage points per week during the closure.
- Boost GDP growth by the same amount in the following quarter.
5. Internal Revenue Service (IRS)
- During a shutdown:
- 30.4% of IRS employees (29,524 staff) would continue working.
- If it extends into tax season, 43,170 employees (44.5% of workforce) would work, but significant disruption could occur if workers refuse to return without pay, as seen during the 2018 shutdown.
6. Food Safety, Parks, and Assistance Programs
- FDA: Nearly 900 inspections were delayed in the 2013 shutdown, with high-risk product inspections resumed weeks into the 2018 closure.
- Food Stamps: Benefits under the Supplemental Nutrition Assistance Program (SNAP) are typically authorized for 30 days after a shutdown begins.
- National Parks: During the 2018 shutdown, parks stayed open but lacked visitor services, leading to damaged sites and trash accumulation.
7. Union Response
- The American Federation of Government Employees (AFGE) criticized the potential "DOGE Shutdown," calling it unacceptable to leave federal workers unpaid during the holidays.
Comments
Post a Comment