The Federal Reserve seems poised to act aggressively on inflation; the Senate proposes sanctions on Russia if Putin invades Ukraine. Tonight's Sentences was written by Ellen Ioanes. Inflation, interest rates, and you Brendan Smialowski/Pool via Getty Images - December's inflation rate was 7 percent, bringing it to the highest it's been in 40 years and hiking up prices at the grocery store and the gas pump, as well as on goods like cars and furniture. Those price increases effectively negate the higher wages workers have been able to negotiate, and present a major threat for the Biden administration and congressional Democrats as midterm elections approach. [AP / Christopher Rugaber]
- The current inflation problem is due to Covid-related supply and demand mismatch; supply chain snarls have made it difficult for goods to get to the consumers who, because they have more money from wage increases and government stimulus, are eager and able to spend. The Federal Reserve, which sets US monetary policy, has been discussing for months the remedies that it can enact to ease inflation.
- Federal Reserve Chair Jerome Powell on Tuesday told the Senate Banking Committee that he believed the economic recovery from the pandemic was going well and that the Fed's efforts to keep the economy afloat through the pandemic could be scaled back to "cool" the economy and lower inflation. But that could also slow hiring, which contradicts the Fed's mandate to achieve full employment — when everyone who wants a job can get one. [NYT / Jeanna Smialek]
- Specifically, the Fed has already started the process of "tapering" — decreasing its purchases of government bonds to fund stimulus. Powell also said Tuesday that he's prepared to raise interest rates on borrowing, like credit and mortgages, multiple times over the next year. [Guardian / Lauren Aratani]
- Interest rate increases are meant to limit the flow of money in the economy by making it more expensive to borrow, and rate increases could start as soon as March. That's quicker than the central bank originally intended, signaling increased concern about the effect inflation is having on the economy, and fears that without aggressive action, it might be long-lasting. [WSJ / Nick Timiraos]
Senate unveils Russia sanctions bill as US, NATO reject Russian security demands - Talks between the US and its NATO allies and an increasingly aggressive Russia reached no conclusions this week, as NATO flatly refused some of Russia's key security demands including an end to the security alliance's open-door membership policy. At the same time, the US Senate revealed plans to target with severe sanctions Russian financial institutions and high-powered individuals, including Russian President Vladimir Putin, should Russia invade Ukraine. [Washington Post / Seung Min Kim]
- While there is still room for negotiation on some issues, like arms control and the military exercises both sides conduct near Ukraine, Russia has amassed about 100,000 troops as well as heavy military equipment on its border with Ukraine — which certainly appears like preparation for an invasion. Should continued diplomatic efforts fail, though, the bill drafted by Sen. Robert Menendez (D-NJ) amps up the economic pressure on Russia and targets the banking system in ways previous sanctions haven't done.
- The bill would allow for sanctions against trading on Russia's primary and secondary sovereign debt, permit sanctions on its extractive industries, and on messaging services banks use to communicate. It would also provide an additional $500 million in weapons for Ukraine. [Sen. Robert Menendez]
- It's much broader than a rival bill from Sen. Ted Cruz (R-TX), which advocates for sanctions on Russia's Nord Stream 2 gas pipeline, which is already built and will provide natural gas to Germany once regulators approve it, regardless of whether Russia invades Ukraine. These sanctions also directly hit Putin and the financial sector; while sanctions imposed since Russia annexed Crimea in 2014 have placed travel bans and asset freezes on some of Putin's inner circle, those haven't deterred Putin in his quest to assert his influence in former Soviet republics. [NYT / Catie Edmonson]
The Treasury Department has issued sanctions against six North Koreans, a Russian citizen, and a Russian business it says provided material to North Korea from Russian and China after a series of missile launches in recent months. [Reuters / David Brunnstrom and Chris Gallagher] - Ida B. Wells, the pioneering Black investigative journalist, suffragist, and civil rights crusader, is now a Barbie doll. [The Hill / Brooke Migdon]
- An American man has received a genetically modified pig heart, the first such xenotransplantation, in a last-ditch effort to save his life. [AP / Carla K. Johnson]
- Ireland will allow adopted people automatic access to their birth records for the first time. [Reuters]
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