A slew of U.S. inflation measures on Friday highlighted the breadth of price pressures in the economy and added to the urgency for the Federal Reserve to start raising interest rates in the near term. The employment cost index was cited by Fed Chairman Jerome Powell in December as a key rationale for the central bank's shift toward a more aggressive stance on inflation. Data on Friday showed an index of employment costs rose 4% in December from a year earlier, the biggest gain in 20 years. In another sign of rising inflationary pressures, the Commerce Department's personal consumption expenditures price index released on Friday, the price index used by the Federal Reserve to set inflation targets, rose 5.8% from a year earlier, the biggest gain since 1982.

In an interview with the Financial Times, Atlanta Fed President Raphael Bostic said the Fed may choose to raise rates by 50 basis points if a more aggressive approach is needed to curb inflation. Bostic insists that three rate hikes of 25 basis points each from March remain the most likely scenario, although persistently high inflation could justify larger hikes. The Fed typically raises rates in 25 basis point increments. "All options are considered at every meeting," Bostic said Friday. "If the data shows that a 50 basis point adjustment is needed or appropriate, then I would support it...if it is reasonable to raise interest rates for several consecutive meetings, I would be comfortable doing so," he told the paper.

The top two major U.S. banks have raised their forecasts for the rate at which the Fed will raise interest rates this year. Among them, Bank of America predicted that the Fed may raise interest rates at each of its meetings this year in response to high inflation. "We now expect seven 25-basis-point rate hikes this year, with the federal funds rate peaking at 2.75%-3.00%," Ethan Harris wrote in a note to clients on Friday. "This should have a lagged impact on the economy, weighing on growth in 2023." JPMorgan raised its forecast for rate hikes in 2022 from four to five. Chief U.S. Economist Michael Feroli said Fed Chairman Jerome Powell's remarks at Wednesday's post-meeting news conference were "clearly aimed at deterring market expectations for quarterly rate hikes."

Progressive Democrats are trying to get Congress to pass some version of President Biden's economic bill by March 1, but House Speaker Nancy Pelosi has cast doubt on that prospect. "We don't have a timetable," Pelosi said Friday in her hometown of San Francisco. "As soon as we have enough votes, we will pass the bill." Biden's social spending and climate bills have been stalled in the Senate since December, when Democratic Sen. Manchin opposed and refused to negotiate the bill. House member Pramila Jayapal, chair of the Congressional Progressive Caucus, urged Senate Democrats on Thursday to break the deadlock so Biden could talk about the bill in his March 1 State of the Union address. "It's their wish," Pelosi said in response to a question about Jayapal's remarks. "We can't stop putting pressure on this. It's important." But she also said: "We have other things to do," including completing a spending package for the government, a bill to support the U.S. semiconductor industry and "some other things." legislation".

Germany's economy shrank 0.7 percent in the fourth quarter, as another wave of coronavirus outbreaks dampened consumer confidence and plagued factories with supply chain problems. Data released by Germany's statistics agency was in line with the initial reading, but fell short of economists' expectations for a 0.3% contraction. Germany, Europe's largest economy, is likely to slip into a second coronavirus recession, with virus restrictions showing no signs of being eased and manufacturing tightening just beginning to ease.

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