U.S. consumer confidence fell to a 10-year low in early February, as rising inflation concerns dented consumer confidence in personal finances. Data on Friday showed the University of Michigan's consumer confidence index fell to 61.7 from 67.2 in January, the lowest since October 2011 and below the median forecast of 67 in a Bloomberg survey.

Economists expect inflation to far exceed the Fed's target this year and take longer to fall back to its 2 percent target, Bloomberg's latest monthly poll showed. U.S. consumer prices will average 5 percent this year, according to the median forecast of 76 economists, up from last month's forecast of 4.6 percent. The survey, which was conducted from February 4 to 10, preceded the release of the latest CPI data - official data showed that the CPI rose 7.5% year-on-year in January, the highest level in 40 years. The price index for personal consumption expenditures -- the Fed's favored measure of inflation -- could average 4.2 percent in 2022, up from 3.8 percent forecast in last month's poll, according to forecasts. Economists say both inflation measures will average more than 2 percent in 2023. Inflation has become a major concern for Fed policymakers as they prepare to raise interest rates starting in March, and traders have ramped up bets they will raise rates by 50 basis points next month.

Former U.S. Treasury Secretary Lawrence Summers said the Federal Reserve should meet immediately to end its quantitative easing program to demonstrate its determination to curb inflation. The Fed's bond-buying program is currently set to end next month. "The Fed should hold an extraordinary meeting immediately to end QE," Summers said in an interview with David Westin on Bloomberg Television's "Wall Street Week." "In an economy with 7.5 percent inflation, and in an economy with the tightest labor market in two generations, it is absurd that central banks are expanding their balance sheets at this moment," the U.S. report released Thursday said. The January CPI report showed higher-than-expected inflation, with broad-based price increases in areas such as food, electricity and housing costs. "It's a testament to how far the Fed has fallen behind," said Summers, a Harvard professor and a paid Bloomberg contributor. He said the Fed can show that it finally truly recognizes the problem by meeting now and ending bond purchases "tomorrow." Markets are widely expected to start raising interest rates at its March 15-16 meeting after the Fed ends its bond-buying program next month.

Goldman Sachs strategists cut their forecasts for U.S. stock market returns this year, citing a sharp tightening of monetary policy that weighed on equity valuations. Strategists cut their year-end target for the S&P 500 to 4,900 from 5,100. The index closed at 4,418.64 on Friday. Although strategists warned that risks were skewed to the downside, the lowered forecast still meant that the stock index still had 11% room to rise, and the point would reach another record high. “The macro picture this year is much tougher than in 2021,” strategists including David Kostin wrote. “There is a lot of uncertainty around the path of inflation and Fed policy.” Goldman Sachs forecasts seven rate hikes by the Fed in 2022. The previous forecast was Five times.

The White House is considering revising President Joe Biden's economic plan to emphasize deficit reduction to win the support of Democratic Senator Manchin, a person familiar with the matter said. Top Democrats in Congress have also discussed increased deficit-cutting measures in recent days, hoping to get the Democratic senator, who has rejected Biden's plan, to change his mind. The shift would have the added benefit of protecting Democrats from accusations of fiscal irresponsibility by Republicans in the midterm elections. While the White House insists the president's plan covers its costs, Biden's $2 trillion climate, tax and social spending plan is stalled by Manchin's opposition. Manchin said his reasons for objecting were concerns about the plan's impact on federal debt and inflation. "The most important thing we have to face is our fiscal responsibility, basically the state of our country's finances," Manchin told reporters in Congress on Thursday after official data showed inflation hit 7.5 percent in January.

The People's Bank of China reiterated that it encourages banks to increase lending to meet loan demand and support slowing economic growth. In its quarterly monetary policy implementation report released on Friday, the People's Bank of China said it would "maintain reasonably sufficient liquidity, guide financial institutions to vigorously expand lending, and enhance the stability of total credit growth". According to the report of the People's Bank of China, it will not engage in "flooding", but also meet the reasonable and effective financing needs of the real economy; monetary policy will "focus on full, precise and advanced efforts" and "maintain a stable credit structure" Optimize.” The remarks were in line with previous hints by central bank officials to ease credit policy at a time when the Chinese government has pledged to overcome a downturn in the property market and sporadic outbreaks of the new crown epidemic. Chinese credit expanded faster than expected in January. According to the report, the People's Bank of China will increase support for small and micro enterprises, technological innovation and green development. The People's Bank of China reiterated that it will keep the growth rate of money supply and social financing scale basically matching the economic growth rate of the same name, and keep the macro leverage ratio basically stable.

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