FirstFT: Fed to start winding back $120bn-a-month stimulus programme

The Federal Reserve said it would begin scaling back its massive $120bn monthly bond-buying programme this month, a critical milestone for a US economy that is recovering from the pandemic and contending with surging inflation.

The decision is the culmination of months of debate among Fed officials about the level of support the world’s largest economy needs as price pressures begin to extend beyond the sectors most sensitive to the post-pandemic reopening.

The move corresponded with abrupt actions by a number of central banks around the world to tighten monetary policy, including the Reserve Bank of Australia and the Bank of Canada.

Markets expect the Bank of England, which will meet today, to raise interest rates for the first time since 2018. Investors are betting that the European Central Bank could follow suit next year despite recent pushback from its president Christine Lagarde.

Thanks for reading FirstFT Europe/Africa. Here’s the rest of today’s news — Gary

Five more stories in the news

1. Finance minister arguments echo beyond Germany All eyes are on who will be Germany’s next finance tsar. The holder of the post wields power far beyond the country’s borders, having shaped the EU’s response to everything from the Greek debt crisis to the pandemic.

2. Poultry industry needs fewer visas for foreign workers The UK poultry industry expects to take up only half of the 5,500 emergency visas made available ahead of Christmas, after farmers cut production and increased local hiring to offset the need for migrant labour.

3. Sequoia in chase for ‘permanent capital’ The storied Silicon Valley venture capital firm is attempting to replicate the success of groups such as Blackstone and Pershing Square by creating a “permanent structure” to house investor capital that will then channel money into its sub-funds.

4. US loan market shifts away from tarnished Libor Companies borrowing in the US loan market are finally shifting away from Libor, just months before the scandal-hit benchmark underpinning trillions of dollars of financial instruments will no longer be available for new deals.

5. ‘The Promise’ wins Booker Prize for fiction Damon Galgut has won the 2021 Booker Prize for fiction for his novel The Promise, a vivid account of family decline in South Africa during the transition from apartheid.

Thanks to those who voted in our poll yesterday. Eighty-seven per cent of readers said Facebook was right to shutter its facial recognition system.

COP26 digest

• A Mark Carney-led coalition of companies has up to $130tn of private capital committed to hitting net zero. Lex says the pledge is too big to be credible.

• BlackRock CEO Larry Fink warned that pressure on public companies to pursue net zero targets — while leaving private ones out of the spotlight — is creating opportunity for “the biggest capital markets arbitrage in my lifetime”.

• Interview: Ugandan climate activist Vanessa Nakate on Africa’s role in curbing emissions — and how she fought back after being cropped out of the picture.

• Beijing has hit back at US criticism of Xi Jinping’s absence from the COP26 climate summit and said the Chinese president was not allowed to join by video link.

The day ahead

Opec meeting Saudi Arabia, Russia and other oil producers will meet to decide whether to increase oil supplies to the global market. Opec and its allies have been gradually winding down the cuts, but some consumer countries believe it is not being done quickly enough.

Lord Frost, the UK Brexit minister, will meet his French counterpart, Clément Beaune, in Paris amid the fishing row between the countries.

Earnings Interim results are due today from Sainsbury’s, BT, Tate & Lyle and Toyota, while Airbnb, Pinterest, Credit Suisse, Moderna and Bertelsmann will report on Q3.

What else we’re reading

How does Europe get its gas? Surging prices and doubts over supplies are exposing Europe’s reliance on the fuel that underpins much of its economy. This visual explainer sheds light on where the continent’s gas comes from, as well as the reasons for the energy crisis.

‘It’s not a giant step to introduce nature into economics’ In a conversation with environment correspondent Leslie Hook, Cambridge professor Partha Dasgupta says “violent” damage to ecosystems is not being accounted for in macroeconomic forecasts.

How we can share our divided world The short answer is: with difficulty. The longer answer is: by being ambitiously pragmatic, writes Martin Wolf. We need to accept that we share our planet and interact with one another too profoundly to avoid co-operation, however much we may dislike one another.

The battle to control the metaverse: Microsoft vs Meta After spending much of the past two years stuck in group video meetings, are the world’s office workers ready to take a big step further into the digital realm? They will decide which tech giant dominates the more immersive virtual world.

Fashion

Sam Leith details the trials of a middle-aged man’s search for socks. Pairs that are comfortable, no-nonsense and lasting have become something of a Holy Grail, he writes.