On The Money — Inflation sees rapid cooldown

Inflation is slowing down, raising questions about the Fed’s next move. We’ll also look at the business lobby’s demands for the 118th Congress, the renewed congressional stock trading ban effort and more on the FTX meltdown.  

But first, a new lawmaker sworn in with a loaned first edition “Superman” comic is reunited with the gem. 

Welcome to On The Money, your nightly guide to everything affecting your bills, bank account and bottom line. For The Hill, we’re Sylvan Lane, Aris Folley and Karl Evers-Hillstrom. Someone forward you this newsletter?

What does easing inflation mean for interest rates? 

Now that inflation is cooling, with six straight months of moderating increases, all eyes are on the Federal Reserve’s next meeting, where officials will decide whether to further slow their interest rate hikes. 

Consumer prices fell 0.1 percent in December and rose 6.5 percent annually, according to the Labor Department’s consumer price index (CPI) released Thursday. 

• That’s down from the 7.1 percent annual increase in November and the 9.1 percent peak in June. 
  
• The report shows several positive signs for consumers: Energy prices fell 4.5 percent in December, the cost of used cars fell 2.5 percent and food prices saw their smallest month-over-month gain since March 2021. 
  
• The data sparked renewed calls for the Fed to slow interest rate hikes, which could cost 1.6 million people their jobs by the end of 2023, according to the Fed’s own projections. 

But the Fed might not be impressed: That’s because core inflation, which excludes volatile food and energy prices and is closely monitored by the Fed, rose 0.3 percent on a month-to-month basis and 5.7 percent annually. That’s only slightly down from the 5.9 percent reading in July 2022. Persistent housing costs are driving most of the increase. 

Karl has the story here. 

BIG BUSINESS DEMANDS 

The U.S. Chamber of Commerce on Thursday warned Congress: Businesses are “fed up” with gridlock.   

The nation’s largest business lobbying group made it clear, during its annual conference, that corporate America wants results out of a divided legislative branch, encouraging bipartisan breakthroughs on immigration, permitting, the debt ceiling and other key issues.  

• The message comes as lawmakers worry that the Senate and House will struggle to reach consensus on must-pass spending bills, let alone bolder legislative efforts.  
  
• The debt limit came up throughout the Chamber’s conference, highlighting the business community’s concern about the prospect of a historic default that would devastate the U.S. economy.  

“We had dinner with a bunch of business leaders and our board members last night talking about their priorities. And there was fear, empathic emotion around the need to not default on our debt, to not play chicken with the true faith and credit of the United States,” U.S. Chamber CEO Suzanne Clark told reporters.  

Karl has more here. 

STOCK BAN IS BACK

Bipartisan duo reintroduce bill banning lawmakers from trading individual stocks 

A bipartisan pair of House lawmakers have reintroduced a bill to ban members of Congress and some of their family from trading individual stocks while they are in office. 

Reps. Abigail Spanberger (D-Va.) and Chip Roy (R-Texas) dropped the Trust in Congress Act on Thursday, marking the third time that the unlikely duo has introduced the legislation. It would stop members of Congress, their spouses and their dependent children from trading individual stocks while serving in their elected position. They previously introduced it in June 2020 and January 2021. 

• The move to ban congressional stock trading has been pushed aside for years. Last year lawmakers toiled over a possible agreement to get the proposition passed, but no breakthrough in talks emerged. Even support from then-Speaker Nancy Pelosi (D-Calif.) was not enough to find consensus. 
  
• A 2022 analysis by The New York Times found that nearly 20 percent of members of Congress were buying or selling stocks where there may be a conflict of interest. 

The Hill’s Stephen Neukam digs in here. 

HOPE SPRINGS ETERNAL

Bankman-Fried says millions of FTX customers could get money back

FTX founder Sam Bankman-Fried on Thursday said the millions of customers who lost money from the collapse of his cryptocurrency exchange could get their money back.  

“I didn’t steal funds, and I certainly didn’t stash billions away,” he said. “Nearly all of my assets were and still are utilizable to backstop FTX customers.” 

• Bankman-Fried said in a Substack post that three factors combined to cause the “implosion” of FTX — the balance sheet of his hedge fund, Alameda Research, growing to $100 billion of net asset value, $8 billion of net borrowing and $7 billion of liquidity on hand; Alameda not successfully limiting its market exposure; and an “extreme, quick, targeted” crash caused by the head of another cryptocurrency exchange, Binance. 
  
• He added that Alameda’s “contagion” spread to FTX, but “substantial recovery” remains possible, and FTX US should be able return all of its customers’ money. He said FTX International has billions of dollars in assets, and he is using almost all of his personal assets to help customers. 

The Hill’s Jared Gans has the deets here. 

Good to Know

A new survey released Thursday found that the top worry for most CEOs in 2023 is a recession or an economic downturn. 

Other items we’re keeping an eye on: 

• Google argued that if the Supreme Court rules to scale back a liability shield for internet companies, the decision could lead to more censorship and hate speech online, according to a brief filed Thursday. 
  
• The United Arab Emirates, which is hosting next year’s global climate summit, has put the head of the country’s oil company in charge of the event.
  
• Walmart removed a pair of boots from its online marketplace after it was determined the item violated the company’s “prohibited product policy,” according to the retailer. 

That’s it for today. Thanks for reading and check out The Hill’s Finance page for the latest news and coverage. We’ll see you tomorrow.