The Irish Bread Bakers Association (IBBA) warned that poor harvests in various parts of the world had dramatically increased the cost of wheat.World wheat stockpiles are at their lowest level in 25 years. Prices have surged to 10-year highs after a drought in Australia threatened to cut its harvest in half. Australian Crop Forecasters cut its estimates for 2006/7 to 11.5 million tonnes, from 25 million a year earlier. Harvests have also been hit in Ukraine and North America.Paul Kelly, director of Food and Drink Industry Ireland, speaking on behalf of IBBA, said: “The major increase in the cost of raw materials comes at a time when other business costs are also rising much faster than general inflation. Bakers are experiencing increases of up to 20% in the cost of flour and increases of over 30% in the cost of gas, their main energy source.”He said that cost increases must eventually be reflected by retail prices. “This does not mean that price increases are profit increases,” said Kelly. “While there is little that can be done about rising global prices, the government must reign in spiralling business costs. The cost of energy and waste management are just two areas where decisive action is needed.”Over the past two years, a number of bakeries in Ireland have closed or significantly rationalised their businesses.”Failure to recoup cost increases in the marketplace will lead to further rationalisation and job losses,” said Kelly.
While noting “”improvement in economic activity and labor market conditions,”” the “”Federal Open Market Committee””:http://www.federalreserve.gov/newsevents/press/monetary/20130918a.htm (FOMC) voted Wednesday to continue its policy of near-zero interest rates and its $85 billion-per-month bond-buying program.[IMAGE]At the same time, the Federal Reserve’s own economic projections suggested the economy might not grow this year as fast as it expected just three months ago.In a statement concluding its two-day monetary policy meeting, the FOMC said it “”decided to await more evidence that progress will be sustained before adjusting the pace of its purchases.””The committee adopted the policy by a 9-1 vote, with only Esther George, president of the Kansas City Fed, dissenting. St. Louis Fed President James Bullard, who had joined with George in her dissents earlier this year, voted in the majority as he had at the July meeting.””The Committee sees the downside risks to the outlook for the economy and the labor market as having diminished, on net, since last fall, but the tightening of financial conditions observed in recent months, if sustained, could slow the pace of improvement in the economy and labor market,”” the FOMC said in its statement. “”The Committee recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance, but it anticipates that inflation will move back toward its objective over the medium term.””The FOMC said its actions ├â┬ó├óÔÇÜ┬¼├àÔÇ£should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative, which in turn should promote a stronger economic recovery and help to ensure that inflation, over time, is at the rate most consistent with the Committee’s dual mandate [of price stability and maximum sustainable economic growth].├â┬ó├óÔÇÜ┬¼├é┬ØFed Chairman Ben Bernanke had originally said the FOMC would wait until the inflation rate rose to 2 percent and the unemployment rate fell to 6.5 percent before the Fed would begin “”tapering””–that is, gradually tightening its stimulative monetary policy. In recent weeks, though, Bernanke hinted the FOMC might act before its targets were achieved. Bernanke came under criticism from some [COLUMN_BREAK]economists who suggested that by acting before its own criteria were met, the FOMC would damage its credibility.At the same time its statement was released Wednesday, the FOMC also released the economic projections of the members of the Federal Reserve and the Federal Reserve Bank presidents. (The president of the New York Fed is a permanent member of the FOMC along with four of the remaining 11 regional presidents.)The projections were slightly weaker than those released three months ago, with slower growth this year–GDP growing 2.0 percent to 2.3 percent compared with 2.3 percent to 2.6 percent forecast in June–and the higher range of GDP growth reduced in the next two years.The projections suggested the unemployment rate criteria for tightening monetary policy might be achieved next year with a projected unemployment rate of 6.4 percent to 6.8 percent, but the more solid target is anticipated in 2015, when the unemployment rate is expected to range between 5.9 percent and 6.2 percent.The 2 percent inflation target–as measured by the personal consumption index tallied by the Bureau of Economic Analysis–is not expected to be reached until after 2016.Even though its criteria for tightening monetary policy remain elusive, the FOMC gave itself some wiggle room.””In judging when to moderate the pace of asset purchases,”” the FOMC said in its statement, “”the Committee will, at its coming meetings, assess whether incoming information continues to support the Committee’s expectation of ongoing improvement in labor market conditions and inflation moving back toward its longer-run objective. Asset purchases are not on a preset course, and the Committee’s decisions about their pace will remain contingent on the Committee’s economic outlook as well as its assessment of the likely efficacy and costs of such purchases.””In other words: Even if the targets are not achieved, the committee said it might act if it believes the economy is on a course to achieve them.Still, the FOMC remained skeptical.””Some indicators of labor market conditions have shown further improvement in recent months, but the unemployment rate remains elevated,”” the committee statement said. “”Household spending and business fixed investment advanced, and the housing sector has been strengthening, but mortgage rates have risen further and fiscal policy is restraining economic growth. Apart from fluctuations due to changes in energy prices, inflation has been running below the Committee’s longer-run objective, but longer-term inflation expectations have remained stable.””_Hear Mark Lieberman on P.O.T.U.S. radio (Sirius-XM 124) Friday at 6:20 a.m. Eastern._ Fed,FOMC Votes No Change in Policy, Foresees Slower Growth Share Agents & Brokers Attorneys & Title Companies Ben S. Bernanke Bureau of Labor Statistics Census Bureau Confidence Consumer spending Federal Reserve Home Sales Home Values Inflation Investors Lenders & Servicers Mark Lieberman Mortgage Bonds Service Providers Unemployment 2013-09-18 Mark Lieberman September 18, 2013 421 Views in Data, Government, Origination, Secondary Market, Servicing