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Welcome to Copenhagen, the city where cycling is king

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With a world-class dining scene, charming waterfront and favorable work/life balance, Copenhagen is a city with an enviable reputation.

And when it comes to getting around its streets, many of the Danish capital’s residents choose to cycle rather than drive. But a bicycle-friendly culture does not happen overnight, with the transition to two wheels in Copenhagen decades in the making.

“If you want to create a biking city then you have to make it safe to go by bike,” Lord Mayor Frank Jensen told Sustainable Energy. “In Copenhagen, children learn to bike when they start going to school, they bike together with their parents, and when they grow up they continue biking.”

Jensen added that 62 percent of Copenhageners used their bike for daily transport, a statistic he described as “magnificent.”

Considerable effort has been made to construct raised, safe lanes for cyclists to use. “We have 41 percent of all trips to work and study being done by bike right now in Copenhagen,” Marie Kastrup, who is head of Copenhagen’s Bicycle Program, said.

“We have a lot of bikes,” Kastrup added. “Copenhageners own five times more bicycles than cars and we have around 375 kilometers of separated bicycle tracks.”

When it comes to sustainability, Copenhagen has grand ambitions and wants to be carbon neutral by 2025. It’s no surprise that bicycles — with no tailpipe emissions — are a key part of this plan.

The benefits of cycling rather than driving are not just environmental, Kastrup said.

“Compared to similar cities in Europe and in the Western world, Copenhagen has relatively low congestion. We made calculations that if between 15 and 20 per cent of all cyclists today were to shift to cars, in several streets traffic would completely stand still.”

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Fed Chairman Powell says economic reopening could cause inflation to pick up temporarily

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Federal Reserve Chairman Jerome Powell said Thursday that he expects some inflationary pressures in the time ahead but they likely won’t be enough to spur the central bank to hike interest rates.

“We expect that as the economy reopens and hopefully picks up, we will see inflation move up through base effects,” Powell said during a Wall Street Journal conference. “That could create some upward pressure on prices.”

Markets reacted negatively to Powell’s comments, with stocks sliding and Treasury yields jumping. Some investors and economists had been looking for him to address the recent surge in rates, with a possible nod toward adjusting the Fed’s asset purchase program.

The Fed currently is buying $120 billion a month in Treasurys and mortgage-backed securities. Recent market chatter has revolved around the central bank potentially implementing a new version of “Operation Twist,” in which it sells short-term notes and buys longer-dated bonds.

According to Fed officials, the central bank is far from any action to try to influence the long end of yields, despite expectations from economists and Wall Street strategists, CNBC’s Steve Liesman reported.

Powell instead reiterated past statements he has made on inflation in saying that he doesn’t expect the move up in prices to be long lasting or enough to change the Fed from its accommodative monetary policy. He did note that the rise in yields did catch his attention, as have improving economic conditions.

“There’s good reason to think that the outlook is becoming more positive at the margins,” he said.

The Fed likes inflation to run around 2%, a rate it believes signals a healthy economy and provides some room to cut interest rates during times of crisis. However, the rate has run below that for most of the past decade and inflation has been particularly weak during the coronavirus pandemic.

With the economy increasingly back on its feet, some price pressures are likely to emerge, said Powell, but he added they likely will be transitory and look higher because of “base effects,” or the difference against last year’s deeply depressed levels just as the Covid-19 crisis began.

Raising interest rates, he added, would require the economy to get back to full employment and inflation to hit a sustainable level above 2%. He doesn’t expect either to happen this year.

“There’s just a lot of ground to cover before we get to that,” he said. Even if the economy sees “transitory increases in inflation … I expect that we will be patient.”

The Fed has repeatedly said that it will keep short-term rates anchored near zero and continue its monthly bond-buying program until it sees not only a low unemployment rate but also a jobs recovery that is “inclusive” across income, gender and racial lines.

However, some economists have worried that the Fed’s commitment to low rates will foster inflation. Powell said he’s “very mindful” of the lessons from runaway inflation in the 1960s and ’70s, but believes this situation is different.

“We’re very mindful and I think it’s a constructive thing for people to point out potential risks. I always want to hear that,” he said. “But I do think it’s more likely that what happens in the next year or so is going to amount to prices moving up but not staying up and certainly not staying up to the point where they would move inflation expectations materially above 2%.”

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Fed Chairman Powell says economic reopening could cause inflation to pick up temporarily

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Federal Reserve Chairman Jerome Powell said Thursday that he expects some inflationary pressures in the time ahead but they likely won’t be enough to spur the central bank to hike interest rates.

“We expect that as the economy reopens and hopefully picks up, we will see inflation move up through base effects,” Powell said during a Wall Street Journal conference. “That could create some upward pressure on prices.”

Markets reacted negatively to Powell’s comments, with stocks sliding and Treasury yields jumping. Some investors and economists had been looking for him to address the recent surge in rates, with a possible nod toward adjusting the Fed’s asset purchase program.

The Fed currently is buying $120 billion a month in Treasurys and mortgage-backed securities. Recent market chatter has revolved around the central bank potentially implementing a new version of “Operation Twist,” in which it sells short-term notes and buys longer-dated bonds.

According to Fed officials, the central bank is far from any action to try to influence the long end of yields, despite expectations from economists and Wall Street strategists, CNBC’s Steve Liesman reported.

Powell instead reiterated past statements he has made on inflation in saying that he doesn’t expect the move up in prices to be long lasting or enough to change the Fed from its accommodative monetary policy. He did note that the rise in yields did catch his attention, as have improving economic conditions.

“There’s good reason to think that the outlook is becoming more positive at the margins,” he said.

The Fed likes inflation to run around 2%, a rate it believes signals a healthy economy and provides some room to cut interest rates during times of crisis. However, the rate has run below that for most of the past decade and inflation has been particularly weak during the coronavirus pandemic.

With the economy increasingly back on its feet, some price pressures are likely to emerge, said Powell, but he added they likely will be transitory and look higher because of “base effects,” or the difference against last year’s deeply depressed levels just as the Covid-19 crisis began.

Raising interest rates, he added, would require the economy to get back to full employment and inflation to hit a sustainable level above 2%. He doesn’t expect either to happen this year.

“There’s just a lot of ground to cover before we get to that,” he said. Even if the economy sees “transitory increases in inflation … I expect that we will be patient.”

The Fed has repeatedly said that it will keep short-term rates anchored near zero and continue its monthly bond-buying program until it sees not only a low unemployment rate but also a jobs recovery that is “inclusive” across income, gender and racial lines.

However, some economists have worried that the Fed’s commitment to low rates will foster inflation. Powell said he’s “very mindful” of the lessons from runaway inflation in the 1960s and ’70s, but believes this situation is different.

“We’re very mindful and I think it’s a constructive thing for people to point out potential risks. I always want to hear that,” he said. “But I do think it’s more likely that what happens in the next year or so is going to amount to prices moving up but not staying up and certainly not staying up to the point where they would move inflation expectations materially above 2%.”

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Why the market is worried about Powell’s stance on inflation

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The bond market sold off on Thursday when Federal Reserve Chairman Jerome Powell expressed little worry about inflation and provided no indication of policy changes ahead.

In an exchange with the Wall Street Journal, the central bank leader acknowledged that an economy recuperating from the depths of the Covid-19 pandemic could see some price pressures ahead.

But he also dismissed them as mostly “base effects.” In other words, prices in the next couple of months will look high, but only when compared to last year, just as the pandemic was beginning and inflation pressures fell through the floor.

In addition to indications of full employment, Powell said, “We’d want to see inflation sustainably above 2% and we’d want to be on track for inflation to run sustainably above 2%.”

“There’s just a lot of ground to cover before we get to that,” he added.

Bond markets sold off during his comments, sending yields higher, as prices and yields move in opposite directions. Stocks also tumbled, sending the Dow industrials down more than 600 points.

Inflation is kryptonite for the bond market for a few reasons.

First, inflation erodes the capital of bonds as rising yields struggle, and generally fail, to keep up with price pressures. Rising yields mean falling prices.

Further, if inflation rises, that means future interest payments one receives for holding the bond are worth less.

Powell said the recent leap in yields was “notable and caught my eye,” but didn’t sound any alarm. Instead, he said he would be concerned only by “disorderly conditions” in the market, which he did not indicate to be case even though yields are at the highest levels since before the pandemic began.

Even if inflation does rise, Powell and other Fed officials say they are content to let it run above their 2% target until the jobs market shows a full and inclusive recovery along income, gender and racial lines.

Wall Street was looking for some indication of policy tweaks from the Fed. Rather than seeking rate hikes, some economists and investors are looking for the Fed to change the composition of its monthly asset purchases.

One option would be to sell short-term bills and buy longer-dated notes in an effort to raise yields on the short end and lower them further out in duration to flatten the yield curve, in a process known as Operation Twist.

Investors worry that the Fed may again have to play catch-up by hiking rates when inflation does occur. Stock market investors also don’t like rising interest rates as they make it more expensive for companies to borrow and endanger debt-laden companies that have become dependent on low rates.

“With respect to financial conditions, it will be up to the Fed on whether they tighten further. The more dovish they get in the face of market expectations of higher inflation, the more financial tightening we’ll see,” wrote Peter Boockvar, chief investment officer at Bleakley Advisory Group.

Boockvar added that Fed officials “have put themselves in a tough situation” and must hope that inflation does not hit the 2% target before employment also reaches their goal.

“If it does, they have a problem because they will be afraid to confront it with higher rates if they remain so focused on employment,” he said.

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