The US Federal Reserve kept its stimulus program in place as expected on Wednesday, but reiterated the government’s fiscal policy is a drag on the economy.
In their first meeting since the government shutdown at the beginning of last month, Fed policymakers made no reference to the potential impact that laying off hundreds of thousands of workers for 16 days might have had on the economy.
Nor did the Federal Open Market Committee (FOMC) hint at the direction of future policy, amid widespread anticipation over when it might rein in the US$85 billion a month stimulus.
Instead, after a month of mostly dull and inconsistent data — much of it delayed and skewed by the shutdown — the FOMC stressed the need to see more evidence of sustained progress before taking action.
After a two-day meeting — the first since Fed Vice Chair Janet Yellen was nominated by the White House to replace Chairman Ben Bernanke on Feb. 1 — the FOMC described economic activity as having “continued to expand at a moderate pace.”
The panel said that household spending and business investment are still advancing, inflation remains well in check and the labor market continues to improve.
Risks to the economy have “diminished, on net, since last fall,” the committee said, repeating observations from its last statement on Sept. 18.
At the same time, unemployment remains elevated, the policymakers said, underscoring the need for continued support to the economy from its ultra-low interest rates and quantitative-easing asset-purchase program.
There was no comment on the Oct. 1-16 shutdown, despite numerous independent analysts estimating that it took about US$24 billion out of the economy and would cost it up to 0.5 percentage points from growth in the fourth quarter.
And there was no allusion to worries that the same show of political brinksmanship that forced the shutdown could resume in January if fresh budget talks between Republicans and Democrats again prove fruitless. The temporary budget for the current fiscal year runs only through Jan. 15.
However, the Fed policymakers did reiterate a view that Bernanke has been pressing since last year, that tightening government spending is holding back the economy’s rebound from the 2008-2009 recession.
“Fiscal policy is restraining economic growth,” the committee said.
Economist Paul Edelstein of IHS Global Insight called the slightly positive Fed statement “puzzling in light of the recent fiscal turmoil and lingering risks.”
At the same time, he said it gave no signal on reducing the bond-purchase program.
“The Fed’s short-term objective is to protect the economic recovery from Washington headwinds,” he said.
With another battle looming in January, it means the Fed might hold off on the taper until March, he said.
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
RECORD-BREAKING: TSMC’s net profit last quarter beat market expectations by expanding 8.9% and it was the best first-quarter profit in the chipmaker’s history Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which counts Nvidia Corp as a key customer, yesterday said that artificial intelligence (AI) server chip revenue is set to more than double this year from last year amid rising demand. The chipmaker expects the growth momentum to continue in the next five years with an annual compound growth rate of 50 percent, TSMC chief executive officer C.C. Wei (魏哲家) told investors yesterday. By 2028, AI chips’ contribution to revenue would climb to about 20 percent from a percentage in the low teens, Wei said. “Almost all the AI innovators are working with TSMC to address the
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”