What is the hurry?
The IMF on Thursday urged the US Federal Reserve to put off raising short-term interest rates until next year because the US economy still needs help.
In its yearly check-up of the US, the IMF predicted the US economy would grow just 2.5 percent this year, down from its April forecast of 3.1 percent.
Photo: AP
The downgrade reflects the economy’s stumbling start to the year: GDP fell the first three months of the year, tripped up by harsh winter weather and the export-killing strength of the US dollar.
The IMF has no direct influence over US economic policy, but the global lending agency is widely respected for its technical expertise on economics and finance.
Since December 2008, the Fed has kept the short-term interest rate it controls near zero.
Fed Chair Janet Yellen last month said she expects to begin raising rates this year.
Many economists expect a rate hike at the Fed’s September meeting.
IMF managing director Christine Lagarde said the risks of raising rates too soon — and wounding the economy before it has reached full strength — outweigh the risks of waiting a bit too long and allowing inflation to creep up.
“The economy would be better off with a rate hike in early 2016,” Lagarde said at a press conference.
The US Department of Commerce reported last week that the US economy shrank at an annual rate of 0.7 percent from January through March.
A widening trade deficit was largely to blame, reducing growth by 1.9 percentage points.
The stronger US dollar makes US exports more expensive overseas and foreign imports cheaper in the US.
Inflation is still well short of the Fed’s 2 percent target.
The IMF does not see it hitting that level until mid-2017.
The inflation threat looks distant now: Consumer prices were lower in April than they had been a year earlier, largely because of tumbling oil prices.
The IMF calls for the Fed to hold off on a rate increase until “there are greater signs of wage or price inflation than are currently evident.”
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
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],”
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
MAJOR BENEFICIARY: The company benefits from TSMC’s advanced packaging scarcity, given robust demand for Nvidia AI chips, analysts said ASE Technology Holding Co (ASE, 日月光投控), the world’s biggest chip packaging and testing service provider, yesterday said it is raising its equipment capital expenditure budget by 10 percent this year to expand leading-edge and advanced packing and testing capacity amid strong artificial intelligence (AI) and high-performance computing chip demand. This is on top of the 40 to 50 percent annual increase in its capital spending budget to more than the US$1.7 billion to announced in February. About half of the equipment capital expenditure would be spent on leading-edge and advanced packaging and testing technology, the company said. ASE is considered by analysts