Now that the US is closing in on full employment and inflation is likely to rise to target levels, the “next step” should be to start gradually increasing rates, a top central banker said on Saturday.
“My forecast is that we’ll reach our maximum employment mandate in the near future and I’m increasingly confident that inflation will gradually move back to our 2 percent goal,” San Francisco Federal Reserve Bank President John Williams said in remarks prepared for delivery to the Arizona Council on Economic Education. “It makes sense, therefore, to start gradually moving away from the extraordinary stimulus that got us here.”
The comments suggest that Williams, a centrist policymaker who was Fed Chair Janet Yellen’s chief researcher when she had his job before moving to Washington, is leaning toward support of a rate hike next month. The Fed has kept interest rates near zero for almost seven years, and the central bank last month said it would consider a rate increase at its Dec. 15 and 16 meeting, the last of the year.
Traders boosted their bets on such a move after a government report on Friday showed the economy added many more jobs than expected last month, sending the jobless rate down to 5 percent, close to or at full employment.
A Reuters poll of top bond dealers also showed a growing number expected borrowing costs to go up next month, with 15 of 17 looking for an increase.
Inflation has languished below the Fed’s goal for years, prompting a few Fed policymakers to still favor waiting on a rate increase until there is better evidence that prices are indeed firming.
Williams on Saturday said he believes that factors holding inflation down, including weak oil prices and a strong dollar, should soon ebb and allow inflation to bounce back.
“We can’t wait until we see the whites of inflation’s eyes; if we did, we would overshoot the mark,” Williams said. “An earlier start to raising rates would also allow a smoother, more gradual process of policy normalization, giving us space to fine-tune our responses to any surprise changes in economic conditions.”
Yellen has also said she wants rates to rise gradually.
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