The US Federal Reserve on Wednesday signaled interest rate cuts beginning as early as next month, saying that it was ready to battle growing global and domestic economic risks as it took stock of rising trade tensions and growing concerns about weak inflation.
Even as the US central bank left its benchmark interest rate unchanged for now, the shift in sentiment since its last policy meeting was marked.
The bulk of Fed policymakers slashed their rate outlook for the rest of the year by about half a percentage point, and Fed Chairman Jerome Powell said others agree the case for lower rates is building; the Fed dropped its pledge to be “patient” before rate moves in a sign it was poised to act.
Powell also stopped referring to weak inflation as “transient.”
Although economic growth is expected to continue, Powell said that policymakers’ concerns congealed in the few weeks since the Fed last met in early last month, with the unpredictable outcome of US President Donald Trump’s trade dispute with China and other countries at the top of their minds.
Trump has repeatedly accused Powell’s Fed of undermining his administration’s efforts to boost economic growth and has repeatedly demanded that rates be cut.
“Seven weeks ago we had a great jobs report and came out of the last meeting feeling that the economy and our policy was in a good place,” Powell said. “News about trade has been an important driver of sentiment in the interim.”
“We are quite mindful of the risks to the outlook and are prepared to move and use our tools as needed,” he told a news conference following the release of a policy statement in which the Fed said it “will act as appropriate to sustain” a nearly 10-year economic expansion.
Fresh economic projections released by the Fed showed that nearly half of the 17 policymakers now show a willingness to lower borrowing costs over the next six months, and seven see rates likely to warrant being lowered by a full half a percentage point — near what bond investors have anticipated.
Although the baseline economic outlook remains “favorable,” Powell said that risks continue to rise, including the drag that rising trade tensions might have on US business investment and signs that economic growth is slowing overseas.
“Ultimately the question we are going to be asking ourselves is: ‘Are these risks going to be continuing to weigh on the outlook?’” Powell said.
“We will act as needed, including promptly if that’s appropriate, and use our tools to sustain the expansion,” he said, adding that if the Fed does ease monetary policy by cutting rates, it might also halt a gradual slimming of its massive balance sheet.
Interest-rate futures surged in response to the dovish remarks, and traders are now betting heavily on three rate cuts by the end of the year.
US stocks turned higher on Wednesday, with the benchmark S&P 500 index up about 0.3 percent from the previous day’s close.
In the US Treasury market, expectations the US central bank would be cutting rates before long drove the yield on two-year notes, often a proxy for Fed policy, to the lowest in a year and a half at about 1.75 percent.
The new economic projections showed policymakers’ views of growth and unemployment were largely unchanged from March, but they now project headline inflation to be just 1.5 percent for the year, down from the previous projection of 1.8 percent.
They also expect to miss their 2 percent inflation target next year, a blow for a central bank that has missed that goal for years.
Policymakers “expressed concerns” about the pace of inflation’s return to 2 percent, Powell said, adding that wages are rising, “but not at a pace that would provide much upward impetus” to inflation.
The long-run federal funds rate, a barometer for the state of the economy over the long term, was cut to 2.5 percent from 2.8 percent.
St Louis Fed President James Bullard, who had argued that rates should be cut, dissented in Wednesday’s policy decision.
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],”
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day
Thousands of parents in Singapore are furious after a Cordlife Group Ltd (康盛人生集團), a major operator of cord blood banks in Asia, irreparably damaged their children’s samples through improper handling, with some now pursuing legal action. The ongoing case, one of the worst to hit the largely untested industry, has renewed concerns over companies marketing themselves to anxious parents with mostly unproven assurances. This has implications across the region, given Cordlife’s operations in Hong Kong, Macau, Indonesia, the Philippines and India. The parents paid for years to have their infants’ cord blood stored, with the understanding that the stem cells they contained