Strong recovery of the US economy means that US interest rates are likely to rise in the next few months, the British newspaper The Times reported yesterday, quoting US Treasury Secretary John Snow.
And Snow also said that financial markets had mistakenly believed that the US wanted to see the dollar fall owing to misinterpretation of a remark he had made at the G7 summit of industrialized nations in Dubai a month ago.
The US had never intended to talk the dollar down, he told The Times.
Snow said that Washington would welcome an increase of interest rates because, far from being a dampener on the economy, it would underline the strength of growth prospects in the US.
Given the US economy's new-found strength, Snow said he would be "frustrated and concerned" if there were no upward movement in interest rates.
In the US, the central bank, the Federal Reserve, has independent responsibility for monetary policy.
Although Snow refrained from discussing monetary decisions, his comments implied that the Bush administration was preparing for much higher rates in the election year ahead.
This is in contrast with sentiment on Wall Street where many leading banks are still predicting that there will be no tightening of monetary policy until 2005, the newspaper said.
Snow said that economic growth in the year ahead would be about 4.0 percent and would "produce loads of jobs."
Referring to the rule of thumb that the US must generate 200,000 jobs a month to cut unemployment, he noted that growth of 4.0 percent would "translate into roughly 2 million new jobs from the third quarter of this year to the third quarter of 2004" or an average of about 200,000 a month, the report said.
He added: "I would stake my reputation on employment growth happening before Christmas. I'd bet dollars to doughnuts that we're going to see a pickup in jobs in the next few months."
Asked about the impact of such rapid growth on interest rates, Snow said: "Interest rates are the price of capital. As profits increase, there is going to be a need for a capital-rationing process."
"I'd be frustrated and concerned if there were not some upward movement [in rates]," he said.
Asked about the dollar, Snow said that US policy had been misunderstood by many commentators, although not by the markets themselves.
The dollar fell sharply in the month after a statement issued in Dubai by G7 ministers, which called for greater flexibility in exchange rates.
The US had never intended to talk the dollar down against other currencies, Snow said, observing that exchange rates were set by the market.
He said that misunderstanding had arisen over his use of the word "milestone" to describe a statement by finance ministers from the G7 which had referred to "greater flexibility" of exchange rates.
Snow said that the "milestone" was a commitment by all G7 countries to stimulate growth at home.
CAUTION: Taiwanese should be alert, even if they have just liked or shared posts that would breach Beijing’s national security legislation for Hong Kong, the council said Due to the newly implemented Hong Kong national security legislation, the Mainland Affairs Council (MAC) has drawn up a list of what it described as “high-risk groups,” cautioning them not to travel to Hong Kong. People who support independence for Taiwan, Hong Kong, Tibet and Xinjiang; those who are critical of the Chinese Communist Party (CCP), the Hong Kong government and the “one country, two systems” concept; and those who donated to or voiced support for the Hong Kong anti-extradition bill movement are urged to refrain from visiting Hong Kong, the council said on its Web site. It released two posts on
NEW HONG KONG LAW: A visit to Beijing-friendly nations or those with weak judicial systems could leave people at risk of deportation to China, a former MAC official said Beijing could request countries with which it has extradition agreements to deport Taiwanese to China to face criminal charges following the implementation of national security legislation for Hong Kong, a former Mainland Affairs Council (MAC) official warned yesterday. Some developing countries, and those close to China because of the Belt and Road Initiative, are likely to accommodate Beijing’s requests to extradite Taiwanese to China, said former deputy MAC minister Chen Ming-chi (陳明祺), who served from July 2, 2018, until May 20, and then returned to his former post as an assistant professor of sociology at National Tsing Hua University. While Taiwanese
MORAL COURAGE: The Ministry of Foreign Affairs urged the global community to face China’s intention to subdue Taiwan and reject such irrational requests The Ministry of Foreign Affairs yesterday strongly condemned the Chinese government for meddling with US officials’ interactions with Taiwan after FBI Director Christopher Wray revealed China’s efforts to discourage US officials from visiting Taiwan. The greatest long-term threat to the US’ information security and intellectual property, as well as its economic vitality, is China’s counterintelligence and economic espionage operations, Wray told a video event at the Hudson Institute in Washington. Beijing is engaged in a highly sophisticated and maligning foreign influence campaign, with methods that include bribery, blackmail and covert deals, he said. Giving an example, Wray said that when a US official
IN THE PIPELINE: The Ministry of National Defense said the sale, expected to take effect in one month, would be the seventh arms sale under the Trump administration The government yesterday thanked the US for approving the possible sale of a US$620 million missile repair and recertification package to Taiwan. The US Department of State has approved the sale of a package to recertify Patriot Advanced Capability-3 (PAC-3) missiles to the Taipei Economic and Cultural Representative Office (TECRO) in Washington for an estimated US$620 million, the US Defense Security Cooperation Agency said in a news release on Thursday. The agency has delivered the required certification to the US Congress, notifying it of the possible sale, it added. The TECRO had requested to buy an upgrade package that would support an operational