Facing a murky economic outlook on the one hand and US elections on the other, the Federal Reserve looks set to hold interest rates steady this week.
The US central bank's federal open market committee (FOMC) will decide at its latest meeting, a two-day affair over tomorrow and Wednesday, to keep its headline rate at 5.25 percent, economists believe.
"There's no reason for them to do anything, expect stick to their wait-and-see policy," Global Insight economist Nigel Gault said.
"They still claim the economy is slowing but it is not clear by how much, so there's no urgency to cut interest rates," he said.
In August, the Fed called off a long-running campaign of hikes by standing pat for the first time in 17 meetings.
The world's biggest economy had slowed from a 5.6 percent acceleration in the first quarter to grow by just 2.6 percent in the second.
Data since then have suggested the economy is still flagging, but not by so much that the US is at risk of recession. Inflation, though, has remained stubbornly high for the Fed's liking.
Leading the way down for the US economy is the housing market, which is hitting the brakes hard after a years-long boom that did much to stoke consumer spending.
But for Lehman Brothers economist Drew Matus, "the Fed is uncertain about the ultimate impact of the housing correction."
Meanwhile over on Wall Street, market betting that the Fed will stay on hold for the foreseeable future has helped propel the Dow Jones index of blue chip shares over the 12,000 mark for the first time ever.
Overshadowing the Fed meeting is the Nov. 7 election for Congress. Opposition Democrats believe they have a fighting chance of retaking one or both houses.
Historically, the Fed has been reluctant to shift tack on monetary policy just before elections, unless its hand is forced by economic or market events.
"The Fed is in the fortunate position that economic factors argue for no change," Gault said.
"If economic data were pointing towards a rate hike, that would make things a little tricky for the Fed with the election just coming," he said.
In fact, most economists expect no change from the Fed for some time to come.
"The next move will be a cut, but I'm not looking for that until the middle of next year," Societe Generale economist Stephen Gallagher said.
NO RECIPROCITY: Taipei has called for cross-strait group travel to resume fully, but Beijing is only allowing people from its Fujian Province to travel to Matsu, the MAC said The Mainland Affairs Council (MAC) yesterday criticized an announcement by the Chinese Ministry of Culture and Tourism that it would lift a travel ban to Taiwan only for residents of China’s Fujian Province, saying that the policy does not meet the principles of reciprocity and openness. Chinese Deputy Minister of Culture and Tourism Rao Quan (饒權) yesterday morning told a delegation of Chinese Nationalist Party (KMT) lawmakers in a meeting in Beijing that the ministry would first allow Fujian residents to visit Lienchiang County (Matsu), adding that they would be able to travel to Taiwan proper directly once express ferry
FAST RELEASE: The council lauded the developer for completing model testing in only four days and releasing a commercial version for use by academia and industry The National Science and Technology Council (NSTC) yesterday released the latest artificial intelligence (AI) language model in traditional Chinese embedded with Taiwanese cultural values. The council launched the Trustworthy AI Dialogue Engine (TAIDE) program in April last year to develop and train traditional Chinese-language models based on LLaMA, the open-source AI language model released by Meta. The program aims to tackle the information bias that is often present in international large-scale language models and take Taiwanese culture and values into consideration, it said. Llama 3-TAIDE-LX-8B-Chat-Alpha1, released yesterday, is the latest large language model in traditional Chinese. It was trained based on Meta’s Llama-3-8B
STUMPED: KMT and TPP lawmakers approved a resolution to suspend the rate hike, which the government said was unavoidable in view of rising global energy costs The Ministry of Economic Affairs yesterday said it has a mandate to raise electricity prices as planned after the legislature passed a non-binding resolution along partisan lines to freeze rates. Chinese Nationalist Party (KMT) lawmakers proposed the resolution to suspend the price hike, which passed by a 59-50 vote. The Taiwan People’s Party (TPP) voted with the KMT. Legislative Speaker Han Kuo-yu (韓國瑜) of the KMT said the resolution is a mandate for the “immediate suspension of electricity price hikes” and for the Executive Yuan to review its energy policy and propose supplementary measures. A government-organized electricity price evaluation board in March
NOVEL METHODS: The PLA has adopted new approaches and recently conducted three combat readiness drills at night which included aircraft and ships, an official said Taiwan is monitoring China’s People’s Liberation Army (PLA) exercises for changes in their size or pattern as the nation prepares for president-elect William Lai’s (賴清德) inauguration on May 20, National Security Bureau (NSB) Director-General Tsai Ming-yen (蔡明彥) said yesterday. Tsai made the comment at a meeting of the Legislative Yuan’s Foreign Affairs and National Defense Committee, in response to Democratic Progressive Party (DPP) Legislator Wang Ting-yu’s (王定宇) questions. China continues to employ a carrot-and-stick approach, in which it applies pressure with “gray zone” tactics, while attempting to entice Taiwanese with perks, Tsai said. These actions aim to help Beijing look like it has