One of the US Federal Reserve’s biggest skeptics about the strength of the global expansion signaled the US economy might be strong enough to withstand an interest-rate increase soon, as key policymakers coalesce around tightening at their next meeting in the middle of this month.
“Assuming continued progress, it will likely be appropriate soon to remove additional accommodation, continuing on a gradual path,” Fed Governor Lael Brainard said in the text of a speech on Wednesday at Harvard University in Cambridge, Massachusetts. “We are closing in on full employment, inflation is moving gradually toward our target, foreign growth is on more solid footing and risks to the outlook are as close to balanced as they have been in some time.”
Brainard, who for months has played the role of lead dove at the Fed by arguing to keep rates lower for longer, said the US economy “appears to be in transition.”
If continued, that would allow the central bank not only to normalize rates gradually, but also begin considering when and how to reduce the size of its US$4.5 trillion balance sheet, she said.
Her improved outlook might add momentum to rising expectations among investors that the Fed would raise rates by a quarter percentage point when the Federal Open Market Committee gathers in Washington on March 14 and March 15.
Hawkish comments from New York Fed President William Dudley and San Francisco’s John Williams on Tuesday already significantly boosted those expectations.
Brainard said she expects the US economy to continue making progress toward the Fed’s goals, driven by growth in consumption, adding that signs of improved business investment are rising.
“The contrast with the situation a year ago is sharp,” she said.
A former undersecretary of the Treasury for international affairs, Brainard also cited favorable developments in a number of major foreign economies.
“Near-term risks to the United States from abroad appear to have diminished,” she said. “Recoveries are gaining traction in China, Europe and Japan, in part reflecting greater confidence in their respective policy environments.”
However, Brainard added that perils remain for the Fed in navigating interest rates out of historically low territory.
Chief among those was the persisting proximity of rates to zero and the likelihood that rates would return there if the economy suffered a negative shock.
Charming US President Donald Trump one week, angering China the next, Japanese Prime Minister Sanae Takaichi has had a busy start and is riding high in the polls, all on a few hours of sleep a night. However, the honeymoon might end soon for the Margaret Thatcher-admiring leader if a spat with China escalates further and she fails to keep inflation in check. “I believe Prime Minister Takaichi will surely do what she needs to do, so I trust her,” Kozue Otsuka, 50, told reporters at a festival this week for business owners seeking good fortune. While buying a lucky kumade rake featuring
TECH TITANS: Amazon’s latest chip joins Google in competing for the 90 percent market share held by Nvidia, which claims it is ‘a generation ahead of the industry’ Amazon Web Services (AWS) on Tuesday launched its in-house-built Trainium3 artificial intelligence (AI) chip, marking a significant push to compete with Nvidia Corp in the lucrative market for AI computing power. The move intensifies competition in the AI chip market, where Nvidia dominates with an estimated 80 to 90 percent market share for products used in training large language models that power the likes of ChatGPT. Google last week caused tremors in the industry when it was reported that Facebook-parent Meta Platforms Inc would employ Google AI chips in data centers, signaling new competition for Nvidia. This followed the release last month of
INSULATED: The company said it is less exposed to global complications, as it has built a strong footprint worldwide, and has multiple sources of rare earths and raw minerals Merck Group yesterday said it would ramp up production next year at its new flagship facility in Kaohsiung’s Lujhu District (路竹) to satisfy growing demand for advanced semiconductor materials and specialty gases, and to address supply resilience issues amid mounting geopolitical risks. Merck made the remarks during a news conference before the inauguration of its 500 million euros (US$582.1 million) facility, which is also to supply other markets in the Asia-Pacific region, it said. Merck executive board deputy chair and electronics CEO Kai Beckmann told reporters the company adopted a “local-for-local” strategy about seven years ago to address the cycle time of
Two companies wholly owned by the daughter of the founder of Hon Hai Precision Industry Co (鴻海精密) on Monday reported to the Taiwan Stock Exchange that they would dispose of all of the Hon Hai shares they hold. In filings with the exchange, Hong Wei Investment Co (鋐維) said it would sell the 2.771 million Hon Hai shares it holds and Frontier Investment Corp (承鋒投資) said it would sell its 2.409 million Hon Hai shares from tomorrow until Jan. 3 next year. The two companies are wholly owned and chaired by Shirley Gou (郭曉玲), the eldest daughter of Hon Hai founder Terry
RSS