The US Federal Reserve was yesterday likely to point to strong economic growth, low unemployment and rising inflation as reasons to stay on a path of gradually lifting interest rates.
However, it was unlikely to make any interest rate moves.
The Fed’s statement might also discuss potential risks from rising trade tensions.
However, it was almost certain that the statement would not acknowledge the recent criticism lodged at the central bank from US President Donald Trump.
The Fed has already raised rates two times this year in March and June. It signaled at the June meeting that it expected to raise two more times this year.
Many analysts believe those hikes will occur next month and in December.
The string of quarter-point rate hikes is intended to prevent the US economy from overheating and pushing inflation from climbing too high.
However, higher rates make borrowing costlier for consumers and businesses, and can weigh down stock prices.
Trump has said he has little patience for the Fed’s efforts to restrain the economy to control inflation.
“Tightening now hurts all that we have done,” Trump tweeted last month, a day after he said in a television interview that he was “not happy” with the Fed’s rate increases.
Over the past quarter-century, US presidents have maintained silence in public about Fed actions, believing that lodging complaints would be counterproductive.
That is because it could produce even faster rate hikes if the central bank feels the need to convince financial markets that it will not yield to political pressure and allow inflation to rise to worrisome levels.
Following Trump’s comments, US Secretary of the Treasury Steven Mnuchin tried to strike a reassuring note that the White House does not want to interfere with the Fed’s policymaking.
“We as an administration absolutely support the independence of the Fed, and the president has made it clear that this is the Fed’s decision,” Mnuchin said on Fox News Sunday.
At the moment, economic growth is strong, rising at an annual rate of 4.1 percent in the April-to-June quarter, the best showing in nearly four years.
Unemployment is at a low 4 percent, and some analysts believe it will fall further when the government releases last month’s figures tomorrow.
However, there are worries as well, led by fears of what a Trump-led trade war might do to growth in the US and around the world.
Delivering the central bank’s semi-annual report to the US Congress last month, Fed Chairman Jerome Powell refrained from criticizing the Trump administration’s effort to use the threat of tariffs to try to lower trade barriers.
However, Powell said that the Fed was hearing a “rising chorus of concern” from business contacts about the harm a trade war could cause.
Powell has not publicly addressed Trump’s criticism of Fed rate hikes.
However, he had previously said in a radio interview that the central bank has long operated independently in making interest-rate decisions based on what was best for the economy and not in response to political pressure.
To many, Tatu City on the outskirts of Nairobi looks like a success. The first city entirely built by a private company to be operational in east Africa, with about 25,000 people living and working there, it accounts for about two-thirds of all foreign investment in Kenya. Its low-tax status has attracted more than 100 businesses including Heineken, coffee brand Dormans, and the biggest call-center and cold-chain transport firms in the region. However, to some local politicians, Tatu City has looked more like a target for extortion. A parade of governors have demanded land worth millions of dollars in exchange
An Indonesian animated movie is smashing regional box office records and could be set for wider success as it prepares to open beyond the Southeast Asian archipelago’s silver screens. Jumbo — a film based on the adventures of main character, Don, a large orphaned Indonesian boy facing bullying at school — last month became the highest-grossing Southeast Asian animated film, raking in more than US$8 million. Released at the end of March to coincide with the Eid holidays after the Islamic fasting month of Ramadan, the movie has hit 8 million ticket sales, the third-highest in Indonesian cinema history, Film
Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) revenue jumped 48 percent last month, underscoring how electronics firms scrambled to acquire essential components before global tariffs took effect. The main chipmaker for Apple Inc and Nvidia Corp reported monthly sales of NT$349.6 billion (US$11.6 billion). That compares with the average analysts’ estimate for a 38 percent rise in second-quarter revenue. US President Donald Trump’s trade war is prompting economists to retool GDP forecasts worldwide, casting doubt over the outlook for everything from iPhone demand to computing and datacenter construction. However, TSMC — a barometer for global tech spending given its central role in the
Alchip Technologies Ltd (世芯), an application-specific integrated circuit (ASIC) designer specializing in server chips, expects revenue to decline this year due to sagging demand for 5-nanometer artificial intelligence (AI) chips from a North America-based major customer, a company executive said yesterday. That would be the first contraction in revenue for Alchip as it has been enjoying strong revenue growth over the past few years, benefiting from cloud-service providers’ moves to reduce dependence on Nvidia Corp’s expensive AI chips by building their own AI accelerator by outsourcing chip design. The 5-nanometer chip was supposed to be a new growth engine as the lifecycle
RSS