US Federal Reserve Chairman Ben Bernanke and his colleagues may indicate the US recovery is gaining strength while repeating a pledge to keep the benchmark interest rate almost at zero for an “extended period.”
The Federal Open Market Committee (FOMC) gathers as growth in the final quarter of the year accelerates to more than 4 percent, the fastest pace in almost four years, according to analysts’ forecasts.
The FOMC will probably discuss how to eventually withdraw unprecedented programs to revive credit, including purchases of US$1.43 trillion in housing debt, economists said.
In a statement yesterday, Fed officials were expected possibly to head off investor expectations that the improving economy would prompt them to raise interest rates early next year.
While acknowledging that job losses are easing after last month’s drop in the unemployment rate, the FOMC could reaffirm that tight credit and weak income growth are among the risks to the recovery.
CONFIDENCE
“The last thing they want is for people to expect that tightening is closer,” said Laurence Meyer, vice chairman of Macroeconomic Advisers LLC in Washington and a former Fed governor. “They are going to increase their confidence about the sustainability of the expansion, but not become materially more optimistic about growth next year.”
The FOMC was scheduled to issue the statement at around 2:15pm after the end of its two-day meeting.
“Assuming they don’t drop ‘extended period,’ market reaction will probably be limited,” said James O’Sullivan, chief economist at MF Global Ltd in New York.
Macroeconomic Advisers raised its forecast for fourth-quarter growth last week to a 4.2 percent annual pace from 3.1 percent, while Credit Suisse and JPMorgan Chase & Co increased its estimate by 1 percentage point to 4.5 percent.
Retail sales last month climbed twice as much as economists had expected, while exports rose to the highest level in 11 months, government figures showed.
‘TWO BATTLES’
“The Fed has to fight two battles: supporting economic growth and showing the market it is concerned about potential inflation later on,” said Sung Won Sohn, former chief economist at Wells Fargo & Co and now a professor at California State University-Channel Islands in Camarillo, California. “Balancing inflation and economic growth and the communications related to that will be their most difficult challenge.”
Fed funds futures on the Chicago Board of Trade indicated on Tuesday a 53 percent chance that the FOMC will raise its main lending rate by at least a quarter-percentage point by its June meeting, compared with 35 percent odds a month ago.
NATIONAL SECURITY: The Chinese influencer shared multiple videos on social media in which she claimed Taiwan is a part of China and supported its annexation Freedom of speech does not allow comments by Chinese residents in Taiwan that compromise national security or social stability, the nation’s top officials said yesterday, after the National Immigration Agency (NIA) revoked the residency permit of a Chinese influencer who published videos advocating China annexing Taiwan by force. Taiwan welcomes all foreigners to settle here and make families so long as they “love the land and people of Taiwan,” Premier Cho Jung-tai (卓榮泰) told lawmakers during a plenary session at the Legislative Yuan in Taipei. The public power of the government must be asserted when necessary and the Ministry of
Proposed amendments would forbid the use of all personal electronic devices during school hours in high schools and below, starting from the next school year in August, the Ministry of Education said on Monday. The Regulations on the Use of Mobile Devices at Educational Facilities up to High Schools (高級中等以下學校校園行動載具使用原則) state that mobile devices — defined as mobile phones, laptops, tablets, smartwatches or other wearables — should be turned off at school. The changes would stipulate that use of such devices during class is forbidden, and the devices should be handed to a teacher or the school for safekeeping. The amendments also say
EMBRACING TAIWAN: US lawmakers have introduced an act aiming to replace the use of ‘Chinese Taipei’ with ‘Taiwan’ across all Washington’s federal agencies A group of US House of Representatives lawmakers has introduced legislation to replace the term “Chinese Taipei” with “Taiwan” across all federal agencies. US Representative Byron Donalds announced the introduction of the “America supports Taiwan act,” which would mandate federal agencies adopt “Taiwan” in place of “Chinese Taipei,” a news release on his page on the US House of Representatives’ Web site said. US representatives Mike Collins, Barry Moore and Tom Tiffany are cosponsors of the legislation, US political newspaper The Hill reported yesterday. “The legislation is a push to normalize the position of Taiwan as an autonomous country, although the official US
CHANGE OF TONE: G7 foreign ministers dropped past reassurances that there is no change in the position of the G7 members on Taiwan, including ‘one China’ policies G7 foreign ministers on Friday took a tough stance on China, stepping up their language on Taiwan and omitting some conciliatory references from past statements, including to “one China” policies. A statement by ministers meeting in Canada mirrored last month’s Japan-US statement in condemning “coercion” toward Taiwan. Compared with a G7 foreign ministers’ statement in November last year, the statement added members’ concerns over China’s nuclear buildup, although it omitted references to their concerns about Beijing’s human rights abuses in Xinjiang, Tibet and Hong Kong. Also missing were references stressing the desire for “constructive and stable relations with China” and
RSS