- Hong Kong stocks resume rally, oil dips after Middle East-fuelled surge
- Crude stable after Israel-Iran surge, Hong Kong stocks resume gains
- Hera spacecraft to probe asteroid deflected by defence test
- US dockworkers to head back to work after tentative deal
- After Helene's destruction, North Carolina starts to rebuild
- Dockers end three-day strike at Montreal port
- What next for OpenAI after $157 billion bonanza?
- Israel-Hamas war causes 86-percent dive in Gaza GDP: IMF
- Milan's Morata moves house after Inter-fan town mayor 'violates' privacy
- 'Devastating' storm hits Augusta National but Masters will go on
- Relief in Brazil, Asia over delay to EU deforestation rules
- Oil prices jump, stocks fall on Middle East tensions
- Biden says 'discussing' possible Israeli strikes on Iran oil facilities
- Oil prices rise, stocks fall on Middle East tensions
- Oil rallies, stocks mostly retreat on Middle East tensions
- Phasing out teen smoking could save 1.2 mn lives: study
- 'Welcome relief': Asia producers hail EU deforestation law delay
- Japan PM slated to announce plans for 'happiness index'
- Turkish inflation falls less than expected in September at 49.4%
- Easing inflation lifts profit at UK supermarket Tesco
- Skiing calls on UN climate science to combat melting future
- China wine industry looks to breed climate resilience
- Tokyo rallies on weak yen, Hong Kong drops after surge
- Dutch airline KLM unveils 'firm' cost-cutting measures
- Carpe diem: the Costa Rican women turning fish into fashion
- Senegal looks to aquaculture as fish stocks dwindle
- Will AI one day win a Nobel Prize?
- Climate change, economics muddy West's drive to curb Chinese EVs
- Argentina's Milei vetoes university budget after huge protests
- TotalEnergies plans to grow oil and gas production until 2030
- 2024 Nobels offer glimmer of hope as global crises mount
- Tokyo rallies on weak yen, Hong Kong reverses after surge
- Tunisia readies for vote as incumbent Saied eyes victory
- High childcare costs in US weigh on women's employment
- US voters seek help with crushing childcare costs
- Taiwan shuts down for second day as Typhoon Krathon to land
- Supercharged storms: how climate change amplifies cyclones
- Biden official urges talks as US port strike enters second day
- Huge protests in Argentina over public university cuts
- Rally in oil prices loses steam on mixed day for global stocks
- South America treated to rare 'ring of fire' eclipse
- Biden official says port strike deal not as far as parties think
- Mexico's new president offers apology for 1968 student massacre
- Historic funding round values OpenAI at $157 billion
- Mixed US car sales in Q3 as industry hopes for post-election bounce
- Thunderstorms are a 'boiling pot' of gamma rays, scientists find
- Scientists unlock secret of 'Girl With Pearl Earring'
- Dolphins flash friendly grins when they're ready to play
- Facing backlash, EU moves to delay deforestation rules
- US private sector adds more jobs than expected in September: ADP
BCC | -0.9% | 138.29 | $ | |
SCS | -1.98% | 12.62 | $ | |
RBGPF | 100% | 58.93 | $ | |
CMSC | -0.16% | 24.74 | $ | |
AZN | -2.12% | 77.93 | $ | |
RIO | -1.42% | 69.83 | $ | |
GSK | -2.81% | 38.37 | $ | |
BCE | -1.77% | 33.84 | $ | |
NGG | -2.7% | 66.97 | $ | |
JRI | -0.6% | 13.3 | $ | |
RYCEF | 1.15% | 6.98 | $ | |
VOD | -0.52% | 9.69 | $ | |
RELX | -1.46% | 46.61 | $ | |
CMSD | -0.16% | 24.89 | $ | |
BTI | -2.45% | 35.11 | $ | |
BP | 0.28% | 32.46 | $ |
Fed attacks US inflation with another interest rate hike
The US Federal Reserve on Wednesday again raised the benchmark interest rate by three-quarters of a percentage point in its ongoing battle to tamp down raging price pressures that are squeezing American families.
It was the second straight 75 basis point increase, and the fourth rate hike this year, as US central bankers move aggressively to cool the strongest surge in inflation in more than four decades, without derailing the world's largest economy.
While the Fed noted signs that the US economy is slowing, it signaled plans to continue to increase borrowing costs.
President Joe Biden is facing political backlash for surging prices, which he has mainly blamed on the Russian invasion of Ukraine that has sent global food and energy prices soaring.
Biden insists the US economy will avoid a recession, but even as his approval ratings have cratered, he has supported the Fed in its battle to quell inflation.
Fed Chair Jerome Powell and others have made it clear they are willing to risk a downturn and will keep raising interest rates until they see solid evidence that inflation is moving back towards the two percent goal.
In a vote that was unanimous -- unlike the decision made in June -- the policy-setting Federal Open Market Committee raised the policy lending rate to a range of 2.25 to 2.5 percent, after starting the year near zero.
"Recent indicators of spending and production have softened," the FOMC statement said.
But "inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher food and energy prices, and broader price pressures," the statement said, adding that it expects ongoing rate increases "will be appropriate."
Economists say this has been the most aggressive Fed tightening cycle since the 1980s, when stagflation -- a wage-price spiral and stagnant growth -- crippled the US economy.
The challenge for policymakers is to quell inflation before it becomes dangerously entrenched without sending the world's largest economy into a recession that would reverberate around the globe.
Powell has argued that the US economy is on solid footing and able to withstand the rate increases, and Wednesday's statement noted that "job gains have been robust in recent months, and the unemployment rate has remained low."
But the FOMC also made clear it is "strongly committed to returning inflation to its two percent objective" -- and prepared to do more if that goal is threatened.
All eyes will be on Powell's press conference starting at 2:30 pm (1830 GMT) for indications of whether he thinks the Fed may be able to ease up or will continue the aggressive moves.
- Recession risk -
Policymakers seemed to acknowledge that some factors are beyond their control.
"Russia's war against Ukraine is causing tremendous human and economic hardship. The war and related events are creating additional upward pressure on inflation and are weighing on global economic activity," the statement said.
While prices have continued to rise, with home prices hitting a new record, rising mortgage rates have slowed housing sales for five straight months.
But global oil prices are trending down, with the US benchmark WTI falling below $95 a barrel from a peak of more than $123 a barrel in March, and gasoline prices at the pump have fallen more than 70 cents from the record of just over $5 a gallon in mid-June.
Meanwhile, the job market has remained strong, and surveys show inflation expectations in the months ahead have started to trend lower.
Policymakers want to engineer a "soft landing," taming inflation without causing a downturn, but economists warn they face an increasingly narrow path to success and it would be easy to overshoot by being too aggressive.
GDP in the first quarter contracted 1.6 percent, and the first reading on the April-June period is due out Thursday.
Though the consensus forecast calls for modest growth, many economists expect a downturn.
Two quarters of negative growth are generally considered a sign the economy is in recession, although that is not the official criteria.
"The Fed is now stuck between a rock and a hard place, with no easy way out without the economy feeling pain," KPMG chief economist Diane Swonk said in an analysis, noting that "Powell has started to underscore that reality by admitting a recession could occur."
"Brace yourself," Swonk said on Twitter, likening the surge in inflation to a cancer that will spread if left untreated.
She said the benchmark interest rate likely will have to rise to a range of 3.75-4.0 percent, which would mean another 150 basis points of increase in coming months.
Kansas City Fed President Esther George dissented at the June meeting, warning that moving too fast could be "unsettling" and raise recession fears, but voted for the big rate hike this time.
A.Leibowitz--CPN