The US Federal Reserve delivered another 75 basis points rate increase at its meeting last week, bringing the total increase in the Fed Funds rate to 225 bps since March.
Policy rates in the US are now as high as they reached during the Fed’s last cycle of increases from 2015 to 2018 — although this year, the central bank has achieved that level in only five months.
The day after the rate increase, preliminary data showed that the US economy contracted by about 1 per cent on a seasonally adjusted annual basis in the second quarter of 2022.
This was the second consecutive quarterly decline in economic output in the world’s largest economy and a technical recession, according to most economics textbooks.
However, calling a recession in the US is the job of a group of economists at the National Bureau of Economic Research (NBER). Their definition is a little broader and more subjective than the textbook one.
The NBER defines a recession as a “significant decline in economic activity that is spread across the economy and that lasts more than a few months”.
With the unemployment rate at 3.6 per cent in June and an average of 457,000 new jobs added every month since the start of this year, it is unlikely that the NBER would say that the US is currently in recession.
This is a view echoed by US Treasury Secretary Janet Yellen and Fed Chairman Jerome Powell.
At its last meeting, the Fed noted that some “recent indicators of spending and production have softened”, alluding to some of the weaker data such as purchasing managers' index surveys falling below 50 or a downturn in the property market. However, the central bank said it remains “strongly committed to returning inflation” to target levels and that it was “highly attentive to inflation risks”.
Unlike the last split decision to increase rates by 75 bps in June, the July vote was unanimous among Fed policymakers.
The question then is where the Fed goes from here. The next meeting is set to conclude on September 21, with two new inflation and employment readings and a series of additional economic data set to be digested before then.
In his comments after last week’s Federal Open Market Committee meeting, Mr Powell signalled that a period of slower growth and some softening in the labour market would probably be necessary to bring inflation down towards the Fed’s 2 per cent target.
Significantly, he did not rule out another outsize rate increase.
While inflation is expected to ease in the coming months, this will be a slow process and the risks from further supply shocks are to the upside.
The Fed has committed itself to bringing inflation down on a sustained basis before it considers halting the pace of policy normalisation and we are hesitant that the next two inflation prints — July and August — will give the Fed much conviction that the inflation story has turned.
As a result, Emirates NBD expects the Fed to push ahead with rate increases through the rest of this year, albeit at a slower pace than in the June and July meetings.
We have pencilled in another 150 bps in rate increases by the end of this year, slightly more than the market is currently pricing.
Khatija Haque is chief economist and head of research at Emirates NBD.
Red flags
- Promises of high, fixed or 'guaranteed' returns.
- Unregulated structured products or complex investments often used to bypass traditional safeguards.
- Lack of clear information, vague language, no access to audited financials.
- Overseas companies targeting investors in other jurisdictions - this can make legal recovery difficult.
- Hard-selling tactics - creating urgency, offering 'exclusive' deals.
Courtesy: Carol Glynn, founder of Conscious Finance Coaching
The specs
Common to all models unless otherwise stated
Engine: 4-cylinder 2-litre T-GDi
0-100kph: 5.3 seconds (Elantra); 5.5 seconds (Kona); 6.1 seconds (Veloster)
Power: 276hp
Torque: 392Nm
Transmission: 6-Speed Manual/ 8-Speed Dual Clutch FWD
Price: TBC
UAE currency: the story behind the money in your pockets
Sour%20Grapes
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more from Janine di Giovanni
The biog
Name: Atheja Ali Busaibah
Date of birth: 15 November, 1951
Favourite books: Ihsan Abdel Quddous books, such as “The Sun will Never Set”
Hobbies: Reading and writing poetry
Mohammed bin Zayed Majlis
Jetour T1 specs
Engine: 2-litre turbocharged
Power: 254hp
Torque: 390Nm
Price: From Dh126,000
Available: Now
Company%20Profile
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MATCH INFO
Champions League quarter-final, first leg
Tottenham Hotspur v Manchester City, Tuesday, 11pm (UAE)
Matches can be watched on BeIN Sports
Killing of Qassem Suleimani
The five pillars of Islam
UAE currency: the story behind the money in your pockets
The National Archives, Abu Dhabi
Founded over 50 years ago, the National Archives collects valuable historical material relating to the UAE, and is the oldest and richest archive relating to the Arabian Gulf.
Much of the material can be viewed on line at the Arabian Gulf Digital Archive - https://www.agda.ae/en
What the law says
Micro-retirement is not a recognised concept or employment status under Federal Decree Law No. 33 of 2021 on the Regulation of Labour Relations (as amended) (UAE Labour Law). As such, it reflects a voluntary work-life balance practice, rather than a recognised legal employment category, according to Dilini Loku, senior associate for law firm Gateley Middle East.
“Some companies may offer formal sabbatical policies or career break programmes; however, beyond such arrangements, there is no automatic right or statutory entitlement to extended breaks,” she explains.
“Any leave taken beyond statutory entitlements, such as annual leave, is typically regarded as unpaid leave in accordance with Article 33 of the UAE Labour Law. While employees may legally take unpaid leave, such requests are subject to the employer’s discretion and require approval.”
If an employee resigns to pursue micro-retirement, the employment contract is terminated, and the employer is under no legal obligation to rehire the employee in the future unless specific contractual agreements are in place (such as return-to-work arrangements), which are generally uncommon, Ms Loku adds.
The Perfect Couple
Starring: Nicole Kidman, Liev Schreiber, Jack Reynor
Creator: Jenna Lamia
Rating: 3/5
Electric scooters: some rules to remember
- Riders must be 14-years-old or over
- Wear a protective helmet
- Park the electric scooter in designated parking lots (if any)
- Do not leave electric scooter in locations that obstruct traffic or pedestrians
- Solo riders only, no passengers allowed
- Do not drive outside designated lanes
TO ALL THE BOYS: ALWAYS AND FOREVER
Directed by: Michael Fimognari
Starring: Lana Condor and Noah Centineo
Two stars
The%20specs
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MATCH INFO
Osasuna 1 Real Madrid 4
Osasuna: García (14')
Real Madrid: Isco (33'), Ramos (38'), Vázquez (84'), Jovic (90' 2)
BMW M5 specs
Engine: 4.4-litre twin-turbo V-8 petrol enging with additional electric motor
Power: 727hp
Torque: 1,000Nm
Transmission: 8-speed auto
Fuel consumption: 10.6L/100km
On sale: Now
Price: From Dh650,000
Global state-owned investor ranking by size
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United States
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China
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UAE
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Japan
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5
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Norway
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Canada
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Singapore
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Australia
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Saudi Arabia
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South Korea
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The specs
Engine: 4.0-litre V8 twin-turbocharged and three electric motors
Power: Combined output 920hp
Torque: 730Nm at 4,000-7,000rpm
Transmission: 8-speed dual-clutch automatic
Fuel consumption: 11.2L/100km
On sale: Now, deliveries expected later in 2025
Price: expected to start at Dh1,432,000
Specs
Engine: Duel electric motors
Power: 659hp
Torque: 1075Nm
On sale: Available for pre-order now
Price: On request
Difference between fractional ownership and timeshare
Although similar in its appearance, the concept of a fractional title deed is unlike that of a timeshare, which usually involves multiple investors buying “time” in a property whereby the owner has the right to occupation for a specified period of time in any year, as opposed to the actual real estate, said John Peacock, Head of Indirect Tax and Conveyancing, BSA Ahmad Bin Hezeem & Associates, a law firm.
