Federal Reserve chairman Jerome Powell on Wednesday said the US central bank could cut interest rates as soon as September, nearly completing the Fed's policy cycle after leaving rates unchanged for almost a year.
"We’re getting closer to the point at which it’ll be appropriate to reduce our policy rate, but we’re not quite at that point," he told reporters.
After leaving the Fed's target range between 5.25 and 5.50 per cent, Mr Powell acknowledged the “considerable progress” made in taming inflation, while also acknowledging the labour market is continuing to move into balance.
“The question will be whether the totality of the data, the evolving outlook in the balance of risks are consistent with rising confidence on inflation and maintaining a solid labour market,” said.
“If that test is met, the reduction in our policy rate could be on the table as soon as the next meeting."
Mr Powell also said there was a “broad sense” among other members on the Federal Open Market Committee to soon begin cutting rates.
“The decision was unanimous … but there is a real discussion back and forth, what the case would be for moving at this meeting,” he said.
Mr Powell appeared to acknowledge that there was some disagreement on when to cut interest rates, saying that a “strong majority” supported leaving them unchanged on Wednesday, rather than all members.
“We suspect today's decision, post-meeting statement and Powell's press conference statements reflect a compromise among the committee members,” Wells Fargo economists Sarah House and Michael Pugliese wrote in a note.
“To thread the needle, we think chair Powell arrived at a compromise: hold rates steady at this meeting, but send overt signals to the market and broader public that the base case is for rate cuts starting soon.”
Art Hogan, chief market strategist at B Riley Wealth, said a significant move like a rate cut could would require consensus among all policy-voting officials.
"I think that now what we'll hear is a very well choreographed message from the Fed speakers that can go back on the tour and talk about what they're thinking about monetary policy," Mr Hogan said.
"And I think that tone change will further solidify the fact that they're getting closer to feeling comfortable enough to pull the trigger here."
Traders have now virtually locked in a September rate cut, with about 84 per cent looking at a quarter-rate reduction, according to CME's FedWatch tool. About 16 per cent forecast a cut of 50 basis points.
"It was the Fed's game to lose, meaning pushing back against the consensus that there's a September rate cut would have been disappointing for the market, and not doing that ... was a victory for both the market and the Fed in terms of messaging," Mr Hogan said.
Should the Fed move to cut rates in September, the Central Bank of the UAE would be expected to follow as its currency is pegged to the dollar.
The UAE's central bank held interest rates steady at 5.40 per cent on Wednesday after the Fed's announcement.
Behind the Fed's shift towards rate cuts is a series of positive economic data from the second quarter, highlighted by moderating inflation.
Last week's Personal Consumption Expenditures Price Index highlighted the progress the Fed has made, with headline inflation coming in at 2.5 per cent.
The Fed has also seen positive developments in the labour market, as the unemployment rate has climbed to a still-healthy 4.1 per cent while job gains have moderated.
In its post-meeting statement, the Federal Open Market Committee acknowledged these two risks are continuing to move into better balance.
The Fed still finds itself in a delicate scenario, as Mr Powell acknowledged.
Cutting rates too soon could undo the progress the Fed has made on taming inflation, while waiting for too long could lead to a recession and a sharp increase in the unemployment rate.
Such a scenario has led some economists, including former New York Fed Governor Bill Dudley, to push for cutting interest rates now.
“Although it might already be too late to fend off a recession by cutting rates, dawdling now unnecessarily increases the risk,” Mr Dudley wrote for Bloomberg Opinion last week.
Jetour T1 specs
Engine: 2-litre turbocharged
Power: 254hp
Torque: 390Nm
Price: From Dh126,000
Available: Now
COMPANY%20PROFILE
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AUSTRALIA%20SQUAD
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How to wear a kandura
Dos
- Wear the right fabric for the right season and occasion
- Always ask for the dress code if you don’t know
- Wear a white kandura, white ghutra / shemagh (headwear) and black shoes for work
- Wear 100 per cent cotton under the kandura as most fabrics are polyester
Don’ts
- Wear hamdania for work, always wear a ghutra and agal
- Buy a kandura only based on how it feels; ask questions about the fabric and understand what you are buying
EA Sports FC 25
Developer: EA Vancouver, EA Romania
Publisher: EA Sports
Consoles: Nintendo Switch, PlayStation 4&5, Xbox One and Xbox Series X/S
Rating: 3.5/5
A%20MAN%20FROM%20MOTIHARI
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Sui Dhaaga: Made in India
Director: Sharat Katariya
Starring: Varun Dhawan, Anushka Sharma, Raghubir Yadav
3.5/5
THE BIO
Favourite car: Koenigsegg Agera RS or Renault Trezor concept car.
Favourite book: I Am Pilgrim by Terry Hayes or Red Notice by Bill Browder.
Biggest inspiration: My husband Nik. He really got me through a lot with his positivity.
Favourite holiday destination: Being at home in Australia, as I travel all over the world for work. It’s great to just hang out with my husband and family.
SPEC%20SHEET%3A%20APPLE%20IPHONE%2014
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F1 The Movie
Starring: Brad Pitt, Damson Idris, Kerry Condon, Javier Bardem
Director: Joseph Kosinski
Rating: 4/5
DMZ facts
- The DMZ was created as a buffer after the 1950-53 Korean War.
- It runs 248 kilometers across the Korean Peninsula and is 4km wide.
- The zone is jointly overseen by the US-led United Nations Command and North Korea.
- It is littered with an estimated 2 million mines, tank traps, razor wire fences and guard posts.
- Donald Trump and Kim Jong-Un met at a building in Panmunjom, where an armistice was signed to stop the Korean War.
- Panmunjom is 52km north of the Korean capital Seoul and 147km south of Pyongyang, North Korea’s capital.
- Former US president Bill Clinton visited Panmunjom in 1993, while Ronald Reagan visited the DMZ in 1983, George W. Bush in 2002 and Barack Obama visited a nearby military camp in 2012.
- Mr Trump planned to visit in November 2017, but heavy fog that prevented his helicopter from landing.
Leaderboard
63 - Mike Lorenzo-Vera (FRA)
64 - Rory McIlroy (NIR)
66 - Jon Rahm (ESP)
67 - Tom Lewis (ENG), Tommy Fleetwood (ENG)
68 - Rafael Cabrera-Bello (ESP), Marcus Kinhult (SWE)
69 - Justin Rose (ENG), Thomas Detry (BEL), Francesco Molinari (ITA), Danny Willett (ENG), Li Haotong (CHN), Matthias Schwab (AUT)
COMPANY%20PROFILE
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Most F1 world titles
7 — Michael Schumacher (1994, ’95, 2000, ’01 ’02, ’03, ’04)
7 — Lewis Hamilton (2008, ’14,’15, ’17, ’18, ’19, ’20)
5 — Juan Manuel Fangio (1951, ’54, ’55, ’56, ’57)
4 — Alain Prost (1985, ’86, ’89, ’93)
4 — Sebastian Vettel (2010, ’11, ’12, ’13)
Stree
Producer: Maddock Films, Jio Movies
Director: Amar Kaushik
Cast: Rajkummar Rao, Shraddha Kapoor, Pankaj Tripathi, Aparshakti Khurana, Abhishek Banerjee
Rating: 3.5
The biog
Name: Mariam Ketait
Emirate: Dubai
Hobbies: I enjoy travelling, experiencing new things, painting, reading, flying, and the French language
Favourite quote: "Be the change you wish to see" - unknown
Favourite activity: Connecting with different cultures
UAE and Russia in numbers
UAE-Russia ties stretch back 48 years
Trade between the UAE and Russia reached Dh12.5 bn in 2018
More than 3,000 Russian companies are registered in the UAE
Around 40,000 Russians live in the UAE
The number of Russian tourists travelling to the UAE will increase to 12 percent to reach 1.6 million in 2023
Joy%20Ride%20
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Dark Souls: Remastered
Developer: From Software (remaster by QLOC)
Publisher: Namco Bandai
Price: Dh199
UAE currency: the story behind the money in your pockets
Our legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants
Killing of Qassem Suleimani
Mohammed bin Zayed Majlis
Types of bank fraud
1) Phishing
Fraudsters send an unsolicited email that appears to be from a financial institution or online retailer. The hoax email requests that you provide sensitive information, often by clicking on to a link leading to a fake website.
2) Smishing
The SMS equivalent of phishing. Fraudsters falsify the telephone number through “text spoofing,” so that it appears to be a genuine text from the bank.
3) Vishing
The telephone equivalent of phishing and smishing. Fraudsters may pose as bank staff, police or government officials. They may persuade the consumer to transfer money or divulge personal information.
4) SIM swap
Fraudsters duplicate the SIM of your mobile number without your knowledge or authorisation, allowing them to conduct financial transactions with your bank.
5) Identity theft
Someone illegally obtains your confidential information, through various ways, such as theft of your wallet, bank and utility bill statements, computer intrusion and social networks.
6) Prize scams
Fraudsters claiming to be authorised representatives from well-known organisations (such as Etisalat, du, Dubai Shopping Festival, Expo2020, Lulu Hypermarket etc) contact victims to tell them they have won a cash prize and request them to share confidential banking details to transfer the prize money.
Labour dispute
The insured employee may still file an ILOE claim even if a labour dispute is ongoing post termination, but the insurer may suspend or reject payment, until the courts resolve the dispute, especially if the reason for termination is contested. The outcome of the labour court proceedings can directly affect eligibility.
- Abdullah Ishnaneh, Partner, BSA Law
TV: World Cup Qualifier 2018 matches will be aired on on OSN Sports HD Cricket channel
