Federal Reserve Chairman Jerome Powell on Friday gave his strongest indication yet that US central bank is on the cusp of cutting interest rates, pointing to a decline in inflation and an “unmistakable” cooling of the American labour market.
“The upside risks to inflation have diminished. And the downside risks to employment have increased,” he said during his keynote address at the Jackson Hole Symposium in Wyoming.
“The time has come for policy to adjust. The direction of travel is clear.”
While he offered no further clues on the pace of rate cuts, Mr Powell's remarks at the annual gathering of central bankers cemented expectations of a rate cut when the Fed holds its next two-day meeting in September.
Markets had already locked in a September rate cut, an initial cut of 25 basis points after Mr Powell's remarks.
New phase in inflation battle unfolds
His remarks also marked the beginning of a phase in the Fed's quest to restore price stability, following the 2022 post-pandemic inflation surge.
The Fed began raising rates that year up its target range from near-zero to its current range of 5.25 to 5.50 per cent. The Fed has held rates steady for more than a year.
The Fed's preferred inflation metric has since fallen from its 2022 peak of 7.1 per cent to its current 2.5 per cent level, not far off from its 2 per cent target.
“My confidence has grown that inflation is on a sustainable path back to 2 per cent,” Mr Powell said.
Although he did not outright declare victory, his remarks on Friday might have come the closest to it.
“While the task is not complete, we have made a good deal of progress,” he said.
Change in tone
One notable difference in Mr Powell's address was his current assessment of the US labour market.
With the inflation issue more or less settled, the Fed is now focused on the other side of its dual mandate, which is maximum employment.
Data from recent months shows that the labour market, once a source of inflationary pressures, is now cooling. The unemployment rate has ticked up from 3.7 per cent at the start of the year to 4.3 per cent – still low by historical standards – while job gains have slowed.
Mr Powell, like many economists, said the increase in unemployment was the result of more workers in the labour force rather than permanent layoffs.
“Even so, the cooling in labour market conditions is unmistakable,” Mr Powell said, adding that he will not tolerate any further softening in the jobs market.
“We do not seek or welcome further cooling in labour market conditions,” he said.
Derek Tang, co-founder of the LHMeyer firm in Washington, said Mr Powell's assessment of the US jobs market was much “darker” than how he viewed it before the July employment report.
“And you know that that darker tone, I think translates into … more possibility that the Fed could cut rates more quickly than what it originally said,” Mr Tang said.
Minutes released by the Federal Open Market Committee on Wednesday already showed that some members were open to a rate cut in July, but a vast majority were supportive of cutting rates next month. Those minutes “add credence to our view that September will mark the start of the monetary easing cycle,” Wells Fargo economists wrote to clients.
August's jobs report could determine just how fast the Fed moves.
While there is a range of perspectives among other members on the policy-setting FOMC, Mr Powell is “quite worried that the kind of slowdown in the labour market is going to speed up,” Mr Tang added.
Mr Powell also said he believes it remains possible to return inflation to 2 per cent while maintaining a strong labour market.
“We will do everything we can to support a strong labour market as we make further progress towards price stability.”
Mr Powell and his colleagues at the central bank have been trying to engineer a soft landing, whereby they bring inflation back down to 2 per cent without bringing the economy into a recession. Only once in the last 60 years has that feat been achieved.
Powell addresses Fed criticism
The Fed chairman also took time during his speech to address criticism the central bank has faced of having been too slow to initially respond to the 2022 inflationary surge.
Mr Powell once described those initial inflation readings as “transitory”, meaning that inflation was not part of a longer-term trend and did not require aggressive rate increases.
But he and his colleagues were proven wrong as supply-chain bottlenecks and a rush of workers joining the labour force coincided with a sustained increase in prices.
“The good ship Transitory was a crowded one,” he said, adding off the cuff that “I think I see some former shipmates out there today”.
“The global nature of inflation was unlike any period since the 1970s. Back then, high inflation became entrenched – outcome we were utterly committed to avoiding,” he said, revisiting a previous Jackson Hole speech in which he said the Fed's path to restoring price stability would likely require a downturn.
The Fed holds its next two-day meeting from September 17-18.
The five pillars of Islam
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Essentials
The flights
Emirates flies direct from Dubai to Seattle from Dh6,755 return in economy and Dh24,775 in business class.
The cruise
UnCruise Adventures offers a variety of small-ship cruises in Alaska and around the world. A 14-day Alaska’s Inside Passage and San Juans Cruise from Seattle to Juneau or reverse costs from $4,695 (Dh17,246), including accommodation, food and most activities. Trips in 2019 start in April and run until September.
A MINECRAFT MOVIE
Director: Jared Hess
Starring: Jack Black, Jennifer Coolidge, Jason Momoa
Rating: 3/5
The bio
His favourite book - 1984 by George Orwell
His favourite quote - 'If you think education is expensive, try ignorance' by Derek Bok, Former President of Harvard
Favourite place to travel to - Peloponnese, Southern Greece
Favourite movie - The Last Emperor
Favourite personality from history - Alexander the Great
Role Model - My father, Yiannis Davos
COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
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1,000 Books to Read Before You Die: A Life-Changing List
James Mustich, Workman
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Our legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
The five pillars of Islam
Some of Darwish's last words
"They see their tomorrows slipping out of their reach. And though it seems to them that everything outside this reality is heaven, yet they do not want to go to that heaven. They stay, because they are afflicted with hope." - Mahmoud Darwish, to attendees of the Palestine Festival of Literature, 2008
His life in brief: Born in a village near Galilee, he lived in exile for most of his life and started writing poetry after high school. He was arrested several times by Israel for what were deemed to be inciteful poems. Most of his work focused on the love and yearning for his homeland, and he was regarded the Palestinian poet of resistance. Over the course of his life, he published more than 30 poetry collections and books of prose, with his work translated into more than 20 languages. Many of his poems were set to music by Arab composers, most significantly Marcel Khalife. Darwish died on August 9, 2008 after undergoing heart surgery in the United States. He was later buried in Ramallah where a shrine was erected in his honour.
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Killing of Qassem Suleimani
Zayed Sustainability Prize
Where to donate in the UAE
The Emirates Charity Portal
You can donate to several registered charities through a “donation catalogue”. The use of the donation is quite specific, such as buying a fan for a poor family in Niger for Dh130.
The General Authority of Islamic Affairs & Endowments
The site has an e-donation service accepting debit card, credit card or e-Dirham, an electronic payment tool developed by the Ministry of Finance and First Abu Dhabi Bank.
Al Noor Special Needs Centre
You can donate online or order Smiles n’ Stuff products handcrafted by Al Noor students. The centre publishes a wish list of extras needed, starting at Dh500.
Beit Al Khair Society
Beit Al Khair Society has the motto “From – and to – the UAE,” with donations going towards the neediest in the country. Its website has a list of physical donation sites, but people can also contribute money by SMS, bank transfer and through the hotline 800-22554.
Dar Al Ber Society
Dar Al Ber Society, which has charity projects in 39 countries, accept cash payments, money transfers or SMS donations. Its donation hotline is 800-79.
Dubai Cares
Dubai Cares provides several options for individuals and companies to donate, including online, through banks, at retail outlets, via phone and by purchasing Dubai Cares branded merchandise. It is currently running a campaign called Bookings 2030, which allows people to help change the future of six underprivileged children and young people.
Emirates Airline Foundation
Those who travel on Emirates have undoubtedly seen the little donation envelopes in the seat pockets. But the foundation also accepts donations online and in the form of Skywards Miles. Donated miles are used to sponsor travel for doctors, surgeons, engineers and other professionals volunteering on humanitarian missions around the world.
Emirates Red Crescent
On the Emirates Red Crescent website you can choose between 35 different purposes for your donation, such as providing food for fasters, supporting debtors and contributing to a refugee women fund. It also has a list of bank accounts for each donation type.
Gulf for Good
Gulf for Good raises funds for partner charity projects through challenges, like climbing Kilimanjaro and cycling through Thailand. This year’s projects are in partnership with Street Child Nepal, Larchfield Kids, the Foundation for African Empowerment and SOS Children's Villages. Since 2001, the organisation has raised more than $3.5 million (Dh12.8m) in support of over 50 children’s charities.
Noor Dubai Foundation
Sheikh Mohammed bin Rashid Al Maktoum launched the Noor Dubai Foundation a decade ago with the aim of eliminating all forms of preventable blindness globally. You can donate Dh50 to support mobile eye camps by texting the word “Noor” to 4565 (Etisalat) or 4849 (du).
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
UAE v Gibraltar
What: International friendly
When: 7pm kick off
Where: Rugby Park, Dubai Sports City
Admission: Free
Online: The match will be broadcast live on Dubai Exiles’ Facebook page
UAE squad: Lucas Waddington (Dubai Exiles), Gio Fourie (Exiles), Craig Nutt (Abu Dhabi Harlequins), Phil Brady (Harlequins), Daniel Perry (Dubai Hurricanes), Esekaia Dranibota (Harlequins), Matt Mills (Exiles), Jaen Botes (Exiles), Kristian Stinson (Exiles), Murray Reason (Abu Dhabi Saracens), Dave Knight (Hurricanes), Ross Samson (Jebel Ali Dragons), DuRandt Gerber (Exiles), Saki Naisau (Dragons), Andrew Powell (Hurricanes), Emosi Vacanau (Harlequins), Niko Volavola (Dragons), Matt Richards (Dragons), Luke Stevenson (Harlequins), Josh Ives (Dubai Sports City Eagles), Sean Stevens (Saracens), Thinus Steyn (Exiles)
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Read more about the coronavirus
Heavily-sugared soft drinks slip through the tax net
Some popular drinks with high levels of sugar and caffeine have slipped through the fizz drink tax loophole, as they are not carbonated or classed as an energy drink.
Arizona Iced Tea with lemon is one of those beverages, with one 240 millilitre serving offering up 23 grams of sugar - about six teaspoons.
A 680ml can of Arizona Iced Tea costs just Dh6.
Most sports drinks sold in supermarkets were found to contain, on average, five teaspoons of sugar in a 500ml bottle.
Killing of Qassem Suleimani
MATCH INFO
Liverpool v Manchester City, Sunday, 8.30pm UAE
The specs
Engine: four-litre V6 and 3.5-litre V6 twin-turbo
Transmission: six-speed and 10-speed
Power: 271 and 409 horsepower
Torque: 385 and 650Nm
Price: from Dh229,900 to Dh355,000
KILLING OF QASSEM SULEIMANI
About Karol Nawrocki
• Supports military aid for Ukraine, unlike other eurosceptic leaders, but he will oppose its membership in western alliances.
• A nationalist, his campaign slogan was Poland First. "Let's help others, but let's take care of our own citizens first," he said on social media in April.
• Cultivates tough-guy image, posting videos of himself at shooting ranges and in boxing rings.
• Met Donald Trump at the White House and received his backing.
UAE currency: the story behind the money in your pockets
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What are the main cyber security threats?
Cyber crime - This includes fraud, impersonation, scams and deepfake technology, tactics that are increasingly targeting infrastructure and exploiting human vulnerabilities.
Cyber terrorism - Social media platforms are used to spread radical ideologies, misinformation and disinformation, often with the aim of disrupting critical infrastructure such as power grids.
Cyber warfare - Shaped by geopolitical tension, hostile actors seek to infiltrate and compromise national infrastructure, using one country’s systems as a springboard to launch attacks on others.
More on Quran memorisation:
Mohammed bin Zayed Majlis
