Federal Reserve officials on Wednesday offered differing perspectives on the state of US inflation, as the prospect of a December interest rate cut grows more uncertain.
The Fed has cut interest rates by a total of 75 basis points in its previous two meetings, bringing down its target range to 4.50-4.75 per cent. An additional 25-basis-point cut was seen as a lock a week ago, but stronger-than-expected data and recent comments from officials have led investors to pare back their expectations.
Roughly 54 per cent of traders expect a 25-basis-point cut next month, compared to 82.5 per cent last week.
Fed Governor Michelle Bowman, a permanent voting member on the central bank's policy-setting committee, said she believes that “stalled” progress in taming inflation dictates a more cautious approach in cutting rates.
“I would prefer to proceed cautiously in bringing the policy rate down to better assess how far we are from the end point,” she said in West Palm Beach, Florida.
In contrast, her fellow Fed Governor Lisa Cook, also a permanent voting member, said she sees continued downwards momentum in inflation as a reason to push through with reducing policy.
“Going forward, I still see the direction of the appropriate policy rate path to be downward,” Ms Cook said at the University of Virginia in Charlottesville.
The contrasting perspectives offer a snapshot into the current thinking of the Federal Reserve, with officials coming to a delicate phase in the easing cycle. Cutting interest rates too soon could rekindle inflation, while leaving them elevated for too long could send the world's most significant economy into a downturn.
All 12 members of the policy-setting Federal Open Market Committee voted in favour of the most recent interest rate cut in November.
But the path forward is less certain.
The Consumer Price Index rose to 2.6 per cent on an annual basis last month, remaining stubbornly above the Fed's long-term 2 per cent target. And despite weak payroll gains attributed to a Boeing strike and natural disasters, the unemployment rate was unchanged at a still-low 4.1 per cent.
At the same time, the nation's economy grew at a solid 2.8 per cent in the third quarter.
Fed officials generally consider their dual risks – price stability and maximum employment – to be relatively in balance, although Ms Bowman remains the outlier in seeing a greater risk to the inflation side.
“I see greater risks to the price stability side of our mandate, especially while the labour market remains near full employment,” she said.
Separately, Boston Fed Governor Lisa Cook joined the dovish side of the argument in remarks at the University of Michigan's Ford School.
Ms Collins, who will be a voting member on the FOMC next year, said she is encouraged by the inflation picture and expects “additional adjustments will likely be appropriate over time”.
Wednesday's round of comments come a week after Fed Chair Jerome Powell pushed back on market expectations of forthcoming rate cuts. Most traders expect the Fed to skip a rate cut in January.
“The economy is not sending any signals that we need to be in a hurry to lower rates,” he said in Dallas.
Also clouding the outlook is the incoming presidency of Donald Trump, who campaigned on pledges to issue across-the-board tariffs and a mass deportation of migrants. Most economists argue such policies would hamper the Fed's inflation fight and restrict economic growth.
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Rating: 3.5/5
In numbers: China in Dubai
The number of Chinese people living in Dubai: An estimated 200,000
Number of Chinese people in International City: Almost 50,000
Daily visitors to Dragon Mart in 2018/19: 120,000
Daily visitors to Dragon Mart in 2010: 20,000
Percentage increase in visitors in eight years: 500 per cent
Quick pearls of wisdom
Focus on gratitude: And do so deeply, he says. “Think of one to three things a day that you’re grateful for. It needs to be specific, too, don’t just say ‘air.’ Really think about it. If you’re grateful for, say, what your parents have done for you, that will motivate you to do more for the world.”
Know how to fight: Shetty married his wife, Radhi, three years ago (he met her in a meditation class before he went off and became a monk). He says they’ve had to learn to respect each other’s “fighting styles” – he’s a talk it-out-immediately person, while she needs space to think. “When you’re having an argument, remember, it’s not you against each other. It’s both of you against the problem. When you win, they lose. If you’re on a team you have to win together.”
Keep it fun and engaging
Stuart Ritchie, director of wealth advice at AES International, says children cannot learn something overnight, so it helps to have a fun routine that keeps them engaged and interested.
“I explain to my daughter that the money I draw from an ATM or the money on my bank card doesn’t just magically appear – it’s money I have earned from my job. I show her how this works by giving her little chores around the house so she can earn pocket money,” says Mr Ritchie.
His daughter is allowed to spend half of her pocket money, while the other half goes into a bank account. When this money hits a certain milestone, Mr Ritchie rewards his daughter with a small lump sum.
He also recommends books that teach the importance of money management for children, such as The Squirrel Manifesto by Ric Edelman and Jean Edelman.
The story in numbers
18
This is how many recognised sects Lebanon is home to, along with about four million citizens
450,000
More than this many Palestinian refugees are registered with UNRWA in Lebanon, with about 45 per cent of them living in the country’s 12 refugee camps
1.5 million
There are just under 1 million Syrian refugees registered with the UN, although the government puts the figure upwards of 1.5m
73
The percentage of stateless people in Lebanon, who are not of Palestinian origin, born to a Lebanese mother, according to a 2012-2013 study by human rights organisation Frontiers Ruwad Association
18,000
The number of marriages recorded between Lebanese women and foreigners between the years 1995 and 2008, according to a 2009 study backed by the UN Development Programme
77,400
The number of people believed to be affected by the current nationality law, according to the 2009 UN study
4,926
This is how many Lebanese-Palestinian households there were in Lebanon in 2016, according to a census by the Lebanese-Palestinian dialogue committee
UAE currency: the story behind the money in your pockets
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