The Federal Reserve building in Washington, US. Reuters
The Federal Reserve building in Washington, US. Reuters
The Federal Reserve building in Washington, US. Reuters
The Federal Reserve building in Washington, US. Reuters

Fed officials offer contrasting views on US inflation and interest rate path


Kyle Fitzgerald
  • English
  • Arabic

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.

The burning issue

The internal combustion engine is facing a watershed moment – major manufacturer Volvo is to stop producing petroleum-powered vehicles by 2021 and countries in Europe, including the UK, have vowed to ban their sale before 2040. The National takes a look at the story of one of the most successful technologies of the last 100 years and how it has impacted life in the UAE. 

Read part four: an affection for classic cars lives on

Read part three: the age of the electric vehicle begins

Read part one: how cars came to the UAE

 

The specs

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Engine: 4.0-litre flat-six
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The five pillars of Islam

1. Fasting

2. Prayer

3. Hajj

4. Shahada

5. Zakat 

UAE currency: the story behind the money in your pockets

Expert input

If you had all the money in the world, what’s the one sneaker you would buy or create?

“There are a few shoes that have ‘grail’ status for me. But the one I have always wanted is the Nike x Patta x Parra Air Max 1 - Cherrywood. To get a pair in my size brand new is would cost me between Dh8,000 and Dh 10,000.” Jack Brett

“If I had all the money, I would approach Nike and ask them to do my own Air Force 1, that’s one of my dreams.” Yaseen Benchouche

“There’s nothing out there yet that I’d pay an insane amount for, but I’d love to create my own shoe with Tinker Hatfield and Jordan.” Joshua Cox

“I think I’d buy a defunct footwear brand; I’d like the challenge of reinterpreting a brand’s history and changing options.” Kris Balerite

 “I’d stir up a creative collaboration with designers Martin Margiela of the mixed patchwork sneakers, and Yohji Yamamoto.” Hussain Moloobhoy

“If I had all the money in the world, I’d live somewhere where I’d never have to wear shoes again.” Raj Malhotra

THE SPECS

Engine: 3.5-litre V6
Transmission: six-speed manual
Power: 325bhp
Torque: 370Nm
Speed: 0-100km/h 3.9 seconds
Price: Dh230,000
On sale: now

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 
Paatal Lok season two

Directors: Avinash Arun, Prosit Roy 

Stars: Jaideep Ahlawat, Ishwak Singh, Lc Sekhose, Merenla Imsong

Rating: 4.5/5

ESSENTIALS

The flights

Emirates flies from Dubai to Phnom Penh via Yangon from Dh2,700 return including taxes. Cambodia Bayon Airlines and Cambodia Angkor Air offer return flights from Phnom Penh to Siem Reap from Dh250 return including taxes. The flight takes about 45 minutes.

The hotels

Rooms at the Raffles Le Royal in Phnom Penh cost from $225 (Dh826) per night including taxes. Rooms at the Grand Hotel d'Angkor cost from $261 (Dh960) per night including taxes.

The tours

A cyclo architecture tour of Phnom Penh costs from $20 (Dh75) per person for about three hours, with Khmer Architecture Tours. Tailor-made tours of all of Cambodia, or sites like Angkor alone, can be arranged by About Asia Travel. Emirates Holidays also offers packages. 

Match info

Uefa Champions League Group H

Juventus v Valencia, Tuesday, midnight (UAE)

Conflict, drought, famine

Estimates of the number of deaths caused by the famine range from 400,000 to 1 million, according to a document prepared for the UK House of Lords in 2024.
It has been claimed that the policies of the Ethiopian government, which took control after deposing Emperor Haile Selassie in a military-led revolution in 1974, contributed to the scale of the famine.
Dr Miriam Bradley, senior lecturer in humanitarian studies at the University of Manchester, has argued that, by the early 1980s, “several government policies combined to cause, rather than prevent, a famine which lasted from 1983 to 1985. Mengistu’s government imposed Stalinist-model agricultural policies involving forced collectivisation and villagisation [relocation of communities into planned villages].
The West became aware of the catastrophe through a series of BBC News reports by journalist Michael Buerk in October 1984 describing a “biblical famine” and containing graphic images of thousands of people, including children, facing starvation.

Band Aid

Bob Geldof, singer with the Irish rock group The Boomtown Rats, formed Band Aid in response to the horrific images shown in the news broadcasts.
With Midge Ure of the band Ultravox, he wrote the hit charity single Do They Know it’s Christmas in December 1984, featuring a string of high-profile musicians.
Following the single’s success, the idea to stage a rock concert evolved.
Live Aid was a series of simultaneous concerts that took place at Wembley Stadium in London, John F Kennedy Stadium in Philadelphia, the US, and at various other venues across the world.
The combined event was broadcast to an estimated worldwide audience of 1.5 billion.

ARSENAL IN 1977

Feb 05 Arsenal 0-0 Sunderland

Feb 12 Manchester City 1-0 Arsenal

Feb 15 Middlesbrough 3-0 Arsenal

Feb 19 Arsenal 2-3 West Ham

Feb 26 Middlesbrough 4-1 Arsenal (FA Cup)

Mar 01 Everton 2-1 Arsenal

Mar 05  Arsenal 1-4 ipswich

March 08 Arsenal 1-2 West Brom

Mar 12 QPR 2-1 Arsenal

Mar 23 Stoke 1-1 Arsenal

Apr 02  Arsenal 3-0 Leicester

Real estate tokenisation project

Dubai launched the pilot phase of its real estate tokenisation project last month.

The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.

Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.

Updated: November 21, 2024, 12:24 AM`