The Federal Reserve cut US interest rates by 25 basis points on Wednesday, but anticipates it will issue fewer cuts next year as central bank officials indicate progress in taming inflation has stalled.
The announcement lowers the Fed's benchmark target range to between 4.25 and 4.50 per cent, a full percentage point lower than when it began cutting rates in September. The Central Bank of the UAE will follow the US central bank's decision because of the currency peg.
Central bank officials' meeting this week came as recent economic data showed inflation is moving sideways, rather than closer to the Fed's 2 per cent target. The Fed anticipates its preferred metric will end the year at 2.4 per cent, slightly higher than its projections in September.
"Today was a closer call but we decided it was the right call," Fed chairman Jerome Powell told reporters.
New projections released by the Fed show the central bank anticipates two quarter-point cuts next year, which would lower the target rate to 3.9 per cent by the end of 2025. The projections are 50 basis points higher than what the Fed estimated in September, at 3.4 per cent.
"I think that the slower pace of cuts for next year really reflects both the higher inflation rate that we have this year and the expectation that inflation will be higher," Mr Powell said. He added that the higher interest rate forecasts are consistent with "firmer inflation projections".
US stocks plummeted as the projections and Mr Powell's remarks raised concerns that it could be months before the Fed cuts rates again.
The Dow Jones Industrial Average fell by 1,123.03 points, or 2.58 per cent, to 42,326.87. It market the index's 10th straight losing day.
The S&P 500 fell 2.95 per cent, while the Nasdaq Composite tumbled 3.56 per cent.
Markets also expect the Fed will move at a slower pace. Traders do not anticipate another rate cut again until June, data from the CME Group showed.
"Although the Committee eased policy today, we would characterize the decision as a 'hawkish' rate cut," Wells Fargo chief economist Jay Bryson wrote to clients.
Driving much of the uncertainty on the Fed's path of interest rate cuts is a series of stronger-than-expected economic data.
The Fed's preferred inflation metric has been moving sideways in recent months. The Personal Consumption Expenditures Price Index rose by 2.3 per cent on an annual basis last month, up from 2.1 per cent the month before. Core PCE, which strips out food and energy prices, also rose from 2.7 per cent to 2.8 per cent year on year.
This month, Fed governor Christopher Waller acknowledged that inflation “may be getting stuck above” the central bank's long-term 2 per cent target, although he was still leaning towards a rate cut.
Inflationary concerns were reflected in the Fed's updated projections. The latest projections show the Fed does not anticipate inflation to return to its 2 per cent target until 2027.
The Fed anticipates PCE inflation will fall to 2.4 per cent this year before increasing to 2.5 per cent in 2025. Core PCE is projected to dip to 2.8 per cent in 2024 before falling to 2.5 per cent the following year.
Job growth also bounced back in November with 227,000 gains, after a Boeing strike and extreme weather weighed on the previous month. Meanwhile, the unemployment rate edged up slightly from 4.1 to 4.2 per cent.
Further complicating the Fed's next steps is the incoming presidency of Donald Trump, who will be sworn in on January 20. Economists generally agree that his policies of mass deportation and universal tariffs are inflationary.
Mr Powell said it is too soon to understand how any tariff-based policy would affect the economic outlook, noting officials do not know what kinds of tariffs will be implemented or if there will be retaliatory tariffs.
"This is not a question that's in front of us right now," he said.
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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.
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TERMINAL HIGH ALTITUDE AREA DEFENCE (THAAD)
What is THAAD?
It is considered to be the US's most superior missile defence system.
Production:
It was created in 2008.
Speed:
THAAD missiles can travel at over Mach 8, so fast that it is hypersonic.
Abilities:
THAAD is designed to take out ballistic missiles as they are on their downward trajectory towards their target, otherwise known as the "terminal phase".
Purpose:
To protect high-value strategic sites, such as airfields or population centres.
Range:
THAAD can target projectiles inside and outside the Earth's atmosphere, at an altitude of 150 kilometres above the Earth's surface.
Creators:
Lockheed Martin was originally granted the contract to develop the system in 1992. Defence company Raytheon sub-contracts to develop other major parts of the system, such as ground-based radar.
UAE and THAAD:
In 2011, the UAE became the first country outside of the US to buy two THAAD missile defence systems. It then stationed them in 2016, becoming the first Gulf country to do so.
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2025 Fifa Club World Cup groups
Group A: Palmeiras, Porto, Al Ahly, Inter Miami.
Group B: Paris Saint-Germain, Atletico Madrid, Botafogo, Seattle.
Group C: Bayern Munich, Auckland City, Boca Juniors, Benfica.
Group D: Flamengo, ES Tunis, Chelsea, Leon.
Group E: River Plate, Urawa, Monterrey, Inter Milan.
Group F: Fluminense, Borussia Dortmund, Ulsan, Mamelodi Sundowns.
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Toyota land Cruiser 2020 5.7L VXR
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How to register as a donor
1) Organ donors can register on the Hayat app, run by the Ministry of Health and Prevention
2) There are about 11,000 patients in the country in need of organ transplants
3) People must be over 21. Emiratis and residents can register.
4) The campaign uses the hashtag #donate_hope
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Explained
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Key figures in the life of the fort
Sheikh Dhiyab bin Isa (ruled 1761-1793) Built Qasr Al Hosn as a watchtower to guard over the only freshwater well on Abu Dhabi island.
Sheikh Shakhbut bin Dhiyab (ruled 1793-1816) Expanded the tower into a small fort and transferred his ruling place of residence from Liwa Oasis to the fort on the island.
Sheikh Tahnoon bin Shakhbut (ruled 1818-1833) Expanded Qasr Al Hosn further as Abu Dhabi grew from a small village of palm huts to a town of more than 5,000 inhabitants.
Sheikh Khalifa bin Shakhbut (ruled 1833-1845) Repaired and fortified the fort.
Sheikh Saeed bin Tahnoon (ruled 1845-1855) Turned Qasr Al Hosn into a strong two-storied structure.
Sheikh Zayed bin Khalifa (ruled 1855-1909) Expanded Qasr Al Hosn further to reflect the emirate's increasing prominence.
Sheikh Shakhbut bin Sultan (ruled 1928-1966) Renovated and enlarged Qasr Al Hosn, adding a decorative arch and two new villas.
Sheikh Zayed bin Sultan (ruled 1966-2004) Moved the royal residence to Al Manhal palace and kept his diwan at Qasr Al Hosn.
Sources: Jayanti Maitra, www.adach.ae
Syria squad
Goalkeepers: Ibrahim Alma, Mahmoud Al Youssef, Ahmad Madania.
Defenders: Ahmad Al Salih, Moayad Ajan, Jehad Al Baour, Omar Midani, Amro Jenyat, Hussein Jwayed, Nadim Sabagh, Abdul Malek Anezan.
Midfielders: Mahmoud Al Mawas, Mohammed Osman, Osama Omari, Tamer Haj Mohamad, Ahmad Ashkar, Youssef Kalfa, Zaher Midani, Khaled Al Mobayed, Fahd Youssef.
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• Increase defence spending to 2.5% of GDP by 2027 but given “turbulent times it may be necessary to go faster”
• Prioritise a shift towards working with AI and autonomous systems
• Invest in the resilience of military space systems.
• Number of active reserves should be increased by 20%
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• New “hybrid Navy” with AUKUS submarines and autonomous vessels
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Plastic tipping points
SQUADS
Pakistan: Sarfraz Ahmed (capt), Azhar Ali, Shan Masood, Sami Aslam, Babar Azam, Asad Shafiq, Haris Sohail, Usman Salahuddin, Yasir Shah, Mohammad Asghar, Bilal Asif, Mir Hamza, Mohammad Amir, Hasan Ali, Mohammad Abbas, Wahab Riaz
Sri Lanka: Dinesh Chandimal (capt), Lahiru Thirimanne (vice-capt), Dimuth Karunaratne, Kaushal Silva, Kusal Mendis, Sadeera Samarawickrama, Roshen Silva, Niroshan Dickwella, Rangana Herath, Lakshan Sandakan, Dilruwan Perera, Suranga Lakmal, Nuwan Pradeep, Vishwa Fernando, Lahiru Gamage
Umpires: Ian Gould (ENG) and Nigel Llong (ENG)
TV umpire: Richard Kettleborough (ENG)
ICC match referee: Andy Pycroft (ZIM)
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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
Last 10 NBA champions
2017: Golden State bt Cleveland 4-1
2016: Cleveland bt Golden State 4-3
2015: Golden State bt Cleveland 4-2
2014: San Antonio bt Miami 4-1
2013: Miami bt San Antonio 4-3
2012: Miami bt Oklahoma City 4-1
2011: Dallas bt Miami 4-2
2010: Los Angeles Lakers bt Boston 4-3
2009: Los Angeles Lakers bt Orlando 4-1
2008: Boston bt Los Angeles Lakers 4-2
Emergency phone numbers in the UAE
Estijaba – 8001717 – number to call to request coronavirus testing
Ministry of Health and Prevention – 80011111
Dubai Health Authority – 800342 – The number to book a free video or voice consultation with a doctor or connect to a local health centre
Emirates airline – 600555555
Etihad Airways – 600555666
Ambulance – 998
Knowledge and Human Development Authority – 8005432 ext. 4 for Covid-19 queries
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WOMAN AND CHILD
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Rating: 4/5
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Ponti
Sharlene Teo, Pan Macmillan
