The US Federal Reserve will enter a new phase in its monetary policy cycle when it meets for the first time this year: stubborn inflation and the beginning of Donald Trump's second presidential term.
Futures markets widely expect the Fed to hold its target range for US interest rates at 4.25 to 4.50 per cent at the conclusion of a two-day meeting on Wednesday. Considering that inflation remains stubbornly above the Fed's 2 per cent target and the labour market remains strong, traders believe the central bank will not resume cutting interest rates until June, CME Group data showed.
But that pause comes at an awkward time for the Fed.
After his inauguration last week, Mr Trump demanded that the Fed and other central banks around the world immediately lower interest rates.
Addressing leaders in Davos, Mr Trump called on Saudi Arabia and Opec to lower oil prices, while saying he would boost domestic oil production, moves he believes will curb inflation.
However, his push ignores some limits to Mr Trump's power as he does not control Opec's decisions, and some domestic oil companies have baulked at his suggestion to increase output. The president also does not control the Fed's rate decisions, and the central bank asserts it decisions are data-dependent.
His stance also ignores one of the stickier components of inflation – domestic services, which clocked in at 4.40 per cent annually last month.
“That's not really going to change much because of oil,” said Derek Tang, economist and co-founder of the LHMeyer firm in Washington.
That is also before the Fed can even begin to quantify how some of Mr Trump's policies – mainly tariffs and deportation of migrants – will affect the economic outlook.
“The difficulty there is, whether it's immigration or tariffs or tax, some of these things won't change until later, so the Fed doesn't know the details, but maybe people are already reacting now in anticipation,” Mr Tang said.
This will not be Mr Powell's first time wrangling with Mr Trump, although the Fed chairman, who was appointed by Mr Trump to lead the central bank, faced withering criticism from the President for keeping rates elevated in 2018-2019.
So far, the Fed chairman has taken a nuanced approach when pressed about Trump 2.0. Asked about how Mr Trump's policies will affect the outlook, Mr Powell has said it is too soon to say.
“We need to see what they are and see what the effects they will have. We’ll have a much clearer picture … when that happens,” he told reporters in December.
Some, including Fed Governor Christopher Waller – a permanent voting member on the rate-setting committee – have argued the policies espoused by the new President will not be too disruptive to the overall economic picture and will not affect his policy decisions.
But minutes from the Fed's meeting showed that at least a few officials believe “recent higher-than-expected readings on inflation, and the effects of potential changes in trade and immigration policy, suggested that the process could take longer than previously anticipated”.
Still, this week's meeting reflects the new political landscape the traditionally apolitical banking institution faces. During his campaign, Mr Trump said he should hold a vote on the Federal Open Market Committee and claimed he had the authority to fire Mr Powell. The Fed chair, for his part, maintains the President has no legal grounds to sack him.
Meanwhile, the Fed begins another year in which consumers are faced with price pressures and higher borrowing costs.
“At some point, I think the fear is the public is not going to find that acceptable any longer,” Mr Tang said.
BACK%20TO%20ALEXANDRIA
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MOUNTAINHEAD REVIEW
Starring: Ramy Youssef, Steve Carell, Jason Schwartzman
Director: Jesse Armstrong
Rating: 3.5/5
GAC GS8 Specs
Engine: 2.0-litre 4cyl turbo
Power: 248hp at 5,200rpm
Torque: 400Nm at 1,750-4,000rpm
Transmission: 8-speed auto
Fuel consumption: 9.1L/100km
On sale: Now
Price: From Dh149,900
Volvo ES90 Specs
Engine: Electric single motor (96kW), twin motor (106kW) and twin motor performance (106kW)
Power: 333hp, 449hp, 680hp
Torque: 480Nm, 670Nm, 870Nm
On sale: Later in 2025 or early 2026, depending on region
Price: Exact regional pricing TBA
LILO & STITCH
Starring: Sydney Elizebeth Agudong, Maia Kealoha, Chris Sanders
Director: Dean Fleischer Camp
Rating: 4.5/5
Director: Laxman Utekar
Cast: Vicky Kaushal, Akshaye Khanna, Diana Penty, Vineet Kumar Singh, Rashmika Mandanna
Rating: 1/5
Diriyah%20project%20at%20a%20glance
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Thank You for Banking with Us
Director: Laila Abbas
Starring: Yasmine Al Massri, Clara Khoury, Kamel El Basha, Ashraf Barhoum
Rating: 4/5
UAE currency: the story behind the money in your pockets
START-UPS%20IN%20BATCH%204%20OF%20SANABIL%20500'S%20ACCELERATOR%20PROGRAMME
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NATIONAL%20SELECTIONS
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Sholto Byrnes on Myanmar politics
How much do leading UAE’s UK curriculum schools charge for Year 6?
- Nord Anglia International School (Dubai) – Dh85,032
- Kings School Al Barsha (Dubai) – Dh71,905
- Brighton College Abu Dhabi - Dh68,560
- Jumeirah English Speaking School (Dubai) – Dh59,728
- Gems Wellington International School – Dubai Branch – Dh58,488
- The British School Al Khubairat (Abu Dhabi) - Dh54,170
- Dubai English Speaking School – Dh51,269
*Annual tuition fees covering the 2024/2025 academic year
Defence review at a glance
• 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%
• More F-35 fighter jets required in the next decade
• New “hybrid Navy” with AUKUS submarines and autonomous vessels
%3Cp%3E%3Ca%20href%3D%22https%3A%2F%2Fwww.thenationalnews.com%2Fbusiness%2Feconomy%2Fislamic-economy-consumer-spending-to-increase-45-to-3-2tn-by-2024-1.936583%22%20target%3D%22_self%22%3EGlobal%20Islamic%20economy%20to%20grow%203.1%25%20to%20touch%20%242.4%20trillion%20by%202024%3C%2Fa%3E%26nbsp%3B%3C%2Fp%3E%0A%3Cp%3E%3Ca%20href%3D%22https%3A%2F%2Fwww.thenationalnews.com%2Fbusiness%2Feconomy%2Fuk-economy-plunges-into-worst-ever-recession-after-record-20-4-contraction-1.1062560%22%20target%3D%22_self%22%3EUK%20economy%20plunges%20into%20worst-ever%20recession%20after%20record%2020.4%25%20contraction%3C%2Fa%3E%3C%2Fp%3E%0A%3Cp%3E%3Ca%20href%3D%22https%3A%2F%2Fwww.thenationalnews.com%2Fbusiness%2Feconomy%2Fislamic-economy-consumer-spending-to-increase-45-to-3-2tn-by-2024-1.936583%22%20target%3D%22_self%22%3EIslamic%20economy%20consumer%20spending%20to%20increase%2045%25%20to%20%243.2tn%20by%202024%3C%2Fa%3E%3C%2Fp%3E%0A
MORE ON THE US DEMOCRATIC PRIMARIES
More coverage from the Future Forum
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.
Other workplace saving schemes
- The UAE government announced a retirement savings plan for private and free zone sector employees in 2023.
- Dubai’s savings retirement scheme for foreign employees working in the emirate’s government and public sector came into effect in 2022.
- National Bonds unveiled a Golden Pension Scheme in 2022 to help private-sector foreign employees with their financial planning.
- In April 2021, Hayah Insurance unveiled a workplace savings plan to help UAE employees save for their retirement.
- Lunate, an Abu Dhabi-based investment manager, has launched a fund that will allow UAE private companies to offer employees investment returns on end-of-service benefits.
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The specs
Engine: Four electric motors, one at each wheel
Power: 579hp
Torque: 859Nm
Transmission: Single-speed automatic
Price: From Dh825,900
On sale: Now
UAE currency: the story behind the money in your pockets
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UAE currency: the story behind the money in your pockets
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
Brolliology: A History of the Umbrella in Life and Literature
By Marion Rankine
Melville House
A Dog's Journey
Directed by: Gail Mancuso
Starring: Dennis Quaid, Josh Gad, Marg Helgenberger, Betty Gilpin, Kathryn Prescott
3 out of 5 stars
