The US Federal Reserve kept a broadly united front in cutting interest rates by 25 basis points on Wednesday, despite a mounting pressure campaign from President Donald Trump.
Analysts had anticipated Wednesday's decision could lead to dissents within the Federal Open Market Committee, with one group arguing for a larger rate cut and a second favouring no cut at all.
In the end, Fed Chair Jerome Powell secured a near-unanimous decision.
“[Mr Powell] has done a good job of building consensus,” said Art Hogan, chief market strategist at B Riley Wealth.
Only Stephen Miran, a top economic ally of Mr Trump who was sworn on to the Fed board on Tuesday, dissented against the result in favour of a 50-basis-point cut.
Mr Powell said there “wasn't widespread support at all” for a rate cut that large. “The only way a single voter can drive change is by making an incredibly persuasive argument,” he said.
The near-unanimous result showed some reprieve amid concerns over the Federal Reserve's independence, which economists hold as sacrosanct in maintaining financial stability.
Mr Trump has repeatedly demanded aggressive interest rate cuts this year, with those demands largely being ignored by Mr Powell and his colleagues. On Monday, he said the Fed should deliver a much larger rate cut than the quarter-point reduction markets had priced in.
Fed governors Michelle Bowman and Christopher Waller, who dissented against holding rates steady in July, voted with Mr Powell on Wednesday. Both are under consideration to replace Mr Powell when his term as Fed chairman expires next year.
“The fact that there was only one dissenter means there's only one active member of the Federal Open Market Committee who is interviewing for the job of Fed chair next year,” Mr Hogan said.
“Having that one dissent is almost like having an asterisk.”
The fact that there was only one dissenter means there's only one active member of the Federal Open Market Committee who is interviewing for the job of Fed chair next year
Art Hogan,
chief market strategist at B Riley Wealth
But Peter Andersen, founder of Andersen Capital Management, said Mr Powell is in a “no-win position to cut rates”.
“I think his credibility has been put at risk with this rate cut because he's trying to navigate what he should be doing, but there's this spectre of relentless pressure of trump to cut rates,” Mr Andersen said.
Divisions in the fine print
Mr Miran was also an outlier in the Fed's updated quarterly economic forecasts. According to the so-called dot plot, where every member on the 19-person committee predicts where interest rates will fall, economists believe the lone dot sitting between 2.5 and 3 per cent for 2025 to be his.
“The addition of his dot pushed down the median rate projection for this year to 3.5 per cent to 3.75 per cent,” Michael Pearce, deputy chief US economist at Oxford Economics, wrote to clients.
“That median hides the deep split on the FOMC – nine of 19 members don't anticipate further cuts this year."
Those divisions underscore the predicament the Fed faces, which is that there are risks to both sides of its dual mandate of price stability and maximum employment.
Wednesday's cut indicated Mr Powell was able to steer the committee towards buttressing the labour market, but he said the FOMC is not hurrying to return to the rate at which policy neither restricts nor loosens the economy.
Derek Tang, an economist at LHMeyer / Monetary Policy Analytics, said that even without Mr Miran, the Fed is “leaning a little more” towards two additional rate cuts this year as opposed to one.
“It’s not that heavy of a lean … but for us it’s enough to tip the balance when it comes to October,” he wrote.
The Fed is due to hold its next meeting on October 28 and 29, where futures markets anticipate a second consecutive 25-basis-point cut, according to CME Group data.
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The five new places of worship
Church of South Indian Parish
St Andrew's Church Mussaffah branch
St Andrew's Church Al Ain branch
St John's Baptist Church, Ruwais
Church of the Virgin Mary and St Paul the Apostle, Ruwais
Why seagrass matters
- Carbon sink: Seagrass sequesters carbon up to 35X faster than tropical rainforests
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- Biodiversity: Support species like sea turtles, dugongs, and seabirds
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UAE currency: the story behind the money in your pockets
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How Beautiful this world is!
'Worse than a prison sentence'
Marie Byrne, a counsellor who volunteers at the UAE government's mental health crisis helpline, said the ordeal the crew had been through would take time to overcome.
“It was worse than a prison sentence, where at least someone can deal with a set amount of time incarcerated," she said.
“They were living in perpetual mystery as to how their futures would pan out, and what that would be.
“Because of coronavirus, the world is very different now to the one they left, that will also have an impact.
“It will not fully register until they are on dry land. Some have not seen their young children grow up while others will have to rebuild relationships.
“It will be a challenge mentally, and to find other work to support their families as they have been out of circulation for so long. Hopefully they will get the care they need when they get home.”
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Building boom turning to bust as Turkey's economy slows
Deep in a provincial region of northwestern Turkey, it looks like a mirage - hundreds of luxury houses built in neat rows, their pointed towers somewhere between French chateau and Disney castle.
Meant to provide luxurious accommodations for foreign buyers, the houses are however standing empty in what is anything but a fairytale for their investors.
The ambitious development has been hit by regional turmoil as well as the slump in the Turkish construction industry - a key sector - as the country's economy heads towards what could be a hard landing in an intensifying downturn.
After a long period of solid growth, Turkey's economy contracted 1.1 per cent in the third quarter, and many economists expect it will enter into recession this year.
The country has been hit by high inflation and a currency crisis in August. The lira lost 28 per cent of its value against the dollar in 2018 and markets are still unconvinced by the readiness of the government under President Recep Tayyip Erdogan to tackle underlying economic issues.
The villas close to the town centre of Mudurnu in the Bolu region are intended to resemble European architecture and are part of the Sarot Group's Burj Al Babas project.
But the development of 732 villas and a shopping centre - which began in 2014 - is now in limbo as Sarot Group has sought bankruptcy protection.
It is one of hundreds of Turkish companies that have done so as they seek cover from creditors and to restructure their debts.
HOSTS
T20 WORLD CUP
2024: US and West Indies; 2026: India and Sri Lanka; 2028: Australia and New Zealand; 2030: England, Ireland and Scotland
ODI WORLD CUP
2027: South Africa, Zimbabwe and Namibia; 2031: India and
Bangladesh
CHAMPIONS TROPHY
2025: Pakistan; 2029: India
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UAE currency: the story behind the money in your pockets
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Porsche Taycan Turbo specs
Engine: Two permanent-magnet synchronous AC motors
Transmission: two-speed
Power: 671hp
Torque: 1050Nm
Range: 450km
Price: Dh601,800
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Engine: twin-turbocharged 3.5-liter V6
Power: 450hp
Torque: 700Nm
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