Federal Reserve chairman Jerome Powell unveiled a new approach to setting US monetary policy, letting inflation and employment run higher in a shift that will likely keep interest rates low for years to come.
Following a more than year-long review, Mr Powell said the Fed will seek inflation that averages 2 per cent over time, a step that implies allowing for price pressures to overshoot after periods of weakness. It also adjusted its view of full employment to allow labour-market gains to reach more workers.
“Our revised statement emphasises that maximum employment is a broad-based and inclusive goal,” Mr Powell said Thursday in a speech delivered virtually for the central bank’s annual policy symposium, traditionally held in Jackson Hole, Wyoming.
“This change reflects our appreciation for the benefits of a strong labour market, particularly for many in low and moderate-income communities.”
During the longest US economic expansion on record until the pandemic hit earlier this year, many groups benefited – including minorities and women – in their ability to find work. With unrest breaking out across the US over racial inequality, questions about how the Fed’s policy helps communities broadly have been raised.
“They really, really, really are not going to be raising interest rates any time soon,” said James Knightley, chief international economist at ING Financial Markets. “The Fed is saying rates will be lower for longer, but don’t worry inflation is not going to be picking up.”
In its new statement on longer-run goals, the Fed said its decisions would be informed by its assessment of “shortfalls of employment from its maximum level.” The previous version had referred to “deviations from its maximum level.” The change de-emphasises previous concerns that low unemployment can cause excess inflation.
While expected, the announcement of the strategy shift came sooner than some thought. After first fluctuating on the news, US stocks resumed their record-breaking rally and the Treasury yield curve steepened to the widest in two months as traders bet policy rates will remain locked near zero for even longer.
Regarding price pressures, the document says the committee will target “inflation that averages 2 per cent over time” and will aim to bring inflation above the 2 per cent target following periods when inflation runs below that level.
Calling the revised strategy a “a robust updating,” Mr Powell spelled out that after periods when inflation has been running below 2 per cent, monetary policy will likely aim to achieve inflation moderately above 2 per cent for some time.
The shift he announced represents the product of an unprecedented review of the Fed’s strategies, tools and approach to communications that began in early 2019.
Since the central bank officially set its inflation target at 2 per cent in 2012, the Fed’s preferred measure of price increases has consistently fallen short of that objective, averaging just 1.4 per cent.
Low inflation contributes to low interest rates, reducing the Fed’s ability to fight off economic downturns and potentially making them deeper and longer. Mr Powell noted a risk, saying that “if excessive inflationary pressures were to build or inflation expectations were to ratchet above levels consistent with our goal”, the central bank wouldn’t hesitate to act.
Fed officials also altered the strategy document to include a section acknowledging that financial stability can also affect their ability to reach their longer-run goals.
“Sustainably achieving maximum employment and price stability depends on a stable financial system,” it said. “Therefore, the committee’s policy decisions reflect its longer-run goals, its medium-term outlook and its assessments of the balance of risks, including risks to the financial system that could impede the attainment of the committee’s goals.”
Scotland v Ireland:
Scotland (15-1): Stuart Hogg; Tommy Seymour, Huw Jones, Sam Johnson, Sean Maitland; Finn Russell, Greig Laidlaw (capt); Josh Strauss, James Ritchie, Ryan Wilson; Jonny Gray, Grant Gilchrist; Simon Berghan, Stuart McInally, Allan Dell
Replacements: Fraser Brown, Jamie Bhatti, D'arcy Rae, Ben Toolis, Rob Harley, Ali Price, Pete Horne, Blair Kinghorn
Coach: Gregor Townsend (SCO)
Ireland (15-1): Rob Kearney; Keith Earls, Chris Farrell, Bundee Aki, Jacob Stockdale; Jonathan Sexton, Conor Murray; Jack Conan, Sean O'Brien, Peter O'Mahony; James Ryan, Quinn Roux; Tadhg Furlong, Rory Best (capt), Cian Healy
Replacements: Sean Cronin, Dave Kilcoyne, Andrew Porter, Ultan Dillane, Josh van der Flier, John Cooney, Joey Carbery, Jordan Larmour
Coach: Joe Schmidt (NZL)
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Checks continue
A High Court judge issued an interim order on Friday suspending a decision by Agriculture Minister Edwin Poots to direct a stop to Brexit agri-food checks at Northern Ireland ports.
Mr Justice Colton said he was making the temporary direction until a judicial review of the minister's unilateral action this week to order a halt to port checks that are required under the Northern Ireland Protocol.
Civil servants have yet to implement the instruction, pending legal clarity on their obligations, and checks are continuing.
UAE currency: the story behind the money in your pockets
Types of bank fraud
1) Phishing
Fraudsters send an unsolicited email that appears to be from a financial institution or online retailer. The hoax email requests that you provide sensitive information, often by clicking on to a link leading to a fake website.
2) Smishing
The SMS equivalent of phishing. Fraudsters falsify the telephone number through “text spoofing,” so that it appears to be a genuine text from the bank.
3) Vishing
The telephone equivalent of phishing and smishing. Fraudsters may pose as bank staff, police or government officials. They may persuade the consumer to transfer money or divulge personal information.
4) SIM swap
Fraudsters duplicate the SIM of your mobile number without your knowledge or authorisation, allowing them to conduct financial transactions with your bank.
5) Identity theft
Someone illegally obtains your confidential information, through various ways, such as theft of your wallet, bank and utility bill statements, computer intrusion and social networks.
6) Prize scams
Fraudsters claiming to be authorised representatives from well-known organisations (such as Etisalat, du, Dubai Shopping Festival, Expo2020, Lulu Hypermarket etc) contact victims to tell them they have won a cash prize and request them to share confidential banking details to transfer the prize money.
Labour dispute
The insured employee may still file an ILOE claim even if a labour dispute is ongoing post termination, but the insurer may suspend or reject payment, until the courts resolve the dispute, especially if the reason for termination is contested. The outcome of the labour court proceedings can directly affect eligibility.
- Abdullah Ishnaneh, Partner, BSA Law
Pari
Produced by: Clean Slate Films (Anushka Sharma, Karnesh Sharma) & KriArj Entertainment
Director: Prosit Roy
Starring: Anushka Sharma, Parambrata Chattopadhyay, Ritabhari Chakraborty, Rajat Kapoor, Mansi Multani
Three stars
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Ferrari 12Cilindri specs
Engine: naturally aspirated 6.5-liter V12
Power: 819hp
Torque: 678Nm at 7,250rpm
Price: From Dh1,700,000
Available: Now
Sole survivors
- Cecelia Crocker was on board Northwest Airlines Flight 255 in 1987 when it crashed in Detroit, killing 154 people, including her parents and brother. The plane had hit a light pole on take off
- George Lamson Jr, from Minnesota, was on a Galaxy Airlines flight that crashed in Reno in 1985, killing 68 people. His entire seat was launched out of the plane
- Bahia Bakari, then 12, survived when a Yemenia Airways flight crashed near the Comoros in 2009, killing 152. She was found clinging to wreckage after floating in the ocean for 13 hours.
- Jim Polehinke was the co-pilot and sole survivor of a 2006 Comair flight that crashed in Lexington, Kentucky, killing 49.
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The specs: 2019 BMW X4
Price, base / as tested: Dh276,675 / Dh346,800
Engine: 3.0-litre turbocharged in-line six-cylinder
Transmission: Eight-speed automatic
Power: 354hp @ 5,500rpm
Torque: 500Nm @ 1,550rpm
Fuel economy, combined: 9.0L / 100km
