Federal Reserve officials are on track to raise interest rates by 75 basis points for a second month in a row when they meet in July, after policymakers pushed back against a bigger move.
Investors reversed bets on a full percentage-point move after wary comments from officials including Atlanta Fed president Raphael Bostic and St Louis’s James Bullard, plus rare good news on inflation.
Shortly after they both spoke on Friday morning, data showed US consumers’ long-term inflation expectations declined in early July by more than forecast to 2.8 per cent, versus 3.1 per cent the month before.
Interest-rate futures contracts currently imply a roughly one-in-six chance that the Fed will increase rates by a full point this month, with a 75 basis-point rise regarded as a certainty.
“Based on what I have heard, absent the most important voice at the table, there seems to be a rally around 75 basis points” of tightening in July, said Mark Spindel, chief investment officer at MBB Capital Partners, referring to chairman Jerome Powell.
The remarks at separate events on Friday by Mr Bostic and Mr Bullard were the latest from officials to signal support for a 75 basis point move, which Mr Powell told reporters last month was on the table for July.
The Fed in June raised the federal funds rate target by 75 basis points — the biggest rise since 1994 — to a range of 1.5 per cent to 1.75 per cent, after previously signalling it would increase by 50 basis points.
Officials regard another 75 basis points as a powerful jolt to the economy, and are keeping an eye on how their policies are affecting growth. Housing markets appear to be cooling and there are scattered signs that consumption is levelling off.
“The real side looks to be softening. You don’t want to really overdo the rate hikes,” Fed governor Christopher Waller said on Thursday.
“A 75 basis point hike is huge. Don’t say because you are not going 100, you are not doing your job.”
At the same time, officials are watching carefully how gauges of inflation expectations are behaving.
Longer-term market measures have come down in recent months, precisely because the Fed has delivered on aggressive policy, and officials understand that they have to continue to deliver if they are going to keep those expectations anchored around their 2 per cent target.
“Inflation expectations are determined not only by movements in inflation, but also by policymakers’ actions to follow through on their strongly stated commitment to return inflation to its longer-run goal — thereby justifying the public’s belief in the central bank’s commitment,” Cleveland Fed chief Loretta Mester said in a speech on June 29.
What it all means is that if inflation remains high — putting expectations at risk — the Fed is signalling it will not hesitate to step harder on the policy brakes, even if that hurts the economy.
Traders boosted bets on a 100 basis-point increase earlier in the week after June’s consumer price index came in at a 9.1 per cent annual gain. Those bets retreated on Friday.
Mr Bostic, speaking in Tampa, Florida, said he was wary of the bigger rate increase because “moving too dramatically I think would undermine a lot of the other things that are working well”.
He also said that he had a “Go Big” group in his bank, and “every time we get to a meeting, they are like, ‘We should just go, go, go.’ I am not in that group today”. Mr Bostic does not vote on policy this year.
Mr Bullard was quoted earlier this week as saying he favoured sticking with a 75 basis point rate move. He declined to declare himself on Friday, but said he backed raising rates to a range of 3.75 per cent to 4 per cent by the end of the year, rather than 3.5 per cent.
That implies about 2.25 percentage points of tightening from current levels. Mr Bullard is a 2022 policy voter.
“I still don’t think they’ll do 100” basis points this month, said Derek Tang, an economist at LH Meyer, a Washington policy analysis company.
“It’s a close call, but it’s tactically unsound. How would they justify a downshift to 50 or 75” if inflation remains high.
Data between now and the meeting include more information on the health of the housing market, among other things, and some still see a risk of a larger move.
“There is still a lot of time between now and the July meeting. Everything is on the table,” said Lindsey Piegza, chief economist at Stifel Nicolaus & Co.
“At the very least, we see a 75 basis-point hike. But I think there is a realistic possibility of a 100-basis point move.”
The BIO:
He became the first Emirati to climb Mount Everest in 2011, from the south section in Nepal
He ascended Mount Everest the next year from the more treacherous north Tibetan side
By 2015, he had completed the Explorers Grand Slam
Last year, he conquered K2, the world’s second-highest mountain located on the Pakistan-Chinese border
He carries dried camel meat, dried dates and a wheat mixture for the final summit push
His new goal is to climb 14 peaks that are more than 8,000 metres above sea level
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David Haye record
Total fights: 32
Wins: 28
Wins by KO: 26
Losses: 4
HOW DO SIM CARD SCAMS WORK?
Sim swap frauds are a form of identity theft.
They involve criminals conning mobile phone operators into issuing them with replacement Sim cards, often by claiming their phone has been lost or stolen
They use the victim's personal details - obtained through criminal methods - to convince such companies of their identity.
The criminal can then access any online service that requires security codes to be sent to a user's mobile phone, such as banking services.
Fitness problems in men's tennis
Andy Murray - hip
Novak Djokovic - elbow
Roger Federer - back
Stan Wawrinka - knee
Kei Nishikori - wrist
Marin Cilic - adductor
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.
Benefits of first-time home buyers' scheme
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- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
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WWE TLC results
Asuka won the SmackDown Women's title in a TLC triple threat with Becky Lynch and Charlotte Flair
Dean Ambrose won the Intercontinental title against Seth Rollins
Daniel Bryan retained the WWE World Heavyweight Championship against AJ Styles
Ronda Rousey retained the Raw Women's Championship against Nia Jax
Rey Mysterio beat Randy Orton in a chairs match
Finn Balor defeated Drew McIntyre
Natalya beat Ruby Riott in a tables match
Braun Strowman beat Baron Corbin in a TLC match
Sheamus and Cesaro retained the SmackDown Tag Titles against The Usos and New Day
R-Truth and Carmella won the Mixed Match Challenge by beating Jinder Mahal and Alicia Fox
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The five pillars of Islam
The Sand Castle
Director: Matty Brown
Stars: Nadine Labaki, Ziad Bakri, Zain Al Rafeea, Riman Al Rafeea
Rating: 2.5/5
Why are asylum seekers being housed in hotels?
The number of asylum applications in the UK has reached a new record high, driven by those illegally entering the country in small boats crossing the English Channel.
A total of 111,084 people applied for asylum in the UK in the year to June 2025, the highest number for any 12-month period since current records began in 2001.
Asylum seekers and their families can be housed in temporary accommodation while their claim is assessed.
The Home Office provides the accommodation, meaning asylum seekers cannot choose where they live.
When there is not enough housing, the Home Office can move people to hotels or large sites like former military bases.
Red Sparrow
Dir: Francis Lawrence
Starring: Jennifer Lawrence, Joel Egerton, Charlotte Rampling, Jeremy Irons
Three stars
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Starring: Vidya Balan, Sanya Malhotra
Director: Anu Menon
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Company profile
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Founded: 2015
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When Umm Kulthum performed in Abu Dhabi
Known as The Lady of Arabic Song, Umm Kulthum performed in Abu Dhabi on November 28, 1971, as part of celebrations for the fifth anniversary of the accession of Sheikh Zayed bin Sultan Al Nahyan as Ruler of Abu Dhabi. A concert hall was constructed for the event on land that is now Al Nahyan Stadium, behind Al Wahda Mall. The audience were treated to many of Kulthum's most well-known songs as part of the sold-out show, including Aghadan Alqak and Enta Omri.
