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close video The Fed risks ‘overshooting’ its inflation, rate hike goals: Diane Swonk

KPMG Chief Economist Diane Swonk says it’s important to remember rapid rate hikes can exacerbate market fragility.

A high-stakes inflation report due Wednesday is expected to show that price pressures within the economy remained strong last month despite an aggressive interest rate hike campaign by the Federal Reserve.

Economists expect the consumer price index, which measures a basket of goods, including gasoline, health care, groceries and rent, to show that monthly prices rose 0.2% in March, down slightly from an increase of 0.4% February. On an annual basis, inflation is projected to have climbed 5.1% at an annual rate, a decline from 6% the previous month and a peak of 9.1% in June. 

While that would mark the slowest pace of inflation since May 2021, it remains nearly three times higher than the Fed's 2% target. 

Other parts of the report are also expected to point to a slow retreat for inflation, a worrisome sign for the U.S. central bank. Core prices, which exclude the more volatile measurements of food and energy, are expected to climb 0.4% or 5.6% annually, suggesting that underlying price pressures remain strong. 

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"Core inflation, and core services, should remain sticky-high," Bank of America analysts wrote in a note Monday,

The report is the last before the Federal Reserve's next policy-setting meeting May 2-3 and will have major implications for the U.S. central bank, which is tightening monetary policy at the fastest rate in decades as it tries to crush out-of-control inflation. 

Officials have already approved nine straight rate increases, lifting the federal funds rate to a range of 4.75% to 5%, the highest since before the 2008 financial crisis. 

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Markets expect policymakers to approve another quarter-percentage point hike at the conclusion of their meeting next month despite upheaval in the banking system and concerns over a slowing economy. 

A man shops for meat at a Safeway grocery store in Annapolis, Md., May 16, 2022. (Jim Watson/AFP via Getty Images / Getty Images)

The probability that the Fed continues its rate hike campaign in May rose to 71% Wednesday, according to data from the CME Group's FedWatch tool, up from 44.8% just one week ago. About 28% of traders, meanwhile, are expecting central bankers to pause the rate hikes. 

"The Fed's policy should continue to have the desired impact on price pressures," said Michael Weisz, president of the investment firm Yieldstreet. "However, the target rate of 2% continues to be a long way off from the current path. The 'higher for longer' thesis may include both interest rates, as well as overall price levels, and thus slowing inflation may not happen as quickly as desired."

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Shoppers in a Kroger supermarket Oct. 14, 2022, in Atlanta. (Elijah Nouvelage/AFP via Getty Images / Getty Images)

The Fed is also watching other economic indicators, including job growth and consumer inflation expectations. In another welcoming sign for the central bank, there were indications the labor market softened but did not deteriorate last week. 

The March jobs report showed employers added 236,000 jobs last month, the smallest gain since December 2020, and that monthly wages also cooled. 

"Employment growth has not yet collapsed, though there are visible signs of continued moderation," said Kathy Bostjancic, Nationwide chief economist. "In all, the Federal Reserve will be pleased by the details of the employment report, but still is supportive of another rate hike in May, which we think could be the last for the tightening cycle, followed by a long pause."

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US ambassador to Israel calls cabinet minister ‘delusional’ for claim UK played key role in Gaza peace deal

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US ambassador to Israel calls cabinet minister 'delusional' for claim UK played key role in Gaza peace deal

The US ambassador to Israel has called cabinet minister Bridget Phillipson “delusional” after she told Sky News the UK played a key role in the Gaza peace deal.

The education secretary told Sunday Morning With Trevor Phillips that Sir Keir Starmer’s presence at a signing ceremony for the ceasefire deal in Egypt on Monday “demonstrates the key role that we have played”.

Politics latest: Phillipson announces crackdown on antisemitism at UK universities

She did not say exactly what the UK’s role in the ceasefire, largely attributed to Donald Trump, is or was.

But she added: “We have played a key role behind the scenes in shaping this.

“It’s right that we do so because it’s in all of our interest, including our own national interest, that we move to a lasting peace in the region.

“These are complex matters of diplomacy that we are involved in. But we do welcome and recognise the critical role that the American government played in moving us to this point.”

More on Bridget Phillipson

However, the US ambassador to Israel, Mike Huckabee, reposted the Sky News clip of Ms Phillipson’s comments and said: “I assure you she’s delusional.

“She can thank Donald Trump anytime just to set the record straight.”

Mr Huckabee was part of the negotiating team for the peace deal, with Mr Trump calling the former Arkansas governor “AMAZING” as he said he “worked so hard, and did so much, to bring about peace in the Middle East”.

In August, Mr Huckabee said the UK and other European nations who said they would declare a Palestinian state were “having the counterproductive effect that they probably think that they want”.

Israel: UK did not play key role in peace deal

Israel’s deputy foreign affairs minister, Sharren Haskell, told Sky News the UK played “the opposite” of a key role in the peace deal after the Palestinian state declaration, which eventually happened in September.

She accused the PM’s initial threat “at a very sensitive time” in July of having “pushed Hamas to embolden their position and to refuse a ceasefire two months ago”.

“I think that right now, the quiet that was given during the negotiation, and to President Trump, had probably played a bigger role than what the government had done two months ago,” she said.

“The message that the UK government has sent Hamas was the message that: the longer they continue this war, they will be rewarded.

“I mean, you must understand that when a terrorist organisation is thanking you. You are on the wrong side of history.”

Read more:
Gaza latest: Hostages Square boos Netanyahu
Hamas official thanks Donald Trump for ceasefire deal

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Final preparations for hostages in Israeli hospital

Ms Phillipson stood by the decision to declare a Palestinian state, saying it was “the right thing to do”.

Husam Zomlot, the Palestinian ambassador to the UK, told Sky News it was a “moment of leadership” for the UK to declare a Palestinian state, and a “responsibility to begin to correct a century of the gravest historic injustices committed against our people”.

He added: “That moment three weeks ago, when the UK did recognise, is a moment when we can say that the wheels of history are turning in a different direction.”

No plans for British troops on the ground

The education secretary also told Sky News the government has “no plans” to put British troops into Israel or Gaza as part of a stabilisation force after the ceasefire.

The US military will help establish a multinational force in Israel, known as a civil-military coordination centre, which is likely to include troops from Egypt, Qatar, Turkey and the UAE.

Tens of thousands of Palestinians have walked back to Khan Younis in southern Gaza. Pic: AP
Image:
Tens of thousands of Palestinians have walked back to Khan Younis in southern Gaza. Pic: AP

On Friday, US officials said up to 200 US troops already based in the Middle East will be moved to Israel to help monitor the ceasefire in Gaza.

The day before, President Trump announced Israel and Hamas had “signed off on the first phase” of a peace plan he unveiled last week.

Pic: Reuters
Image:
Pic: Reuters

Aid trucks have been gathering in Egypt to cross into Gaza after months of warnings by aid groups of famine in parts of the territory.

In Israel, the remaining hostages are due to be returned from Gaza by Hamas on Monday under the first phase of the peace plan. Twenty are believed to still be alive, 26 have been declared dead, while the fate of two is unknown.

The ceasefire agreement has been made two years after Hamas stormed Israel on 7 October 2023, killing 1,200 people and taking 251 hostages.

Israel’s military offensive has killed more than 67,000 Palestinians in Gaza, according to the Hamas-run health ministry, which the UN deems reliable.

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Sports

Brewers edge Cubs to make first NLCS since 2018

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Brewers edge Cubs to make first NLCS since 2018

MILWAUKEE — Perhaps some divine intervention had a hand in the Brewers advancing to the National League Championship Series for the first time since 2018 after they defeated the Cubs in Game 5 of the NL Division Series on Saturday night. More than once, general manager Matt Arnold said he looked “to the heavens” for some inspiration from Brewers icon Bob Uecker, who passed away last offseason.

“I kept saying, ‘Bob, we need you,'” Arnold said in the Brewers’ champagne-soaked clubhouse following the tense 3-1 win. “We know he’s with us.”

Arnold’s prayers were answered as Milwaukee hit three solo home runs while perfectly navigating its own bullpen game — just as the Cubs were attempting to do — holding Chicago to a solo home run. Midseason pickup Andrew Vaughn went deep again, while midseason call-up Jacob Misiorowski pitched the bulk of the game, going four innings and allowing just that one run.

Vaughn, in particular, felt the meaning of the moment more than most. Traded by the Chicago White Sox after a terrible start to his season, he found new life with the Brewers. He compiled a 1.126 OPS in the series, including two home runs.

“The journey has been kind of crazy,” Vaughn said. “But not taking anything for granted. The opportunity to be with this group, it’s changed my life.”

For Misiorowski, it was the first time in 17 appearances, dating back to the regular season, that he didn’t issue a walk. He gave up three hits and struck out three in a masterful performance.

“I think I was giving everything I’ve got,” he said. “And I think I left everything out there.”

The other four Brewers pitchers held the Cubs scoreless.

“It kind of went according to plan,” Brewers manager Pat Murphy said. “But then, we saw [Aaron Ashby] was a little bit not as sharp as he could have been. It’s his fourth time seeing them. And then, Chad Patrick was maybe the player of the game because you don’t expect him to be that good, pitching an inning plus.”

Patrick relieved Ashby during a potential turning point in the sixth. With Milwaukee up 2-1, Ashby gave up a hit and then hit a batter, putting runners on first and second with no outs. But then he threw the pitch of the game, a nasty 98.6 mph fastball on the edge of the zone to Kyle Tucker, who swung and missed on a 3-2 count. Patrick entered next. He got Seiya Suzuki to fly out and caught Ian Happ looking. It was the last rally of the season for the Cubs.

“Ashby made a pretty darned good pitch, 3-2, to Tucker,” Cubs manager Craig Counsell said. “Looked like right down away on the corner. It was a nasty pitch. Seiya had a good at-bat against Patrick. … And then, they got out of it essentially.

“It’s really the only inning you could talk about. We just didn’t do much. We had six baserunners. You’re going to have to hit homers to have any runs scoring in scenarios like that.”

The win completed a back-and-forth series where the home team held serve throughout. The Brewers admitted the environment in Games 3 and 4 in Chicago got to them, allowing the Cubs to even the series after Milwaukee took a 2-0 lead. Would the Brewers give it away like they did in the wild-card round last year when New York Mets star Pete Alonso beat them with a late home run in the deciding game?

Longtime Brewers star Christian Yelich was asked what he learned from that heartbreaking experience.

“Just go at it fearless,” Yelich said during the postgame clubhouse party. “You can’t really lose them tougher than we did last year. So going into the night, you just play with a bunch of freedom. You know you’ve got belief and trust in your teammates that we’re going to be able to get the job done. That’s exactly what we’re able to do.”

The Brewers said all the right things about beating the Cubs, though it had to feel extra special taking down a big-market payroll and Milwaukee’s former manager, who left for greener pastures two years ago. As has become the norm since he took the job in Chicago, Counsell was booed every time he poked his head out of the dugout.

Milwaukee owner Mark Attanasio was asked if he had any doubts about his team continuing its winning ways after Counsell left the organization before the 2024 season.

“I believed in the process and the system and the people,” Attanasio said. “The Cubs were really good this year. It’s just a testament to this whole organization.”

In terms of big-market, high-payroll teams, the Cubs were just the appetizer. Next up for the Brewers are the defending champion Los Angeles Dodgers, who reside in the sport’s second-largest market and own the highest team payroll in the majors, more than $200 million ahead of the Brewers.

“It doesn’t get any more big market and small market than Brewers-Dodgers,” Yelich said with a smile. “We’re up against it. We know it. We love being in those situations. It’s fitting the season for us is going to come down to that series, that team and all that star power. You have the average Joes coming there. We’re going to do what we did all year, compete our asses off, go hard and see what happens.”

Attanasio added: “Let’s go! I can’t wait.”

The Brewers went 6-0 against the Dodgers in the regular season and have home-field advantage in the series, but they will be the decided underdogs. Uecker’s spirit might be needed now more than ever, as taking down the Dodgers despite everything that the Brewers have accomplished will be their toughest task yet.

“I’m grateful for the guys we’ve had in the room,” Murphy said. “They’ve been doubted every year. Everyone. There’s no one predicting the Brewers playing the Dodgers in the series.”

Arnold added: “We’ve been planning for this. You can’t just roll out of bed and play the Dodgers.”

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Sports

Bichette off Jays’ ALCS roster; Scherzer, Bassitt on

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Bichette off Jays' ALCS roster; Scherzer, Bassitt on

Toronto Blue Jays shortstop Bo Bichette is not on the roster for the AL Championship Series vs. the Seattle Mariners.

Bichette has not played since spraining his left knee in a collision on Sept. 6. He ran for the first time Wednesday, hit live pitching Friday and appeared to be in some discomfort as he ran the bases for the first time Saturday.

Game 1 against the Mariners is scheduled for Sunday night at Rogers Centre.

Toronto’s offense did not falter without the 27-year-old Bichette in the AL Division Series. The Blue Jays scored 34 runs in the four games and pounded the New York Yankees‘ pitching for 23 runs in the first two contests at home. But Bichette was one of the team’s three best hitters during the regular season.

A free agent this winter, Bichette rebounded from a dreadful, injury-plagued 2024 season in which he posted a .598 OPS in 81 games to his previous All-Star-level form in his platform year. He batted .311 — tied for second in the AL — with 18 home runs, 94 RBIs and an .840 OPS in 139 games, though he was the worst defensive shortstop in the majors as measured by outs above average and defensive runs saved.

Andres Gimenez, previously the team’s starting second baseman, started at shortstop for the Blue Jays in their division series win over Yankees. Utilityman Ernie Clement also played shortstop for Toronto during the regular season after Bichette’s injury.

After carrying just three starters in the AL Division Series and deploying a bullpen game in Game 4, the Blue Jays are carrying both Max Scherzer and Chris Bassitt — who finished the season on the injured list with back inflammation — on the ALCS roster as possible options for length. Both starters threw in a simulated game early in the week at Rogers Centre.

ESPN’s Jorge Castillo contributed to this report.

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