Fed's Jerome Powell says strong economy could require rate hikes: 'Inflation is still too high'

Published

2 years ago

October 23, 2023

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The US economy’s strength and continued tight labor markets could warrant further Federal Reserve interest rate increases, Fed Chair Jerome Powell said on Thursday in remarks that appeared to push back against market expectations that the central bank’s rate hikes had reached an end.

“We are attentive to recent data showing the resilience of economic growth and demand for labor. Additional evidence of persistently above-trend growth, or that tightness in the labor market is no longer easing, could put further progress on inflation at risk and could warrant further tightening of monetary policy,” Powell said in remarks to the Economic Club of New York.

For inflation to durably return to the Fed’s 2% target, it “is likely to require a period of below-trend growth and some further softening in labor market conditions,” Powell said.

Since the Fed began raising interest rates in March of 2022 the unemployment rate has varied little from the current 3.8%, below the level most Fed officials feel is noninflationary, and overall economic growth has generally remained above the 1.8% annual growth rate Fed officials see as the economy’s underlying potential.

The Fed is “proceeding carefully” in evaluating the need for any further rate increases, Powell said, likely leaving intact current expectations that the Fed will leave its benchmark policy rate steady at the current 5.25% to 5.5% range at the upcoming Oct. 31-Nov. 1 meeting.

There is evidence the labor market is cooling, Powell said, with some important measures approaching levels seen even before the pandemic.

Powell also noted a number of fresh “uncertainties and risks” that need to be accounted for as the Fed tries to balance the threat of allowing inflation to rekindle against the threat of leaning on the economy more than is necessary.

Those include new geopolitical risks to the economy from the “horrifying” attack on Israel by the Palestinian militant Hamas group, Powell said.

“Our institutional role at the Federal Reserve is to monitor these developments for their economic implications, which remain highly uncertain,” Powell said. “Speaking for myself, I found the attack on Israel horrifying, as is the prospect for more loss of innocent lives.”

He also noted recent market-driven increases in bond yields that have helped to “significantly” tighten overall financial conditions.

“Persistent changes in financial conditions can have implications for the path of monetary policy,” Powell said, with higher market-based interest rates, if sustained, doing the same job as Fed rate increases.

But the Fed chair also voiced what has become a lingering theme at the central bank: That despite steady progress on lowering inflation, the battle isn’t over, with further rate increases still a possibility and the duration of tight monetary conditions still to be determined.

“Inflation is still too high, and a few months of good data are only the beginning of what it will take to build confidence that inflation is moving down sustainably toward our goal,” Powell said, citing the progress made since inflation peaked last year but also noting that one of the Fed’s main measures of inflation remained at 3.7% through September, nearly twice the central bank’s target.

“We cannot yet know how long these lower readings will persist, or where inflation will settle over coming quarters,” Powell said. “The path is likely to be bumpy and take some time…My colleagues and I are united in our commitment to bringing inflation down sustainably to 2%.”

The weeks since the Fed’s September meeting have been unusually turbulent, with worries about regional war in the Middle East rising and bond markets driving market interest rates higher, tightening the financial conditions faced by businesses and households somewhat independent of the Fed.

Data since the Fed’s last meeting also has shown US job growth reaccelerating unexpectedly, retail sales defying predictions of a slowdown and varying measures of prices offering inconsistent signals about whether inflation is on track to return to the Fed’s 2% target in a timely manner.

Powell’s appearance comes less than 48 hours before the beginning of the traditional quiet period ahead of the rate-setting Federal Open Market Committee’s meeting on Oct. 31-Nov. 1. While a handful of other Fed officials have appearances later on Thursday and Friday before blackout begins on Saturday, it is Powell’s remarks that will set the tone for policy expectations heading into that meeting.

Should they leave rates unchanged in two weeks as is now widely expected, it would mark the first back-to-back meetings with no rate increase since the Fed kicked off its hiking campaign in March 2022.

A Reuters poll of more than 100 economists published on Wednesday showed more than 80% expect no rate hike at the next meeting, and most also believe the Fed is done with rate hikes even though a majority of policymakers at their September meeting projected one more quarter-point increase was likely to be needed by year end.

Many in the poll offered the caveat that if progress on inflation stalls out or reverses, the Fed would not hesitate to resume raising rates.

Sports

Now in LF, Altuve asks off Astros’ leadoff spot

Published

3 hours ago

April 29, 2025

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Now in LF, Altuve asks off Astros' leadoff spot

Associated Press

Apr 28, 2025, 07:16 PM ET

HOUSTON — Jose Altuve asked manager Joe Espada to move him out of the leadoff spot and into the second hole for the Houston Astros. The reason? He wanted more time to get to the dugout from left field.

Altuve is playing left for the first time in his career after spending his first 14 MLB seasons at second base. “I just need like 10 more seconds,” he said.

The 34-year-old Altuve made the transition to the outfield this season after the trade of Kyle Tucker and the departure of Alex Bregman shook up Houston’s lineup.

Jeremy Peña was in the leadoff spot for Monday night’s game against Detroit. Altuve didn’t suggest that Peña be the one to take his leadoff spot.

“I just told Joe that maybe he can hit me second some games at some point, and he did it today,” Altuve said. “I just need like that little extra time to come from left field, and he decided to put Jeremy [there].”

Peña entered Monday hitting .255 with three homers and 11 RBIs. He hit first in Sunday’s 7-3 win over Kansas City — with Altuve getting a day off — and had two hits and three RBIs.

Along with giving him a little extra time to get ready to bat, Altuve thinks the athletic Peña batting leadoff could boost a lineup that has struggled at times this season.

“Jeremy is one of those guys that has been playing really good for our team,” Altuve said. “He’s taking really good at-bats. He’s very explosive and dynamic on the bases, so when he gets on base a lot of things can happen. Maybe I can bunt him over so Yordan [Alvarez] can drive him in.”

Altuve is a nine-time All-Star. The 2017 AL MVP is hitting .274 with three homers and nine RBIs this season.

Espada said he and Altuve often share different ideas about the team and that they had been talking about this as a possibility for a while before he made the move.

“He’s always looking for ways to get everyone involved and he’s playing left field, comes in, maybe give him a little bit more time to get ready between at-bats, just a lot of things that went into this decision,” Espada said. “He’s been around, he knows himself better than anyone else here, so hopefully this could create some opportunities for everyone here and we can score some runs.”

Politics

Sex offenders to be denied refugee status under plans to improve women’s safety

Published

3 hours ago

April 29, 2025

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Sex offenders to be denied refugee status under plans to improve women's safety

Migrants convicted of sex offences in the UK or overseas will be unable to claim asylum under government plans to change the law to improve border security.

The Home Office announcement means foreign nationals who are added to the sex offenders register will forfeit their rights to protection under the Refugee Convention.

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As part of the 1951 UN treaty, countries are allowed to refuse asylum to terrorists, war criminals and individuals convicted of a “particularly serious crime” – which is currently defined in UK law as an offence carrying a sentence of 12 months or more.

The government now plans to extend that definition to include all individuals added to the Sex Offenders’ Register, regardless of the length of sentence, in an amendment to the Border Security, Asylum and Immigration Bill, which is currently going through parliament. It’s understood they also hope to include those convicted of equivalent crimes overseas.

Those affected will still be able to appeal their removal from the UK in the courts under the European Convention on Human Rights (ECHR).

It is unclear how many asylum seekers will be affected, as the government has been unable to provide any projections or past data on the number of asylum seekers added to the Sex Offenders’ Register.

Home Secretary Yvette Cooper said: “Sex offenders who pose a risk to the community should not be allowed to benefit from refugee protections in the UK.

“We are strengthening the law to ensure these appalling crimes are taken seriously.”

Safeguarding and Violence Against Women and Girls Minister Jess Philips said: “We are determined to achieve our mission of halving violence against women and girls in a decade.

“That’s exactly why we are taking action to ensure there are robust safeguards across the system, including by clamping down on foreign criminals who commit heinous crimes like sex offences.”

The Home Office would like voters to see this as a substantial change. But that’s hard to demonstrate without providing any indication of the scale of the problem it seeks to solve.

Clearly, the government does not want to fan the flames of resentment towards asylum seekers by implying large numbers have been committing sex crimes.

But amid rising voter frustration about the government’s grip on the issue, and under pressure from Reform – this measure is about signalling it is prepared to take tough action.

Conservatives: ‘Too little, too late’

The Conservatives claim Labour are engaged in “pre-election posturing”.

Chris Philp MP, the shadow home secretary, said: “This is too little, too late from a Labour government that has scrapped our deterrent and overseen the worst year ever for small boat crossings – with a record 10,000 people crossing this year already.

“Foreign criminals pose a danger to British citizens and must be removed, but so often this is frustrated by spurious legal claims based on human rights claims, not asylum claims.”

The Home Office has also announced plans to introduce a 24-week target for appeal hearings (known as “first-tier tribunals”) to be held for rejected asylum seekers living in taxpayer-supported accommodation, or for foreign national offenders.

The current average wait is 50 weeks. The idea is to cut the asylum backlog and save taxpayers money – Labour have committed to end the use of asylum hotels by the end of this parliament.

It’s unclear how exactly this will be achieved, although a number of additional court days have already been announced.

The government also plans to crack down on fake immigration lawyers who advise migrants on how to lodge fraudulent asylum claims, with the Immigration Advice Authority given new powers to issue fines of up to £15,000.

World

Power returning in Spain and Portugal after large parts hit by blackout – but what caused it?

Published

3 hours ago

April 29, 2025

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Power returning in Spain and Portugal after large parts hit by blackout - but what caused it?

Power supplies have been returning in Spain and Portugal after large parts, including the capitals Madrid and Lisbon, were hit by a huge outage on Monday.

Millions of people were caught up in the chaos after the mass blackout brought many areas to a standstill, with trains stopping, planes grounded, internet and mobile phone services cut, traffic lights and ATMs down, and some routine hospital operations suspended.

Spain‘s interior ministry declared a national emergency and the two countries’ governments convened emergency cabinet meetings as officials tried to find out what caused the outage which started around 12.30pm (11.30am UK time).

Blackouts in Spain and Portugal: Follow latest updates

About half the electricity supplies in Spain have now been restored by the grid operator, Prime Minister Pedro Sanchez said on Monday evening, adding the rest should be back by Tuesday.

In a televised address, Mr Sanchez said authorities have not yet worked out what had caused the blackout in the Iberian Peninsula and were not ruling anything out.

He asked the public to refrain from speculation, and urged people to call emergency services only if really necessary.

Eduardo Prieto, the head of operations at Spanish power grid operator Red Electrica, said the event was unprecedented, calling it “exceptional and extraordinary”.

Meanwhile, Portugal‘s Prime Minister Luis Montenegro said power in his country would be fully restored in the coming hours.

He said all the state services remained operating in the country despite all the difficulties. He also said there was “no indication” a cyberattack was the cause.

‘Rare atmospheric phenomenon’

Portugal’s grid operator Ren claimed the outage was caused by a fault in the Spanish electricity grid, related to a “rare atmospheric phenomenon”.

Ren says that, due to extreme temperature variations in Spain, there were “anomalous oscillations” in very high-voltage lines.

It also says that given the complexity of the issue, it could take up to a week for the network to fully normalise again.

It comes as France briefly lost power following the outages in Spain and Portugal, French grid operator RTE said.

Parts of Madrid underground were evacuated and traffic lights in the city were not working, according to local media.

Play was suspended at the Madrid Open tennis tournament due to the outage – with Britain’s Jacob Fearnley forced off court in a critical moment during his third-round tie with Grigor Dimitrov.

The loss of power affected scoreboards and the camera above the court. Organisers later announced the tournament would not be able to resume on Monday, with afternoon and evening sessions cancelled.

What has been affected by the blackout?

Here’s what we know has been impacted so far:

:: Transport, including trains, metros and airports – with traffic lights also down.

:: Internet and mobile coverage.

:: Lighting in homes, businesses and other buildings, though backup generators are in place in many.

:: ATMs and card payments, as well as most till systems.

:: Lifts in buildings are stuck.

:: Electric car chargers and fuel pumps are also down.

:: Air conditioning units.

:: A significant quantity of water pumps, meaning some homes have no access to drinking water.

Airports affected

Aena, which runs international airports across Spain, said earlier that “some incidents were occurring” at the airports due to the outage.

The company added in a statement: “Contingency generators are active. Please check with your airline, as there may be disruptions to access and ground transportation.”

People ‘had nowhere to go’

Maddie Sephton, who is from west London, was on the Madrid Metro when the power outage occurred.

“We got on the train and everything was fine,” she told Sky News. “But then everything went dark.”

She was stuck on the train for 20 minutes until a staff member opened the doors manually.

Mrs Sephton says she was on her way to the airport at the time – and had to exit the station by walking up 15 flights of stairs with her luggage.

“No lifts are operating – making it difficult for elderly people with limited mobility,” she added.

Above ground, she said that “everyone is just standing around and waiting”.

Bars were unable to take card payments, cash machines are down, and traffic lights weren’t working either.

“I currently don’t have any internet service and just €15 in my wallet – I can’t withdraw any money from the ATM,” she added.

“A couple have offered to let us get a ride in their taxi to the airport. Their flight is at 4.30pm so they’re pretty relaxed – but my flight back to London is at 3pm and I’m nervous.”

Mrs Sephton said: “People are just walking but have nowhere to go, and nothing to do.”

Meanwhile, thousands of passengers had to be evacuated after the blackout left the metro service in Barcelona without power.

The blackout was also reported to have forced the closure of the city’s tram system and rendered some traffic lights there inoperable.

It has also impacted medical facilities, with hospitals in Madrid and Catalonia forced to suspend routine medical work. Staff have been able to attend to critical patients using power from backup generators.

It comes as Metrovalencia, the urban rail system, encompassing both metro and tram services in Valencia, said traffic in the city was “disrupted” due to a “general power outage in the city”.

The outage also hit the Portuguese capital Lisbon and surrounding areas, as well as northern and southern parts of the country.

Portugal’s government said the incident appeared to stem from problems outside the country, an official told national news agency Lusa.

“It looks like it was a problem with the distribution network, apparently in Spain. It’s still being ascertained,” Cabinet Minister Leitão Amaro was quoted as saying.