US central bank takes step towards first rate cut but signals extended caution
The US central bank has raised expectations that interest rate cuts are around the corner, but also signalled it wants more evidence that easing inflation is sustainable.
The Federal Reserve kept its core interest rate range steady between 5.25-5.5% following the first meeting of its Federal Open Market Committee in 2024.
Its statement to accompany the decision showed it had dropped a longstanding reference to possible further hikes
in borrowing costs.
It said: “The committee judges that the risks to achieving its employment and inflation goals are moving into better balance”, signalling an improvement in conditions towards a rate cut.
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But crucially it added: “The committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2% – its target rate.”
At a news conference, Fed chair Jay Powell told reporters: “We do have confidence but we want to get greater
confidence” that cooling inflation data is sending “a true signal”.
Federal Reserve Chairman Jerome Powell remains cautious on the prospects for rate cuts in the short term. Pic: AP
The remarks saw a shift in financial market expectations for the first rate cut.
The majority of opinion moved to May from March.
The Fed’s tightening cycle began in March 2022 when price pressures were ramping up in the wake of Russia’s invasion of Ukraine.
Inflation peaked at a 40-year high several months later and the headline rate has eased at a faster pace than in Europe since.
US stocks fell following the release of the Fed’s statement while the dollar rose against many currencies though not versus the pound.
That could be a consequence of expectations that the Bank of England will take a harder line on the prospect of rate cuts.
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December: ‘Too early to speculate on interest rate cut’
UK rate-setters are widely tipped to leave the Bank rate at 5.25% – the level it has sat at since August last year – on Thursday.
While inflation has also eased sharply from the peak above 11% witnessed in 2022, it remains more stubborn than across the Atlantic.
The pace of price increases in the economy remains double the Bank of England’s 2% target rate, above 4%.
It was for that reason that policymakers including governor Andrew Bailey have stuck to a script since December that it is too early to think about rate cuts.
Financial markets currently see four reductions in 2024, beginning in May.
The Bank’s latest thinking will be revealed in the minutes of the Monetary Policy Committee (MPC) meeting and the accompanying Monetary Policy Report.
Mr Bailey hosts a news conference shortly after the information is released.
The first clue towards any shift in the ‘hold’ stance will come from the voting among the nine members of the MPC.
Three backed a rate increase in December while the other six won the day by backing no change.
There are 161 people still missing in Texas in the aftermath of last weekend’s deadly flash floods, the state’s governor has said.
Speaking at a news conference on Tuesday, governor Gregg Abbot said the number of missing had risen markedly.
He said among the missing were five children and one counsellor from Camp Mystic – where at least 27 people were killed in the flash flooding.
At least 109 people are confirmed to have died in the floods, which took place on the 4 July weekend, but this figure has been steadily climbing ever since.
People comforted each other in Kerville. Pic: Jason Fochtman/Houston Chronicle via AP
The bulk of deaths, and the main search for additional bodies, have been concentrated in Kerr County and the city of Kerrville.
The area was transformed into a disaster zone when torrential rains struck the region early last Friday, unleashing deadly flooding along the Guadalupe River.
Travis County, Kendall County, Burnett County, Williamson County, and Tom Green County were also hit.
Mr Abbot said many of those who were unaccounted for were in the Texas Hill Country area, but had not registered at a camp or hotel, posing further challenges for authorities.
Camp Mystic
Mr Abbot planned to make another visit to Camp Mystic.
The century-old all-girls Christian summer camp was badly hit by the flash floods, with at least 27 campers and counsellors dying.
Hanna Lawrence, left, and Rebecca Lawrence, right. Pic: John Lawrence/AP
Lila Bonner (L) and Eloise Peck both died in the flash floods at Camp Mystic, Texas. Pic: Family handout
Chloe Childress. Pic: Debra Alexander Photography via AP
Some of the victims include Hanna and Rebecca Lawrence, both eight, Chloe Childress, 19, who was among the counsellors at Camp Mystic when the flood hit, and Eloise Peck and Lila Bonner, both nine.
There were scenes of devastation at the camp as the flood water receded.
Outside the cabins where the girls had slept, mud-splattered blankets and pillows were scattered.
Also in the debris were pink, purple and light blue luggage, decorated with stickers.
A view inside a cabin at Camp Mystic after the flooding. Pic: Ronaldo Schemidt/AFP via Getty Images
Camper’s belongings lie on the ground following flooding on the Guadalupe River, at Camp Mystic.
Pic: Reuters
‘Everything looked flooded and broken’
One of the campers, 10-year-old Lucy Kennedy, told Sky’s US partner network, NBC News, that she woke up to the sound of thunder at around midnight before the floods struck.
“I couldn’t go back to sleep,” she said. “I just had a feeling that something really bad was about to happen.”
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She said the girls at the camp were told to grab blankets, pillows and water bottles and line up single file as the floodwater rose, before getting airlifted to safety.
Wynne Kennedy, Lucy’s mother, added: “When I saw her, she was wrapped up in a blanket, had a teddy bear.
“We just held each other tight, and I held her all night.”
Their home in Kerrville was also destroyed by the flash floods.
Lucy Kennedy, 10 who was rescued from Camp Mystic, and her mother Wynne. Pic: NBC
Political row
Meanwhile, a political row has unfolded parallel to the recovery efforts, with some questioning whether local authorities sent out warnings and alerts early enough.
Similarly, Democrats have criticised Donald Trump over cuts his Elon Musk-launched Department of Government Efficiency (DOGE) has made to the National Weather Service – but it isn’t clear whether these actually made any difference.
Read more:
Sisters killed in Texas flooding found holding hands
Why did deadly Texas floods catch people by surprise?
Wall of water
The flash floods erupted before daybreak on Friday, after massive amounts of rainfall caused the Guadalupe River to rise by eight metres in less than an hour.
The wall of water overwhelmed cabins, tents and trails along the river’s edge.
Some survivors were found clinging to trees.
Some of the campers had to swim out of their cabin windows to get to safety, while others clung to rope to make it to higher ground.
The date for Sean “Diddy” Combs’s sentencing hearing has been confirmed.
Following his high-profile trial, the hip-hop mogul was found guilty of two counts of transportation for prostitution by jurors in Manhattan, New York, last week – but was cleared of sex-trafficking and racketeering conspiracy.
Defence lawyers argued Combs, who has been in prison in Brooklyn since his arrest in September last year, should be bailed ahead of sentencing given the not guilty verdicts for the more serious charges, but Judge Arun Subramanian denied this – citing, among other things, the rapper’s own admissions of previous violent behaviour.
Sean ‘Diddy’ Combs in court after the verdict was delivered. Pic: Reuters/ Jane Rosenberg
The charges of sex-trafficking and racketeering conspiracy carried a potential life sentence. Combs still faces up to 20 years in prison for the prostitution-related offences, but is not expected to receive the maximum punishment.
After the verdict was delivered, the judge scheduled the sentencing hearing for 3 October. At a remote follow-up conference on Tuesday, with agreement from the defence and prosecution, the judge approved the date.
Combs joined the call but did not make any comment.
Any sentence will include credit for time already served – which will be just over a year by the time the hearing takes place.
During his trial, Combs was accused by prosecutors of abusing and coercing three alleged victims, including his former long-term partner, singer and model Cassie Ventura.
Jurors found the allegations did not amount to sex-trafficking or racketeering, or running a criminal enterprise – but they did find him guilty of transporting Cassie and another former girlfriend “Jane” for prostitution offences around the US, and paying male escorts to engage in sexual encounters.
Despite the guilty verdict on those charges, the 55-year-old’s team described it as “the victory of all victories”.
Read more:
How the trial unfolded
The rise and fall of Sean ‘Diddy’ Combs
In an interview over the weekend, defence lawyer Marc Agnifilo said Combs had received a standing ovation from fellow inmates when he returned to jail after being acquitted of the more serious charges.
“They all said, ‘We never get to see anyone who beats the government’,” he said.
Ahead of sentencing, Combs’s lawyers will file their recommendations by 19 September, with prosecutors likely to follow a week later.
Prosecutors previously said the rapper could face about four to five years in prison under federal sentencing guidelines, while the defence has suggested a two-year sentence.
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