Bumper US interest rate cut aims to boost flagging economy

Published

18 hours ago

September 18, 2024

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US interest rates have been slashed for the first time in more than four years – by more than many expected – amid fears the world’s largest economy is flagging.

The US central bank, the Federal Reserve, brought interest rates down by 0.5 percentage points to 4.75% to 5%.

Unlike the UK, the US interest rate is a range to guide lenders rather than a single percentage.

Bringing down inflation to 2% is a primary goal of the Fed and it has used interest rates to draw money out of the economy by making borrowing more costly since 2022, when the Ukraine/Russia price shock hit.

Recent figures show the Fed is not far from its inflation target – with the main measure hitting 2.5% in August, the lowest rate in three years.

But signs of a weakening economy emerged last month as data on job creation led to recession fears.

The Fed signalled in its statement that while it was confident on both the inflation and growth outlooks, a slowdown in the pace of hiring was a cause for concern.

Only one member of its rate-setting committee dissented on the 0.5 percentage point reduction. Financial market participants had been split on whether it would go for the 0.25 option instead.

US stocks rallied in the wake of the decision, with the Dow Jones Industrial Average and broader S&P 500 both up by more than 0.5% from flat positions moments before the rate decision was revealed.

The dollar was trading a cent lower versus sterling at $1.32.

Some market analysts said the Fed’s move showed Fed chair Jay Powell and his fellow policymakers had been too slow to react to the employment slowdown.

He told reporters: “We’re going to be making decisions meeting by meeting, based on the incoming data and the evolving outlook, the balance of risks… it’s a process of recalibrating our policy stance away from where we had it a year ago, when inflation was high and unemployment low, to a place that’s more appropriate given where we are now and where we expect to be.

“That process will time time”, he added, saying there would be no “rush”.

Michael Sheehan, fund manager of fixed income at EdenTree Investment Management, said: “Kicking off this cutting cycle with a 50 basis point reduction will undoubtedly vindicate those who had argued that the Fed had fallen behind the curve.

“Any doubts that this cutting cycle would be any less dramatic than previous ones have been firmly laid to rest.

“We expect this larger cut of 50 basis points to boost risk assets in the short term. The key for markets, and indeed the Federal Reserve, will be how far the softening of the labour market has to run.

“Powell will be hoping that taking aggressive action early will go some way to curtailing a substantial weakening and achieve the elusive soft landing.”

What about the UK?

It comes as the UK central bank the Bank of England meets on Thursday to make its own interest rate decision.

While the Bank will focus on UK economic data – and on Wednesday afternoon was expected by markets to hold rates – it could be influenced by US decision-making.

Lower interest rates tend to weaken currencies, so a big cut from the Fed could be good news for the pound.

While being able to buy more dollars is good news for people holidaying in the US and paying for imports like oil, it’s bad news for exporters who get less for their goods as a result and have a less competitive product.

Lower exports can slow inflation, meaning the Bank could be more likely to cut.

US

Titan submersible: New coastguard video shows wreckage on seafloor

Published

5 hours ago

September 19, 2024

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Titan submersible: New coastguard video shows wreckage on seafloor

New video has been released of the remains of the Titan submersible – more than 3700m down on the seafloor.

The US Coast Guard said it shows “the aft dome, aft ring, remnants of the hull and carbon fiber debris”.

It comes shortly after images of the sub’s tail were released.

A hearing is currently taking place in the US about the Titan’s fatal implosion on a trip to the Titanic in June 2023.

OceanGate’s former operations boss told the panel earlier this week the sub was a huge risk and the company was only focused on profit.

David Lochridge also painted an unflattering picture of the firm’s founder, Stockton Rush, saying he would “fly off the handle” and had a “total disregard for safety”.

In one incident, he said Mr Rush crashed the sub into a wreck site and threw the PlayStation controller used to pilot the vehicle at his head.

Three Britons died in the incident – adventurer Hamish Harding and father and son Shahzada and Suleman Dawood

Mr Rush and Frenchman Paul-Henri Nargeolet were also killed instantly when the craft was crushed by the pressure of the ocean.

OceanGate’s scientific director Steven Ross is expected to give evidence on Thursday, as is Renata Rojas, a mission specialist for the American company.

The firm suspended operations after the disaster and now has no full-time staff but is being represented by a lawyer during the US Coast Guard hearing.

Titan lost contact with its support ship on 18 June last year, prompting a search in the Atlantic that made global headlines.

However, the wreck was found four days later 300m from the Titanic’s bow. The sub had been making voyages to the site of the legendary shipwreck since 2021.

US

Sean ‘Diddy’ Combs refused bail a second time as he faces sex trafficking charges

Published

18 hours ago

September 18, 2024

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Sean 'Diddy' Combs refused bail a second time as he faces sex trafficking charges

Sean “Diddy” Combs has been refused bail a second time as he faces several charges including sex trafficking, drug possession and firearms offences.

US district judge Andrew L Carter said the government had proved “by clear and convincing evidence that there is no condition or set of conditions” that will ensure the safety of the community and that the rapper and music mogul will not tamper with witnesses.

The 54-year-old pleaded not guilty after he was first arrested by officers at the Park Hyatt hotel in Manhattan, New York, on Monday.

He was originally denied bail and told he would be detained after pleading not guilty to three felony counts during an initial court appearance on Tuesday.

Lawyers representing Combs asked a judge on Wednesday to let him await his trial at his luxury home on an island near Miami Beach, as opposed to in jail in Brooklyn.

But prosecutors argued against the proposal, saying there was too great a risk that Combs could threaten or harm witnesses.

Combs’s lawyers offered a $50m (£37.8m) bail package in exchange for his release to home detention with GPS monitoring and strict limitations on who could visit him.

Arguing to keep him behind bars, prosecutor Emily Johnson told the judge that Combs had a long history of intimidating both accusers and witnesses to his alleged abuse.

Ms Johnson cited text messages from women who said Combs forced them into “Freak Offs” and then threatened to leak explicit videos of them engaging in sexual acts.

She also said that Combs’s own defence team was “minimising and horrifically understating” his propensity for violence.

The defence and prosecution were wrangling over the request before the judge passed his ruling.

“I am feeling confident. We’re going to go get Mr Combs out of jail,” Combs’s lawyer Marc Agnifilo said on his way into court on Wednesday, before the judge decided Combs would spend his time before the trial at the Metropolitan Detention Center.

A legal indictment released after Combs’s arrest detailed allegations dating to 2008, accusing him of abusing, threatening, and coercing women for years “to fulfill his sexual desires, protect his reputation, and conceal his conduct”.

He allegedly induced female victims and male sex workers into drug-fuelled sexual performances, dubbed “Freak Offs”, according to the report.

Combs, formerly known as Puff Daddy and P Diddy, was once one of the most influential figures in hip-hop – famous as a producer and manager of the late Notorious BIG, as well as a rapper in his own right for hits including I’ll Be Missing You, Come With Me, and Bad Boy For Life.

However, in November, his former girlfriend, the R&B singer Cassie, filed a lawsuit accusing him of coercing her, and others, into unwanted sex in drug-fuelled settings.

The suit was settled in one day, but months later CNN aired hotel security footage showing Combs punching and kicking Cassie and throwing her to the floor.

He apologised after the video aired, saying: “I was disgusted when I did it.”

US

Harvey Weinstein pleads not guilty to new sex crime charge in New York

Published

18 hours ago

September 18, 2024

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Harvey Weinstein pleads not guilty to new sex crime charge in New York

Harvey Weinstein has appeared in court over a new sex crime charge, accused of sexually assaulting a woman in a hotel in New York in 2006.

The new indictment against the disgraced producer was first announced last week, just days after he underwent emergency heart surgery at a hospital in Manhattan to remove fluid on his heart and lungs.

Prosecutors did not give further details at the time, but said new charges were not part of the case that led to his now-overturned landmark #MeToo conviction in 2020.

Appearing in court in Manhattan in a wheelchair on Wednesday, Weinstein pleaded not guilty to a new first-degree felony charge.

He wore a dark suit and a blue tie, with a large bandage on his right hand, and responded emphatically when asked for his plea. “Not guilty.”

Weinstein, 72, has always maintained that any sexual activity was consensual.

The new indictment accuses the former movie mogul of forcing a sex act on a woman at some point between 29 April and 6 May 2006, in a hotel in downtown Manhattan.

He is also charged with a criminal sexual act in the first degree and rape in the third degree, in relation to a previous New York State Supreme Court indictment, Manhattan’s district attorney Alvin Bragg Jr said. Weinstein has also pleaded not guilty to these charges.

“Thanks to this survivor who bravely came forward, Harvey Weinstein now stands indicted for an additional alleged violent sexual assault,” Mr Bragg said. “This investigation is ongoing. If you have been sexually assaulted, I assure you that our team of dedicated prosecutors, investigators, social workers, and many more stand at the ready to support you.”

No details about the accuser involved in the new charge have been released.

“She will be fully prepared to speak her truth at trial to hold Mr Weinstein accountable before a jury of his peers,” her lawyer, Lindsay Goldbrum, said in a statement.

Why was Weinstein’s original conviction overturned?

As well as this, Weinstein is also facing a retrial over his 2020 rape and sexual assault conviction, which was overturned by New York’s highest court in a landmark ruling in April.

The Court of Appeals ruled he did not get a fair trial as the judge who presided over the hearing had unfairly allowed testimony against him based on allegations that were not part of the case.

Weinstein had been serving a 23-year prison sentence at the time. Despite the conviction being overturned, he has remained in custody due to another conviction last year, for the rape of an actress in Los Angeles in 2013.

The retrial is scheduled to start on 12 November, subject to possible delay due to the new indictment.

Prosecutors have said they will seek to include the new charges into the retrial, but Weinstein’s lawyers say there should be a separate case.

Meanwhile, earlier in September, prosecutors in the UK dropped two charges of indecent assault brought in 2022, saying there was “no longer a realistic prospect of conviction”.

Once one of the most powerful people in Hollywood, Weinstein co-founded the film and television production companies Miramax and The Weinstein Company, and produced films such as the Oscar-winning Shakespeare In Love, Pulp Fiction, and The Crying Game.

A judge agreed last week to let Weinstein remain indefinitely in the prison ward at Bellevue Hospital instead of being transferred back to the infirmary ward at New York’s Rikers Island jail complex.