US interest rates see fourth 0.75 percentage point rise to tackle inflation

Published

2 years ago

November 2, 2022

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The US central bank has imposed its fourth major interest rate rise in a row.

The Federal Reserve, the central bank known as the Fed, has once again hiked rates by 0.75 percentage points in an effort to curb soaring inflation.

The widely-expected rise will mean more expensive borrowing for the likes of mortgage holders and those paying credit card debt.

American interest rates now stand at 3.75% to 4% up from 3% to 3.25% since the last increase in September.

The latest tough stance has been taken in an effort to limit spiralling inflation, which stood at more than 8.2% in the US in the 12 months up to September. The rises are being made as part of an overall plan to reduce inflation to 2%.

There is to be no let up in pursuing that target as the committee that decides US interest rates said it anticipated “ongoing increases” in rates will be appropriate “for some time”.

The Fed has taken on responsibility for inflation, speaking at the announcement, chair of the Fed, Jay Powell said price stability is the responsibility of his organisation and the bedrock of the economy. “Without price stability, the economy does not work for anyone,” he said.

Just how high those rates reach remains to be seen. Mr Powell added there’s “significant uncertainty” around the level of rate rises but it’s expected rates will be higher than previously expected.

What will determine how much interest rates rise are readings on public health, labour market conditions, inflation, and financial and international developments.

The longer the current high rate of inflation continues, the greater the chance that expectations of inflation will become entrenched, Mr Powell added.

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Now is not the time to be considering when interest rises may moderate, he said, ongoing rate hikes are needed to get to a level that is “sufficiently restrictive”.

The impact of those rate rises are already having a negative effect on the economy, economists have said.

“A Fed-induced recession is still a very real – and dangerous – possibility,” said Rakeen Mabud, chief economist and managing director of policy and research at the Groundwork Collaborative.

“The slowdown in the housing market is the canary in the coal mine – a warning of the real price we will all pay if Chair Powell continues on his interest rate bender.”

If rates continue to rise a recession worse than that experienced after the global financial crisis could result, the United Nations Conference on Trade and Development (UNCTAD) had warned.

The rate had been 0% at the beginning of this year but the Fed has progressively increased the figure across five announcements. The low rate was reached during the pandemic when the Fed wanted borrowing to be cheap for businesses and consumers to remain financially afloat.

US economy bounces back from recession territory even as storm continues to brew

Not since the early 1980s has the Fed embarked on such an aggressive monetary-tightening campaign with Mr Powell on Wednesday describing the rises are increasing at a “historically fast pace”.

Prior to Wednesday’s increase, the Fed had already upped rates in September, June and July by what were, at the time, rises not seen since 1994.

The Fed is just one of many central banks targeting interest rates as inflationary pressures drive the cost of living crises across economies.

On Thursday, the Bank of England is anticipated to also raise its base rate of interest by 0.75% to 3%.

US

Trump is unlikely to take Biden’s advice on China – and it could change the world

Published

4 hours ago

November 17, 2024

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Trump is unlikely to take Biden's advice on China - and it could change the world

As the two most powerful countries in the world, the relationship between the United States and China is the most consequential of all bilateral ties.

Any change in interactions and behaviour by either side does not just impact security, economic activity and trade in Washington and Beijing, but also affects the rest of the planet.

President Xi Jinping chose to make this point publicly as he said hello – and presumably goodbye – to Joe Biden when the two men met on the sidelines of an economic forum in Peru in what was likely their last face-to-face sit down before the US leader hands the keys to the White House over to Donald Trump.

“As two major countries, China and the United States should bear in mind the interest of the whole world and inject more certainty and positive energy into the turbulent world,” Mr Xi said, speaking through a translator.

“It is my consistent belief that as the world’s most important bilateral relationship, a stable China-US relationship is critical not only to the interests of the Chinese and American peoples but also to the future and destiny of the entire humanity.”

Mr Biden, whose relationship with his opposite number does not just span his four years as president but also when he previously served as vice president under Barack Obama, also focused on the importance of dialogue.

“We haven’t always agreed, but our conversations have always been candid and always been frank,” he said, sitting at a long table, surrounded by aides, with Mr Xi opposite him.

“I think that’s vital. These conversations prevent miscalculations, and they ensure the competition between our two countries will not veer into conflict. Be competition, not conflict.”

While clearly directed at him, it is doubtful that Mr Trump will heed the advice.

He has consistently criticised the Biden administration for being too soft on Beijing and has vowed to be much tougher – even saying he would impose 60% tariffs on Chinese imports.

The president-elect’s picks for top jobs in the White House, such as with China hawks Senator Marco Rubio as his desired secretary of state, and Representative Mike Walz as national security adviser, also point to a hardening in the US’ position on Beijing – which is on a trajectory to overtake Washington as the world’s number one superpower.

This moment of re-ordering in global dominance – something the UK was once forced to absorb when the sun set on the British Empire – is on course to happen regardless of who is in the White House.

But a more hostile and combative commander-in-chief in the White House makes it an increasingly perilous time for everyone.

It is perhaps why the current leaders in Beijing and Washington are so keen to stress that while their feelings towards one another go up and down, the ability to keep talking is critical.

US

Xi Jinping says China is ‘ready to work’ with Donald Trump during last meeting with Joe Biden

Published

10 hours ago

November 17, 2024

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Xi Jinping says China is 'ready to work' with Donald Trump during last meeting with Joe Biden

Joe Biden has met with Xi Jinping for the last time as US president, where the Chinese leader said he is “ready to work” with Donald Trump.

Speaking at the Asia-Pacific Economic Cooperation forum in Lima, Peru, Mr Biden said the US and China’s relationship should be about “competition, not conflict”.

“We haven’t always agreed, but our conversations have always been candid and always been frank,” he said.

“We’ve never kidded one another. These conversations prevent miscalculations, and they ensure the competition between our two countries will not veer into conflict.

“We’ve been level with one another. I think that’s vital.”

Their last-ever meeting comes as president-elect Donald Trump vows to introduce blanket 60% tariffs on US imports of Chinese goods as part of a series of “America First” trade measures.

But despite Mr Trump’s proposed measures, Mr Xi said his country’s goal “of a stable, healthy and sustainable China-US relationship remains unchanged”.

“Our commitment to mutual respect, peaceful coexistence and… cooperation as principles for handling China-US relations remains unchanged,” he added.

The Chinese president then said the country is “ready to work with the new US administration to maintain communication, expand cooperation and manage differences, so as to strive for a steady transition”.

Neither Mr Xi nor Mr Biden responded to a question about whether there were concerns about Mr Trump’s proposed tariffs.

The president-elect has also named several China hawks to his transition team, such as Senator Marco Rubio as secretary of state and Representative Mike Waltz as national security adviser.

Under Mr Biden, Washington has introduced restrictions on US investment in Chinese artificial intelligence, quantum computing and semiconductors.

Former house speaker Nancy Pelosi also visited the island of Taiwan – which China views as a breakaway province – in April 2022.

In their meeting at this time last year – which followed a surge in tensions when an alleged Chinese spy balloon was shot down over the US – both leaders said direct communication between American and Chinese military forces would be restored.

US

Mike Tyson reveals he ‘almost died’ ahead of fight with YouTuber-turned-boxer Jake Paul

Published

10 hours ago

November 17, 2024

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Mike Tyson reveals he 'almost died' ahead of fight with YouTuber-turned-boxer Jake Paul

Former heavyweight champion Mike Tyson says the health scare in June, which forced the postponement of his boxing match with Jake Paul, almost cost him his life.

“I almost died in June,” Tyson wrote on X, adding that he “had 8 blood transfusions. Lost half my blood and 25lbs in hospital”.

The 58-year-old, who lost to the YouTuber-turned-boxer in a unanimous points decision in Texas, tweeted that the situation was far worse than people had realised.

Following Tyson’s recovery, after reportedly suffering an ulcer flareup, he reflected on the result of the fight.

“This is one of those situations when you lost but still won… no regrets to get in the ring one last time,” he said.

That contrasts with Tyson’s comments after the match in which he refused to confirm whether it would be his last fight.

“It depends on the situation,” Tyson said before suggesting a fight with Paul’s older brother, Logan Paul, who was standing near him in the ring.

Critics argued that the revised match – which involved fewer and shortened rounds, as well as heavier gloves – fell short of entertaining.

Some claimed it appeared more like a glorified sparring session.

It was Tyson’s first sanctioned pro bout since 2005, when he lost to Kevin McBride and then went into retirement – only briefly reappearing for an exhibition match in 2020 against Roy Jones Jr.

Paul has plenty to prove

Paul, 27, still has plenty to prove. The social media influencer wants to be a championship fighter and compete for a championship belt within two years. “I think it could happen in the next 24 months,” Paul said.

“I truly, truly believe in my skills and my ability and my power. And the cruiserweight division is seemingly open for the taking on that timeline,” he added.

The only professional match he has lost so far has been to Tommy Fury, the less-accomplished brother of former heavyweight champion Tyson Fury.

But there are questions about when Paul will fight a contender in his prime, as opposed to former champions or mixed martial artists.

Could Paul really take on Alvarez?

Intriguingly, in the days before his fight with Tyson, Paul mentioned super middleweight champion Canelo Alvarez, considered one of the best boxers in the world.

According to reports, the Texas bout earned Paul $40m (£31.7m) versus $20m (£15.8m) for Tyson.

Netflix said 60 million households worldwide viewed the contest on its streaming platform, and nearly 50 million tuned in to watch the undercard which saw Ireland’s Katie Taylor beat Puerto Rico’s Amanda Serrano.

Even so there were some technical glitches. More than 90,000 users reported problems on Netflix at its peak, according to the website Downdetector, which tracks outages.