Officials at the US Federal Reserve are warning markets not to get carried away about the prospect of cutting interest rates early, suggesting that premature rate cuts would undo much of the progress the monetary authority has made in taming inflation.
Projections released after the Fed's December meeting forecast three rate cuts this year, to bring interest rates down from 5.4 per cent to the target range of 4.75 and 5.0 per cent. The timing on when this might happen is unclear, December's minutes showed.
But markets have remained bullish that rate cuts could come within the first quarter this year. Even a hotter-than-expected inflation report did little to dent market optimism that the Fed would begin cutting rates as soon as March.
A chorus of warnings from numerous Fed officials has mostly tempered market expectations. Today, roughly 52 per cent of traders expect a March rate cut, down from nearly 77 per cent last week.
Fed officials have been sounding the warnings before their self-imposed blackout before their first policy meeting of the year.
Their general message: Don't expect rate cuts anytime soon.
“I see no reason to move as quickly or cut as rapidly as in the past,” said Federal Reserve Governor Christopher Waller during a Brookings Institution event this week.
John Williams, who heads the Federal Reserve Bank in New York, has said the Fed will need to hold a restrictive stance for “some time” until the central bank is “confident that inflation is moving towards 2 per cent on a sustained basis”.
Inflation has climbed down considerably since the Fed began its tightening cycle last year. And with high interest rates not causing mass layoffs, it has given room to believe the Fed will achieve a soft landing.
But last week's Consumer Price Index (CPI) showed that prices rose 3.4 per cent on an annual level in December, slightly higher than in November. Mr Waller said he would be closely looking at CPI revisions due next month.
Federal Reserve Bank of Cleveland President Loretta Mester, meanwhile, told Bloomberg TV she needs to see “some more evidence” on the inflation path for believing that March is too soon to cut rates.
Even one of the more dovish members of the Federal Open Market Committee, Atlanta Fed President Raphael Bostic, doesn't foresee rate cuts coming until the third quarter.
Cutting rates prematurely, he said, could undo much of the progress the Fed has made.
“In such an unpredictable environment, it would be unwise to lock in an emphatic approach to monetary policy,” he said during an event in Atlanta on Thursday.
The Fed officials, all voting members of the FOMC this year, caveated their outlooks on the basis that their decisions will be determined by incoming data.
The Fed next meets on January 30-31, when it is expected to hold interest rates steady at 5.4 per cent.
The distance learning plan
Spring break will be from March 8 - 19
Public school pupils will undergo distance learning from March 22 - April 2. School hours will be 8.30am to 1.30pm
Staff will be trained in distance learning programmes from March 15 - 19
Teaching hours will be 8am to 2pm during distance learning
Pupils will return to school for normal lessons from April 5
'Ghostbusters: From Beyond'
Director: Jason Reitman
Starring: Paul Rudd, Carrie Coon, Finn Wolfhard, Mckenna Grace
Rating: 2/5
The biog
Marital status: Separated with two young daughters
Education: Master's degree from American Univeristy of Cairo
Favourite book: That Is How They Defeat Despair by Salwa Aladian
Favourite Motto: Their happiness is your happiness
Goal: For Nefsy to become his legacy long after he is gon
More from Rashmee Roshan Lall
Who was Alfred Nobel?
The Nobel Prize was created by wealthy Swedish chemist and entrepreneur Alfred Nobel.
- In his will he dictated that the bulk of his estate should be used to fund "prizes to those who, during the preceding year, have conferred the greatest benefit to humankind".
- Nobel is best known as the inventor of dynamite, but also wrote poetry and drama and could speak Russian, French, English and German by the age of 17. The five original prize categories reflect the interests closest to his heart.
- Nobel died in 1896 but it took until 1901, following a legal battle over his will, before the first prizes were awarded.
Dhadak 2
Director: Shazia Iqbal
Starring: Siddhant Chaturvedi, Triptii Dimri
Rating: 1/5
BULKWHIZ PROFILE
Date started: February 2017
Founders: Amira Rashad (CEO), Yusuf Saber (CTO), Mahmoud Sayedahmed (adviser), Reda Bouraoui (adviser)
Based: Dubai, UAE
Sector: E-commerce
Size: 50 employees
Funding: approximately $6m
Investors: Beco Capital, Enabling Future and Wain in the UAE; China's MSA Capital; 500 Startups; Faith Capital and Savour Ventures in Kuwait
SERIES INFO
Afghanistan v Zimbabwe, Abu Dhabi Sunshine Series
All matches at the Zayed Cricket Stadium, Abu Dhabi
Test series
1st Test: Zimbabwe beat Afghanistan by 10 wickets
2nd Test: Wednesday, 10 March – Sunday, 14 March
Play starts at 9.30am
T20 series
1st T20I: Wednesday, 17 March
2nd T20I: Friday, 19 March
3rd T20I: Saturday, 20 March
TV
Supporters in the UAE can watch the matches on the Rabbithole channel on YouTube
The Bloomberg Billionaire Index in full
1 Jeff Bezos $140 billion
2 Bill Gates $98.3 billion
3 Bernard Arnault $83.1 billion
4 Warren Buffett $83 billion
5 Amancio Ortega $67.9 billion
6 Mark Zuckerberg $67.3 billion
7 Larry Page $56.8 billion
8 Larry Ellison $56.1 billion
9 Sergey Brin $55.2 billion
10 Carlos Slim $55.2 billion
MATCH INFO
Bangla Tigers 108-5 (10 ovs)
Ingram 37, Rossouw 26, Pretorius 2-10
Deccan Gladiators 109-4 (9.5 ovs)
Watson 41, Devcich 27, Wiese 2-15
Gladiators win by six wickets
Results
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QUARTER-FINAL
Wales 20-19 France
Wales: T: Wainwright, Moriarty. Cons: Biggar (2) Pens: Biggar 2
France: T: Vahaamahina, Ollivon, Vakatawa Cons: Ntamack (2)
From Zero
Artist: Linkin Park
Label: Warner Records
Number of tracks: 11
Rating: 4/5
Top 10 in the F1 drivers' standings
1. Sebastian Vettel, Ferrari 202 points
2. Lewis Hamilton, Mercedes-GP 188
3. Valtteri Bottas, Mercedes-GP 169
4. Daniel Ricciardo, Red Bull Racing 117
5. Kimi Raikkonen, Ferrari 116
6. Max Verstappen, Red Bull Racing 67
7. Sergio Perez, Force India 56
8. Esteban Ocon, Force India 45
9. Carlos Sainz Jr, Toro Rosso 35
10. Nico Hulkenberg, Renault 26
