Key inflation metric slows as Fed signals hold on interest rate cuts
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Gulf Today
3 hours ago
- Gulf Today
US Fed to cut rates in September and once more this year: Experts
A Federal Reserve interest rate cut in September, the first this year, followed perhaps by another before year-end remains the base forecast for most economists polled by Reuters amid rising concerns about the health of the world's biggest economy. US inflation is rising again, with more upward pressure expected from President Donald Trump's tariffs, and there have been big downward revisions to hiring figures over recent months that suggest the job market is weakening. Trump has berated Fed Chair Jerome Powell over his reluctance to cut rates. And at the July meeting there was clear divergence from the steady rates position among a minority of Federal Open Market Committee members. Alongside simmering doubts over the Fed's independence from political interference and declining reliability of economic data, it has become more difficult for economists to make predictions with great conviction. August is not typically a month for big forecast changes either. Many are waiting for the next round of inflation and jobs data, as well as a speech from Powell, his last at the Fed's annual Jackson Hole conference held this month as his term as Fed chief ends in May. Economists are broadly sticking to a more cautious outlook than interest rate futures traders, whose pricing suggests a near-certainty of a September cut and strong likelihood of another, and the possibility of a third by year-end. A 61% majority, 67 of 110, predicted the Fed would lower its benchmark interest rate by 25 basis points to 4.00%-4.25% on September 17 for the first time this year, up from 53% in July's survey. One forecast a 50 basis point move. The remaining 42 said the Fed would hold rates again. 'We think that market participants are excessively confident in a September cut, as they are misinterpreting both the FOMC's assessment of labour market conditions and its reaction function,' wrote economists at Barclays in a note. 'In our view, the main question is not so much about whether the Fed needs to ease policy to lean against job declines, but whether the situation warrants cuts on the grounds that the balance of risks has shifted away from inflation and toward the full employment mandate.' Over 60% of respondents, 68 of 110, predicted there would be either one or two rate cuts this year, broadly unchanged from last month. But there was no consensus on where the federal funds rate would be at end-2025. A near-80% majority of economists who answered an extra question, fewer than the usual sample, said the inflation impact from tariffs would be temporary. A 68% majority also expected no serious erosion of the Fed's independence during the remainder of Powell's term. Inflation forecasts were broadly unchanged from last month, averaging above the Fed's 2% target through at least 2027. The unemployment rate was expected to be around the current 4.2% or slightly above over the next few years, suggesting economists have not yet fully responded to the recent sharp downward revisions to hiring and may do so in the next poll if August jobs data are also weak. 'We come down on the side of thinking the Fed would prefer to retain optionality,' said Michael Gapen, chief US economist at Morgan Stanley. 'This would leave room for a soft August employment report to open the door for cuts, or a reasonably strong employment report plus another round of firming in CPI inflation to keep the Fed on hold.' Separately, Foreign holdings of US Treasuries rose to record levels in June, topping $9 trillion for a fourth straight month, data from the Treasury Department showed on Friday. Holdings of US Treasuries climbed to $9.13 trillion in June, up from $9.05 trillion in May. Compared with a year earlier, Treasuries owned by foreigners were up nearly $1 trillion, or 10% higher. However, on a transaction basis, the US experienced outflows of $5 billion after buying roughly $147 billion in Treasuries in May, the largest since August 2022. In April, there was an outflow of $40.8 billion as President Donald Trump's back-and-forth tariff policies roiled markets. Japan remained the largest non-U.S. holder of Treasuries, with a record $1.147 trillion in June, up $12.6 billion from the previous month's $1.134 trillion. UK investors, the second-largest owner of US government debt, raised their pool of Treasuries to another record of$858.1 billion, up 0.6% from $809.4 billion in May. The UK overtook China as the second-largest non-US holder of Treasuries in March. The UK is widely viewed as a custody country, generally a proxy for hedge fund investments. Other countries used by hedge funds for custody services include the Cayman Islands and the Bahamas. Treasury holdings of China, the third-largest owner of US government debt, were little changed at$756.4 billion, compared with $756.3 billion in May, which was the lowest since February 2009 when the country's stock of Treasuries dropped to$744.2 billion. Agencies
Al Etihad
4 hours ago
- Al Etihad
Air Canada grounds hundreds of flights over cabin crew strike
16 Aug 2025 18:59 Toronto (AFP) Air Canada cancelled hundreds of flights on Saturday as it began shutting down operations in response to a strike by flight attendants -- triggering summer travel chaos for its 130,000 daily largest airline, which flies directly to 180 cities worldwide, urged customers not to go to the airport if they have a ticket for Air Canada or its lower-cost subsidiary Air Canada said flights by Air Canada Express, which are operated by a third party, would not be impacted by the walkout."Air Canada deeply regrets the effect the strike is having on customers," the company said in a Canadian Union of Public Employees (CUPE), which represents Air Canada's 10,000 flight attendants, said that strike action officially began at 12:58 am local time (0458 GMT) on response, Air Canada began a "lockout" of cabin crew belonging to CUPE, preventing the employees from working during the standoff fueled by a payment Canada had been gradually winding down operations ahead of the possible labour of 8:00 pm Friday, the airline said it had cancelled 623 flights affecting more than 100,000 passengers. Its full 700-flight daily schedule has been scrapped for Saturday."At this time, Air Canada remains engaged and committed to negotiate a renewal to its collective agreement with CUPE," it said. Unpaid ground work In addition to wage increases, the union says it wants to address uncompensated ground work, including during the boarding Canada detailed its latest offer in a Thursday statement, specifying that under the terms, a senior flight attendant would on average make CAN$87,000 ($65,000) by has described Air Canada's offers as "below inflation (and) below market value."The union has also rejected requests from the federal government and Air Canada to resolve outstanding issues through independent economy, though showing resilience, has begun feeling the effects of President Donald Trump's trade war, with his tariffs hitting crucial sectors like auto, aluminum and a statement issued before the strike began, the Business Council of Canada warned an Air Canada work stoppage could add further pain. "At a time when Canada is dealing with unprecedented pressures on our critical economic supply chains, the disruption of national air passenger travel and cargo transport services would cause immediate and extensive harm to all Canadians," it said.
Middle East Eye
10 hours ago
- Middle East Eye
Israel is the last vestige of European colonialism - so Trump defends it at all costs
At a July rally in Des Moines, Iowa, Donald Trump used a telling turn of phrase. While touting the benefits of his recently passed tax-and-spend bill, the American president remarked: 'No death tax, no estate tax, no going to the banks and borrowing from, in some cases, a fine banker - and in some cases, Shylocks and bad people.' 'Shylock' is, of course, a reference to the Jewish moneylender in Shakespeare's The Merchant of Venice and is widely recognised as an antisemitic trope. The Anti-Defamation League, for example, called the president out for his comment, while Trump, for his part, later claimed ignorance of the term's anti-Jewish connotations. It might be possible to write this off as an isolated comment, but Trump's gaffe is part of a larger pattern of antisemitism linked to his Make America Great Again (Maga) movement. In May, NPR identified three administration officials with close ties to antisemitic extremists, including a man described by federal prosecutors as a 'Nazi sympathiser' and a prominent Holocaust denier. More recently, Trump's erstwhile ally Elon Musk has come under fire for antisemitism once again when his Grok AI bot launched into antisemitic tirades praising Adolf Hitler. All of this contrasts sharply with the Trump administration's stated goal of combating antisemitism and its unapologetically pro-Israel posture. On 29 January 2025, Trump signed an executive order titled 'Additional Measures to Combat Anti-Semitism', providing a pretext for his administration to pursue deportations of pro-Palestine student activists like Mahmoud Khalil. New MEE newsletter: Jerusalem Dispatch Sign up to get the latest insights and analysis on Israel-Palestine, alongside Turkey Unpacked and other MEE newsletters One month before his gaffe in Des Moines, Trump followed the Israeli military's lead by bombing Iran and pulling out of negotiations over their nuclear programme. Even Musk felt obliged to make pro-Israel gestures when he toured the sites of the 7 October Hamas attack in a highly publicised visit in November 2023. Odd alliance How do we explain this alliance between the seemingly antisemitic Maga movement and Israel? Analysts usually point to two major factors. First is the power and influence of pro-Israel lobbying groups, donors, media figures and political operatives, famously analysed by political scientists John Mearsheimer and Stephen Walt. Second is the role of Christian Zionists in the Maga movement, including prominent figures like the current American ambassador to Israel, Mike Huckabee. Huckabee has explicitly stated that his pro-Israel approach is rooted in his belief that the rapture is imminent and that Israel will be the site of unfolding Biblical prophecy during the end of days. While these factors both play an important role in shaping the Maga-Israel alliance, neither explains the deep intensity of the Trump-era American right's attachment to Israel. The core of the Maga-Israel alliance is not about votes, theology or even security: it is a project of historical amnesia. It seeks to erase the moral and political lessons of decolonisation I believe a more foundational impulse is at work, one tied not only to theology or lobbying power, but to historical memory. This impulse lies at the intersection of multiple programmes currently underway - all intent on rehabilitating colonialism's reputation. These include suppression of teaching and speaking about the colonial past, active justification of colonialism's historical crimes, efforts to undermine recognised international humanitarian law and struggles against active decolonial movements. The Maga-Israel alliance should be understood as part of a broader effort to suppress the memory of colonialism's atrocities and to create a sanitised narrative of colonial history in order to resuscitate colonialism in the present. In the Maga version of modern global history, Israel has come to represent the symbolic last vestige of European colonialism still allowed to flourish, and Palestine stands in for the last unresolved case of anti-colonial resistance. Supporting Israel, then, is not just a normal matter of American foreign policy; it is a proxy battle in culture wars over history, identity and the legitimacy of settler colonialism. The Maga movement has mobilised around a common sense of nostalgia for a past in which white, western, Christian civilisation exercised global dominance. Commentators reflecting on Trump's first term often associated this notion with a desire to re-establish the belief systems of the United States in the 1950s, the dawn of the so-called 'American century'. In his second term, it seems more appropriate to interpret Maga nostalgia as invoking, not the era beginning in the 1950s, but rather the one that began a century earlier at the peak of Euro-American colonialism. Colonial land grab As a recent article in the Monthly Review pointed out, it was no accident that - after opining about the possibility of adding Canada, Greenland and the Panama Canal as new American territories - Trump hung a portrait of James K Polk in the Oval Office. Polk served as president from 1845-49 and oversaw the largest territorial expropriation of land in US history after the Mexican War. In the Maga worldview, the era of Anglo-American power ushered in by colonial land grabs at this time brought order, democracy and prosperity in its wake. The post-World War Two era marked a decided turn in the other direction, and the massive movement for decolonisation in the 1950s and 60s upended the worldview of Polk and others like him. The United Nations (UN) Charter was drawn up at this time and was based on the principle of sovereign equality among all nations. This implied that unequal relationships of domination and extraction between nations, such as the relationship between coloniser and colonised, should be undone. Israel has distilled western colonial war techniques, but fails to quell resistance Read More » Article 2 prohibited member states from using force to acquire territory and foresaw the resolution of disputes undertaken in a manner that ensures international peace as well as justice. By the 1970s, the number of UN member states had more than quadrupled. The British, French, Russian, German, Dutch and Portuguese empires were dismantled, and their territories returned to governments representing the indigenous inhabitants from the pre-war era. Because of the United States' unique role in creating and sustaining the post-World War Two order, Maga supporters imagine their country can sidestep critiques of the decolonisation movement. I have written elsewhere about how the circumstances of the battle between colonial powers on the one hand and the Nazi regime on the other have allowed for a kind of global amnesia to take place with regard to the legacy of racism in creating the world we inhabit today. The Maga narrative is just one particularly virulent example of this broader western cultural tendency. Middle America is obsessed with World War Two, as we can see in popular culture like the History Channel. A survey conducted in 2016 found that fully 70 percent of military history programming on the network dealt with the single conflict of World War Two. The Maga movement plays on this popular fixation on "the good war" to whitewash American history and deny any link between nationalistic pride in their own country and the kind of antisemitism associated with the Nazi movement it fought against. Israel's role The importance of Israel's role in this story is in inverse proportion to its small territorial size. The creation of a state for the Jewish people in the wake of the Holocaust has allowed Maga republicans - along with the broader western world - to imagine that history's most uniquely horrific crime has been answered for in the American-led postwar order. This narrative element produces a double effect for those who retell it. On one hand, the creation of a Jewish state in the wake of the Holocaust allows western powers to imagine themselves as just and righteous, even as many of those same powers had collaborated in or turned a blind eye to its unfolding. The foundation of the state of Israel is a form of symbolic restitution, allowing western culture to wash its hands of the stain of antisemitism and to imagine that they have made amends to the aggrieved Jewish people. On the other hand, excessive focus on the Holocaust as a singular crime in need of restitution deflects attention from the many other atrocities committed on a similar scale by western colonial empires. Palestine is not just a contested land; it is the last mirror in which the West might see the truth of its colonial past For example, scholars estimate that upwards of 10 million people were killed due to King Leopold's forced labour regime in the Congo Free State, while the Bengal famine caused by official policy led to the deaths of 3 million people in British India. In the US, scholars have called the loss of life associated with American colonisation an 'Indigenous Holocaust', estimating the number of Native American deaths from 1492 onwards at 4.5 million. Making amends for these crimes and others like them would require political and social reorganisation on a world scale. Instead of coming face-to-face with this global reckoning, western culture has chosen to hyperfixate on one specific case in a small bit of territory on the Levantine coast. Israel as we know it today took shape in the context of the Mandate for Palestine, founded in the wake of the First World War (1914-18), when Britain and France split up the Arab provinces of the Ottoman Empire among themselves. But while the rest of the Mandates were eventually returned to governments representing the indigenous inhabitants of the territory from the pre-war era, in Palestine, Jewish settlers from Europe - who had created a new political identity of their own based on historical-religious claims - were recognised as sovereign. Today, Palestine is the only colony founded in the late imperial period that has never undergone a decolonisation process. Algeria, Kenya, Zimbabwe and South Africa were all sites of European settlement and indigenous dispossession from 1850 to 1950, and all eventually experienced some version of decolonisation. This is why efforts to acknowledge Israel as a settler-colonial state have stirred such controversy; to do so would be to say that Israel is out of step with the moral arc of the modern world in which colonialism is understood as a crime rather than a civilising mission. For Maga ideologues and their global counterparts, it is precisely Israel's status as the last bastion of 19th-century-style colonialism today that makes flocking to its defence attractive. In their eyes, the revisionist Zionism of Netanyahu and his ilk is a shining example of what the West 'should have' done: established a firm grip, refused to apologise and dealt harshly with native resistance. The Maga movement celebrates Israel, not in spite of its colonial character, but because of it. In their eyes, Israel is the living rebuttal to decolonisation, multiculturalism and the whole post-1945 liberal international order they are in the process of dismantling. In this sense, the Maga-Israel alliance should be understood alongside efforts to suppress teaching critical race theory and suppress what Trump calls the 'woke agenda'. It is an effort to turn back the clock to an earlier era and put the genie of progressive decolonisation back in its bottle. Maga nostalgia Maga nostalgia for the 19th-century heyday of colonialism is not an isolated phenomenon. One need only look to Vladimir Putin's Russia, which has launched a war of territorial conquest in Ukraine in an effort to undo Soviet efforts acknowledging Ukrainian nationality a century ago. Similarly, Trump's ally Jair Bolsonaro in Brazil has praised the American colonial cavalry and denied the existence of an ongoing genocide against indigenous groups in the Amazon. When US Secretary of State Marco Rubio opined in a January 2025 interview that 'eventually [the world is] going to reach back to a point where you had a multipolar world, multi-great powers in different parts of the planet', he was talking about returning to an era of imperial competition not unlike the one that culminated in two world wars in the first half of the twentieth century. Israel and Trump: From euphoria to anxiety Read More » It is no accident that Rubio's comment echoes similar statements made by the anti-liberal Russian philosopher Alexander Dugin, whose book Multipolarity: The Era of Great Transition has influenced radical circles on the right and the left. The core of the Maga-Israel alliance is not about votes, theology or even security: it is a project of historical amnesia. It seeks to erase the moral and political lessons of decolonisation and to re-legitimise the colonial worldview. It allows the Holocaust to be remembered in isolation, while any acknowledgement of the millions killed in colonial atrocities around the world is suppressed. Palestine is not just a contested land; it is the last mirror in which the West might see the truth of its colonial past. And so, the mirror must be shattered. Palestinians and those who sympathise with them must be silenced, not because they are wrong, but because they remember. And in remembering, they threaten to unmake the myths upon which the American empire depends. The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Eye.
