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CTV News
41 minutes ago
- CTV News
Fed to hold rates steady despite Trump's push for big cuts
Federal Reserve Chairman Jerome Powell looks over a document of cost figures as President Donald Trump watches during a visit to the Federal Reserve, Thursday, July 24, 2025, in Washington. (AP Photo/Julia Demaree Nikhinson) WASHINGTON — The Federal Reserve is expected to leave interest rates unchanged on Wednesday, six days after President Donald Trump again demanded that the U.S. central bank cut borrowing costs during a rare presidential visit to its headquarters in Washington. The steep reduction in the benchmark interest rate that Trump wants - he has suggested cutting it from the current 4.25 to 4.50 per cent range to as low as one per cent - is far out of line with an economy that has hewn largely to a steady-as-it-goes trajectory in the six weeks since the Fed's last meeting. Such dramatic rate cuts would likely boost inflation in the view of many economists and are more in line with what the central bank would do to lift the economy out of recession. Trump's demands, which have coincided with an unrelenting campaign of attacks by the president and administration officials on Fed Chair Jerome Powell, have made little impression on policymakers. Even rate-cut advocates on the policy-setting Federal Open Market Committee favor a more traditional quarter-percentage-point cut at this week's meeting, not the aggressive rate slashing embraced by the White House. Even the modest rate cut appears to be a minority opinion, limited publicly so far to two Trump appointees to the Fed's Board of Governors, Governor Christopher Waller and Vice Chair for Supervision Michelle Bowman. There is speculation that Waller and Bowman could issue dissents if the Fed on Wednesday holds the policy rate steady for the fifth time since December. More closely watched will be any clue in the wording of the Fed's policy decision or in Powell's post-meeting press conference about the possibility of a rate cut in September, a move consistent with both current market pricing of federal funds contracts and the median outlook Fed officials held as of June when they anticipated two quarter-percentage-point rate reductions by the end of the year. The Fed is scheduled to release its policy statement at 2 p.m. EDT (1800 GMT), with Powell's press conference following half an hour later. Pressure campaign With inflation still above the Fed's two per cent target and the unemployment rate remaining low, it's unclear how far the statement or Powell will go in providing guidance about the Sept. 16 to 17 meeting, with two months of inflation and jobs data still to come before then. 'We expect the Fed to hold rates steady for the fifth straight meeting and largely maintain existing signals about the policy outlook,' Deutsche Bank economist Matthew Luzzetti and his colleagues wrote ahead of this week's meeting. They said they anticipated both Bowman and Waller would dissent, marking the first time since 1993 that two Fed governors will have broken with the consensus. 'In terms of near-term policy, Powell is unlikely to remove a September rate cut from consideration nor intentionally raise the probability of that outcome. Instead, ahead of key data releases – including two more jobs and inflation reports – we expect he will continue to indicate the Fed's data-dependent stance, which will entail making decisions on a meeting by-meeting basis," the Deutsche Bank analysts said. Policymakers have taken a 'wait-and-see' approach to rate cuts since December, when Trump's recent election victory and impending inauguration raised the possibility in the minds of many economists that what had been a steady decline in inflation might reverse, at least temporarily, if the administration followed through with its campaign promises to slap steep tariffs on imports, limit labor force growth by deporting immigrants, and boost demand with tax cuts and higher deficits. The import duties that have been imposed so far are in key ways lower than initially threatened by the administration, but are still significant - and in the latest Consumer Price Index report had begun pushing goods prices higher. Trump, who campaigned on a promise to lower prices, has insisted that inflation is not a risk and urged immediate rate cuts, slamming Powell for, in the president's view, forcing his government to pay more to finance its deficits and leading to higher mortgage rates for potential home buyers. The pressure campaign appeared to culminate last week when administration criticism of a Fed building renovation project led Trump to visit the site to see it for himself. The visit seemed to put to rest risks that Trump would try to fire Powell over the project, even as the rate cut demands continue. Powell has said he intends to serve as Fed chief until his term expires next May. (Reporting by Howard Schneider; Editing by Paul Simao)
Globe and Mail
an hour ago
- Globe and Mail
Japan's Panasonic announces a new chief at its group company as its profits barely hold up
TOKYO (AP) — Japanese electronics and technology company Panasonic has chosen a new chief executive at a group company after eking out a 1.2% rise in its first-quarter profit. Kenneth William Sain, a former Boeing executive, will replace Yasuyuki Higuchi as Panasonic Connect's president and chief executive in April 2026, the company said Wednesday. Panasonic Connect offers solutions and products for various supply chains, public services, infrastructure and entertainment sectors. Sain joined Panasonic in 2019 as CEO of Panasonic Avionics. 'Ken is an exceptional leader with extensive global experience and a deep understanding of business and technology,' Higuchi said in a statement. Panasonic Holdings Corp.'s April-June profit totaled 71.46 billion yen ($483 million), up from 70.6 billion yen. Its quarterly sales declined 10.6% from last year to 1.9 trillion yen ($12.8 billion). The Osaka-based maker of home appliances, solar panels and batteries for Tesla vehicles kept its full year profit forecast unchanged at 310 billion yen ($2.1 billion), down 15% from the previous year. Panasonic said the impact from U.S. President Donald Trump's tariffs was not yet fully factored in. The company said it will try to minimize the effect on its operating profit with cost cuts and other measures. Consumer electronics sales were strong in Japan, Panasonic said, while they were also healthy in China, supported by subsidies. On the positive side, it said demand for AI servers and air-conditioners was expected to grow. But concerns remain about slowing demand for electric vehicles because of U.S. tariffs and the ending of tax credits. Panasonic also said it's planning to get its new lithium-ion battery factory in Kansas fully operational later this year, after a delayed start. Panasonic said in May that it was slashing its global workforce by 10,000 people , half in Japan and half overseas, to become 'lean.' The job cuts amount to about 4% of its workforce.
CTV News
2 hours ago
- CTV News
Starbucks shares rise as CEO Niccol's turnaround efforts gain traction
Starbucks shares rose about five per cent before the bell on Wednesday as the coffee chain's strong quarterly sales signaled CEO Brian Niccol's turnaround plan was bearing fruit. A simplified menu and investments in store and labor operations were some of the highlights of Niccol's 'Back to Starbucks' initiative. The major brand reset follows several quarters of falling sales. 'It seems like the company is planning to be on offense next year once its new operating model is in place,' Morgan Stanley analysts said. Niccol, who took the helm in August, on Tuesday laid out plans to upgrade store design, including a lower-cost 'coffee house of the future' esthetic, and pledged more than half a billion dollars in investments for thousands of stores across the U.S. next year. 'The goal has shifted from an initial 'Back to Starbucks' to an appropriately ambitious goal for a 'Better Starbucks,' where everyone can experience the best of Starbucks,' J.P. Morgan analysts said in a note. Tariff uncertainty and elevated inflation have hit U.S. consumer sentiment, forcing some businesses to revamp their strategies. In Starbucks' North America market, its largest, quarterly same-store sales dropped two per cent, consistent with last year's decline. In China, same-store sales increased two per cent amid stiff competition from local rivals such as Luckin Coffee and Cotti Coffee. Starbucks has been exploring options such as strategic partnerships and joint ventures for its China business, which was valued at up to US$10 billion, according to media reports earlier this month. Following the results, at least seven brokerages raised their price targets on the stock. The company trades at a 12-month forward price-to-earnings ratio of 33.28. 'The turnaround has taken longer than we expected... but the efforts are coalescing and progress is being made. We think once these start working, the impact will be significant and pretty immediate,' BTIG analyst Peter Saleh said. (Reporting by Siddarth S and Akriti Shah in Bengaluru; Editing by Harikrishnan Nair and Devika Syamnath)
