Aurelia Butler

(Reuters) -Two Federal Reserve policymakers on Saturday said they feel the U.S. central bank’s job on taming inflation is not yet done, but also signaled they do not want to risk damaging the labor market as they try to finish that job.The remarks, from Governor Adriana Kugler and San Francisco Fed President Mary Daly, highlight the delicate balancing act facing U.S. central bankers this year as they look to slow their pace of rate-cutting. The Fed lowered short-term rates by a full percentage point last year, to a current range of 4.25%-4.50%.Inflation by the Fed’s preferred measure is well down from its mid-2022 peak of around 7%, registering 2.4% in November. Still that’s above the Fed’s 2% goal, and in December policymakers projected slower progress toward that goal than they had earlier anticipated. “We are fully aware that we are not there yet – no one is popping champagne anywhere,” Kugler said at the annual American Economic Association conference in San Francisco. “And at the same time … we want the unemployment rate to stay where it is” and not increase rapidly. In November, unemployment was 4.2%, consistent in both her and colleague Daly’s view with maximum employment, the Fed’s second goal alongside its price stability goal. “At this point, I would not want to see further slowing in the labor market — maybe gradually moving around in bumps and chunks on a given month, but certainly not additional slowing in the labor market,” said Daly, who was speaking on the same panel. The policymakers were not asked, nor did they volunteer their views, about the potential impact of incoming president Donald Trump’s economic policies, including tariffs and tax cuts, which some have speculated could fuel growth and reignite inflation.  Two Federal Reserve policymakers on Saturday said they feel the U.S. central bank’s job on taming inflation is not yet done, but also signaled they do not want to risk damaging the labor market as they try to finish that job.The remarks, from Governor Adriana Kugler and San Francisco Fed President Mary Daly, highlight the delicate balancing act facing U.S. central bankers this year as they look to slow their pace of rate-cutting. The Fed lowered short-term rates by a full percentage point last year, to a current range of 4.25%-4.50%.Inflation by the Fed’s preferred measure is well down from its mid-2022 peak of around 7%, registering 2.4% in November. Still that’s above the Fed’s 2% goal, and in December policymakers projected slower progress toward that goal than they had earlier anticipated. “We are fully aware that we are not there yet – no one is popping champagne anywhere,” Kugler said at the annual American Economic Association conference in San Francisco. “And at the same time … we want the unemployment rate to stay where it is” and not increase rapidly. In November, unemployment was 4.2%, consistent in both her and colleague Daly’s view with maximum employment, the Fed’s second goal alongside its price stability goal. “At this point, I would not want to see further slowing in the labor market — maybe gradually moving around in bumps and chunks on a given month, but certainly not additional slowing in the labor market,” said Daly, who was speaking on the same panel. The policymakers were not asked, nor did they volunteer their views, about the potential impact of incoming president Donald Trump’s economic policies, including tariffs and tax cuts, which some have speculated could fuel growth and reignite inflation.  Two Federal Reserve policymakers on Saturday said they feel the U.S. central bank’s job on taming inflation is not yet done, but also signaled they do not want to risk damaging the labor market as they try to finish that job.The remarks, from Governor Adriana Kugler and San Francisco Fed President Mary Daly, highlight the delicate balancing act facing U.S. central bankers this year as they look to slow their pace of rate-cutting. The Fed lowered short-term rates by a full percentage point last year, to a current range of 4.25%-4.50%.Inflation by the Fed’s preferred measure is well down from its mid-2022 peak of around 7%, registering 2.4% in November. Still that’s above the Fed’s 2% goal, and in December policymakers projected slower progress toward that goal than they had earlier anticipated. “We are fully aware that we are not there yet – no one is popping champagne anywhere,” Kugler said at the annual American Economic Association conference in San Francisco. “And at the same time … we want the unemployment rate to stay where it is” and not increase rapidly. In November, unemployment was 4.2%, consistent in both her and colleague Daly’s view with maximum employment, the Fed’s second goal alongside its price stability goal. “At this point, I would not want to see further slowing in the labor market — maybe gradually moving around in bumps and chunks on a given month, but certainly not additional slowing in the labor market,” said Daly, who was speaking on the same panel. The policymakers were not asked, nor did they volunteer their views, about the potential impact of incoming president Donald Trump’s economic policies, including tariffs and tax cuts, which some have speculated could fuel growth and reignite inflation.   More

VIENNA (Reuters) -Talks between Austria’s two main centrist parties on forming a coalition government without the far-right Freedom Party (FPO) collapsed on Saturday, prompting conservative Chancellor Karl Nehammer to announce he would step down.A day earlier a third party, the liberal Neos, walked away from the talks, blaming the other parties for failing to take the bold and decisive action it said it had called for.”I will stand down as chancellor and as leader of the People’s Party in the coming days and enable an orderly transition,” Nehammer said in a video statement on X, after talks with the Social Democrats (SPO).The coalition talks’ collapse three months after September’s parliamentary election underscores the growing difficulty of forming stable governments in European countries, such as Germany and France, where the far right is on the rise but many parties are loath to partner with them.The eurosceptic, Russia-friendly FPO won that election with roughly 29% of the vote. It would have needed a coalition partner to govern but Nehammer ruled out governing with FPO leader Herbert Kickl, meaning no potential coalition partner for the FPO was forthcoming.Austrian President Alexander Van der Bellen, a former leader of the Greens, therefore tasked Nehammer with forming a government. Now that Nehammer is stepping down, the two most likely options are either that Kickl is tasked with forming a government or a snap election is called.Nehammer has described Kickl is too much of a conspiracy theorist to lead a government yet has said much of the FPO is trustworthy. Kickl, however, is not an outlier within his party, which overlaps with Nehammer’s party on issues such as immigration.The leadership of Nehammer’s People’s Party (OVP) was due to meet on Sunday morning to discuss who should succeed him. Whoever takes over is likely to be more open to a coalition with the FPO, which a large portion of the OVP favours.The two parties governed in coalition under OVP leadership from 2017 until 2019, when the FPO’s then-leader was felled by a video-sting scandal and that coalition collapsed.FAR RIGHT RISINGSupport for the FPO has grown since the last election. It holds a lead of more than 10 points over the People’s Party (OVP) and the SPO, opinion polls show.That poses a dilemma for President Van der Bellen, who has expressed reservations about Kickl becoming chancellor.SPO leader Andreas Babler confirmed at a news conference that the talks had collapsed, blaming Nehammer’s party for seeking to skimp on pensions and salaries for teachers and police officers. Nehammer blamed the SPO for insisting on taxing wealth and inheritance, the SPO’s flagship campaign policy.”We know what threatens to happen now. An FPO-OVP government with a right-wing extremist chancellor that will endanger our democracy on many points,” Babler said.Kickl, who has consistently railed against the coalition talks and Van der Bellen’s decision not to task him with forming a government, again likened those talks to the three-party “traffic-light coalition” in Germany which recently collapsed.”Nehammer, Babler and Van der Bellen have also failed. They were the architects of the loser traffic light (coalition) and are now confronted with the ruins of their Kickl prevention strategy,” Kickl said in a statement.”Alexander Van der Bellen bears a significant share of the responsibility for the chaos that has arisen and the time that has been lost … After today’s events, he is under pressure to act.” More

The government is “focussing on cost-saving measures” to tackle the deficit, Paul Chan told residents on a programme on public broadcaster RTHK where he was gathering public feedback ahead of the upcoming budget. “Although we need to move forward with public works projects… we have to prioritise developments according to their urgency,” he said.The growth rate of economy in the first three quarters of 2024 was not as strong as expected due to high interest rates and external challenges, Chan said.Hong Kong’s economy is expected to grow 2.5% in 2024, he wrote in a blog post in December. That followed a 1.8% third quarter growth rate, which fell below expectations. The estimated deficit for the year ending in March is about double the previous forecast of HK$48.1 billion in the budget presented in February.Chan attributed the deficit mainly to a sharp decline in land sales revenue. Boosting the economy amid a fiscal deficit would be Hong Kong’s “biggest challenge”, he said. ($1 = 7.7779 Hong Kong dollars) More

$75 per monthComplete digital access to quality FT journalism with expert analysis from industry leaders. Pay a year upfront and save 20%.What’s included Global news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print edition More