Aurelia Butler

Both Smigiel and Reinhart expect the Federal Reserve to maintain its current position on interest rates this month. However, Smigiel anticipates at least one more rate hike before the year ends, possibly in November. The Federal Reserve’s primary communication is expected to emphasize its commitment to maintaining restrictive policy measures for as long as necessary. This is a strategy aimed at ensuring economic stability and managing inflation rates, underscored Reinhart.In terms of market conditions and investment opportunities, Smigiel expressed skepticism about the market’s multiple expansion amidst rising real rates. He highlighted an unusual trend where growth stocks have surged by nearly 30%, while the broader market has increased more than 15%, all in the face of yields rising by over 60 basis points this year. This observation led him to anticipate limited appreciation in the near term.Reinhart, however, was optimistic about the strength of the economy and its ability to withstand potential lag factors, even if another rate hike occurs this year. He cited the addition of an average of one-third of a million workers to payrolls each month as an indicator of a robust economy.However, Reinhart warned that restrictive Fed policy could place the economic expansion at risk and increase vulnerability to adverse shocks such as government shutdowns, sudden increases in student loan payments, or prolonged strikes. He pointed out that over the past four decades, firm policies from the Fed have led to recessions five out of six times.Reinhart maintained that the Federal Reserve’s ultimate goal is to lower inflation and that it will keep the policy restrictive for as long as necessary to achieve this. He expects the funds rate to remain at a high plateau until the Federal Reserve is convinced that inflation is on a downward trend.This article was generated with the support of AI and reviewed by an editor. For more information see our T&C. More

The UAW union launched simultaneous strikes at three factories owned by General Motors (NYSE:GM), Ford (NYSE:F) and Chrysler parent Stellantis (NYSE:STLA) last Friday. The walkout by some 12,700 workers will halt production of some popular models.The union has said it was prepared to expand the strike to more auto plants if a deal, for which negotiations started in July, is not reached by Friday noon. Here is a timeline of events beginning with the election of the new UAW chief in March:Date Development March 25 Shawn Fain wins the race for the role of UAW president; vows to take a tough stance with the Big Three automakers. July 10 The union says it will open contract talks with Detroit’s Big Three automakers starting July 13. July 11 Fain says the union is not afraid to hold a strike at any of the automakers without a fair contract. July 19 Fain meets President Joe Biden at the White House as the union briefed the staff on contract talks with the Detroit Three automakers. Aug. 1 The UAW presents demands to Stellantis, says the union is seeking ambitious benefit increases from the Detroit Three, including double-digit pay rises and defined-benefit pensions for all workers. Aug. 2 The union presents contract demands to General Motors Aug. 3 The union presents contract demands to Ford Aug. 8 Fain angrily tosses contract proposals from Stellantis in a trash can, citing numerous concessions that the Chrysler parent is seeking in labor talks. Aug. 25 The UAW says 97% of voting members were in favor of authorizing a strike at the Detroit Three if an agreement is not reached before Sept. 14. Aug. 31 The union says it has filed unfair labor practice charges with the National Labor Relations Board (NLRB) against GM and Stellantis, saying they have refused to bargain in good faith. Aug. 31 Ford makes a contract offer to the UAW, providing hourly employees with 15% guaranteed combined wage increases, lumpsum payments and improved benefits over the life of the contract Sept. 1 The U.S. NLRB says it will investigate unfair labor practice charges filed by the UAW union against GM and Stellantis. Sept 6 The UAW makes a labor contract counterproposal on economic issues to Ford Sept. 7 GM makes counteroffer to the UAW that includes a 10% wage hike and two additional 3% annual lumpsum payments over four years. Fain calls the offer “insulting.” Sept. 8 Stellantis says it offered U.S. hourly workers a 14.5% wage hike over four years but no lumpsum payments. Sept. 8 Fain says the UAW union wants a deal to avoid walkouts at the Detroit Three but expects to go on strike against all of them next week if they do not improve their contract offers. Sept. 11 Stellantis says it plans to make a new counteroffer to the UAW after the union made its own revised offer on Sunday ahead of the expiration of the current four-year labor deal Thursday night. Sept. 13 The UAW rejected counteroffers from the automakers and outlined plans for strikes targeting individual U.S. auto plants in what would be its first-ever simultaneous strike against the Detroit Three. Sept. 15 The UAW launched simultaneous strikes that will halt production of some popular models at three factories owned by GM, Ford and Stellantis. Sept. 16 Negotiators for the UAW and Ford had “reasonably productive discussions” toward a new contract, while officials at Chrysler parent Stellantis said a proposal to resume work at an idled Illinois factory has fallen through. Spet. 18 On the fourth day of the strike, the UAW union said it would announce on Friday more plants to strike if no serious progress was made in talks, adding to pressure on the Detroit Three automakers More

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In his remarks, Trichet noted that global debt had reached a record $307 trillion in the second quarter of 2023, pushing the global debt-to-GDP ratio to 336%. He pointed out that Korea’s household debt was particularly concerning, accounting for 102.2% of the country’s nominal GDP in the first quarter of 2023. This made Korea the only country in that period whose household debt exceeded its GDP.Trichet also expressed concerns about slow globalization or deglobalization, which he said would significantly impact the Korean economy given its heavy involvement in global trade.Addressing inflation, Trichet emphasized the need to “gain control over inflation” to avoid a situation similar to what followed the global oil crisis of the 1970s and early 80s. However, he noted that current circumstances were different due to changing attitudes of central banks towards inflation.The former ECB president observed that central banks, including those in the United States and Europe, are “extremely keen on” combating inflation and have demonstrated their ability to “drastically change their monetary policy”, unlike in past when they did not take inflation seriously.Among strategies to combat inflation, Trichet suggested ensuring alignment between central bank policies and government fiscal policies. He advised against simultaneous augmentation of policy rate by a central bank and expansion of fiscal policy by a government.Despite these challenges, Trichet expressed “reasonable optimism” in his keynote speech at the G20 Global Financial Stability Conference 2023 about regaining control of inflation in the medium term. He praised central banks of emerging countries for their responsibility in countering inflation and acknowledged that central banks of advanced economies, after initial hesitation, also demonstrated appropriate determination to regain control of inflation.”Despite the inflationary surge since 2021, we have not observed a destabilization of the inflation expectations on a medium-term [three to four years] basis. This is reassuring, even if the game is not over,” Trichet said.This article was generated with the support of AI and reviewed by an editor. For more information see our T&C. More