Aurelia Butler

Powell told a news conference after the Fed’s latest interest-rate hike that there was “a lot left to go to” see such a soft landing.”So the staff now has a noticeable slowdown in growth starting later this year in the forecast, but given the resilience of the economy recently, they are no longer forecasting a recession,” he said.Fed staff last November introduced the notion that a recession might be “almost as likely” as their baseline outlook at the time for below-trend growth, minutes of Fed meetings show. In March, on the heels of the banking sector upheaval that had just been triggered by the collapse of Silicon Valley Bank earlier that month, they shifted to outright forecasting “a mild recession” later this year.The shift by staff to a less pessimistic baseline outcome for the economy dovetails with outlook upgrades by a number of private-sector economists in recent weeks who have done the same in acknowledgment of the economy’s resilience in the face of Fed 5.25 percentage points of rate increases since March 2022.Many who had placed a low probability on the Fed achieving a “soft landing” now see that as the likelier outcome than recession.Indeed, the consensus estimate among economists polled by Reuters is that Thursday’s first reading of gross domestic product for the April-through-June period will show output grew at a 1.8% annualized rate, more or less on par with the 2% rate logged in the first three months of the year.Fed policymakers themselves slightly upgraded their assessment of activity alongside their rate hike decision on Wednesday. They described recent activity as indicating a “moderate” rate of growth, whereas in policy statements dating back to last September they referred to activity growth as “modest.” More

Salameh, whose 30-year tenure as governor has been stained by a deepening financial crisis and charges at home and abroad of embezzlement of public funds, said he would leave his post when his latest term ends on July 31. “I am going to turn a page of my life,” Salameh, 72, told local broadcaster LBCI in an interview that appeared to take place in a showcase room at the bank. “I believe that during these 30 years, there were 27 of them when the Central Bank contributed with its monetary policies to establishing economic stability and development,” he said, apparently referring to the years preceding the meltdown.His comments came amid a tug-of-war among top politicians over what to do once he leaves office, with a cabinet session set for tomorrow to discuss a possible successor.Since the economy began to unravel in 2019, the Lebanese pound has lost 98% of its value in the parallel market and most of the population has been locked out of their bank savings.The collapse followed decades of corruption and profligate spending by ruling politicians, which many Lebanese say Salameh helped facilitate. Some analysts have described his policy to lend to the government as a “Ponzi scheme.” Salameh said on Wednesday he was being pinned as a “scapegoat” and that his more recent interventions in the money market had helped keep the pound from deteriorating further. “A lot of people were upset that this bank stayed steadfast, and that this bank on its own, because there was no government during this whole crisis, ran the economy,” he said. “We wouldn’t have been able to survive for three or four years… so how is this a Ponzi scheme?”Salameh stands formally accused in Lebanon, France and Germany of embezzling hundreds of millions in public funds from the central bank by collecting commissions as a fee from bond buyers and then transferring the funds to Forry Associates, owned by the governor’s brother.He denied those charges again on Wednesday. “Neither directly nor indirectly did any money from the Central Bank go to Forry,” Salameh said.Salameh also faces Interpol Red Notices stemming from arrest warrants in Germany and France. He is still under investigation in at least three other countries over corruption charges. More

Today’s top storiesThe US Federal Reserve announces its decision on interest rates at 2pm ET/7pm London today. Check back here for details and reaction.Anthropic, Google, Microsoft and OpenAI launched the Frontier Model Forum, a new group to research increasingly powerful AI and establish best practice for controlling it as regulatory scrutiny tightens.British billionaire Joe Lewis was charged in the US with insider trading. The owner of Tottenham Hotspur football club was accused of tipping off associates including employees on his superyacht.For up-to-the-minute news updates, visit our live blogGood evening.Alison Rose’s departure as NatWest chief overnight is the latest crisis to hit the UK banking sector in a torrid summer of criticism over “de-banking” and accusations of profiteering.Rose was forced to quit the taxpayer-backed lender after admitting to the inaccurate briefing of a BBC journalist about the closure of the bank account belonging to Nigel Farage, former UK Independence party leader and Brexit linchpin. Farage had produced evidence that Coutts, NatWest’s private banking business, had shut the account partly because of his political views. Shareholders are now putting pressure on chair Howard Davies to follow suit.The Treasury had been quick to act when the affair hit the headlines, summoning bank chiefs to discuss the issues, culminating with today’s agreement by the banks to overhaul their handling of account closures and commit to upholding clients’ “freedom of expression”. (You can read more on “politically exposed” people and their banking relationships in this explainer.)The Farage affair has also shone a light on the wider problem of the unbanked. More than a million adults in the UK are still without an account, with the young, ethnic minorities, gig workers and those living in poorer areas disproportionately affected. The row comes hot on the heels of criticism from Bank of England governor Andrew Bailey that banks needed to pass on higher interest rates to savers, echoing demands from chancellor Jeremy Hunt and the Financial Conduct Authority watchdog, and accusations from MPs that banks were profiteering. Upcoming earnings statements are likely to be pored over for further evidence. Lloyds this morning increased the 2023 guidance on its net interest margin, the difference between what it charges on loans and the rate it pays on deposits, compared with previous figures released in February. Barclays reports tomorrow, followed by NatWest on Friday.On a positive note, HSBC, which publishes results next Tuesday, today became the first of the UK’s big lenders to announce rate cuts on fixed-term mortgages in a rare sign of hope for homeowners facing a surge in borrowing costs. Brokers expect rivals to follow its lead in order to win business. FT deputy editor Patrick Jenkins has argued that some of the accusations of profiteering were unfair and that undermining banks’ margins could erode their financial strength, weaken the City, and thus the industry’s ability to fuel the economy. A minimally profitable banking system is unlikely to prove convincingly robust, he says. Moreover, an analysis by rating agency S&P suggests UK banks have handed more of the benefits of interest rate rises to savers than their counterparts in Europe and the US.Nevertheless, as well as encouraging more competition, authorities need to do more to improve awareness of bank products and make it easier to switch into high-yielding accounts, says the FT’s editorial board. Broader access to financial education — the theme of the FT’s FLIC charitable campaign — should also be a top priority, it argues. Need to know: UK and Europe economyThe UK is set to incur the highest debt interest costs in the developed world this year as persistently high inflation and an unusually large proportion of government bonds linked to price rises damage the public finances. A new Big Read explains why UK businesses have such a poor record on productivity. Low investment and skills gaps are partly to blame, compounded by political instability. The country’s job support system is also in need of serious overhaul, according to a new report.Wind farms and the fishing industry face a new/old danger in the Baltic Sea: unexploded mines from two world wars. About 300,000 tonnes of unexploded munitions are littering the seabed. The latest FT film features the Ukrainian start-ups and IT workers who have been developing military tech and putting themselves on the front line defending their country from Russia.

Video: Ukraine tech sector goes to war | FT Film

Need to know: Global economyThe risk of a crash landing for the global economy has receded, the IMF’s chief economist told the FT, even as he warned that central banks’ efforts to restrain inflation would weigh heavily on growth. The IMF now expects expansion of 3 per cent this year following a stronger than expected first quarter. Some economists are more sceptical.Markets welcomed the Chinese government’s latest moves to support the economy as Beijing flagged up problems with the highly indebted property sector and local governments, as well as lagging domestic demand. Details are scant but here’s what we know so far. The government separately said its diplomatic affairs were in an “orderly” state despite the disappearance and sudden removal from office of foreign minister Qin Gang.In less than a decade, Mexico’s drug cartels have created a highly profitable business to feed US demand for fentanyl, the synthetic opioid. Interesting fact: all the fentanyl needed to supply the US for one year weighs just 5 tonnes and would easily fit into one lorry. That compares with about 125 tonnes for heroin and even more for cocaine.

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Need to know: businessMicrosoft and Alphabet, Google’s parent, reported greater resilience than expected in their core businesses in the second quarter, helping to underpin Big Tech’s recent share price gains as both companies cautioned about higher AI spending ahead. Snap warned of pressure on margins as it ploughs more investment into AI, while Spotify was hit by the cost of axing podcasts and jobs, slumping to a €302mn loss.Apple, which reports results next week, has reignited enthusiasm in virtual and augmented reality start-ups with its Vision Pro headset. The company believes its “mixed reality” device will usher in a “new era” in “spatial computing” and have a similar impact to how the iPhone revolutionised mobile computing. Samsung released its latest bendable smartphones.Nissan and Renault finalised a shake-up in their alliance in the face of China’s growing strength in electric vehicles. Stellantis, owner of Jeep and Peugeot, said it was preparing for China’s EV invasion and Hyundai was bullish on EV sales. JLR’s recovery was helped by sales of its high-end Range Rovers as it embarks on major EV investment to catch up with its rivals.Shares in LVMH, owner of Louis Vuitton and Tiffany, fell after it reported a slowdown in the US luxury market. Sales in China however appear to be rebounding after the easing of pandemic restrictions.Another key takeaway from this year’s crop of European company reports is the emphasis on politics, especially when it comes to Russia’s invasion of Ukraine, writes international business editor Peggy Hollinger.Saudi football club Al Hilal has approached Qatar-owned Paris Saint-Germain with a €300mn bid to sign Kylian Mbappé, a record-breaking offer for the French forward. The approach from Al Hilal, which is owned by Saudi Arabia’s sovereign wealth fund, highlights Riyadh’s disruptive ambitions in sport.

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The World of Work“Workcations” — doing your job from a holiday destination — are gaining in popularity, especially among the young, with some companies offering their staff “work from anywhere” weeks. Both Americans and Britons named Italy as their preferred destination. The Working It podcast discusses “imposter syndrome” and how self-doubt can be useful in the workplace. UK pay growth since the start of the pandemic has been strongest for top earners in London, according to new analysis, marking the reversal of a trend which had seen the poorest areas of the country benefiting the most.Some good newsAmid the devastation wrought by wildfires across Europe a glimmer of optimism comes in the shape of bison and rare horses. In a groundbreaking experiment in the Iberian peninsula, the endangered animals are playing a crucial role in clearing scrubland and vegetation that serve as fuel for the blazes. More