Aurelia Butler

SPRING HILL, Tenn./WASHINGTON (Reuters) – U.S. Treasury Secretary Janet Yellen said on Wednesday that while inflation remained elevated, there were encouraging signs that supply-demand mismatches were easing in many sectors of the economy.”Over the past two years, we have worked successfully to ease supply chain pressures, and that includes funding pop-up container yards and moving several ports to 24/7 operations,” Yellen said in remarks made at an Ultium Cells LLC electric vehicle battery plant under construction near Nashville.An employment report last week showed U.S. job growth accelerated sharply in January while the unemployment rate hit a more than 53-1/2-year low of 3.4%, pointing to a tight labor market that could be a headache for the Federal Reserve in its battle against inflation.Fed officials on Wednesday said more interest rate rises are on the cards as the U.S. central bank presses forward with its efforts to cool inflation, although none were ready to suggest that January’s hot jobs report could push them back to a more aggressive monetary policy stance.The Fed’s decided last Wednesday to moderate the pace of what had been a historically aggressive rate hike campaign to reduce high inflation.”It is true that interest rates have gone up and slowly, that raises the cost to the country and to the federal budget of interest on debt. So in that sense, it’s a drag. Our future projections, have long assumed that interest rates would move back towards more normal levels,” Yellen added on Wednesday.Some investors believe signs of strength in the labor market make a recession less likely and increase the chances of a soft landing, in which the Fed tames inflation without pushing the economy into a recession.Inflation, based on the Fed’s preferred measure, is running at more than double the target. More

WASHINGTON (Reuters) -U.S. Treasury Department officials highlighted several challenges facing financial firms that are increasingly turning to cloud computing services to support a range of their activities, warning in a report on Wednesday that failure to address them could leave lingering vulnerabilities. The risk was particularly acute for small and medium-sized financial institutions, the department said. Deputy Secretary of the Treasury Wally Adeyemo said while “there is no question that providing consumers with secure and reliable financial services means greater demand for cloud-based technologies,” there needed to be “safe and effective migration” as banks and other financial companies adopt cloud services. “Treasury found that cloud services could help financial institutions become more resilient and secure, but that there were some significant challenges that could detract from these benefits,” department officials wrote in their report assessing current cloud adoption in the financial industry.Those issues include financial firms’ exposure to potential cyber incidents, an industry-wide reliance on a small number of cloud providers and a lack of technology workers able to help financial institutions deploy cloud services, among other challenges, department officials said. The report also noted that the patchwork global rules made it “nearly impossible” for larger firms to consistently adopt cloud systems globally.For example, financial firms and cloud service providers in the European Union are facing stricter rules, and will need to show how quickly they could recover from a cyber attack under a law due to take effect at the end of 2024.Treasury officials recommended steps that could help the sector adopt cloud computing, adding that it “neither endorses nor discourages cloud service adoption by the sector.” The banking industry was generally supportive of the report. The Bank Policy Institute, which represents larger banks, said in a statement it welcomed collaboration with government officials on bolstering cloud adoption and addressing risks.The department was establishing a working group to address the challenges raised in the report and said it would work with U.S. financial regulators, the industry and international partners to address the risks. Technology companies that provide cloud computing services include Amazon (NASDAQ:AMZN) Inc’s Amazon Web Services, Alphabet (NASDAQ:GOOGL) Inc’s Google, Microsoft Corp (NASDAQ:MSFT) and Oracle Corp (NYSE:ORCL). More

Good morning. Gautam Adani, whose Indian business empire is under pressure over fraud allegations, repaid a $1.1bn share-backed loan last week after facing a margin call of more than $500mn, according to four people with direct knowledge of the matter. They said the repayment was designed to avoid further damage to investor confidence in the group. Adani’s empire, which spans airports to energy, has been reeling since New York-based short seller Hindenburg Research last month accused it of accounting fraud and stock price manipulation. The Adani group has denied the claims. The lenders of the $1.1bn loan, which included Barclays, Citigroup and Deutsche Bank, requested last week that the billionaire top up the amount of stock pledged against the loan after a sharp fall in the shares of the listed Adani companies, according to the people with knowledge of the matter. Go deeper: One place the crisis engulfing Adani Group has gone undebated: India’s parliament, where Adani holds longtime allies. Five more stories in the news1. Biden warns China over threats to US sovereignty President Joe Biden used his annual State of the Union address to Congress to deliver a defiant message to Beijing and defend his economic record in the White House. Biden also said his economic plans, with billions of dollars in subsidies for domestic manufacturing including semiconductors, were helping the US win the economic competition.Analysis: This was one of the feistiest speeches of Biden’s presidency, in which he went off script on several occasions to respond to Republican heckles and jeers.2. Google shares fall sharply after AI chatbot debut stumbles Shares of Google parent Alphabet closed almost 8 per cent lower on Wednesday, wiping billions of dollars off its market value, as Wall Street digested the potential damage to its search dominance and profits from a new artificial intelligence battle with Microsoft.3. UK considers sending fighter jets to Ukraine Britain said it was looking into sending combat aircraft to Ukraine after President Volodymyr Zelenskyy called for western fighter jets in an impassioned plea for “wings for freedom” in the UK parliament. Downing Street said UK defence secretary Ben Wallace had been asked to examine “what jets we might be able to give” Ukraine, but it warned this was a “medium to long-term” solution.4. Popeyes re-enters China to take on KFC Tims China will relaunch the fried chicken chain Popeyes in China, as food and beverage franchises snap up retail space to capture an anticipated post-lockdown consumption rebound. The Chinese operator of Canadian coffee chain Tim Hortons announced a partnership with Miami-headquartered Popeyes yesterday, with the aim of opening 1,700 outlets in China in the next decade. 5. Hermès wins landmark lawsuit over ‘MetaBirkin’ NFTs An artist who sold non-fungible tokens featuring digital depictions of Birkin handbags has been ordered to pay $133,000 in damages to the brand’s owner Hermès, a victory for the French luxury group in a landmark case over how US intellectual property rights are applied to digital assets.

A Hermès diamond and Himalayan Nilo crocodile Birkin bag at an auction in Beverly Hills. The ‘MetaBirkin’ NFT collection features the iconic bag covered in fur © Reuters

Thanks to readers who took our quiz yesterday. Of the respondents, 53% said that the positive impact of artificial intelligence will outweigh the negative. The day aheadJapanese PM hosts Philippines’ president Fumio Kishida will hold talks with Philippines’ President Ferdinand Marcos Jr. The leaders are expected to sign agreements related to humanitarian assistance and disaster relief, infrastructure, defence, agriculture and digital co-operation. EU summit in Brussels Ukrainian president Volodymyr Zelenskyy is expected to attend the special summit following his visit to the UK. Former FBI agent in US court Charles McGonigal, who has been charged with working for sanctioned Russian oligarch Oleg Deripaska, is expected to appear in federal court in Manhattan.Join us on February 23 at 1pm GMT/9pm HKT for a subscriber only webinar, Putin’s war on Ukraine: when and how will it end? with the FT’s Ben Hall, Chris Miller and guests. Register for your free ticket at ft.com/ukraine-event.

What else we’re reading How FTX built its network of stars Endorsements from celebrities and athletes such as American football player Tom Brady, basketball star Steph Curry and comedian Larry David played a big role in the rapid rise of FTX. But behind the star-studded facade, court documents reveal a web of personal and financial relationships.

Allure of abroad fades for Chinese MBA students Enrolling for an MBA abroad has been an important part of many Chinese professionals’ career plans for the best part of two decades. But the pandemic and rising tensions between China and the west are leading some prospective students to study domestically or within Asia.Sign up: The FT is launching a new six-part email series that will take you through every stage of applying for an MBA. Register for free today.Syria suffers disaster upon disaster The biggest earthquake to strike Turkey in eight decades has also wrought devastation across the border in north-west Syria, an impoverished, war-shattered region that provides pockets of sanctuary for the remnants of the opposition that fought Bashar al-Assad’s regime over a 12-year civil conflict.Credit Suisse’s make-or-break moment The scandal-plagued lender is set to publish what will arguably be the most important set of financial results in its 167-year history. Credit Suisse has warned it is on course for its second consecutive annual loss, with chair Axel Lehmann describing 2022 as a “horrifying year”. Will a radical restructuring be enough to turn it into a banking powerhouse?Why Rothschild is calling time on the public market For years, Alexandre de Rothschild watched his family wrangle over whether their eponymous investment bank should remain a publicly listed company. Now, the seventh-generation leader has settled the debate once and for all, launching a €3.7bn deal to take the Anglo-French institution private — his highest-stakes move since taking over the bank five years ago.“You can’t be half pregnant,” de Rothschild told the Financial Times. “It was clear that we had reached the limit and full potential of the listing. Our DNA is much better suited to being a private company.”Take a break from the newsIn his latest style column, Robert Armstrong explains why you should say no to oversized clothes. More

OTTAWA (Reuters) -The Bank of Canada hiked rates last month rather than leaving them unchanged because of labor market tightness and stronger-than-expected growth, according to minutes from the policy-setting meeting released on Wednesday.The minutes suggested the Bank of Canada would likely keep rates unchanged at the next meeting, and analysts said it showed officials were on a less-aggressive policy footing than many had expected.The minutes were released for the first time in the central bank’s history in an effort to provide more transparency, as the 87-year old institution battles to restore credibility lost when inflation spiked to more than 8%.The central bank said a second rationale for the quarter-percentage-point rate hike was “the risk of inflation getting stuck somewhere above 2%” for the period ending in 2024.”Data on both the labor market and economic activity suggested that there was more excess demand in the economy in the fourth quarter of 2022 than previously forecast,” the minutes said, explaining the decision to raise rates.The bank never considered making a half-percentage-point hike, according to the minutes. The fact that they debated whether to leave rates unchanged while most economists expected a hike “suggests a more dovish tilt among Governing Council members than was previously appreciated,” Royce Mendes, head of macro strategy at Desjardins Group, said in a note.On Jan. 25, the Bank of Canada hiked its key interest rate to 4.5%, the highest level in 15 years, and became the first major central bank to say it would likely hold off on further increases for now. The council operates on a consensus basis and does not vote on policy decisions.On Tuesday, Governor Tiff Macklem said no further rate hikes would be needed if, as expected, the economy stalled and inflation fell. Inflation slowed to 6.3% in December, still more than three times the central bank’s 2% target.’ON HOLD’The minutes show that the central bank wanted to change its guidance after the pause in hikes, which it says is needed to gauge the effect of eight rate hikes in the past 11 months, and described what it wanted to communicate.”Council wanted to convey that the bar for additional rate increases was now higher” and to “give a clear sense that they would need an accumulation of evidence to determine whether further rate increases would be required” to return inflation to target.”It sounds like they’re definitely on hold in March,” said Sal Guatieri, senior economist at BMO Capital Markets. “There is definitely a desire to just stand back now and not overdo it” and tip the economy into recession, he said.The Bank of Canada had stood out from its peers, including the U.S. Federal Reserve, the Bank of England and the European Central Bank, in not providing some form of record of their meetings until now.The minutes, divided into four sections, covered policy meetings that began on Jan 18. The last two sections speak directly to the “considerations” made ahead of the decision, and the decision itself.The first two sections provided an overview of the international and domestic economic context, much of which was also in the Monetary Policy Report (MPR), published on Jan. 25.However, the members of the governing council discussed one risk to the U.S. outlook not mentioned in the MPR, which is the threat by Republicans to potentially shut down government if President Joe Biden does not reduce federal spending.”The impending debt ceiling negotiations could be protracted and pose risks of financial volatility if an agreement were elusive,” the minutes said.Three-quarters of all Canadian goods and services exports go to the United States. More

“The air passenger forecasts ICAO is announcing today build on the strong momentum toward recovery in 2022, as previously assessed by ICAO statistical analysis,” the UN’s International Civil Aviation Organization Secretary General Juan Carlos Salazar said in a statement.ICAO’s prediction is the first major global forecast since China abandoned COVID-19 travel restrictions last month. In December airlines association IATA predicted a full global recovery to 2019 levels by 2024. More

NEW YORK (Reuters) -Federal Reserve officials on Wednesday said more interest rate rises are in the cards as the U.S. central bank presses forward with its efforts to cool inflation although none were ready to suggest that January’s hot jobs report could push them back to a more aggressive monetary policy stance.Moving to a federal funds rate of between 5.00% and 5.25% “seems a very reasonable view of what we’ll need to do this year in order to get the supply and demand imbalances down,” New York Fed President John Williams said at a Wall Street Journal event, adding that the Fed would probably be able to take “smaller steps” this year relative to the pace of much of the tightening campaign. Williams’ comments were his first since the Fed’s decision last Wednesday to moderate the pace of what had been a historically aggressive rate hike campaign to reduce high inflation. Williams serves as vice chair of the rate-setting Federal Open Market Committee, which boosted its benchmark overnight rate by a quarter of a percentage point to the 4.50%-4.75% range. The Fed’s rate hike was followed just days later by surprisingly strong January jobs data that suggested the central bank may have to raise rates even more as it seeks to better balance strong demand with available supply in the economy.Speaking on Tuesday, Fed Chair Jerome Powell said “if we continue to get, for example, strong labor market reports or higher, higher inflation reports, it may well be the case we have to do more” with rate rises over time. Williams did not signal that the January hiring data, highlighted by a gain of 517,000 jobs and decline in the unemployment rate to a 53-1/2-year low of 3.4%, would necessarily change the rate-hike outlook, nor did he suggest the Fed should have done something larger last week had it known what was in the jobs report.As the Fed is “likely to be closer to where the peak interest rate is going to be this year, we can take smaller steps still to get to whatever we need to get to,” Williams said.KEEPING THE BRAKES ONSpeaking to the Joint Center for Political and Economic Studies, Fed Governor Lisa Cook said “it is appropriate to move in smaller steps while we assess the effects of our cumulative tightening in the economy and inflation.”Cook also said the strong job gain coupled with moderating wage growth last month had increased hopes for a “soft landing” scenario in which the central bank can tame inflation without triggering a recession. She added that she believes the central bank’s work to bring inflation back to its 2% target “can be accomplished without a large increase in unemployment.”Inflation, based on the Fed’s preferred measure, is running at more than double the target.In remarks to an Arkansas State University conference, Federal Reserve Governor Christopher Waller said there are signs the central bank’s rate rises are starting to pay off, but he noted that economic data has not been cooling off quickly enough. He also said that while wage growth has slowed, the decline is “not enough,” adding “the Fed will need to keep a tight stance of monetary policy for some time.”Meanwhile, Minneapolis Fed leader Neel Kashkari, who has a voting role on the FOMC this year, said in remarks in Boston that he still believes the federal funds rate will need to go as high as 5.4% or even further if the data called for it. Fed forecasts in December, which will be revised next month, eyed a 5.1% stopping point for a rate rise campaign that started with near zero interest rates in March of last year. Williams, in his remarks, reiterated his belief that it remains key for monetary policy to get to and stay at levels that will restrain economic growth “for a few years.” He added that his expectations of future Fed rate cuts are driven mostly by a need to respond to the likelihood of lower levels of inflation in the future. Fed forecasts from December showed the central bank lowering rates next year.”If you think about 2024, with inflation coming down, if we don’t cut interest rates, at some point the real interest rate, the interest rate adjusted for inflation, will continue to go up” and in practice make monetary policy even more restrictive, he said. Lowering rates when inflation cools is ultimately about keeping monetary policy in the same place of economic restraint, he said. More