Aurelia Butler

COLUMBUS, Ohio (Reuters) – On a noisy factory floor in Columbus, Ohio, trade union apprentice Jorge Herrera moved quickly as he assembled ventilation ducts to be used in the construction of a large car manufacturing plant on the outskirts of the city. The 27-year-old asylum seeker from Nicaragua, who had welding experience back in his home country, crossed the U.S.-Mexico border two years ago. He struggled with unstable jobs before he was hired by the sheet metal workers’ union this year despite speaking little English, passing his entry test with the help of a translation app.He works alongside Sofia Mattern Mondragon, a 22-year-old Mexican-American worker who grew up in the United States. She’s the only other Spanish speaker on the floor, but said she sometimes struggles to translate the more technical metal work terms.A few machines over, Tim Lyman, 60, said over the hammering of duct parts and the screech of metal saws, that while communication can be tricky, “if they want to learn, I’ll teach them.”The arrival of record numbers of migrants at the U.S.-Mexico border has posed a political problem for U.S. President Joe Biden as he seeks reelection in November, up against former President Donald Trump, who has made cracking down on immigration a top issue in his campaign. A White House spokesperson said the Biden administration has called on Congress to pass bipartisan immigration reform legislation that has been stymied by Republicans. It has also sped up processing work permits and created new legal pathways through which hundreds of thousands of migrants were immediately eligible to apply for permits. A Trump campaign spokeswoman Karoline Leavitt slammed these efforts as taking jobs from Americans.But in Columbus, local union workers have welcomed the extra hands from migrants and refugees with work permits, union officials say, amid construction labor shortages. Help accessing immigrant communities to find workers to hire has been among the top three requests the Columbus Chamber of Commerce has fielded from local businesses in recent years, said Kelly Fuller, the chamber’s vice president of talent and workforce development. Nationwide, the increase in the number of available workers from 2021 to 2023 was the fastest two-year jump this century, with roughly half the growth coming from people born elsewhere, and U.S. Federal Reserve staff recently raised their economic growth estimates to account for higher immigration. A number of European countries, such as Spain, are also experiencing boosts to their economies fueled by migrant labor. In the U.S., the expansion of the labor force has kept the economy growing and consumer spending up without driving inflation even higher, said Brookings Institution economist Tara Watson.Immigration is bolstering a U.S. workforce that would otherwise be set to decline as the baby boomer generation retires, she added. “And especially in some fields, we have long-run structural needs that Americans are just not going to fill,” Watson said, pointing to a lack of home health aides and other direct care workers. ‘FIELD OF DREAMS’Around Columbus, large construction projects abound, including for Intel (NASDAQ:INTC) chip factories that President Joe Biden called “literally a field of dreams” in his 2023 State of the Union address. Columbus is among the fastest growing cities in the United States, with factories and warehouses dotting its perimeter.But with a shortage of skilled labor, unions are discussing how to reach and retain people like Herrera, including by partnering bilingual workers with new hires. Unions have distributed flyers about their apprenticeship programs in Spanish and other languages, said Dorsey Hager, a union official who sits on the Columbus/Central Ohio Building & Construction Trades Council.Herrera found out about the opportunity after he stopped by the factory and asked if they had work. First-year sheet metal apprentices earn $20.58 an hour plus benefits, according to a union flyer. The wage upon completion of the four year apprenticeship is around $36 an hour.”It’s something good for the long term,” Herrera said.He regularly sends money back to Nicaragua, where his wife and two children still live. He left because of political violence, he said, and hopes to bring his family to the United States should he win asylum.Columbus is becoming an increasingly popular destination for migrants. More than 9,000 immigrants had a Columbus address in new immigration court proceedings in fiscal year 2023, a 350 percent increase from fiscal year 2019, according to immigration court data made available by the Transactional Records Access Clearinghouse. Overall in Ohio since the start of the 2024 fiscal year, the Biden administration has issued around 16,300 work permits to asylum applicants and certain people who received humanitarian parole, including under the new legal pathways, a Department of Homeland Security official said. Around 3,700 more permits were granted to applicants for Temporary Protected Status.’HELP EACH OTHER’In Central Ohio, advocates Claudia Cortez-Reinhardt and Isbel Alvarado have helped unions connect with dozens of immigrant workers. At town halls, Cortez-Reinhardt said, workers get excited when they hear about the opportunity of a secure income along with education and health benefits.Even with work permits, many new immigrants face barriers such as language and transportation in the car-dependent city of Columbus. One of the sheet metal apprentices they helped, Ronal Pinto, 45, used to work as a mechanical engineer in an aluminum foil factory in Venezuela.He fled his home country for Chile, he said, but after four years he and his wife decided to head to the U.S. to ask for asylum there. They settled in Columbus, where he had friends from Venezuela who had arrived earlier. The first two years were difficult, he said, with a string of temporary, low-paid jobs. Now, he feels like he has made it.He lives with his wife, their toddler, his parents-in-law and sister-in-law in a small house, a 45-minute drive from the construction site where he works.On Saturdays, Pinto attends English classes at a nearby college. He is far from fluent, he said, but is working hard to improve. A few of his coworkers are trying to learn some Spanish to communicate with him, too, he said.Around the city, he has noticed more Venezuelans and he is happy to be able to extend a helping hand to newer arrivals, including letting them know about the apprenticeship programs. “We help each other. At least us Venezuelans, we have always been this way,” Pinto said. More

This article is an on-site version of Martin Sandbu’s Free Lunch newsletter. Premium subscribers can sign up here to get the newsletter delivered every Thursday. Standard subscribers can upgrade to Premium here, or explore all FT newslettersAt the start of this week, my colleagues at the FT reported on how western banks still operating in Russia have seen their profits balloon in the country. As a result, they contributed nearly €1bn in taxes last year to a Kremlin hell-bent on annihilating free Ukraine. It’s a particularly stark example of the murky ethics of western businesses’ Russia presence, and one that sent me back mentally to when I was wearing a moral philosophy hat. (You didn’t know I once had a moral philosophy hat? You must have missed my recent essay on effective altruism!) Below are some thoughts about how to think ethically about such business decisions.The FT bank story is just the tip of the iceberg. The total amount of taxes paid by all western companies could be 20 times greater. The Kyiv School of Economics and the activist initiative Leave Russia track about 3,500 western companies with a Russian presence, as part of a campaign to make them pull out. They find that about two-thirds have not.Why not? Many cite legal obstacles and punitive exit taxes, and no doubt many find it hard to let go of lucrative profit-makers. Nevertheless, a number of businesses have clearly found it possible to divest completely. And in the case of European banks, their supervisor has ordered several of them to scale down their operations in Russia. But it bears noting that even those corporates that make a clean break typically do so through a sale or split-off. So the business activity still gets carried out, just by new owners or under new brand names, as a wide-ranging KSE report has laid out. Whatever economic value was being created before, still is, and taxes keep being paid on that value. It’s not obvious what this achieves, reputation-laundering aside.What, then, is a poor business executive to do, if they want to do the morally right thing, but find themself with significant operations in Russia or another trigger-happy dictatorship? There are often transparent answers to what would best safeguard a company’s reputation (usually to turn your coat with public opinion) and somewhat less transparent ones to what would maximise profits (do the maths on the reputational costs of staying versus forgone profits of leaving). But that’s not the question here. What if you have principles and actually want to act ethically? The question arises for portfolio investors, too, not just corporates.To think in a principled way about how to avoid doing wrong, you need clarity about what the wrongs you are potentially committing consist of. Back in the stone age when I was teaching business ethics to Wharton students, I made sure they became familiar with the three families of western ethical thinking: consequentialism (what outcomes do my actions produce), deontology (what rights and duties must I respect, and in the Kantian version, can I justify my action as something that could be universally performed), and Aristotelian role ethics (how do I best fulfil my function in society). Business executives (indeed anyone) should only consider themselves well-informed if they are familiar with these. But in themselves they are neither sufficient nor, perhaps, necessary for solid applied moral reasoning in a specific case (especially given the temptation to pick a framework and the ease of reverse-engineering an argument that concludes with what you would like to do anyway). Instead, here is a more intuitive way to break down the problem.Companies could be morally at fault in three ways (some of which also apply to portfolio investors). They could be unethically benefiting from wrongdoing. They are, after all, in Russia to make profits. They could also be enabling the country’s wrongdoing — such as by contributing to the public purse through taxes. The case of the banks is particularly flagrant: as my colleagues report, western banks retain access to the global Swift transaction processing system and can offer local clients a service that Russian banks increasingly struggle to match, and which undoubtedly makes sanctions evasion easier. Finally, even if a corporate’s or investor’s presence makes no direct material difference, they could still be judged complicit with the regime’s crimes through the endorsement implicit in choosing to stay.But this does not always lead straightforwardly to a conclusion that western investors and corporates ought, morally, to leave. Depending on how you define “leaving”, there are moral costs of leaving as well. If you sell your investments to local investors, you are not just benefiting but accelerating your own financial reward. If, conversely, you dispose of your investment at a below-market price, so it could be said to benefit less, you are granting something of value to someone else — which in Russia and similar cases is likely to be someone with close relations to the regime and who may be deeply implicated in the wrongdoing that’s going on. And whatever the price you get, if you simply cash out, the business activity in question goes on as before, and so does any enabling of Russia’s war. If you have to pay a special tax to get out, your leaving may even enable it more than your staying.Again, western banks are an important special case. Many of them have tried to “leave” by swapping their own assets held up in Russia with Russian interests frozen by sanctions in the west. The fact that Moscow is keen on such swaps should be enough to smell a rat. The particular moral cost here is that a swap would remove a means of leverage for the west against Russia — and no doubt on very favourable financial terms for the Kremlin and its friends. So just leaving does not necessarily keep you morally in the clear. Once blood money comes your way, you do not avoid the stains by simply handing the money back.Still, it’s not a justification for doing something wrong that another would do it in your place if you refrained. Staying in when you can leave does make you complicit, even if the wrongdoing goes on anyway. That should matter. And it would clearly be wrong to send any fresh money into Russia. So would pretending to pull out but continuing to supply what used to be the local subsidiary through a new middleman in Dubai, as the KSE report claims of a well-known western cosmetics company.But what if leaving would worsen the enabling or support of wrongdoing — because you pay more tax on leaving than you would have done on staying, say, or because you hand control of the business activity to someone more eager to use it for the regime’s benefit? This may not be a very realistic scenario; in a dictatorship such as Russia, it is easy for the government to direct what a business does anyway. But it suggests the minimum conditions for it being morally acceptable to stay, namely that you can and do use your presence, while it lasts, to minimise any benefit or support it lends to the war. This will almost always require a drastic change to business as usual. But it may not always point to a clean exit as the first resort. Instead, it points to something deeply counterintuitive to good business people: to do the business badly. The most striking quote in my colleagues’ story is one from a frustrated European banking executive:We can’t do anything with Russian deposits apart from keeping them with the central bank. So as interest rates went up, so did our profits.They couldn’t help making outsize profits (and paying outsize taxes), poor things. But that is surely not true. There are lots of things you can do to drive your profits down to zero. You can curtail activity (in the case of banks, that means calling in old loans and not making new ones). You can make your services slow, poor and bureaucratic (“thanks for filling in 100 forms, here is yet another for your extended family’s last 10 years’ of travel, with documentation”). You can reduce your workers’ hours while maintaining their pay (“the office will only be open from 11am to 2pm today”). You can keep shops and branches closed (“closed for maintenance”). You can rent huge new spaces and never open them. You can allow people to pretend to work. You can shift people into completely unnecessary and unproductive jobs. You can, in short, aim to replicate many features of the Soviet economy.This is meant to make you smile but it’s not mere silliness. If you are going to stay for ethical reasons, you have to use your presence in ethical ways, and in today’s Russia that means detracting from rather than contributing to the economy and especially taxes. That should be your goal, even if you can’t really speak too loudly about it or you will soon see your business handed over to more enthusiastic owners. This sort of sabotage mentality means unlearning how good business executives normally think about their jobs. But that, I think, is what ethics requires in this evil situation.There are three arguments against the demanding nuances I have set out, in favour of a much simpler “just get out” conclusion. The first is that in a clouded and noisy reality, it is hard to judge nuances and easy to let pre-existing biases dominate — and most companies’ bias would be towards staying in and continue making money while possible. The ethical executive can pre-empt this bias by avoiding the situation altogether.The second is that it is dangerous for local staff. It would certainly have to be directed by western executives from afar, which may not be feasible. The third and most important argument is that what Ukrainians themselves ask for must matter. And there is a clear desire in Ukraine for Russia to be maximally isolated from the west, in all possible ways. The need for such cross-cutting consistency — a message of how Russia has alienated itself from western democracy — could outweigh anything that could be achieved by strategically using whatever influence remains on the ground. Businesses without an extremely principled ethical backbone and a clarity of vision to use any remaining presence in Russia ethically should clearly just leave. Even the best-run (in an ethical sense) businesses need to accept that exit is the ultimate destination. But on their way out, they should see the value in whatever sabotage they can cause, for as long as possible.Other readablesFederal Reserve chair Jay Powell admits it’s taking longer to become confident that the US central bank’s inflation target will be achieved.Why isn’t China managing to rebalance its economy?My colleagues offer a deep dive into how the EU dodged disaster when Vladimir Putin cut off the gas.Twenty years on from the accession of former communist bloc countries to the EU, their economic catch-up with the west is striking.Investors are Trump-proofing their portfolios ahead of the US election.Recommended newsletters for youChris Giles on Central Banks — Your essential guide to money, interest rates, inflation and what central banks are thinking. Sign up hereTrade Secrets — A must-read on the changing face of international trade and globalisation. Sign up here More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Global political tensions and healthcare inequities are undermining efforts to combat the biggest disease threats, the new head of one of the world’s biggest biomedical charities has warned.Rising friction between western countries and China and Russia had combined with a “sense of unfairness” in poorer countries over Covid-19 pandemic resources to make it harder to broker international deals, said the Wellcome Trust’s John-Arne Røttingen.His remarks come as the World Health Organization’s 194 member states make a final push to agree a landmark treaty on pandemic preparedness ahead of a late May deadline. In September, countries are due to gather on the sidelines of the UN General Assembly to discuss how to tackle the growing danger of antibiotic-resistant “superbugs”.“We have a more difficult environment to find common solutions across countries, because of the geopolitical situation,” Røttingen told the Financial Times in Wellcome’s London headquarters. “West-east tension is increasing . . . and the pandemic has increased the divide between the [richer] north and [poorer] south.”Big international meetings on pandemic preparedness, universal health coverage and tuberculosis last year “didn’t achieve a lot”, Røttingen said. The difficult talks on the pandemic treaty since then have highlighted how delayed access to Covid vaccines in some poorer countries had “created a sense of unfairness that now needs correction”, he added.“We have strong voices from Africa saying that equity needs to be in the forefront on finding solutions — and that the high-income countries, when we really had a global crisis, attended first and foremost to ourselves,” said Røttingen, who is Norwegian. “So definitely the north-south divide on issues like equity and access to medicines has been increasing.”Wellcome Trust chief John-Arne Røttingen said big international meetings on pandemic preparedness, universal health coverage and tuberculosis last year ‘didn’t achieve a lot’ More

LONDON (Reuters) – Russia’s ability to mete out like-for-like retaliation if Western leaders seize its frozen assets has been eroded by dwindling foreign investment, but officials and economists say there are still ways it can strike back.The United States wants to seize immobilised Russian reserves – around $300 billion globally – and hand them to Ukraine, while EU leaders favour ringfencing profits from the assets, estimating they will total 15-20 billion euros by 2027.Much of that money is centrally held, meaning it is accessible if the West decides to go after it.Russia says any attempt to take its capital or interest would be “banditry” and has warned of catastrophic consequences, although it has been vague about exactly how it might respond.Former President Dmitry Medvedev on Saturday acknowledged that Russia did not have enough U.S. state property to retaliate symmetrically and would have to go after private investors’ cash instead – a step he said would be no less painful.Reuters spoke to six economists, lawyers and experts who have been tracking the status of assets frozen by both sides since Russia launched its full-scale invasion of Ukraine in February 2022.The consensus among them was that one of the most likely countermeasures would be to confiscate foreign investors’ financial assets and securities currently held in special “type-C” accounts, access to which has been blocked since the war started unless Moscow grants a waiver.Russia does not disclose how much is in the accounts, held by the country’s National Settlement Depository, a sanctioned entity. Russian officials have said the amount is comparable to the $300 billion of Russian reserves frozen.”Payouts on blocked assets in type-C accounts could start to be seized in favour of the state,” said Vladimir Yazev, investment portfolio manager at investment firm Aigenis.”Additionally, the government may consider measures on blocking non-exchange assets still held by unfriendly countries.” These assets include taxes, grants and private donations.A Russian lawyer familiar with C accounts, who asked not to be named, said that if non-residents decline to take part in an asset swap scheme run by a state-appointed Russian broker, the only remaining option would be confiscation or foreclosure.Under the scheme, Westerners would get Russians’ blocked holdings of foreign securities and Russians get Westerners’ blocked holdings of Russian ones. Retail investors wishing to participate have until May 8 to submit offers.Kremlin spokesman Dmitry Peskov said at the weekend that there was still a lot of Western money in Russia that could be targeted by Moscow’s counter-measures. He said the government would also pursue legal challenges against the confiscation of assets. “Russia…will tirelessly defend its interests,” he said.CORPORATE SEIZUREOn Saturday, Medvedev proposed the confiscation of private individuals’ Russian assets as one response to any U.S. seizure of its reserves, adding such a move was justified by the “hybrid war” being waged against Moscow.The former president, who espouses hardline views towards the West, is a close ally of President Vladimir Putin and maintains influence as deputy chairman of the Security Council of Russia.However, since Western nations imposed sweeping sanctions in response to the invasion of Ukraine, foreign holdings in Russia have dropped by around 40% to $696 billion, central bank data shows, reducing some of the potency of such a threat.In addition to stakes in companies and physical assets, Russia could target foreign investment held in securities, according to one of the economists, who asked not to be named because of the sensitivity of the subject.But experts said the latest published figures from Russia’s central bank on foreign direct investment showed that a sizeable proportion of foreign money was likely coming from Russian companies registered abroad.Russia stopped releasing a country-by-country breakdown after the invasion, but the last such data published for Jan. 1, 2022 showed that Cyprus, where many Russian firms are incorporated, accounted for almost 30% of all Russia’s FDI.Many Russian companies are also incorporated in the Netherlands.”A chunk of total FDI in Russia is really Russian money already,” said Gian Maria Milesi-Ferretti, senior fellow in economic studies at The Hutchins Center on Fiscal and Monetary Policy at the Brookings Institution, a U.S. think-tank.Russia’s state-run RIA news agency reported in January that Western firms’ assets worth $288 billion were ripe for seizure in Russia, citing January 2022 data.Reuters could not determine where RIA took its figures from, but central bank figures showed $289 billion in derivative and other foreign investments at that time.That figure had fallen to $215 billion by end-2023. RIA also said Cyprus and the Netherlands, respectively, accounted for $98.3 billion and $50.1 billion of those assets, implying a high degree of Russian company ownership.The central bank and finance ministry did not respond to a request for comment on the figures.’ASSETS FOR A SONG’Moscow has already forced foreign companies selling assets in Russia to do so at discounts of at least 50%. It has placed other Western assets under temporary management and installed Kremlin-friendly executives.Western companies have acknowledged losses totalling $107 billion, a significant sum that goes beyond the value of physical assets. “Russia has already snatched up affiliates of Western firms, often for a song,” said Milesi-Ferretti. But the value of seized assets is not just in buildings and machinery, it is also in the technology, know-how and connections attached, he added.Energy group Shell (LON:SHEL), fast food giant McDonald’s (NYSE:MCD) and carmakers Volkswagen (ETR:VOWG_p) and Renault (EPA:RENA) have sold their Russian businesses. Others including Austrian bank Raiffeisen, food group Nestle and U.S. food and beverage giant PepsiCo (NASDAQ:PEP) continue to do business.Another area of leverage Moscow has is in Europe, where the Brussels-based depository Euroclear holds the majority of Russia’s reserves.Some politicians in the bloc are nervous that the euro could be adversely affected if other countries such as China – a Russian ally – start repatriating reserves as a precaution against them being swooped on down the line.There is also the risk that Russia could, through court action, try to seize Euroclear cash in securities depositories in Hong Kong, Dubai and elsewhere. The worry is that this could drain Euroclear capital and require a huge bailout.A Euroclear spokesperson declined to comment on what Russia might do.”Euroclear of course takes into account all possible risk scenarios and strengthens its capital by retaining Russian sanction-related profits as a buffer against current and future risks,” the spokesperson added.While its ties with the West have frayed, Russia has used a current account surplus of almost $300 billion in 2022-23 to build up overseas assets – likely in so-called friendly jurisdictions that do not openly oppose the war in Ukraine, according to Milesi-Ferretti.Russia’s efforts to reduce its integration into Western financial systems since its illegal annexation of Crimea in 2014 have cut dependence on foreign money, but also limited possible retaliation in any frozen asset fight, he added.”If the aim is to retaliate, having a smaller amount of assets to seize makes your threat less salient.” More

“Going forward, the fund will keep the ratio of risky assets at 65% in its strategic asset allocations and invest in various kinds of alternative assets in a swift manner within the ratio to raise investment earnings,” the ministry said in a statement, after a meeting to review the fund’s investment strategy.It is a top priority for NPS to raise investment returns and delay the depletion of the fund, currently expected to run out of funds by 2055 due to a fast-ageing population.The target of 65% was announced as the board governing the fund’s investment policy decided to implement a “reference portfolio”, a new portfolio rule allowing flexible asset allocations within a long-term target ratio.Until now, the NPS has allocated assets according to its five-year target ratios set for each asset and reviewed on an annual basis.The ministry said it decided to introduce the new portfolio management rule because the current mechanism restricted the fund’s investments, making it unable to respond to a recent market trend of new investment opportunities.The NPS held 1,069.7 trillion won ($777.68 billion) in total assets at the end of February, with stocks and alternative assets accounting for 46.7% and 16.0% of assets, respectively. It plans to continue increasing investments abroad and in non-traditional assets to seek higher returns. ($1 = 1,375.5100 won) More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.The disruption to global trade from ships not being able to use the Red Sea or Suez Canal for trips between Asia and Europe could last into next year, according to the chief executive of the world’s second-largest container group.Vincent Clerc, chief executive of Denmark’s AP Møller-Maersk, said there was no sign of tensions easing after attacks by Houthi rebels in Yemen caused container shipping companies to divert their vessels around the Cape of Good Hope, adding time and cost to the transportation of goods.“We can see that the situation in the Red Sea is not going to be shortlived, but will last at least into the second half of the year . . . We are not very optimistic we will be going through Suez any time soon,” he told the Financial Times.Costs for container shipping — the backbone of global trade — have jumped since the Houthi attacks began in mid-November while the increasing delivery time has caused supply chain issues for retailers and manufacturers.Maersk said that volumes had been stronger than it expected in the first quarter of this year, which combined with the prolonged disruption in the Red Sea, caused it to lift its financial guidance for the current year. It now expects to make an operating loss of between zero and $2bn, having previously forecast a loss as big as $5bn.“When we provided guidance, we had no clue whether [disruption in the Red Sea] would stay with us for weeks or last a long time. It now looks very likely that it will stay with us for longer. At the shortest, we would see trade resume on its old pattern late in this year,” Clerc said.Maersk’s revenues fell 13 per cent in the first quarter to $12.4bn from a year earlier. Its operating profit plummeted from $2.3bn in the first quarter of 2023 to $177mn this year, but improved from a loss of $537mn in the fourth quarter. Clerc said Maersk was continuing to forecast an operating loss for the year in spite of the higher than expected volumes due to the large number of new vessels ordered by competitors likely to come into service this year, which were expected to lead to overcapacity.“While we are getting a reprieve, we expect the reprieve to be of a temporary nature. Over time, this reprieve will be overwhelmed by the sheer number of ships coming online,” he added.However, Clerc said that uncertainty remained over the timing of that trend, which could begin in the fourth quarter of this year or the start of next year. He cautioned that Maersk needed to remain “very, very disciplined on our cost management” and not assume that the current situation would persist.The boss of Maersk, overtaken as the world’s largest container shipping group in 2022 by Mediterranean Shipping Company, said he feared that the rise in costs unleashed by sailing around the Cape of Good Hope could lead to inflationary pressure that would be hard to bring down. More

“While the Committee added a hawkish acknowledgment of the “lack of further progress” on inflation so far this year to its statement, Chair Powell offered a dovish message in his press conference,” economists led by Jan Hatzius said in a note.”We have left our forecast unchanged and continue to expect two rate cuts this year in July and November,” they added.Economists said the most noteworthy aspect of Powell’s speech was his strong pushback against the idea of interest rate hikes. The Fed Chair stated that an increase in policy rates seems “unlikely” and expressed confidence that the current policy settings are sufficiently restrictive. Moreover, he indicated that the Federal Reserve would need convincing evidence of insufficient restrictiveness to consider rate hikes, evidence which is currently absent. Should inflation progress stall, Powell suggested that the FOMC’s response would likely be to delay any planned rate cuts rather than to increase rates, setting a high threshold for any potential hikes, Goldman highlighted.“Powell offered no major clues on the timing of a rate cut but struck a consistently dovish tone on inflation,” said economists. Echoing views held by Goldman Sachs, Powell downplayed the significance of the inflation rise in the first quarter and noted ongoing wage growth and the lack of signs pointing to an overheating economy. Furthermore, he noted that inflation expectations remain stable and underscored the time delays inherent in the inflation process. Powell also expressed optimism that declining housing costs and ongoing improvements on the supply side will continue to exert downward pressure on inflation, projecting a decrease in inflation rates throughout the year.“Powell said his forecast is that overall inflation will move back down this year, though he acknowledged that his confidence was lower than it was before because of the upside surprise in recent months,” economists wrote.“Finally, in response to a question about how the November elections affect the Fed’s ability to cut at upcoming meetings, Powell was adamant that the elections will not influence the FOMC’s decisions,” they continued. More

March household spending could fall 2.4% from the same month a year earlier, compared with the prior month’s 0.5% decline, according to the poll of 16 economists.That would mark a 13th straight month of year-on-year declines and its biggest drop since January when it fell 6.3%.”Consumption of items such as clothing and service-related spending likely weakened due to cooler weather in early March,” SMBC Nikko Securities’ analysts said in the poll.”We expect real consumption to fall 1.8% in the first quarter, swinging from a 0.7% increase in the final three months of 2023,” they added, noting that a scandal at Toyota (NYSE:TM)’s compact car unit Daihatsu that led to the suspension of output and shipments likely suppressed spending on cars.On the month, household spending is expected to slip 0.3% in March which compares with a 1.4% rise for February.The data from the Internal Affairs and Communications Ministry is due out at 8:30 a.m. May 10 (2330 GMT May 9).Weak household consumption is a source of concern among Japanese policymakers who want to see a virtuous cyle of economic growth led by strong wage hikes and solid consumer spending.The Bank of Japan in March ended negative interest rates and yield curve control altogether in a landmark shift away from its unconventional ultra-easy policy, though it has said it will keep accommodative conditions for the time being given the fragile economy.Separately, current account data is expected to show a surplus of 3.49 trillion yen ($22.4 billion) in March, versus February’s 2.64 trillion yen surplus. Those figures from the Ministry of Finance are due on May 10 at 8:50 a.m. (May 9, 2350 GMT).($1 = 156.0400 yen) (This story has been refiled to correct the spelling of ‘curve’ in paragraph 9) More