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    Fed Holds Rates Steady, Noting Lack of Progress on Inflation

    The Federal Reserve left interest rates unchanged for a sixth straight meeting and suggested that rates would stay high for longer.Federal Reserve officials left interest rates unchanged and signaled that they were wary about how stubborn inflation was proving, paving the way for a longer period of high borrowing costs.The Fed held rates steady at 5.3 percent on Wednesday, leaving them at a more than two-decade high, where they have been set since July. Central bankers reiterated that they needed “greater confidence” that inflation was coming down before reducing them.“Readings on inflation have come in above expectations,” Jerome H. Powell, the Fed chair, said at a news conference after the release of the central bank’s rate decision.Jerome H. Powell, the Fed chair, said that the central bank needed “greater confidence” that inflation was coming down before it decided to cut interest rates, which are at a two-decade high.Susan Walsh/Associated PressThe Fed stands at a complicated economic juncture. After months of rapid cooling, inflation has proved surprisingly sticky in early 2024. The Fed’s preferred inflation index has made little progress since December, and although it is down sharply from its 7.1 percent high in 2022, its current 2.7 percent is still well above the Fed’s 2 percent goal. That calls into question how soon and how much officials will be able to lower interest rates.“What we’ve said is that we need to be more confident” that inflation is coming down sufficiently and sustainably before cutting rates, Mr. Powell said. “It appears that it’s going to take longer for us to reach that point of confidence.”The Fed raised interest rates quickly between early 2022 and the summer of 2023, hoping to slow the economy by tamping down demand, which would in turn help to wrestle inflation under control. Higher Fed rates trickle through financial markets to push up mortgage, credit card and business loan rates, which can cool both consumption and company expansions over time.But Fed policymakers stopped raising rates last year because inflation had begun to come down and the economy appeared to be cooling, making them confident that they had done enough. They have held rates steady for six straight meetings, and as recently as March, they had expected to make three interest rate cuts in 2024. Now, though, inflation’s recent staying power has made that look less likely.Many economists have begun to push back their expectations for when rate reductions will begin, and investors now expect only one or two this year. Odds that the Fed will not cut rates at all this year have increased notably over the past month.Mr. Powell made it clear on Wednesday that officials still thought that their next policy move was likely to be a rate cut and said that a rate increase was “unlikely.” But he demurred when asked whether three reductions were likely in 2024.He laid out pathways in which the Fed would — or would not — cut rates. He said that if inflation came down or the labor market weakened, borrowing costs could come down.On the other hand, “if we did have a path where inflation proves more persistent than expected, and where the labor market remains strong, but inflation is moving sideways and we’re not gaining greater confidence, well, that could be a case in which it could be appropriate to hold off on rate cuts,” Mr. Powell said.Investors responded favorably to Mr. Powell’s news conference, likely because he suggested that the bar for raising rates was high and that rates could come down in multiple scenarios. Stocks rose and bond yields fell as Mr. Powell spoke.“The big surprise was how reluctant Powell was to talk about rate hikes,” said Michael Feroli, chief U.S. economist at J.P. Morgan. “He really seemed to say that the options are cutting or not cutting.”Still, a longer period of high Fed rates will be felt from Wall Street to Main Street. Key stock indexes fell in April as investors came around to the idea that borrowing costs could remain high for longer, and mortgage rates have crept back above 7 percent, making home buying pricier for many want-to-be owners.Fed officials are planning to keep rates high for a reason: They want to be sure to stamp out inflation fully to prevent quickly rising prices from becoming a more permanent part of America’s economy.Policymakers are closely watching how inflation data shape up as they try to figure out their next steps. Economists still expect that price increases will start to slow down again in the months to come, in particular as rent increases fade from key price measures.“My expectation is that we will, over the course of this year, see inflation move back down,” Mr. Powell said on Wednesday. But he added that “my confidence in that is lower than it was because of the data that we’ve seen.”As the Fed tries to assess the outlook, officials are likely to also keep an eye on momentum in the broader economy. Economists generally think that when the economy is hot — when companies are hiring a lot, consumers are spending and growth is rapid — prices tend to increase more quickly. Growth and hiring have not slowed down as much as one might have expected given today’s high interest rates. A key measure of wages climbed more rapidly than expected this week, and economists are now closely watching a jobs report scheduled for release on Friday for any hint that hiring remains robust.But so far, policymakers have generally been comfortable with the economy’s resilience.That is partly because growth has been driven by improving economic supply: Employers have been hiring as the labor pool grows, for instance, in part because immigration has been rapid.Beyond that, there are hints that the economy is beginning to cool around the edges. Overall economic growth slowed in the first quarter, though that pullback came from big shifts in business inventories and international trade, which often swing wildly from one quarter to the next. Small-business confidence is low. Job openings have come down substantially.Mr. Powell said Wednesday that he thought higher borrowing costs were weighing on the economy.“We believe that our policy stance is in a good place and is appropriate to the current situation — we believe it’s restrictive,” Mr. Powell said.As the Fed waits to make interest rate cuts, some economists have begun to warn that the central bank’s adjustments could collide with the political calendar.Donald J. Trump, the former president and presumptive Republican nominee, has already suggested that interest rate cuts this year would be a political move meant to help President Biden’s re-election bid by pumping up the economy. Some economists think that cutting in the weeks leading up to the election — either in September or November — could put the Fed in an uncomfortable position, drawing further ire and potentially making the institution look political.The Fed is independent of the White House, and its officials have repeatedly said that they will not take politics into account when setting interest rates, but will rather be guided by the data.Mr. Powell reiterated on Wednesday that the Fed did not and would not take into account political considerations in timing its rate moves.“If you go down that road, where do you stop? So we’re not on that road,” Mr. Powell said. “It just isn’t part of our thinking.” More

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    BlackRock is opening a Saudi investment firm with initial $5 billion from PIF

    Asset manager BlackRock will launch an investment platform in Riyadh with the help of a $5 billion anchor investment from Saudi Arabia’s Public Investment Fund, the kingdom’s sovereign wealth fund.
    The new platform will be called BlackRock Riyadh Investment Management, or BRIM.
    BlackRock CEO Larry Fink said in a statement that the kingdom “has become an increasingly attractive destination for international investment as Vision 2030 comes to life.”

    The BlackRock logo is displayed at the company’s headquarters in New York City on Nov. 14, 2022.
    Leonardo Munoz | Getty Images

    Asset manager BlackRock will launch an investment platform in Riyadh with the help of a $5 billion anchor investment from Saudi Arabia’s Public Investment Fund, the kingdom’s sovereign wealth fund.
    The announcement Tuesday followed the signing of a memorandum of understanding between BlackRock’s Saudi division and the PIF with the aim of spurring capital markets growth in the oil-rich Gulf country.

    BlackRock, the world’s largest asset manager with $10 trillion in assets under management, will “launch investment strategies across asset classes for the Saudi market, including both public and private markets, managed by a Riyadh-based investment team,” a joint press release from the firm and the PIF read.
    The new platform will be called BlackRock Riyadh Investment Management, or BRIM.
    BRIM aims to help bring foreign institutional investment into Saudi Arabia as well as develop the Saudi asset management industry, expand local capital markets and investor diversification, and support the development of the kingdom’s asset management talent, the release said.

    The initiative, as well as many others by the PIF, which oversees $925 billion in assets under management, contributes to Saudi Arabia’s Vision 2030, a multitrillion-dollar project aiming to modernize the kingdom’s economy and diversify it away from oil. Central to that effort is bringing major international institutions, investment and foreign talent into Saudi Arabia itself.
    The establishment of BRIM aims to foster “further growth in the Saudi capital market ecosystem and enable a growing international investment management sector based in Saudi Arabia,” the press statement said.

    Larry Fink, CEO of BlackRock, said in the statement that the kingdom “has become an increasingly attractive destination for international investment as Vision 2030 comes to life.”
    The asset managing giant has been doing work with Saudi Arabia for years, and in 2018 made clear it would not pull out despite major controversy over the killing of journalist Jamal Khashoggi by Saudi agents.
    In another move increasing its ties to the kingdom, BlackRock in July 2023 gave Saudi Aramco CEO Amin Nasser a seat on its board of directors. Aramco is the largest oil company in the world.
    At the time, BlackRock said the move reflected the firm’s emphasis on the Middle East as part of its long-term strategy.
    — CNBC’s Yun Li contributed to this report. More

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    Job Openings and Hiring Are at a 3-Year Ebb

    The red-hot labor market cooled somewhat in March, government data showed on Wednesday.Employers had 8.5 million unfilled job openings on the last day of March, the fewest since early 2021, according to data released by the Labor Department. They also filled the fewest jobs in nearly four years, suggesting that employers’ seemingly insatiable demand for workers might finally be abating.A slowing labor market would be welcome news for policymakers at the Federal Reserve, who are concluding a two-day meeting on Wednesday amid signs that inflation is proving difficult to stamp out. Fed officials have said they see falling job openings as a sign that supply and demand are coming into better balance.For workers, however, that rebalancing could mean a loss of the bargaining power that has brought them strong wage gains in recent years. The number of workers voluntarily quitting their jobs fell to 3.3 million, the lowest level in more than three years and a far cry from the more than four million a month who were leaving their jobs at the peak of the “great resignation” in 2022.“This continued moderation is largely positive for the market and the economy overall, and is mostly sustainable for the time being,” Nick Bunker, economic research director for the Indeed Hiring Lab, wrote in a note on Wednesday. But, he added, “if job openings continue to decline for much longer, hiring of unemployed workers will eventually retreat enough to drive unemployment up.”There is little sign of that so far, however. Despite high-profile job cuts at a few large companies, layoffs remain low overall, and fell in March. And while job openings have fallen, there are still about 1.3 available positions for every unemployed worker. Data released by the Labor Department on Tuesday showed that wage growth picked up in the first three months of the year, suggesting workers retain some leverage.The data released Wednesday came from the Labor Department’s monthly survey of job openings and labor turnover. Economists will get a more timely snapshot of the labor market on Friday, when the government releases its monthly jobs report.Forecasters expect that data to show that employers added about 240,000 jobs in April and that the unemployment rate remained below 4 percent for the 27th consecutive month. More

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    Private payrolls increased by 192,000 in April, more than expected for resilient labor market

    Private employers added 192,000 workers in April, better than the Dow Jones consensus outlook for 183,000 though a slight step down from the upwardly revised 208,000 in March, ADP reported.
    The firm’s wage measure showed annual pay gains up 5% from a year ago, the smallest gain since August 2021.

    Private payrolls increased at a faster than expected pace in April, indicating there are still plenty of tailwinds for the U.S. labor market, according to ADP.
    The payrolls processing firm reported Wednesday that companies added 192,000 workers for the month, better than the Dow Jones consensus outlook for 183,000 though a slight step down from the upwardly revised 208,000 in March.

    At the same time, the firm’s wage measure showed worker pay up 5% from a year ago, a multiyear low that provided some welcome news against multiple other signs showing inflation has proved more resilient than many economists and policymakers had expected.
    “Hiring was broad-based in April,” ADP chief economist Nela Richardson said. “Only the information sector – telecommunications, media, and information technology – showed weakness, posting job losses and the smallest pace of pay gains since August 2021.”
    Job gains were strongest in leisure and hospitality, which posted an increase of 56,000. Other industries showing gains included construction (35,000) and sectors covering trade, transportation and utilities as well as education and health services, both of which saw increases of 26,000.
    Professional and business services contributed 22,000 to the total while financial activities added 16,000.
    Companies with 500 or more workers showed the biggest gain in hiring with 98,000.

    The ADP release comes two days ahead of the more closely watched nonfarm payrolls report. In recent months, ADP has consistently undershot the Labor Department’s count, though the numbers were fairly close in March. The department’s Bureau of Labor Statistics reported that private payrolls increased by 232,000 for the month versus ADP’s 208,000.
    Friday’s report is expected to show growth of 204,000 in total nonfarm payrolls for April, down from March’s 303,000, according to the consensus Dow Jones estimate. More

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    The Fed Tries to Steer Clear of Politics, but Election Year Is Making It Tough

    Economists are wondering whether political developments could play into both the Fed’s near-term decisions and its long-term independence.Federal Reserve officials are fiercely protective of their separation from politics, but the presidential election is putting the institution on a crash course with partisan wrangling.Fed officials set policy independently of the White House, meaning that while presidents can push for lower interest rates, they cannot force central bankers to cut borrowing costs. Congress oversees the Fed, but it, too, lacks power to directly influence rate decisions.There’s a reason for that separation. Incumbent politicians generally want low interest rates, which help to stoke economic growth by making borrowing cheap. But the Fed uses higher interest rates to keep inflation slow and steady — and if politicians forced to keep rates low and goose the economy all the time, it could allow those price increases to rocket out of control.In light of the Fed’s independence, presidents have largely avoided talking about central bank policy at all ever since the early 1990s. Pressuring officials for lower rates was unlikely to help, administrations reasoned, and could actually backfire by prodding policymakers to keep rates higher for longer to prove that they were independent from the White House.But Donald J. Trump upended that norm when he was president. He called Fed officials “boneheads” and implied that Jerome H. Powell, the Fed chair, was an “enemy” of America for keeping rates too high. And he has already talked about the Fed in political terms as he campaigns as the presumptive Republican nominee, suggesting that cutting interest rates before November would be a ploy to help President Biden win a second term.Some of Mr. Trump’s allies outside his campaign have proposed that the Fed’s regulatory functions should be subject to White House review. Mr. Trump has also said that he intends to bring all “independent agencies” under White House control, although he and his campaign have not specifically addressed directing the Fed’s decisions on interest rates.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    What to Watch as the Fed Makes Its Interest Rate Decision

    Policymakers are expected to leave borrowing costs unchanged, but investors are bracing for signals that rates will stay higher for longer.Federal Reserve officials will conclude their two-day policy meeting on Wednesday afternoon, and while central bankers are widely expected to leave interest rates unchanged, there is an unusual degree of uncertainty about what exactly they will signal about the future.On the one hand, officials could stick with their recent script: Their next policy move is likely to be an interest rate reduction, but incoming inflation and growth data will determine how soon reductions can begin and how extensive they will be.But some economists are wondering if the central bank could pivot away from that message, opening the door to the possibility that its next rate move will be an increase rather than a cut. Inflation has proved alarmingly stubborn in recent months and the economy has retained substantial momentum, which could prod officials to question whether their current 5.33 percent rate setting is high enough to weigh on consumer and business borrowing and slow the economy. Policymakers believe that they need to use interest rates to tap the brakes on demand and bring inflation fully under control.The Fed will release its policy decision in a statement at 2 p.m. Eastern. But investors are likely to focus most intently on a news conference scheduled for 2:30 p.m. with Jerome H. Powell, the Fed chair. Central bankers will not release quarterly economic projections at this gathering — the next set is scheduled for release after the Fed’s June 11-12 meeting.Here’s what to watch on Wednesday.The Key Question: How Hawkish?The key question going into this meeting is how much central bankers are likely to change their tone in response to stubborn inflation.After three full months of limited progress on lowering inflation, some economists see a small chance that the Fed could signal that it’s open to considering raising interest rates again — a message that Fed watchers would consider “hawkish.” But many think that the Fed will stick with its current message that rates are likely to simply remain set to the current relatively high rate for a longer period of time.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Federal Money Is All Over Milwaukee. Biden Hopes Voters Will Notice.

    White House officials have barnstormed Wisconsin to make the connection between big changes and their signature laws.Across Milwaukee, residents can see evidence of federal money from laws passed under the Biden administration, if they know where to look.It shows up in a growing array of solar panels near the airport. Ramshackle houses rehabilitated and sold to first-time buyers. The removal of lead paint and pipes. The demolition of a derelict mall. A crime lab and emergency management center. A clinic and food pantry for people with H.I.V. Funding to help dozens of nonprofits provide services like violence prevention efforts and after-school programs.But of the more than $1 billion for Milwaukee County in the American Rescue Plan Act, the Bipartisan Infrastructure Law and the Inflation Reduction Act — legislation that President Biden counts among his greatest accomplishments — much is harder to see, like funds to prevent drastic cuts to public safety during the pandemic. Some money has yet to be spent, like $3.5 million to rebuild the penguin exhibit at the local zoo and $5.1 million to repair the roof of Milwaukee Mitchell International Airport.That presents both an opportunity and a challenge to Mr. Biden’s re-election campaign as it seeks to show Americans how federal investments have improved their lives. Doing so is difficult because the laws delegated many spending decisions to state and local officials, obscuring the money’s source.“The link between the resources themselves and anything that happens on the ground that’s visible to people is very opaque,” said Robert Kraig, executive director of the progressive advocacy group Citizen Action of Wisconsin. “You need to find some way to communicate this idea that there’s concrete progress within people’s communities that improves quality of life — and that there’s more coming.”Vivent Health, a newly constructed facility in Milwaukee that offers services to people with H.I.V.Sara Stathas for The New York TimesSolar panels installed atop the Milwaukee Central Library, which includes a green roof.Sara Stathas for The New York TimesWe are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More