Evelyn Reynolds

Officials are likely to keep interest rates unchanged at the conclusion of their January meeting. Here’s a look at what might come next.Federal Reserve officials will conclude their two-day meeting on Wednesday, and they are widely expected to keep interest rates steady at a two-decade high when they release their policy decision at 2 p.m.But investors are likely to closely watch the meeting — particularly Chair Jerome H. Powell’s 2:30 p.m. news conference — for hints of when policymakers might begin to lower interest rates. The Fed has held its policy rate in a range of 5.25 to 5.5 percent since July, and officials projected in December that they might lower borrowing costs by three-quarters of a percentage point over the course of 2024.But both the timing and the magnitude of those rate cuts remain uncertain. On the one hand, inflation has come down more swiftly than many economists had expected in recent months. On the other, economic growth is proving stronger than anticipated, which could give companies the wherewithal to keep raising prices into the future.Here’s what to know about this meeting.The Fed’s statement could change.The Fed’s post-meeting policy statement has suggested that officials will watch economic data “in determining the extent of any additional policy firming that may be appropriate.” Now that further rate increases are looking less and less likely, that language may be in for a tweak.Powell has a delicate balancing act.Fed officials do not want to keep interest rates so high for so long that they squeeze the economy too much and tip it into a recession. On the other hand, they do not want to cut rates too much too early, allowing the economy to accelerate and risking a renewed pickup in inflation. Mr. Powell could talk about how officials will try to strike that balance.Growth vs. inflation will be critical.A lot of what comes next will hinge on which numbers Mr. Powell and his colleagues decide to focus on — growth or inflation — and investors might get a hint at that this week. Growth and consumer spending are both faster than many economists had expected. But the Fed’s preferred inflation gauge is also below 3 percent for the first time since early 2021, even after stripping out food and fuel costs, which can fluctuate from month to month.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?  More

“What we are seeing in the U.K. and a number of other countries is a need to put in place medium-term fiscal plans that will accommodate a significant increase in spending pressures,” Pierre-Olivier Gourinchas said during a press briefing.
In the U.K., he said, this included spending on the National Health Service, social care, education and the climate transition, as well as measures to boost growth, while preventing debt levels from increasing.

British Finance Minister Jeremy Hunt said earlier this month the U.K. would not enter a recession this year.
Hannah Mckay | Reuters

LONDON — The U.K. government should not introduce further tax cuts this year, the International Monetary Fund said Tuesday, as its chief economist argued the national budget needed the money for public services and growth-friendly investments.
“What we are seeing in the U.K. and a number of other countries is a need to put in place medium-term fiscal plans that will accommodate a significant increase in spending pressures,” Pierre-Olivier Gourinchas said during a press briefing.

In the U.K., he said, this included spending on the National Health Service, social care, education and the climate transition, as well as measures to boost growth, while preventing debt levels from increasing.
“In that context, we would advise against further discretionary tax cuts, as envisioned or discussed now,” he said.
An IMF spokesperson separately said the U.K. had higher spending needs across public services and investments than were currently reflected in the government’s budget plans. The IMF has recommended the U.K. strengthens taxes on carbon emissions and property, eliminates loopholes in wealth and income taxation, and reforms rules which set pension levels.
British Finance Minister Jeremy Hunt will announce his latest budget in early March, in what may be the last major fiscal announcement before a General Election is held. The timing of the vote is uncertain, but it must be called by the Conservative government at some point this year.
The Conservatives face an uphill battle, with the opposition Labour party ahead in most polls.

Hunt announced several tax cuts in his fall budget, and made several suggestions he wants to introduce more in the spring.
U.K. public sector net borrowing has fallen sharply, and in December 2023 was around half that of the prior year due to higher VAT (a sales levy) and income tax receipts and lower spending.
The IMF on Tuesday forecast 0.6% growth for the U.K. economy this year, up slightly from an estimated 0.5% figure for 2023. It revised its forecast for 2025 lower by 0.4 percentage points, to 1.6%, when it said disinflation will ease financial conditionals and allow real incomes to recover.

The downgrade, it said, “reflects reduced scope for growth to catch up in light of recent upward statistical revisions to the level of output through the pandemic period.”
Gourinchas told CNBC on Tuesday that despite a weak growth outlook for the year, the U.K. had seen positive news on inflation, which is forecast to average 2.8%.
“We’re at that point, we think, that the Bank of England will be in a position like the Federal Reserve and [European Central Bank] to ease policy rates as inflation is finally brought towards target,” he said. More

The International Monetary Fund upgraded its growth forecasts and offered a more optimistic outlook for the world economy.The global economy has been battered by a pandemic, record levels of inflation, protracted wars and skyrocketing interest rates over the past four years, raising fears of a painful worldwide downturn. But fresh forecasts published on Tuesday suggest that the world has managed to defy the odds, averting the threat of a so-called hard landing.Projections from the International Monetary Fund painted a picture of economic durability — one that policymakers have been hoping to achieve while trying to manage a series of cascading crises.In its latest economic outlook, the I.M.F. projected global growth of 3.1 percent this year — the same pace as in 2023 and an upgrade from its previous forecast of 2.9 percent. Predictions of a global recession have receded, with inflation easing faster than economists anticipated. Central bankers, including the Federal Reserve, are expected to begin cutting interest rates in the coming months.“The global economy has shown remarkable resilience, and we are now in the final descent to a soft landing,” said Pierre-Olivier Gourinchas, the chief economist of the I.M.F.Policymakers who feared they would need to hit the brakes on economic growth to contain rising prices have managed to tame inflation without tipping the world into a recession. The I.M.F. expects global inflation to fall to 5.8 percent this year and 4.4 percent in 2025 from 6.8 percent in 2023. It estimates that 80 percent of the world’s economies will experience lower annual inflation this year.The brighter outlook is due largely to the strength of the U.S. economy, which grew 3.1 percent last year. That robust growth came despite the Fed’s aggressive series of rate increases, which raised borrowing costs to their highest levels in 22 years. Consumer spending in America has held strong while businesses have continued to invest. The I.M.F. now expects the U.S. economy to grow 2.1 percent this year, up from its previous prediction of 1.5 percent.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?  More

The euro zone economy stabilized in the fourth quarter of 2023, flash figures published by the European Union’s statistics agency showed on Tuesday.
The bloc narrowly avoided the shallow recession that was forecast in a Reuters poll of economists, following a 0.1% fall in GDP in the third quarter.
The euro zone’s seasonally-adjusted GDP was flat compared with the previous quarter and expanded by 0.1% versus the previous year.

Cargo trains stand on the railway tracks at a transshipment station in Frankfurt am Main, western Germany, as in background can be seen the city’s skyline, on January 23, 2024.
Kirill Kudryavtsev | Afp | Getty Images

The euro zone economy stabilized in the fourth quarter of 2023, flash figures published by the European Union’s statistics agency showed on Tuesday.
The bloc narrowly avoided the shallow recession that was forecast in a Reuters poll of economists, following a 0.1% fall in GDP in the third quarter.

The euro zone’s seasonally-adjusted GDP was flat compared with the previous quarter and expanded by 0.1% versus the previous year. In a preliminary estimate, the euro area was seen posting 0.5% growth over the whole of 2023.
Its biggest economy, Germany, posted a 0.3% contraction in the final quarter of the year, according to figures also out on Tuesday. The country narrowly skirted a technical recession due to an upwards revision to its reading for the third quarter, when the economy stagnated.
The French economy was steady in the fourth quarter, while Spain outperformed forecasts to expand by 0.6%.
The European Commission’s euro zone sentiment indicator meanwhile showed a decline in consumer confidence — though the outlook for businesses in services and industrials was slightly brighter.
The euro zone economy is in a “phase of prolonged weakness” that is being driven by Germany, while southern European economies lead the way in growth, Bert Colijn, senior economist at ING, said in a note.

“Germany is struggling with weak global demand for goods and heavy industry is suffering from higher energy prices,” he said.
The euro zone’s divergence from the U.S. is growing, he added, partly explained by a larger decline in inflation-adjusted wages, energy prices hitting industrials, and lower levels of fiscal support.
The euro continued to log narrow losses against the U.S. dollar following the fresh Tuesday data, also posting tight gains against the British pound. The U.S. economy smashed expectations for the end of the year, expanding by 3.3% in the fourth quarter. U.K. figures are due out in the middle of February.
The European Central Bank has hauled interest rates to a record high over the last year and a half, creating tighter financial conditions across the region which have helped cool inflation from a peak of 10.6% in October 2022 to 2.9% in December. The latest euro zone inflation flash figures are due Thursday. More

The central bank is widely expected to lower interest rates this year. But with growth and consumer spending chugging along, explaining it may take some work.The Federal Reserve is widely expected to leave interest rates unchanged at the conclusion of its meeting on Wednesday, but investors will be watching closely for any hint at when and how much it might lower those rates this year.The expected rate cuts raise a big question: Why would central bankers lower borrowing costs when the economy is experiencing surprisingly strong growth?The United States’ economy grew 3.1 percent last year, up from less than 1 percent in 2022 and faster than the average for the five years leading up to the pandemic. Consumer spending in December came in faster than expected. And while hiring has slowed, America still boasts an unemployment rate of just 3.7 percent — a historically low level.The data suggest that even though the Fed has raised interest rates to a range of 5.25 to 5.5 percent, the highest level in more than two decades, the increase has not been enough to slam the brakes on the economy. In fact, growth remains faster than the pace that many forecasters think is sustainable in the longer run.Fed officials themselves projected in December that they would make three rate cuts this year as inflation steadily cooled. Yet lowering interest rates against such a robust backdrop could take some explaining. Typically, the Fed tries to keep the economy running at an even keel: lowering rates to stoke borrowing and spending and speed things up when growth is weak, and raising them to cool growth down to make sure that demand does not overheat and push inflation higher.The economic resilience has caused Wall Street investors to suspect that central bankers may wait longer to cut rates — they were previously betting heavily on a move down in March, but now see the odds as only 50-50. But, some economists said, there could be good reasons for the Fed to lower borrowing costs even if the economy continues chugging along.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?  More

The retailer has been raising wages for store workers. It’s now turning its attention to improving salaries and benefits for their bosses.Walmart, the nation’s largest private employer, is raising salaries and benefits for store managers as it looks for ways to retain them.Walmart said on Monday that managers of its U.S. stores would be eligible for grants of up to $20,000 in company stock every year. The stock will vest over a three-year period, with a percentage vested each quarter.Earlier this month, Walmart said it would increase the average salary for store managers to $128,000 from $117,000. The big-box retailer also said bonuses for store managers could reach up to 200 percent of base salary, with a store’s profitability becoming a bigger factor in the calculation.Store managers are crucial in driving sales and profitability within their stores and keeping morale high in a dynamic business. The managers are also seen as an important pipeline for leadership at the company.A store manager at a Walmart Supercenter oversees hundreds of employees who work across a variety of departments, including food, apparel, pharmacies and auto centers. These stores often attract scores of shoppers and bring in millions of dollars in sales each year. At the start of the Covid pandemic, store managers were given even more responsibilities as the company adapted to changing consumer behavior, including managing e-commerce abilities like in-store pickup for online orders and navigating goods that are out of stock as well as excess inventory.“It’s fair to say that we’re asking them to act like owners and to think like owners,” John Furner, the chief executive of Walmart U.S. and previously a manager at a company store, said in a briefing with reporters. 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?  More

Many feared that artificial intelligence would kill jobs. But hospitals, insurance companies and others are creating roles to navigate and harness the disruptive technology.In September, the Mayo Clinic in Arizona created a first-of-its-kind job at the hospital system: chief artificial intelligence officer.Doctors at the Arizona site, which has facilities in Phoenix and Scottsdale, had experimented with A.I. for years. But after ChatGPT’s release in 2022 and an ensuing frenzy over the technology, the hospital decided it needed to work more with A.I. and find someone to coordinate the efforts.So executives appointed Dr. Bhavik Patel, a radiologist who specializes in A.I., to the new job. Dr. Patel has since piloted a new A.I. model that could help speed up the diagnosis of a rare heart disease by looking for hidden data in ultrasounds.“We’re really trying to foster some of these data and A.I. capabilities throughout every department, every division, every work group,” said Dr. Richard Gray, the chief executive of the Mayo Clinic in Arizona. The chief A.I. officer role was hatched because “it helps to have a coordinating function with the depth of expertise.”Many people have long feared that A.I. would kill jobs. But a boom in the technology has instead spurred law firms, hospitals, insurance companies, government agencies and universities to create what has become the hottest new role in corporate America and beyond: the senior executive in charge of A.I.The Equifax credit bureau, the manufacturer Ashley Furniture and law firms such as Eversheds Sutherland have appointed A.I. executives over the past year. In December, The New York Times named an editorial director of A.I. initiatives. And more than 400 federal departments and agencies looked for chief A.I. officers last year to comply with an executive order by President Biden that created safeguards for the technology.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?  More

In 2018, Anna-Lisa Miller was working with agricultural cooperatives in Hawaii, helping them reinvest in their communities through shared ownership.Ms. Miller, who had gone to law school and had planned to do civil rights litigation, loved the principle of workers partaking in the financial success of their employers, and the next year joined Project Equity, a nonprofit that helps small businesses transition to worker ownership. But it was slow going, with each transaction requiring customized assistance.Then she came across an investor presentation from a different universe: KKR, one of the world’s largest private equity firms. In it, a KKR executive, Pete Stavros, discussed a model he had been developing to provide employees with an equity stake in companies it purchased, so the workers would reap some benefits if it was flipped for a profit. When all goes according to plan, KKR doesn’t give up a penny of profit, since newly motivated workers benefit the company’s bottom line, elevating the eventual sale price by more than what KKR gives up.In 2021, the two met up to talk about the idea. By that time, Mr. Stavros had decided to start an organization to promote his model more broadly, hoping to reach the 12 million people who work for companies that private equity firms own. Ms. Miller saw it as a way to move much faster.“Me, as Anna-Lisa working at Project Equity — zero ability to influence private equity in any way — I thought, ‘Oh, gosh, maybe this could be a really efficient scale lever,’” Ms. Miller said. “And here’s Pete, not only doing it but wanting to start this nonprofit.”A few months later, she was the founding executive director of the new group, Ownership Works. The organization now has 25 employees working in a sleek New York office space a couple of blocks from KKR’s soaring headquarters at Hudson Yards. A couple of dozen private equity firms have signed on to give the idea a try.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?  More