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    Fed Officials Debated Whether a Big Rate Cut Was Smart in September

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    Freshly released minutes from the central bank’s September meeting show that policymakers were divided on how much to cut rates.Federal Reserve officials were divided over how much to lower interest rates in September, minutes from their last meeting showed, although most officials favored the large half-point rate cut that central bankers ultimately made.“Noting that inflation was still somewhat elevated while economic growth remained solid and unemployment remained low, some participants observed that they would have preferred” a quarter point reduction, according to the minutes from the Sept. 17 and 18 gathering released on Wednesday. And “a few others indicated that they could have supported such a decision.”While one Fed governor, Michelle Bowman, did vote against the Fed’s big rate cut in favor of a smaller move, the fresh minutes showed that she was not alone in her misgivings. They suggested that the merits of a smaller move were debated.“A few participants” thought that a smaller move “could signal a more predictable path of economic normalization,” the minutes showed.The revelation that there was a spirited discussion about how much to cut rates at the Fed’s last meeting underscores what an uncertain juncture the central bank is facing. Officials are trying to calibrate policy so that it is cooling the economy enough to wrangle inflation fully, without slowing it so much that it plunges America into a recession. But that is an inexact science.The Fed’s ultimate decision — to start of its rate-cutting campaign with a big reduction — came in response to a few economic trends. Inflation has been cooling substantially, job gains had slowed, and the unemployment rate had recently moved up. Those factors suggested that it might be time to remove the Fed’s foot from the economic brakes by lowering rates decisively.Now, though, it looks increasingly unlikely that Fed officials will make another large rate cut this year.Hiring picked up in September, data released last week showed, and the unemployment rate ticked back down. When that is combined with recent evidence of solid consumer spending and healthy household balance sheets, risks of a big economic pullback now seem less pronounced.Given the progress, Fed officials have been signaling that the economic projections that they released after their September meeting are probably a good guide for the rest of 2024. Those suggested that policymakers will cut rates at both their November and December meetings, but by only a quarter point each time.The next big question facing the Fed is when it will stop shrinking its balance sheet of bond holdings. Policymakers bought bonds in huge sums during the early part of the 2020 pandemic, swelling their holdings. They have been shrinking their balance sheet steadily by allowing securities to expire without reinvesting them.Officials appear inclined to stick with that plan, at least for now, based on the minutes.“Several participants discussed the importance of communicating that the ongoing reduction in the Federal Reserve’s balance sheet could continue for some time even as the committee reduced its target range for the federal funds rate,” the minutes showed. More

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    Boeing and Workers Dig In for a Long Fight, Despite Strike’s Cost

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    Nearly a month into a union walkout, the aerospace giant withdrew its latest contract offer, and the two sides exchanged blame over the breakdown.Boeing and its largest union appear to be digging in for a long fight — even as some striking workers start to look for temporary jobs and the company risks having its credit rating downgraded to junk status.Nearly a month into the strike, negotiations between Boeing and the union resumed this week under federal mediation after a long break. But they collapsed on Tuesday with the company withdrawing its latest offer. The two sides traded blame for the breakdown.In a message to employees, Stephanie Pope, the chief executive of Boeing’s commercial airplane unit, said the union had made “demands far in excess of what can be accepted if we are to remain competitive as a business.”The union accused Boeing of being “hellbent” on sticking to the offer that labor leaders had previously rejected for being insufficient to garner the support of most of its more than 33,000 members.A long strike is the last thing Boeing needs. The company, which hasn’t reported a full-year profit since 2018, is now losing tens of millions of dollars more every day that striking workers are not building planes. Boeing is also trying to persuade regulators to let it produce more 737 Max jets, its best-selling plane. And on Tuesday, S&P Global Ratings said it was considering lowering the company’s credit rating, which sits just above junk status, depending on the strike’s length.The walkout, which began on Sept. 13, is also difficult for workers, many of whom are living off savings and have had to find health coverage after Boeing dropped them from its plan this month.Do you work with Boeing?We want to hear from people who have experience working at or with Boeing to better understand what we should be covering. We may use your contact information to follow up with you. We will not publish any part of your submission without your permission. If you have information that you want to share with The New York Times using tools that can help protect your anonymity, visit: https://www.nytimes.com/tips.

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    Fed’s Logan calls for ‘gradual’ rate cuts, says ‘should not rush’

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    “Following last month’s half-percentage-point cut in the fed funds rate, a more gradual path back to a normal policy stance will likely be appropriate from here to best balance the risks to our dual-mandate goals,” Logan said in her first public remarks since the Fed reduced its policy rate to the 4.75%-5.00% range three weeks ago. The central bank, she said, “should not rush to reduce the fed funds target to a ‘normal’ or ‘neutral’ level but rather should proceed gradually while monitoring the behavior of financial conditions, consumption, wages and prices.”In prepared remarks to an energy conference hosted by the Greater Houston Partnership, Logan ran through a litany of reasons to go slow, even as she also noted that inflation progress has been broad-based and the labor market has cooled.”I continue to see a meaningful risk that inflation could get stuck above our 2% goal,” she said, noting the potential for stronger-than-expected consumer spending or economic growth; “unwarranted” further easing in financial conditions; and the possibility that the level of borrowing costs that neither presses down or up on economic growth – the “neutral rate” – is higher than it was before the pandemic. Other upside inflation risks include the reemergence of supply chain issues amid geopolitical risks and the East Coast dockworkers strike, she said, noting that workers and port operators plan to revisit their contract in January. Logan did nod to risks that the labor market, while still healthy, could “cool beyond what is needed to sustainably return inflation to 2% or that the employment situation may even deteriorate abruptly.” And Logan also said she “supported” the decision, though omitting any modifier like “strongly” or “whole heartedly” that other Fed policymakers have used to characterize their degree of enthusiasm for the half-point move.”Less-restrictive policy will help avoid cooling the labor market by more than is necessary to bring inflation back to target in a sustainable and timely way,” Logan said. Her comments made clear she remains worried that inflation pressures could reemerge. “Downside risks to the labor market have increased, balanced against diminished but still real upside risks to inflation,” she said. “Any number of shocks could influence what that path to normal will look like, how fast policy should move and where rates should settle.” The policy path, she added, should not follow a preset course; the Fed, she said, “will need to remain nimble and willing to adjust if appropriate.” The Fed will release minutes of its Sept. 17-18 meeting later on Wednesday, and investors expect to learn more about how divided policymakers may have been about delivering a bigger-than-expected rate cut, and their outlook for the rate path ahead. More

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    India denounces ‘stifling’ EU carbon tax on imports

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    German economy expected to contract again in 2024, economy minister says

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    BERLIN (Reuters) – Germany’s economy is expected to contract by 0.2% in 2024, the economy ministry said on Wednesday, becoming the only member of the Group of Seven (G7) major industrial democracies to post shrinking output this year, as was also the case in 2023.The government is cutting its forecast from a previous projection of 0.3% growth for this year, as the expected recovery in the second half of the year failed to materialise.Germany’s economy was already the weakest among its large euro zone peers and other G7 countries last year, with a 0.3% decline in gross domestic product.If economic output contracts for a second consecutive year, which last happened in 2002-2003 when exporting and manufacturing industries struggled, Germany would be the only G7 economy in contraction, according to the latest projections of the International Monetary Fund. Germany’s economy contracted in the second quarter, sparking fears of a possible recession, which is defined as two consecutive quarters of contraction. Early indicators such as industrial production and business climate suggest that the economic downturn has continued into the second half of the year, the ministry said. The economy has not grown strongly since 2018 due to its structural problems and geopolitical challenges, German Economy Minister Robert Habeck said in his presentation of the forecasts. To counter the cyclical and structural challenges, the German government has agreed a growth package of 49 measures to stimulate the economy.”If they are implemented, the economy will be stronger and more people will come back to work,” Habeck said.The plans must be approved by both houses of parliament later this year. That means the coalition government need votes from opposition conservatives in the upper house Bundesrat, which represents Germany’s 16 federal states.BACK TO GROWTH IN 2025By the turn of the year, the growth dynamics should gradually revive again, the ministry said, expecting 1.1% growth for 2025, up from 1.0% previously. Growth is expected to resume in 2025 due mainly to increased private consumption resulting from higher wage settlements, falling inflation and tax relief, the ministry said. Lower interest rates should also stimulate consumption, it said. For the first time, the government has included a forecast for 2026, when Germany’s economy is seen expanding by 1.6%.Inflation is expected to decline further, slowing to 2.2% in 2024 from 5.9% last year, then to 2.0% in 2025 and 1.9% in 2026. More