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    Overreaction watch, no-landing edition

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    Save over 65%$99 for your first yearFT newspaper delivered Monday-Saturday, plus FT Digital Edition delivered to your device Monday-Saturday.What’s included Weekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysis More

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    Fed’s Williams says appropriate again to cut rates ‘over time’, FT reports

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    Last week, Federal Reserve Chair Jerome Powell indicated the bank would likely stick with quarter-percentage-point interest rate cuts and was not “in a hurry” after new data boosted confidence in economic growth and consumer spending.Williams, who holds a permanent vote on the rate-setting Federal Open Market Committee, echoed Powell’s comments, telling the FT he doesn’t see the September move “as the rule of how we act in the future.””I personally expect that it will be appropriate again to bring interest rates down over time,” he told the FT.”Right now, I think monetary policy is well positioned for the outlook, and if you look at the SEP [Summary of Economic Predictions] projections that capture the totality of the views, it’s a very good base case with an economy that’s continuing to grow and inflation coming back to 2 per cent.”On Friday, government data showed an unexpectedly strong job market, which called into question widespread concerns the labor sector was weakening.The payrolls report prompted a repricing of near-term Fed rate cuts. Traders are now pricing in an 87% chance of a quarter-point rate cut next month, and have taken out any chance of an outsized half-point cut, according to CME’s FedWatch tool. (https:// More

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    Samsung apologises for disappointing profit as it struggles in AI chips

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    The world’s largest memory chip, smartphone and TV maker estimated an operating profit of 9.1 trillion won ($6.78 billion) for the three months ended Sept. 30, versus a 10.3 trillion won LSEG SmartEstimate. That would compare with 2.43 trillion won in the same period a year earlier and 10.44 trillion won in the preceding quarter.Samsung’s share price, which has fallen more than 20% so far this year, fell 1.2% after the earnings guidance. The company has been the world’s biggest memory chipmaker for three decades but it is battling growing competition in both conventional and advanced chips.High-margin chips used in AI servers are driving a recovery in the chip market after a post-pandemic downturn last year. Still, Samsung has lagged behind SK Hynix in supplying high-bandwidth memory (HBM) chips to AI leader Nvidia (NASDAQ:NVDA).”We have caused concerns about our technical competitiveness, with some talking about the crisis facing Samsung,” Young Hyun Jun, Vice Chairman, Device Solutions Division, Samsung Electronics (KS:005930), said. “These are testing times,” he said, pledging to turn the challenge into an opportunity and focus on enhancing long-term technological competitiveness. In a further challenge, Samsung said in a statement that sales of its high-end HBM3E chips to an unidentified major customer have been delayed. It did not elaborate on the issue.Earnings declined in the company’s memory chip business as Chinese chip rivals increased supplies of “legacy” products” and some mobile customers adjusted inventories, offsetting solid demand for high bandwidth memory (HBM) and other chips used in servers, Samsung added. Demand remains lacklustre for commodity chips used in PCs and smartphones upon which Samsung relies more than rivals, analysts said. In May, Samsung abruptly replaced the chief of its semiconductor division, handing the reins to Jun in a bid to overcome a “chip crisis”. ($1 = 1,342.3700 won) More

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    Bank of Korea to kick off easing cycle with 25 bps cut on October 11: Reuters poll

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    BENGALURU (Reuters) – The Bank of Korea will cut its key interest rate by 25 basis points to 3.25% on Friday, according to a majority of economists polled by Reuters who expect that to be the only reduction this year as it attempts to balance growth and financial stability.Inflation eased rapidly to 1.6% in September from 2% in August, the lowest since early 2021 and below the Bank of Korea’s (BOK) medium-term target of 2%. Since its last meeting in August, the central bank has shifted its focus to economic growth, which unexpectedly contracted last quarter. However, the BOK is likely to proceed cautiously when cutting rates as growth in household debt and a heated property market pose risks to financial stability.All but three of 37 economists polled Oct. 1-7 forecast the central bank would cut its base rate by 25 basis points on Oct. 11, bringing rates to 3.25%. The rest said no change.If realised, the BOK will join Asian peers Bank Indonesia and the Philippine central bank which began cutting rates before the U.S. Federal Reserve started its own easing campaign with a 50 basis point cut last month. Suktae Oh, chief Korea economist at Societe Generale (OTC:SCGLY), said the Fed’s large rate cut and South Korea’s growth and inflation data supported the case for a BOK rate cut this month, but added that further cuts in the near term were unlikely.”Persistent concerns around the housing market will make it difficult for policymakers to explicitly propose an additional rate cut in the near future, in other words, this would reduce the likelihood of a back-to-back rate cut in November,” he said.Among economists who provided a forecast for year-end around 84%, or 27 of 32, said 3.25%. Five predicted one more 25 basis point rate cut. This outlook was largely unchanged from an August survey and in line with market expectations. Poll data showed the BOK will cut rates more slowly than some of its regional peers, with a total of 50 basis points of cuts next year, taking rates to 2.75% by end-2025.”We are expecting the BOK to end the year at 3.25%, followed by two more 25bp cuts in 2025 to 2.75%…and is likely to take a breather there,” said Kelvin Lam, senior economist at Pantheon Macroeconomics.”However, the BOK may speed up or slow down the pace of cuts depending on external factors, since they do not want the Korean won to fluctuate or depreciate too much.”Following the U.S. Fed’s September rate cut and expectations for two more this quarter, the Korean won has gained around 4% after touching its weakest level so far this year in mid-April.Korea’s economic growth will improve this year, averaging 2.4% from 1.4% last year, before slowing to 2.1% in 2025, poll medians showed.(Other stories from the October Reuters global economic poll) More