Economy

PARIS (Reuters) -Pavel Durov, the Russian-born founder of Telegram who was arrested in Paris, has nothing to hide it is absurd to hold an owner responsible for abuse of the messaging and social media platform, Telegram said in a statement. Durov, a 39-year-old billionaire cast as “Russia’s Mark Zuckerberg”, was arrested at Le Bourget airport outside Paris shortly after landing on a private jet late on Saturday from Azerbaijan.The arrest of the Telegram CEO prompted a warning from Moscow to Paris that he should be accorded his rights, and criticism from X owner Elon Musk who said that free speech in Europe was under attack.Though there has been no official French comment on the arrest, French news channel franceinfo said that Durov was still in custody on Monday and that he could remain in custody for up to four days. Telegram, in a short statement released after midnight Paris time, gave no details of the arrest but said the Dubai-based company abided by European Union laws and its moderation was “within industry standards and constantly improving”.”Telegram’s CEO Pavel Durov has nothing to hide and travels frequently in Europe,” Telegram said. “It is absurd to claim that a platform or its owner are responsible for abuse of that platform.””We’re awaiting a prompt resolution of this situation. Telegram is with you all.”Durov, who has dual French and United Arab Emirates citizenship, was arrested as part of a preliminary police investigation into allegedly allowing a wide range of crimes due to a lack of moderators on Telegram and a lack of cooperation with police, a French police source said.A cybersecurity gendarmerie unit and France’s national anti-fraud police unit are leading the investigation, the source said, adding that the investigative judge was specialised in organised crime.When asked about his arrest, the Kremlin on Monday said it had yet to see any official French accusations against Durov.”We do not yet know what exactly Durov is accused of,” Kremlin spokesman Dmitry Peskov told a news briefing.”With what exactly are they trying to incriminate Durov? Without (knowing), it would probably be wrong to make any statements,” Peskov said.FRENCH CITIZENTelegram was founded by Durov, who left Russia in 2014 after he refused to comply with demands to shut down opposition communities on his VK social media platform, which he has sold.The encrypted application, with close to 1 billion users, is particularly influential in Russia, Ukraine and the republics of the former Soviet Union. It is ranked as one of the major social media platforms after Facebook (NASDAQ:META), YouTube, WhatsApp, Instagram, TikTok and WeChat.Durov, who was born in Soviet Leningrad and graduated from St Petersburg State University, lists his political views as “libertarian” and says he was inspired by Apple (NASDAQ:AAPL) co-founder Steve Jobs. He obtained his French passport in 2021 through a special procedure for high-profile foreigners exempting them from the usual legal requirements, including having lived in the country for at least five years. The French foreign ministry, which is in charge of the procedure, did not immediately reply to a Reuters request for comment. The Elysee presidential office also declined to comment, deferring to the foreign ministry. According to French law, any foreigner can be handed citizenship under the special rules provided he speaks French and “contributes through his outstanding work to France’s influence and the prosperity of its international economic relations”. Durov never lived in France and it was unclear what special link he had to the country. On June 10, Durov posted in his Telegram channel: “As a French citizen, I agree that France is the best holiday destination.” Snapchat founder Evan Spiegel received French citizenship in 2018 under the same programme, local media reported at the time. Snap did not respond to request for comment.Russian state media reported that Durov also had citizenship of Russia and of St Kitts and Nevis. Reuters was unable to verify those reports. Estimated by Forbes to have a fortune of $15.5 billion, Durov said in April some governments had sought to pressure him, but the app should remain a neutral platform and not a “player in geopolitics”.Durov, whose arrest led news bulletins in Russia, came up with the idea for an encrypted messaging app while facing pressure from Russian authorities. His younger brother, Nikolai, designed the encryption.”I would rather be free than to take orders from anyone,” Durov said in April about his exit from Russia and search for a home for his company, which included stints in Berlin, London, Singapore and San Francisco.Russian lawmaker Maria Butina, who spent 15 months in U.S. prison for acting as an unregistered Russian agent, said Durov “is a political prisoner – a victim of a witch-hunt by the West”. More

JACKSON HOLE, Wyoming (Reuters) – In 2022, when the Federal Reserve’s focus shifted to combating inflation, it had to ratchet up interest rates fast to get monetary policy caught up with fast-rising prices.Two years later, the focus has changed again – this time to protecting the job market, as outlined in Chair Jerome Powell’s speech Friday at the Fed’s annual Jackson Hole conference. A policy catch-up again appears to be needed – in the other direction, albeit at a likely less frantic speed.Powell’s signal of coming rate cuts completed a Fed shift that began in January when it acknowledged emerging job market risks, and now it has made countering those its top job.The open question: Are a weakening job market and rising unemployment rate evidence of an economy settling into a healthy place of steady growth with little upside risk to the jobless rate or part of a slide that will gather speed?The answer will appear in upcoming employment reports and shape how far and fast the Fed will have to cut rates to prevent what Powell called an “unwelcome further weakening in labor market conditions.””We do not seek or welcome further cooling in labor market conditions,” Powell said, remarks that seemed to set the current 4.3% unemployment rate as a level he would like to defend as he made the sour admission that “conditions are now less tight than those that prevailed before the pandemic.” The jobless rate was 4.1% and falling when Powell became chair in 2018, falling as low as 3.5% in 2019 without raising inflation concerns – conditions Powell said he hoped he could recreate after COVID-19 threw the economy into a tailspin.Today’s Fed rate of 5.25%-5.50% is seen as restricting the economy and putting jobs at risk and is well above officials’ median estimate of 2.8% for the longer-term “neutral” rate. Assuming inflation continues ebbing towards the Fed’s 2% target, job market changes will determine how fast officials head toward that neutral level and whether they need to go even lower to restore full employment. “We’re definitely cooling, but are we cooling to a point where we’re going to level out…or is this just a pit stop to a stronger cool down?” Nela Richardson, ADP Research Institute’s chief economist, said on the conference sidelines.Richardson, along with many Fed officials and others in attendance, argues the economy remains strong and is likely just settling to its underlying trends – “normalizing” from the pandemic’s extremes. But the sense of urgency around employment has intensified.THE SHIFTThe Fed’s two-year battle against inflation saw rates rise to a quarter-century high without any appreciable job-market fallout. Officials next meet on Sept. 17-18 on a very different footing than just a few weeks ago as they ready to cut rates and debate whether the job market is just slowing or at a precipice.The Fed’s language around risk began steadily changing this year. Until January Fed policy statements said officials were “highly attentive” to inflation risks. Then that month it said “the risks to achieving its employment and inflation goals are moving into better balance.”They said in June that risk had “moved toward better balance” and in July that risks “continue to move into better balance,” adding they were now “attentive” to both the job market and inflation.Powell’s remarks completed the journey, saying “the balance of the risks to our two mandates has changed” and policymakers would “do everything we can to support a strong labor market”.Now comes the catch-up.In September officials will update interest rate projections showing their sense of the pace of cuts to come. As recently as June they were still worried about sticky inflation, saw the unemployment rate steady at 4%, and anticipated just a single quarter-percentage-point rate cut this year. Pantheon Macroeconomics chief economist Ian Shepherdson, who has been predicting a job market slide, called Powell’s tone “startling” relative to June’s outlook, taking it as evidence the Fed had “waited too long” to shift.Apollo Global Management (NYSE:APO) chief economist Torsten Slok, meanwhile, frets that with layoff rates remaining low, the Fed may still court inflation risk if it cuts rates too fast.’VERY DIFFERENT PICTURE’The Fed is having its own data battles.July’s job gains of just 114,000 were noticeably weaker than the pandemic-era average, but in line with what before the pandemic was considered a reasonable pace to match population growth.Another closely watched metric, the ratio of open jobs to unemployed persons, has fallen from an historic high of 2-to-1 during the pandemic to 1.2-to-1, akin to pre-pandemic levels in another sign of the economy normalizing.Powell on Friday even somewhat downplayed the 4.3% unemployment rate, regarding it as a result of rising labor supply and slowed hiring, not outright job losses.There is “good reason to think that the economy will get back to 2% inflation while maintaining a strong labor market,” he said.Boston Fed President Susan Collins said in an interview she sensed there was an “overall resilience” in the labor market, with the unemployment rate possibly about to level off.”What I have seen is some evidence of plateauing,” she said, “not a ‘blowing through.'”Still, there are concerns the labor market may be weaker than it seems, risks that could play out in coming months and push the Fed towards faster or deeper rate cuts to defend its “maximum employment” objective.Fed Governor Adriana Kugler, a career labor economist, said at one of the conference research discussions that both sides of the openings-to-unemployed ratio may be mismeasured – with fewer vacancies than reported in the monthly Job Openings and Labor Turnover Survey and more unemployed people if alternate measures of joblessness that include discouraged workers, for example, are considered.She estimates the jobs-to-unemployed ratio is actually down to 1.1, already near break-even, and perhaps even lower.”There are many more layoffs now going into non-employment as opposed to standard measures of unemployment,” she said. If other measures of unemployment were included, “you may get a very different picture” of the job market. More

WASHINGTON (Reuters) – Democratic presidential nominee Kamala Harris is promising to build more housing as the centerpiece of an effort to tackle rising costs that have stressed U.S. households and left home ownership beyond the reach of many Americans.While Harris has deliberately steered clear of some policy specifics in her month-old presidential bid, she has laid out detailed plans to spur new construction and reduce costs for renters and homebuyers, largely through tax incentives. “We will end America’s housing shortage,” she said as she accepted the Democratic presidential nomination last week.Republican presidential candidate Donald Trump’s campaign has also promised to reduce costs through tax breaks and reduced regulations. But on the campaign trail, he has defended local housing restrictions that prevent many types of affordable housing from being built.Voters rate housing costs as their second-most important economic worry, after fears of rising prices and stagnating income, a Reuters/Ipsos opinion poll found in May.Housing construction collapsed during the 2007-2009 financial crisis and has been slow to recover in the years since, leaving the United States short 2.9 million units, according to Moody’s (NYSE:MCO) Analytics. Pandemic-driven shortages of construction materials pushed up the price of new housing, while rising interest rates made mortgages more expensive. U.S. home prices have risen 50% in the last five years and rents have risen 35%, according to real estate firm Zillow (NASDAQ:ZG).Harris’ housing plan could help her win over voters in an election where economic concerns are paramount, said Alyssa Cass, a Democratic strategist who says the issue is a top concern in focus groups.”Anything that would reduce the cost of housing is music to voters’ ears,” she said.At an Aug. 16 campaign stop in North Carolina, Harris called for building 3 million more housing units in four years, on top of the 1 million or so built annually by the private sector, through a new tax credit for developers who build homes aimed at first-time homebuyers and a $25,000 tax credit for those buyers.She also proposed a $40 billion fund to encourage local governments to build more affordable housing, streamlining regulations and expanding rental aid, among other steps.The Committee for a Responsible Federal Budget, a nonpartisan watchdog group, estimates those policies would cost at least $200 billion over 10 years.If elected president, Harris might have trouble enacting those policies into law as similar proposals from President Joe Biden have failed to clear Congress.Trump’s position is less clear. The Republican Party’s platform calls for boosting home ownership through tax breaks and eliminating regulations, though it does not outline specifics. However, Trump also has spoken against proposals to loosen local zoning restrictions that prevent apartments, duplexes and other forms of affordable housing from being built in neighborhoods reserved for single family houses.“I keep hearing about the suburban woman doesn’t like Trump,” he said at a campaign event in Howell, Michigan last week. “I keep the suburbs safe. I stopped low-income towers from rising right alongside of their house, and I’m keeping the illegal aliens away from the suburbs.”Trump’s running mate, U.S. Senator JD (NASDAQ:JD) Vance, has blamed immigrants for the housing shortage.Jenny Schuetz, a housing expert at the nonpartisan Brookings Institution, said that comment amounted to a “not very subtle dog whistle” that recalled the racially charged housing fights of the 1970s, when white residents resisted efforts to integrate suburban areas. “Trying to frame housing affordability as a social issue, rather than an economic one, isn’t helpful to actually addressing the problem,” she said.During Trump’s 2017-2021 presidency, his housing secretary Ben Carson proposed easing zoning rules but did not take action. More recently, he called for opposing any efforts to weaken single-family zoning in Project 2025, a conservative policy plan that has been disavowed by the Trump campaign.Harris has not said whether she would push local governments to loosen zoning regulations, but she has been involved in a broader Biden administration effort to encourage development. In June, she announced $85 million in grants to 21 local governments to remove “barriers to affordable housing,” including reforming land-use policies in some areas. The Biden administration plans to distribute another $100 million later this year. More

As per analysts at Evercore ISI analysts, these remarks indicate growing apprehension within the ECB about falling behind the monetary easing curve.Lane’s prepared remarks largely focused on the ECB’s response to macroeconomic developments since the pandemic, reflecting on how the institution navigated the economic shocks that hit the eurozone. However, the most telling insights came in his conclusions, where Lane hinted at the ECB’s future monetary policy direction. He emphasized that while it is crucial for the monetary stance to remain restrictive to ensure a sustainable disinflation process, there are significant risks associated with keeping rates too high for too long. As per Lane, such a path could lead to chronically below-target inflation over the medium term and exacerbate negative impacts on output and employment.Evercore ISI analysts interpret Lane’s remarks as an indication that some members of the ECB, particularly those with a more dovish stance, are becoming increasingly worried about the ECB’s trajectory in the context of global monetary policy trends. “We think this signals that Lane and likely other doves in the ECB Council are becoming increasingly concerned that the ECB may fall behind the curve in terms of monetary easing given the shift in the Fed rate outlook and signs that the economic recovery in the EZ – and especially in Germany– may be losing momentum,” the analysts said. This could leave the eurozone economy vulnerable to prolonged periods of weak inflation and a potential breakdown in the labor market.Evercore ISI suggests that Lane’s comments might be a precursor to a more proactive approach from the ECB, advocating for a faster pace of monetary easing to mitigate these risks. “This is consistent with our view that the ECB should make October a “live” meeting, but our base case remains that the ECB will cut in September and December but skip October, before speeding up to a cut every meeting in Q1 25,” the analysts said. A significant drop in services inflation, which is expected to be reported soon, could further compel the ECB to act swiftly, breaking the current policy inertia.The broader context of Lane’s remarks is informed by the research presented at the symposium, which underscored the complex trade-offs central banks face in the current economic environment. Pierpaolo Benigno and  Gauti B. Eggertsson in a research paper have re-examined the relationship between job vacancies, unemployment, and inflation, suggesting that traditional models may no longer accurately capture the dynamics at play. This research reinforces the idea that central banks, including the ECB, need to be vigilant and adaptive in their policy responses to avoid missteps that could either reignite inflation or stifle economic growth.Other papers discussed at the symposium also highlighted the evolving nature of monetary policy transmission. For instance, a study by Gomez-Cram, Kung, and Lustig found that U.S. Treasury yields have become more sensitive to fiscal news, signaling a shift in how government bonds are perceived in global markets. This shift has significant implications for central banks’ use of quantitative easing (QE) as a policy tool, particularly in the eurozone, where QE has been a cornerstone of the ECB’s response to economic crises. More

Powell signaled that the Fed is now prepared to lower interest rates, aligning with market expectations for a series of rate cuts. His remarks suggest that the Fed’s dual mandate of price stability and maximum employment is increasingly skewed towards supporting the labor market, even as inflation trends towards the Fed’s 2% target.During the speech, Powell did not push back against market expectations of multiple rate cuts.“The time has come for policy to adjust. The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks,” he said.While he was not more dovish than the market, Powell “didn’t utter any hawkish views whatsoever to alter the market’s dovish expectations for several rate cuts,” strategists at Yardeni Research said in a note.The federal funds rate (FFR) futures market currently indicates a total of 100 basis points in cuts, bringing the rate down to 4.25% by year-end. Projections suggest the FFR could decrease further to 3.00% by the end of next year.However, Yardeni strategists believe Powell’s comments on Friday may have been “overly” dovish, and that his latest pivot “won’t be his last.”They note that while inflation has been trending downwards, it may not be wise to ease policy too quickly, especially with the labor market remaining relatively strong.Powell’s emphasized that “upside risks to inflation have diminished,” while “the downside risks to employment have increased.” ​​This reflects the Fed’s view that the labor market, which has cooled from its previously overheated state, is now a greater concern than the possibility of inflation reaccelerating.But should inflationary pressures resurface, it could leave the Fed vulnerable, according to Yardeni.The strategists point out that just a month ago, Powell was emphasizing the need to maintain a restrictive policy stance to keep demand in line with supply and to manage inflationary pressures.At that time, Powell mentioned the Fed’s dual mandate of price stability and maximum employment repeatedly, indicating a balanced approach. In contrast, at Jackson Hole, Powell mentioned the mandate only twice, placing greater emphasis on the need to support the labor market.However, that stance could require yet another pivot from Powell and the Fed if economic conditions change again, Yardeni strategists cautioned.“In our opinion, Powell was too dovish on Friday, needlessly so, because the labor market has simply normalized after pandemic-related effects rather than cooled in response to economic weakness,” they wrote. More

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$75 per monthComplete digital access to quality FT journalism with expert analysis from industry leaders. Pay a year upfront and save 20%.What’s included Global news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print edition More

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