FirstFT: the United States raises the possibility of a “restrictive” policy to fight against inflation

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According to the minutes of the last FOMC meeting held in early May, the Federal Reserve could adopt a “restrictive” policy that would better fight inflation through more aggressive interest rate hikes.

Most U.S. monetary policymakers have agreed on the need to keep raising the Fed’s main interest rate — currently pegged at 0.75% to 1% — by 50 basis points “in the next two meetings.”

This would align with the Fed’s goal of “quickly” bringing interest rates down to a neutral level, where it doesn’t stimulate or slow the economy.

But officials fear this could undermine the strong recovery in the job market. Participants “noted that a restrictive policy stance may well become appropriate depending on how the economic outlook evolves and the risks to the outlook” – highlighting the possibility that the Fed may need to aim for an even higher level of interest rates. interest, either by increasing the pace of its rate hike, lengthening its tightening cycle, or doing both.

Fed officials, including Chairman Jay Powell, are trying to engineer what they have described as a “soft” or “soft” landing to lower inflation without triggering a recession, which they have acknowledged. be a difficult balancing act. “Several participants commented on the challenges monetary policy faced in restoring price stability while maintaining strong labor market conditions,” the minutes read.

Thanks for reading FirstFT Asia. Here is the rest of the news from the day. — Sophie


The podcast Behind the Money is back! In our first episode, host Michela Tindera wonders: Is a crypto mood shift afoot? FT reporter Ethan Wu explains how the effects of Bitcoin’s price drop and the collapse of a popular stablecoin have rippled through to other areas of the crypto space and why it matters , even for people who are not crypto investors.

1. China may struggle to grow its economy in the second quarter Premier Li Keqiang has urged officials to help businesses resume production after the Covid-19 shutdowns. His comments yesterday were prompted by fears that the country would struggle to meet its annual growth target of 5.5% while battling Omicron outbreaks.

2. Beijing cracks down on elite students after lockdown protests Students at two major universities, Tsinghua and Beijing, have been barred from leaving their campuses for weeks as schools enforce strict Covid-19 restrictions. The measures have sparked discontent and protests, with university officials urging some students to leave campus altogether.

3. Nineteen children killed in Texas school shooting US President Joe Biden has issued a moving plea for the country to ‘stand up to the gun lobby’ after a gunman killed at least 19 children and two adults in America’s deadliest shooting since a decade. Law enforcement officers fatally shot Salvador Ramos, 18, suspected of carrying out the mass shooting at Robb Elementary School in Uvalde, Texas.

The Archbishop of San Antonio comforts families after the shooting at an elementary school in the town of Uvalde, Texas © AP

4. North Korea fires suspected ballistic missile North Korea yesterday launched a suspected intercontinental ballistic missile and two other projectiles, according to the South Korean government, a day after Joe Biden wrapped up his first tour of the region as US president.

5. Pakistan seeks to renegotiate IMF loan as food prices soar Pakistani officials are in talks with the IMF to resume lending under a $6 billion loan program in 2019, which has been on hold since a dispute earlier this year with the previous government. The country, which depends on imported staples such as wheat, is already seeing its people go hungry as costs soar.

The day ahead

Results Several companies are reporting their full-year results today, including Alibaba, Ted Baker and Intermediate Capital Group, as well as first-quarter results from Baidu, Dell and Macy’s.

American economy The United States today released its first quarter GDP figures and consumer spending data.

Australia Sorry Day commemorates the forced removal of Indigenous children from their parents

What else we read

How hubris and Covid transformed Sri Lanka Until recently, Sri Lankans enjoyed one of the highest standards of living in South Asia. But now the country has opened talks with the IMF on a $4 billion bailout, and observers are waiting to see how China, a major creditor, will react.

© Editing FT; AFP/Getty Images/Dreamstime

Pfizer warns of ‘constant waves’ of Covid-19 Growing apathy over Covid-19 and politicization of the pandemic response will cost lives as the world is hit by new waves of the virus in the coming months, the chief executive of Pfizer has warned. “What worries me is complacency,” Albert Bourla told the FT.

Will the “subscription economy” feel the Netflix effect? The wave of companies offering subscriptions took off around 2011, led by TV and music streaming services and quickly followed by beauty products, clothing, organic coffee, craft beer, pet food , etc. “The subscription economy” is heading for its first serious downturn, writes Helen Thomas.

Andreessen Horowitz Bets on Crypto’s ‘Golden Era’ with New $4.5 Billion Fund Despite the stock market crash, the venture capital group has made its biggest bet yet on the future of blockchain technology. It plans to allocate about $1.5 billion for seed investments, while the remaining $3 billion would be earmarked for venture capital investments.

A dark atmosphere settles in Davos Russia’s invasion of Ukraine, soaring inflation, Chinese lockdowns and growing uncertainty about globalization conspired to dampen business sentiment at the World Economic Forum meeting in Davos. “There are three R-words right now: it’s Russia, it’s recession and it’s [interest] rate,” said Citigroup chief Jane Fraser.

Movie theater

The Cannes Film Festival celebrates its 75th year with Volodymyr Zelensky, Tom Cruise and Sharon Stone all making appearances. The FT brings you the highlights.

©Getty

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