Inflation in the US eased more than expected last month, fuelling hopes that the Federal Reserve is close to cutting interest rates.
The Consumer Price Index (CPI) decreased 0.1 per cent in June, data from the Labour Department showed. On an annual basis, CPI inflation rose 3.0 per cent, down from 3.3 per cent in May. It marked the third straight month of moderating inflation.
Core inflation, which does not include food and energy, fell from 3.4 per cent to 3.3 per cent.
Economists had predicted headline CPI inflation would drop to 3.1 per cent on an annual basis, according to a median estimate compiled by FactSet. Core CPI was expected to rise 3.4 per cent.
“This morning's CPI report was arguably the most encouraging one the FOMC has received since it began its inflation fight nearly two and a half years ago,” Wells Fargo economists Sarah House and Michael Pugliese wrote to investors, referring to the policy-setting Federal Open Market Committee.
The Fed has held its benchmark rate steady at 5.25 to 5.50 per cent since last July. Central banks in the UAE and Saudi Arabia, which follow the Fed's lead, have also maintained their own interest rates since then.
Fed Chairman Jerome Powell told politicians in congressional testimony on Wednesday that he has seen “considerable progress” in bringing inflation closer to the central bank's 2 per cent target, but added “more good data” was required before moving on rate cuts.
While he declined to offer a timetable on when this would happen, traders expect the Fed will make an initial rate cut in September before potentially two additional quarter-point cuts in their November and December meetings, according to CME Group data.
Mahmoud Alkudsi, senior market analyst at ADSS, said “expectations are growing for an impending monetary policy pivot”.
“With inflation cooling off from the higher levels earlier in the year, the Federal Reserve will gain greater confidence in its current road map, with the coveted 2 per cent target growing closer,” Mr Alkudsi wrote to clients.
And in a further clue that the Fed sees the economy as cooling, Mr Powell described the labour market as “strong, but not overheated”. While the US jobs market added a healthy 206,000 positions last month, the unemployment rate unexpectedly ticked up to 4.1 per cent.
Unlike other central banks, the Fed has a dual mandate of maintaining price stability and maximum employment.
Mr Powell touched on the two-sided risks the US central bank faces. Holding rates for either too long or not long enough both threaten the health of the economy, either by steering it into a recession and causing an unwanted sharp rise in unemployment, or seeing inflation rise again.
“We're very much aware that we have two-sided risks now … and we're determined to balance those as best we can,” Mr Powell said.
How to protect yourself when air quality drops
Install an air filter in your home.
Close your windows and turn on the AC.
Shower or bath after being outside.
Wear a face mask.
Stay indoors when conditions are particularly poor.
If driving, turn your engine off when stationary.
COMPANY%20PROFILE
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COMPANY PROFILE
Name: HyperSpace
Started: 2020
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
Based: Dubai, UAE
Sector: Entertainment
Number of staff: 210
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
Company%20Profile
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BUNDESLIGA FIXTURES
Saturday, May 16 (kick-offs UAE time)
Borussia Dortmund v Schalke (4.30pm)
RB Leipzig v Freiburg (4.30pm)
Hoffenheim v Hertha Berlin (4.30pm)
Fortuna Dusseldorf v Paderborn (4.30pm)
Augsburg v Wolfsburg (4.30pm)
Eintracht Frankfurt v Borussia Monchengladbach (7.30pm)
Sunday, May 17
Cologne v Mainz (4.30pm),
Union Berlin v Bayern Munich (7pm)
Monday, May 18
Werder Bremen v Bayer Leverkusen (9.30pm)
Business Insights
- Canada and Mexico are significant energy suppliers to the US, providing the majority of oil and natural gas imports
- The introduction of tariffs could hinder the US's clean energy initiatives by raising input costs for materials like nickel
- US domestic suppliers might benefit from higher prices, but overall oil consumption is expected to decrease due to elevated costs
COMPANY PROFILE
Founders: Alhaan Ahmed, Alyina Ahmed and Maximo Tettamanzi
Total funding: Self funded
If you go
Where to stay: Courtyard by Marriott Titusville Kennedy Space Centre has unparalleled views of the Indian River. Alligators can be spotted from hotel room balconies, as can several rocket launch sites. The hotel also boasts cool space-themed decor.
When to go: Florida is best experienced during the winter months, from November to May, before the humidity kicks in.
How to get there: Emirates currently flies from Dubai to Orlando five times a week.
What is the Supreme Petroleum Council?
The Abu Dhabi Supreme Petroleum Council was established in 1988 and is the highest governing body in Abu Dhabi’s oil and gas industry. The council formulates, oversees and executes the emirate’s petroleum-related policies. It also approves the allocation of capital spending across state-owned Adnoc’s upstream, downstream and midstream operations and functions as the company’s board of directors. The SPC’s mandate is also required for auctioning oil and gas concessions in Abu Dhabi and for awarding blocks to international oil companies. The council is chaired by Sheikh Khalifa, the President and Ruler of Abu Dhabi while Sheikh Mohamed bin Zayed, Abu Dhabi’s Crown Prince and Deputy Supreme Commander of the Armed Forces, is the vice chairman.
Company%20Profile
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Secret Nation: The Hidden Armenians of Turkey
Avedis Hadjian, (IB Tauris)