US President Donald Trump increased his attacks on Federal Reserve chairman Jerome Powell on Monday, sparking a new market sell-off to begin the week's trading.
In a social media post, Mr Trump called on the Fed to issue “pre-emptive cuts” for the presumed weaker growth and higher inflation forecasts that economists generally believe to be a result of the trade war he started earlier this year.
Mr Trump also said costs were trending downwards, warning “there can be a slowing” of the economy unless Mr Powell – who the President called a "loser" – cuts interest rates.
The Fed is expected to keep interest rates steady at about 4.3 per cent when it meets next month, according to CME Group data.
The US market, meanwhile, already on edge, resumed the sell-off that began after Mr Trump announced a series of tariffs.
The Dow Jones Industrial Average fell 971 points – or 2.48 per cent – while the S&P 500 and Nasdaq Composite fell 2.36 per cent and 2.55 per cent, respectively.
The US dollar index, which measures the greenback against a basket of foreign currencies, dipped as low as 97.72, its lowest in three years.
Mr Trump escalated his attacks on the Fed chairman last week after Mr Powell suggested the central bank was not hurrying to cut rates amid heightened uncertainty over the effects of the tariffs. Mr Powell added the larger-than-expected tariffs could force the Fed to choose between inflation or weaker growth.
“If I want him out, he’ll be out of there real fast, believe me,” Mr Trump said on the possibility of firing the Fed chairman last week. In a separate social media post, he said Mr Powell's “termination cannot come fast enough".
Those remarks sparked fears that Mr Trump could undermine the independence of the Fed, which makes its monetary policy decisions without political interference.
Removing a Fed chair over a policy dispute would probably cause more market turmoil as investor confidence rests on the central bank's ability to make its decisions independently rather than for short-term political gains.
Those fears have also bled into the bond market, with the yield on the 10-year Treasury climbing 8 basis points at 4.409 per cent.
Whether a president can fire a Fed chair remains an open question, and one that has never been tested. Mr Powell has remained adamant that the President does not have the authority to fire him. He also said he would not leave if asked.
White House economic adviser Kevin Hassett on Friday said the Trump administration was studying whether firing Mr Powell was an option.
“That would undermine the credibility of the Fed,” Chicago Fed president Austan Goolsbee told CBS on Sunday.
The specs: McLaren 600LT
Price, base: Dh914,000
Engine: 3.8-litre twin-turbo V8
Transmission: Seven-speed automatic
Power: 600hp @ 7,500rpm
Torque: 620Nm @ 5,500rpm
Fuel economy 12.2.L / 100km
T20 World Cup Qualifier
Final: Netherlands beat PNG by seven wickets
Qualified teams
1. Netherlands
2. PNG
3. Ireland
4. Namibia
5. Scotland
6. Oman
T20 World Cup 2020, Australia
Group A: Sri Lanka, PNG, Ireland, Oman
Group B: Bangladesh, Netherlands, Namibia, Scotland
The White Lotus: Season three
Creator: Mike White
Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell
Rating: 4.5/5
The Melbourne Mercer Global Pension Index
The Melbourne Mercer Global Pension Index
Mazen Abukhater, principal and actuary at global consultancy Mercer, Middle East, says the company’s Melbourne Mercer Global Pension Index - which benchmarks 34 pension schemes across the globe to assess their adequacy, sustainability and integrity - included Saudi Arabia for the first time this year to offer a glimpse into the region.
The index highlighted fundamental issues for all 34 countries, such as a rapid ageing population and a low growth / low interest environment putting pressure on expected returns. It also highlighted the increasing popularity around the world of defined contribution schemes.
“Average life expectancy has been increasing by about three years every 10 years. Someone born in 1947 is expected to live until 85 whereas someone born in 2007 is expected to live to 103,” Mr Abukhater told the Mena Pensions Conference.
“Are our systems equipped to handle these kind of life expectancies in the future? If so many people retire at 60, they are going to be in retirement for 43 years – so we need to adapt our retirement age to our changing life expectancy.”
Saudi Arabia came in the middle of Mercer’s ranking with a score of 58.9. The report said the country's index could be raised by improving the minimum level of support for the poorest aged individuals and increasing the labour force participation rate at older ages as life expectancies rise.
Mr Abukhater said the challenges of an ageing population, increased life expectancy and some individuals relying solely on their government for financial support in their retirement years will put the system under strain.
“To relieve that pressure, governments need to consider whether it is time to switch to a defined contribution scheme so that individuals can supplement their own future with the help of government support,” he said.
The specs
Engine: 1.5-litre, 4-cylinder turbo
Transmission: CVT
Power: 170bhp
Torque: 220Nm
Price: Dh98,900
The biog
Favourite films: Casablanca and Lawrence of Arabia
Favourite books: Start with Why by Simon Sinek and Good to be Great by Jim Collins
Favourite dish: Grilled fish
Inspiration: Sheikh Zayed's visionary leadership taught me to embrace new challenges.
