The US Federal Reserve raised its interest rate by another three-quarters of a point on Wednesday as part of its efforts to cool record-high inflation.
The central bank's decision comes after the country's inflation jumped to 9.1 per cent, its highest level in more than 40 years.
"Inflation is much too high," Fed Chairman Jerome Powell said in his remarks explaining the central bank's decision.
Mr Powell added that another "unusually large increase could be appropriate", as the Fed looks to control prices.
By raising interest rates, the central bank makes it more expensive to mortgage a house or take out a business loan. Consumers presumably react to the interest rate rise by borrowing and spending less, thus cooling the economy.
The aggressive actions from the Fed come amid criticisms that it was too slow to react to the rising cost of goods last year. Fed Chair Jerome Powell has suggested the central bank could achieve a "soft" or "softish" landing by bringing demand down and reining in prices without driving the economy into a recession.
"We're not trying to have a recession. We don't think we have to. We think that there's a path for us to be able to bring inflation down while sustaining a strong labour market," Mr Powell said.
He added that he does not believe the US is currently in a recession.
A 75-point rate increase brings rates to a 2.25 per cent to 2.5 per cent target range, equalling its estimate of a "neutral" level that neither restricts nor stimulates growth. The strategy is a significant shift for the central bank. Only four months ago, it set interest rates at 0 per cent and bought billions of dollars in bonds to support the economy during the Covid-19 pandemic.
Economists say the Fed's actions are the most aggressive since the 1980s, when the US economy was hamstrung by stagflation.
While prices have continued to rise, with home prices reaching a record, there are signs the pace of the increases has begun to slow, which may allow the central bank to ease up on its rate increases.
Global oil prices are trending down, with the US benchmark WTI falling to below $95 a barrel from its peak of more than $123 in March. Petrol prices at the pump have fallen 69 cents from the record of just over $5 a gallon in mid-June.
"My colleagues and I are acutely aware of that high inflation imposes significant hardship, especially on those least able to meet the higher costs of essentials like food, housing and transportation," Mr Powell said.
The US Commerce Department is expected on Thursday to report that gross domestic product grew at a turgid pace in the second quarter. GDP in the first quarter contracted by 1.6 per cent.
Two consecutive quarters of negative growth are typically considered a recession, although they are not the official criteria.
New employment data scheduled to be released next week will show whether robust job creation, considered an important strength of the US economy at the moment, continued in July.
Agencies contributed to this report
The President's Cake
Director: Hasan Hadi
Starring: Baneen Ahmad Nayyef, Waheed Thabet Khreibat, Sajad Mohamad Qasem
Rating: 4/5
Race card
6.30pm: Emirates Holidays Maiden (TB), Dh82,500 (Dirt), 1,900m
7.05pm: Arabian Adventures Maiden (TB), Dh82,500 (D), 1,200m
7.40pm: Emirates Skywards Handicap (TB), Dh82,500 (D), 1,200m
8.15pm: Emirates Airline Conditions (TB), Dh120,000 (D), 1,400m
8.50pm: Emirates Sky Cargo (TB), Dh92,500 (D)1,400m
9.15pm: Emirates.com (TB), Dh95,000 (D), 2,000m
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The Programme
Saturday, October 26: ‘The Time That Remains’ (2009) by Elia Suleiman
Saturday, November 2: ‘Beginners’ (2010) by Mike Mills
Saturday, November 16: ‘Finding Vivian Maier’ (2013) by John Maloof and Charlie Siskel
Tuesday, November 26: ‘All the President’s Men’ (1976) by Alan J Pakula
Saturday, December 7: ‘Timbuktu’ (2014) by Abderrahmane Sissako
Saturday, December 21: ‘Rams’ (2015) by Grimur Hakonarson
MATCH INFO
Mumbai Indians 186-6 (20 ovs)
Kings XI Punjab 183-5 (20 ovs)
Mumbai Indians won by three runs
UAE currency: the story behind the money in your pockets
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Silent Hill f
Publisher: Konami
Platforms: PlayStation 5, Xbox Series X/S, PC
Rating: 4.5/5
Company profile
Company: Rent Your Wardrobe
Date started: May 2021
Founder: Mamta Arora
Based: Dubai
Sector: Clothes rental subscription
Stage: Bootstrapped, self-funded
Origin
Dan Brown
Doubleday
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Electric scooters: some rules to remember
- Riders must be 14-years-old or over
- Wear a protective helmet
- Park the electric scooter in designated parking lots (if any)
- Do not leave electric scooter in locations that obstruct traffic or pedestrians
- Solo riders only, no passengers allowed
- Do not drive outside designated lanes
Company info
Company name: Entrupy
Co-founders: Vidyuth Srinivasan, co-founder/chief executive, Ashlesh Sharma, co-founder/chief technology officer, Lakshmi Subramanian, co-founder/chief scientist
Based: New York, New York
Sector/About: Entrupy is a hardware-enabled SaaS company whose mission is to protect businesses, borders and consumers from transactions involving counterfeit goods.
Initial investment/Investors: Entrupy secured a $2.6m Series A funding round in 2017. The round was led by Tokyo-based Digital Garage and Daiwa Securities Group's jointly established venture arm, DG Lab Fund I Investment Limited Partnership, along with Zach Coelius.
Total customers: Entrupy’s customers include hundreds of secondary resellers, marketplaces and other retail organisations around the world. They are also testing with shipping companies as well as customs agencies to stop fake items from reaching the market in the first place.
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.
Our family matters legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
COMPANY%20PROFILE
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Sarfira
Director: Sudha Kongara Prasad
Starring: Akshay Kumar, Radhika Madan, Paresh Rawal
Rating: 2/5
Killing of Qassem Suleimani
Favourite book: ‘The Art of Learning’ by Josh Waitzkin
Favourite film: Marvel movies
Favourite parkour spot in Dubai: Residence towers in Jumeirah Beach Residence