Federal Reserve Chairman Jerome Powell suggested the US central bank will keep interest rates elevated for a prolonged period of time. Reuters
Federal Reserve Chairman Jerome Powell suggested the US central bank will keep interest rates elevated for a prolonged period of time. Reuters
Federal Reserve Chairman Jerome Powell suggested the US central bank will keep interest rates elevated for a prolonged period of time. Reuters
Federal Reserve Chairman Jerome Powell suggested the US central bank will keep interest rates elevated for a prolonged period of time. Reuters

Jerome Powell to face grilling on US interest rates in Congress hearing


Kyle Fitzgerald
  • English
  • Arabic

Federal Reserve Chairman Jerome Powell is expected to defend his position of keeping US interest rates elevated at a House of Representatives committee hearing on Wednesday.

His testimony before the House Financial Services Committee will be the most high-profile remarks Mr Powell has given since he ruled out a March rate cut following the Fed's meeting in January.

He and his colleagues at the US central bank have embarked on a speaking tour since saying that they need to have more confidence before they begin dialling back rates.

The Fed has raised interest rates to the current 5.25 per cent to 5.50 per cent range over a period of roughly two years in response to a surge in US inflation.

Recent economic data has shown inflation steadily climbing down towards the Fed's long-term goal without the widespread job losses Mr Powell and politicians had predicted.

The Fed's preferred metric gauge slowed to 2.4 per cent last month after reaching a peak of 7.1 per cent in the summer of 2022, according to Labour Department data. And continued strong growth has boosted hopes that the Fed can achieve a so-called soft landing.

But last week's inflation report also highlighted the Fed's bumpy path to return to 2 per cent. The Personal Consumption Expenditures (PCE) Price Index rose 0.3 per cent last month after a 0.1 per cent increase in December, leading markets to believe the Fed will not begin cutting interest rates until June.

Mr Powell is expected to use his testimony to defend the Fed's higher-for-longer position, despite pressure from some politicians who say elevated rates are harming American consumers and businesses.

In a letter to Mr Powell, Democratic chairman of the Senate Banking Committee Sherrod Brown said higher interest rates are harming consumers through higher housing costs.

“Keeping interest rates high will be detrimental to American workers and their families and do little to bring down prices or promote moderate economic growth,” Mr Brown wrote on January 30.

But Mr Powell is likely to shrug off political pressure on dialling back, as he did in his 2023 testimony.

In addition to his Wednesday appearance before the House Financial Services Committee, Mr Powell on Thursday will also appear before the Senate Banking Committee.

Banking capital requirements

This week's congressional hearings also come roughly one year after the collapse of three regional US banks, which rekindled fears of a potential new global financial crisis.

Politicians are expected to use their lines of questioning to grill Mr Powell on the Fed's proposal to raise capital requirements for large banks by roughly 20 per cent.

The requirements from the Fed and Federal Deposit Insurance Corporation (FDIC) would affect banks whose assets range from $100 to $250 billion, exceeding the standards of Basel 3 Endgame.

Mr Powell has said that the proposal must have “broad support” of the Federal Reserve Board.

The chief executives of America's largest banks who would be subject to this rule cautioned against these standards during a hearing in December.

“We believe this will negatively harm the American economy without making the US financial system safer,” Goldman Sachs chief executive David Solomon told a Senate Committee.

The proposal, written by vice chairman for supervision Michael Barr, was published in June last year in response to the March 2023 collapses of Silicon Valley Bank, Signature Bank and First Republic Bank.

SVB's collapse prompted emergency actions from the Fed, FDIC and Treasury Department to protect the failed banks' depositors.

Speaking at a Brookings Institution event on Tuesday, Republican House Financial Services chairman Patrick McHenry criticised federal regulators for failing to supervise the failed banks.

“They did not act in an appropriate fashion commensurate with the rules that they had. And because they didn't do that, it had to then graduate up to … Chairman Powell and [Treasury] Secretary [Janet] Yellen stepping in to calm things when it should have been done at lower levels,” he said.

THE SPECS

Aston Martin Rapide AMR

Engine: 6.0-litre V12

Transmission: Touchtronic III eight-speed automatic

Power: 595bhp

Torque: 630Nm

Price: Dh999,563

The biog

Title: General Practitioner with a speciality in cardiology

Previous jobs: Worked in well-known hospitals Jaslok and Breach Candy in Mumbai, India

Education: Medical degree from the Government Medical College in Nagpur

How it all began: opened his first clinic in Ajman in 1993

Family: a 90-year-old mother, wife and two daughters

Remembers a time when medicines from India were purchased per kilo

THE NEW BATCH'S FOCUS SECTORS

AiFlux – renewables, oil and gas

DevisionX – manufacturing

Event Gates – security and manufacturing

Farmdar – agriculture

Farmin – smart cities

Greener Crop – agriculture

Ipera.ai – space digitisation

Lune Technologies – fibre-optics

Monak – delivery

NutzenTech – environment

Nybl – machine learning

Occicor – shelf management

Olymon Solutions – smart automation

Pivony – user-generated data

PowerDev – energy big data

Sav – finance

Searover – renewables

Swftbox – delivery

Trade Capital Partners – FinTech

Valorafutbol – sports and entertainment

Workfam – employee engagement

Key developments

All times UTC 4

The White Lotus: Season three

Creator: Mike White

Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell

Rating: 4.5/5

Final scores

18 under: Tyrrell Hatton (ENG)

- 14: Jason Scrivener (AUS)

-13: Rory McIlroy (NIR)

-12: Rafa Cabrera Bello (ESP)

-11: David Lipsky (USA), Marc Warren (SCO)

-10: Tommy Fleetwood (ENG), Chris Paisley (ENG), Matt Wallace (ENG), Fabrizio Zanotti (PAR)

GAC GS8 Specs

Engine: 2.0-litre 4cyl turbo

Power: 248hp at 5,200rpm

Torque: 400Nm at 1,750-4,000rpm

Transmission: 8-speed auto

Fuel consumption: 9.1L/100km

On sale: Now

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What is a robo-adviser?

Robo-advisers use an online sign-up process to gauge an investor’s risk tolerance by feeding information such as their age, income, saving goals and investment history into an algorithm, which then assigns them an investment portfolio, ranging from more conservative to higher risk ones.

These portfolios are made up of exchange traded funds (ETFs) with exposure to indices such as US and global equities, fixed-income products like bonds, though exposure to real estate, commodity ETFs or gold is also possible.

Investing in ETFs allows robo-advisers to offer fees far lower than traditional investments, such as actively managed mutual funds bought through a bank or broker. Investors can buy ETFs directly via a brokerage, but with robo-advisers they benefit from investment portfolios matched to their risk tolerance as well as being user friendly.

Many robo-advisers charge what are called wrap fees, meaning there are no additional fees such as subscription or withdrawal fees, success fees or fees for rebalancing.

Dust and sand storms compared

Sand storm

  • Particle size: Larger, heavier sand grains
  • Visibility: Often dramatic with thick "walls" of sand
  • Duration: Short-lived, typically localised
  • Travel distance: Limited 
  • Source: Open desert areas with strong winds

Dust storm

  • Particle size: Much finer, lightweight particles
  • Visibility: Hazy skies but less intense
  • Duration: Can linger for days
  • Travel distance: Long-range, up to thousands of kilometres
  • Source: Can be carried from distant regions
AUSTRALIA SQUAD

Aaron Finch, Matt Renshaw, Brendan Doggett, Michael Neser, Usman Khawaja, Shaun Marsh, Mitchell Marsh, Tim Paine (captain), Travis Head, Marnus Labuschagne, Nathan Lyon, Jon Holland, Ashton Agar, Mitchell Starc, Peter Siddle

MATCH INFO

Manchester City 1 Chelsea 0
De Bruyne (70')

Man of the Match: Kevin de Bruyne (Manchester City)

New UK refugee system

 

  • A new “core protection” for refugees moving from permanent to a more basic, temporary protection
  • Shortened leave to remain - refugees will receive 30 months instead of five years
  • A longer path to settlement with no indefinite settled status until a refugee has spent 20 years in Britain
  • To encourage refugees to integrate the government will encourage them to out of the core protection route wherever possible.
  • Under core protection there will be no automatic right to family reunion
  • Refugees will have a reduced right to public funds

Ordinary Virtues: Moral Order in a Divided World by Michael Ignatieff
Harvard University Press

ALRAWABI%20SCHOOL%20FOR%20GIRLS
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The Greatest Royal Rumble card as it stands

The Greatest Royal Rumble card as it stands

50-man Royal Rumble - names entered so far include Braun Strowman, Daniel Bryan, Kurt Angle, Big Show, Kane, Chris Jericho, The New Day and Elias

Universal Championship Brock Lesnar (champion) v Roman Reigns in a steel cage match

WWE World Heavyweight ChampionshipAJ Styles (champion) v Shinsuke Nakamura

Intercontinental Championship Seth Rollins (champion) v The Miz v Finn Balor v Samoa Joe

United States Championship Jeff Hardy (champion) v Jinder Mahal

SmackDown Tag Team Championship The Bludgeon Brothers (champions) v The Usos

Raw Tag Team Championship (currently vacant) Cesaro and Sheamus v Matt Hardy and Bray Wyatt

Casket match The Undertaker v Chris Jericho

Singles match John Cena v Triple H

Cruiserweight Championship Cedric Alexander v tba

Europe's top EV producers
  1. Norway (63% of cars registered in 2021)
  2. Iceland (33%)
  3. Netherlands (20%)
  4. Sweden (19%)
  5. Austria (14%)
  6. Germany (14%)
  7. Denmark (13%)
  8. Switzerland (13%)
  9. United Kingdom (12%)
  10. Luxembourg (10%)

Source: VCOe 

Queen

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(Young Money/Cash Money)

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MATCH INFO

Uefa Champions League, semi-final result:

Liverpool 4-0 Barcelona

Liverpool win 4-3 on aggregate

Champions Legaue final: June 1, Madrid

Our legal columnist

Name: Yousef Al Bahar

Advocate at Al Bahar & Associate Advocates and Legal Consultants, established in 1994

Education: Mr Al Bahar was born in 1979 and graduated in 2008 from the Judicial Institute. He took after his father, who was one of the first Emirati lawyers

THE TWIN BIO

Their favourite city: Dubai

Their favourite food: Khaleeji

Their favourite past-time : walking on the beach

Their favorite quote: ‘we rise by lifting others’ by Robert Ingersoll

Company profile

Name: Dukkantek 

Started: January 2021 

Founders: Sanad Yaghi, Ali Al Sayegh and Shadi Joulani 

Based: UAE 

Number of employees: 140 

Sector: B2B Vertical SaaS(software as a service) 

Investment: $5.2 million 

Funding stage: Seed round 

Investors: Global Founders Capital, Colle Capital Partners, Wamda Capital, Plug and Play, Comma Capital, Nowais Capital, Annex Investments and AMK Investment Office  

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

UAE currency: the story behind the money in your pockets
The Settlers

Director: Louis Theroux

Starring: Daniella Weiss, Ari Abramowitz

Rating: 5/5

Zakat definitions

Zakat: an Arabic word meaning ‘to cleanse’ or ‘purification’.

Nisab: the minimum amount that a Muslim must have before being obliged to pay zakat. Traditionally, the nisab threshold was 87.48 grams of gold, or 612.36 grams of silver. The monetary value of the nisab therefore varies by current prices and currencies.

Zakat Al Mal: the ‘cleansing’ of wealth, as one of the five pillars of Islam; a spiritual duty for all Muslims meeting the ‘nisab’ wealth criteria in a lunar year, to pay 2.5 per cent of their wealth in alms to the deserving and needy.

Zakat Al Fitr: a donation to charity given during Ramadan, before Eid Al Fitr, in the form of food. Every adult Muslim who possesses food in excess of the needs of themselves and their family must pay two qadahs (an old measure just over 2 kilograms) of flour, wheat, barley or rice from each person in a household, as a minimum.

Updated: April 04, 2024, 8:47 AM