Claire Jones

The IMF has warned the US that its massive fiscal deficits have stoked inflation and pose “significant risks” for the global economy. The fund said in its benchmark Fiscal Monitor that it expected the US to record a fiscal deficit of 7.1 per cent next year — more than three times the 2 per cent average for other advanced economies. It also raised concerns over Chinese government debt, with the country set to record a deficit of 7.6 per cent in 2025 — more than double the 3.7 per cent average f…

Iran has warned Israel it is likely to review its nuclear stance if its atomic facilities are threatened, as tensions rise following the Islamic republic’s weekend drone and missile attack on Israel. Iran’s Revolutionary Guards said on Thursday that Tehran may “reconsider” its nuclear policy, which it has long insisted is purely peaceful but which western powers say has put it on the threshold of becoming a weapons state. The warning was issued as the US and UK announced new sanctions on Iran’…

Some US Federal Reserve officials signalled they would be prepared to raise interest rates further if inflation became more aggressive, according to a record of their last meeting at the start of May. “Various participants mentioned a willingness to tighten policy further should risks to inflation materialise in a way that such an action became appropriate,” said the minutes of the May 1 Federal Open Market Committee meeting, published on Wednesday. The prospects of a rate rise have fallen sin…

US Treasury secretary Janet Yellen has said “substantial increases” in living costs are a “problem to a lot of people” as persistent inflation dents President Joe Biden’s standing with voters ahead of November’s election. Prices for housing and everyday goods were still high for many voters, Yellen acknowledged, despite strong wage growth in recent months. “They see it when they shop for food. They see it in terms of rentals. With higher mortgage rates, it’s tough for young people who would li…

A top Federal Reserve official has called for interest rates to stay on hold for an “extended” time, saying lowering borrowing costs before inflation was under control would put the foundations of US prosperity at risk. Neel Kashkari, Minneapolis Fed president, also told the FT podcast The Economics Show that Americans’ “visceral” hatred of inflation meant that some people would prefer a recession to a jump in prices. “The economy is, in the US, quite strong, the labour market is strong, infla…

Mounting political heat is complicating interest rate decisions in the US and the UK, where central banks are weighing whether to cut borrowing costs as voters prepare to go to the polls. The Bank of England and the Federal Reserve want to avoid any perception that they were cutting interest rates to help incumbent governments, former officials and economists said, making it more likely they will swerve moves that are too close to polling day. The situation is particularly tricky for the BoE,…

US inflation fell to 3.3 per cent in May, raising expectations of early interest rate cuts and delivering a boost to the stock market and President Joe Biden. The data, issued on Wednesday hours before Federal Reserve officials outlined their plans for rate cuts this year, was marginally below economists’ expectations. The S&P 500 gained 0.9 per cent to close at a record high. Trading in the afternoon was choppy following Fed chair Jay Powell’s press conference, where he discussed the policyma…

US Federal Reserve officials have signalled that they expect to cut interest rates just once this year, taking a hawkish stance on inflation as they held borrowing costs at a 23-year high. Updated forecasts on Wednesday showed the Fed’s median rate-setter anticipated making one quarter-point cut this year, surprising traders who had priced in two cuts prior to the report. The central bank held rates at 5.25 to 5.5 per cent. The new predictions marked a significant change from the Federal Open…

US millionaires have signalled their support for Joe Biden’s push to make the wealthiest Americans pay more tax, in a sign that the president’s plan to impose bigger levies on extreme wealth is playing well with the country’s upper-middle class. A YouGov poll of Americans with assets other than their home worth more than $1mn showed that a majority supported a more progressive US tax system, one of the tenets of Biden’s economic strategy for re-election in November. Almost 60 per cent of the 8…

A top Federal Reserve official has backed more interest rate rises if inflation sticks at its current level, saying immigration and aggressive fiscal stimulus are likely to keep US prices rising more quickly than in other rich economies. Michelle Bowman, one of the Fed’s governors and a voter on its rate-setting Federal Open Market Committee, said she remained “willing to raise” borrowing costs again “should progress on inflation stall or even reverse”. Bowman’s remarks came in a speech on Tue…