US inflation remains “uncomfortably” above the Federal Reserve’s target despite the progress it has made in recent months, a senior bank official said on Saturday.
The US central bank has held interest rates at a two-decade high for the past year as it battles to return inflation to its long-term target of two percent following a COVID-19-era surge in prices.
The Fed’s favored inflation gauge now sits at an annual rate of just 2.5 percent — well below the peak reached in 2022 — while the US economy is still growing and the labor market has somewhat weakened.
Photo: Al Drago, Bloomberg
Against this backdrop, Fed chair Jerome Powell said late last month that the bank could move ahead with its first interest rate cut as soon as next month — if economic data continues to come in as expected.
However, some Fed officials have been more cautious about signaling rate cuts than others.
“The progress in lowering inflation during May and June is a welcome development,” Fed Governor Michelle Bowman told a conference in Colorado Springs. “But inflation is still uncomfortably above the committee’s two percent goal.”
Despite “upside risks,” Bowman said she still expects inflation to ease in the coming months.
However, she warned policymakers to remain patient “and avoid undermining continued progress on lowering inflation by overreacting to a single data point.”
“I will remain cautious in my approach to considering adjustments to the current stance of policy,” she added.
The remarks from Bowman, who is a permanent voting member on the Fed’s rate-setting committee, suggest that she remains concerned about cutting interest rates too soon — despite overwhelming support for a rate cut in the financial markets next month.
Futures traders are now wholly convinced that the Fed would cut interest rates at a meeting next month, and are instead split over how big its first cut would be, CME Group Inc data showed.
FOPLP PLANS? The chipmaker said the budget was for fab construction and manufacturing facilities, but did not comment on reports of talks with Innolux Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) board of directors yesterday approved capital appropriations of US$29.62 billion to install and upgrade the firm’s chip manufacturing process technologies, as well as its advanced and mature packaging technology capacity. The capital expenditure budget would also be for fab construction and installation of manufacturing facilities, the world’s biggest contract chipmaker said in a statement. TSMC did not comment on reports that it was in talks with flat-panel display maker Innolux Corp (群創) to acquire an idle plant as it prepares to convert manufacturing equipment into a new chip packaging production line that is to use fan-out
A boom: The airlines saw a rise in international flights and demand for cargo services, with the latter attributed to AI needs and vendors opting to have items delivered by air China Airlines Ltd (CAL, 中華航空) and EVA Airways Corp (長榮航空) have reported their highest-ever net profit for the first half of the year amid a boom in international travel and growing demand for cargo services. The global airline industry’s momentum from last year extended into the first six months of this year. That momentum along with an increase in the number of flights supported passenger revenue growth, the two airlines said on Friday. CAL’s net profit in the first six months of this year hit a new high of NT$7.14 billion (US$220 million), resulting in earnings per share of NT$1.08, the airline
The world’s biggest steel producer sounded the alarm about a crisis in China that carries the potential to send global shock waves, warning of a deeper industry downturn than major events in 2008 and 2015. Conditions in China are like a “harsh winter” that would be “longer, colder and more difficult to endure than we expected,” China Baowu Steel Group Corp (寶武鋼鐵集團) chairman Hu Wangming (胡望明) told staff at the company’s half-year meeting. For commodities including steel, the warning from Baowu underscores risks to demand and prices, as well as what ArcelorMittal SA, the No. 2 firm in the industry, called an
DIGITAL TRANSFORMATION: Domestic chip gear output is forecast to be higher than last year’s NT$149.7bn as strong demand for AI and HPC technologies continues The production value of Taiwan’s semiconductor equipment is likely to grow this year after falling 7.3 percent last year amid strong global demand for artificial intelligence (AI) and other emerging technologies, the Ministry of Economic Affairs said. The ministry made the comment last week after reporting that the production value of Taiwan-made semiconductor equipment for the first five months of this year rose by 5.5 percent from a year earlier to NT$62.7 billion (US$1.93 billion). If the forecast is correct, the production value of Taiwan’s semiconductor equipment would be higher than the NT$149.7 billion last year and stay above the NT$100 million