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Economists trim Fed rate cut estimates on fear of Trump inflation surge

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Economists trim Fed rate cut estimates on fear of Trump inflation surge

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The Federal Reserve is set to take a more cautious approach to interest rate cuts on fears that the Trump administration’s policies will stoke higher inflation, according to academic economists polled by the Financial Times. 

The economists, who were surveyed between December 11 and 13, moved up their forecasts for the federal funds rate next year compared to the previous FT-Chicago Booth poll in September. The vast majority thought it would hover at 3.5 per cent or higher by the end of 2025, whereas most respondents in September said it would probably fall below 3.5 per cent by that point.

If the Fed follows through with a quarter-point cut at its meeting next week as expected the policy rate will stand at 4.25-4.5 per cent.

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“Over the last few months, the downside risks to the labour market have become a little less bad and progress on inflation seems to have stalled a bit,” said Jonathan Wright, a former Fed economist now at Johns Hopkins University, who helped to design the survey.

“Inflation has come down more painlessly than I and most people had expected, but I think we may still be seeing that the last bit [getting to target] will be a little harder, and so that certainly is an unlikely environment for the Fed to be in a hurry to reduce rates,” said Wright.

Tara Sinclair, who previously worked at the Treasury department and is now a professor at George Washington University, said that could even translate to the Fed going on an extended pause after a December cut and holding interest rates steady for the remainder of next year.

“In my mind, they need to stay in restrictive territory all the way until it’s clear that inflation is back at their target,” she added.

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Officials are plotting how quickly to get to a “neutral” policy rate that neither stimulates nor suppresses growth. They have openly discussed slowing the pace of cuts once they get closer to that level, although chair Jay Powell has conceded that policymakers lack clarity as to where that is.

“We’re pretty sure it’s below where we are now,” he told reporters in November.

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Looming large over the policy outlook is the return of Donald Trump to the White House next month. Trump has vowed to enact sweeping tariffs and deport millions of Americans while also slashing taxes and regulations.

Just over 60 per cent of the economists polled in the survey, which was conducted in partnership with the University of Chicago Booth School of Business, thought Trump’s plans would have a negative impact on US growth. Most are also bracing for higher inflation if his plans to enact universal tariffs and steep levies on China materialise.

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These concerns are percolating at a time when worries about price pressures still linger.

Just over 80 per cent of the 47 economists polled said that inflation over the next year, as measured by the personal expenditures price index once food and energy prices are stripped out, would not dip below 2 per cent until January 2026 or later. In September, only about 35 per cent of polled respondents made the same estimate.

The median estimate of core PCE inflation over the next 12 months also rose to 2.5 per cent from 2.2 per cent compared to September’s survey.

Economists remained sanguine about the outlook for the economy, with the median estimate of real GDP growth rising to 2.3 per cent from 2 per cent in September. Concerns about a recession were also distant, with over half of respondents estimating that the next recession would start no earlier than the third quarter of 2026.

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Yet over a longer horizon, Sinclair warned that Trump’s policies would start to bite.

“I think very clearly in the long run this combination of policies is not good,” she said.

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The Fed may also struggle with how to navigate this period, the economists warned, with one bracing for a “confrontation” between the president-elect and Powell if the central bank is forced to keep rates elevated to counteract the impact of Trump’s policies.

Wright said the Fed would be “more twitchy” on inflation than in the past, given the post-pandemic surge in price pressures.

“Back in 2019, the Fed could afford to take a view of ‘we’re going to wait until we see the white of inflation’s eyes’”, he said. “I don’t think that’s the attitude that the Fed is going to have today.”

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Arson engulfs Mississippi synagogue, a congregation once bombed by Ku Klux Klan

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Arson engulfs Mississippi synagogue, a congregation once bombed by Ku Klux Klan

A fire damaged the Beth Israel Congregation in Jackson, Miss. The fire department said arson was the cause.

Hannah Orlansky/Beth Israel Congregation


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Hannah Orlansky/Beth Israel Congregation

Authorities have charged one person with arson in a fire that badly damaged Beth Israel Congregation in Jackson, Miss., early Saturday morning. The Jackson Fire Department, the Bureau of Alcohol, Tobacco, Firearms & Explosives, and the FBI are investigating.

Zach Shemper, Beth Israel Congregation president, said he’s stunned.

“Crazy things happen all over the world and nothing really hits home until it actually hits directly home,” he told Mississippi Public Broadcasting. “When it hits home, it’s just hard. Honestly, I’m still trying to wrap my own head around it.”

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Shemper also released a statement saying the synagogue and its 150 families are resilient.

“As Jackson’s only synagogue, Beth Israel is a beloved institution, and it is the fellowship of our neighbors and extended community that will see us through,” he said.

The congregation was founded in 1860, according to Beth Israel’s website. In 1967, local Ku Klux Klan members bombed the place of worship and the home of the rabbi at the time, who had spoken out against racism and segregation. No one was hurt in the civil rights-era bombings or Saturday’s fire.

Charles Felton, Jackson Fire Department chief of fire investigations, told NPR in an interview on Sunday that flames and smoke caused extensive damage and destroyed Beth Israel’s library, where he says the fire was started. The fire was reported to 911 just after 3 a.m.

“All contents in that library are destroyed. There’s not much that can be retrieved from the library area. The other portions of the building do not have actual fire damage, but they have damage as far as smoke and soot,” he said.

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Shemper said the fire destroyed two Torahs, the Jewish sacred texts, and damaged five others. A Torah that survived the Holocaust was protected by a glass display case and was not damaged. The synagogue’s Tree of Life plaque honoring congregants’ meaningful occasions was destroyed. Shemper said the library, administrative offices and the lobby suffered the most damage.

Surveillance video shows a man wearing a hoodie and a mask pouring liquid from a can inside the synagogue, according to Shemper. Felton said Jackson Fire investigators later received information from an area hospital that led them to the suspect, who was arrested Saturday evening.

“There was a suspect possibly burned at a local hospital,” he told NPR. “They did go to the hospital at which point they interviewed the person of interest and that person did confess to having involvement in the fire.”

The Jackson Fire Department’s powers include the authority to charge suspects, according to Felton, who said the department has filed arson charges against the suspect, who authorities have not publicly named. He said federal authorities will make a determination on whether to pursue hate crime charges.

The FBI’s office in Jackson said in a statement that it was aware of the incident and was working with other law enforcement on the investigation.

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Jackson Mayor John Horhn said the city stands with Beth Israel and the Jewish community.

“Acts of antisemitism, racism, and religious hatred are attacks on Jackson as a whole and will be treated as acts of terror against residents’ safety and freedom to worship,” said a statement from the mayor’s office.

Beth Israel is planning to immediately move forward.

“With support from our community, we will rebuild. Beth Israel Congregation has been the Jewish spiritual home in Jackson, Mississippi, for over 160 years,” said Shemper’s statement. “We are devastated but ready to rebuild.”

He said several local churches have offered temporary space for Beth Israel to continue services.

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The attack comes after investigators say a father and son opened fire on Jewish people celebrating Hanukkah on Bondi Beach in Sydney, Australia, last month. Fifteen people were killed and dozens were injured.

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Nationwide anti-ICE protests call for accountability after Renee Good’s death

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Nationwide anti-ICE protests call for accountability after Renee Good’s death

A large bird puppet crafted at In the Heart of the Beast Puppet and Mask Theatre in Minneapolis is carried down Lake Street during a march demanding ICE’s removal from Minnesota on Saturday, Jan. 10, 2026.

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People have been taking to the streets nationwide this weekend to protest the Trump administration’s immigration enforcement tactics following the death of Renee Good in Minneapolis, a 37-year-old woman who was shot and killed by a U.S. Immigration and Customs Enforcement (ICE) officer this week.

At least 1,000 events across the U.S. were planned for Saturday and Sunday, according to Indivisible, a progressive grassroots coalition of activists helping coordinate the movement it calls “ICE Out For Good Weekend of Action.”

Leah Greenberg, a co-executive director of Indivisible, said people are coming together to “grieve, honor those we’ve lost, and demand accountability from a system that has operated with impunity for far too long.”

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“Renee Nicole Good was a wife, a mother of three, and a member of her community. She, and the dozens of other sons, daughters, friends, siblings, parents, and community members who have been killed by ICE, should be alive today,” Greenberg said in a statement on Friday. “ICE’s violence is not a statistic, it has names, families, and futures attached to it, and we refuse to look away or stay silent.”

Large crowds of demonstrators carried signs and shouted “ICE out now!” as protests continued across Minneapolis on Saturday. One of those protestors, Cameron Kritikos, told NPR that he is worried that the presence of more ICE agents in the city could lead to more violence or another death.

“If more ICE officers are deployed to the streets, especially a place here where there’s very clear public opposition to the terrorizing of our neighborhoods, I’m nervous that there’s going to be more violence,” the 31-year grocery store worker said. “I’m nervous that there are going to be more clashes with law enforcement officials, and at the end of the day I think that’s not what anyone wants.”

Demonstrators in Minneapolis on Saturday, Jan. 10, 2026.

Demonstrators in Minneapolis on Saturday, Jan. 10, 2026.

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The night before, hundreds of city and state police officers responded to a “noise protest” in downtown Minneapolis. An estimated 1,000 people gathered Friday night, according to Minneapolis Police Chief Brian O’Hara, and 29 people were arrested.

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People demonstrated outside of hotels where ICE agents were believed to be staying. They chanted, played drums and banged pots. O’Hara said that a group of people split from the main protest and began damaging hotel windows. One police officer was injured from a chunk of ice that was hurled at officers, he added.

Minneapolis Mayor Jacob Frey condemned the acts of violence but praised what he said was the “vast majority” of protesters who remained peaceful, during a morning news conference.

“To anyone who causes property damage or puts others in danger: you will be arrested. We are standing up to Donald Trump’s chaos not with our own brand of chaos, but with care and unity,” Frey wrote on social media.

Commenting on the protests, Department of Homeland Security (DHS) spokesperson Tricia McLaughlin told NPR in a statement, “the First Amendment protects speech and peaceful assembly — not rioting, assault and destruction,” adding, “DHS is taking measures to uphold the rule of law and protect public safety and our officers.”

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Good was fatally shot the day after DHS launched a large-scale immigration enforcement operation in Minnesota set to deploy 2,000 immigration officers to the state.

In Philadelphia, police estimated about 500 demonstrators “were cooperative and peaceful” at a march that began Saturday morning at City Hall, Philadelphia Police Department spokesperson Tanya Little told NPR in a statement. And no arrests were made.

In Portland, Ore., demonstrators rallied and lined the streets outside of a hospital on Saturday afternoon, where immigration enforcement agents bring detainees who are injured during an arrest, reported Oregon Public Broadcasting.

A man and woman were shot and injured by U.S. Border Patrol agents on Thursday in the city. DHS said the shooting happened during a targeted vehicle stop and identified the driver as Luis David Nino-Moncada, and the passenger as Yorlenys Betzabeth Zambrano-Contreras, both from Venezuela. As was the case in their assertion about Good’s fatal shooting, Homeland Security officials claimed the federal agent acted in self-defense after Nino-Moncada and Zambrano-Contreras “weaponized their vehicle.”

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Why men should really be reading more fiction

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Why men should really be reading more fiction

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A friend sent a meme to a group chat last week that, like many internet memes before it, managed to implant itself deep into my brain and capture an idea in a way that more sophisticated, expansive prose does not always manage. Somewhat ironically, the meme was about the ills of the internet. 

“People in 1999 using the internet as an escape from reality,” the text read, over an often-used image from a TV series of a face looking out of a car window. Below it was another face looking out of a different car window overlaid with the text: “People in 2026 using reality as an escape from the internet.” 

Oof. So simple, yet so spot on. With AI-generated slop — sorry, content — now having overtaken human-generated words and images online, with social media use appearing to have peaked and with “dumb phones” being touted as this year’s status symbol, it does feel as if the tide is beginning to turn towards the general de-enshittification of life. 

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And what could be a better way to resist the ever-swelling stream of mediocrity and nonsense on the internet, and to stick it to the avaricious behemoths of the “attention economy”, than to pick up a work of fiction (ideally not purchased on one of these behemoths’ platforms), with no goal other than sheer pleasure and the enrichment of our lives? But while the tide might have started to turn, we don’t seem to have quite got there yet on the reading front, if we are on our way there at all.

Two-fifths of Britons said last year that they had not read a single book in the previous 12 months, according to YouGov. And, as has been noted many times before on both sides of the Atlantic, it is men who are reading the least — just 53 per cent had read any book over the previous year, compared with 66 per cent of women — both in overall numbers and specifically when it comes to fiction.

Yet pointing this out, and lamenting the “disappearance of literary men”, has become somewhat contentious. A much-discussed Vox article last year asked: “Are men’s reading habits truly a national crisis?” suggesting that they were not and pointing out that women only read an average of seven minutes more fiction per day than men (while failing to note that this itself represents almost 60 per cent more reading time).

Meanwhile an UnHerd op-ed last year argued that “the literary man is not dead”, positing that there exists a subculture of male literature enthusiasts keeping the archetype alive and claiming that “podcasts are the new salons”. 

That’s all well and good, but the truth is that there is a gender gap between men and women when it comes to reading and engaging specifically with fiction, and it’s growing.

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According to a 2022 survey by the US National Endowment for the Arts, 27.7 per cent of men had read a short story or novel over the previous year, down from 35.1 per cent a decade earlier. Women’s fiction-reading habits declined too, but more slowly and from a higher base: 54.6 per cent to 46.9 per cent, meaning that while women out-read men by 55 per cent in 2012 when it came to fiction, they did so by almost 70 per cent in 2022.

The divide is already apparent in young adulthood, and it has widened too: data from 2025 showed girls in England took an A-Level in English literature at an almost four-times-higher rate than boys, with that gap having grown from a rate of about three times higher just eight years earlier.

So the next question is: should we care and, if so, why? Those who argue that yes, we should, tend to give a few reasons. They point out that reading fiction fosters critical thinking, empathy and improves “emotional vocabulary”. They argue that novels often contain heroic figures and strong, virtuous representations of masculinity that can inspire and motivate modern men. They cite Andrew Tate, the titan of male toxicity, who once said that “reading books is for losers who are afraid to learn from life”, and that “books are a total waste of time”, as an example of whose advice not to follow. 

I agree with all of this — wholeheartedly, I might add. But I’m not sure how many of us, women or men, are picking up books in order to become more virtuous people. Perhaps the more compelling, or at least motivating, reason for reading fiction is simply that it offers a form of pleasure and attention that the modern world is steadily eroding. In a hyper-capitalist culture optimised for skimming and distraction, the ability to sit still with a novel is both subversive and truly gratifying. The real question, then, is why so many men are not picking one up.

jemima.kelly@ft.com

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