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Federal Reserve officials wanted ‘greater confidence’ that US inflation was cooling

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Federal Reserve officials wanted ‘greater confidence’ that US inflation was cooling

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Federal Reserve officials thought that US inflation was cooling but still needed “greater confidence” before they agreed to cut interest rates from their 23-year high, according to minutes of their most recent meeting.

“Participants suggested that a number of developments in the product and labour market supported their judgment that price pressures were diminishing,” said the minutes from the June meeting, published on Wednesday.

Some rate-setters also noted that retailers were now offering price cuts in the face of weakening consumer demand.

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But members of the Federal Open Market Committee also thought they should hold rates at the current level of 5.25-5.5 per cent until “additional information had emerged to give them greater confidence” that inflation was moving “sustainably” to the Fed’s 2 per cent target, the minutes said.

The minutes come after months of concern that price pressures were still not easing as quickly as Fed officials hoped, making them reluctant to cut borrowing costs too quickly.

The Fed sharply increased rates two years ago in a bid to quell inflation that reached multi-decade highs in 2022. Inflation fell quickly last year, and the central bank’s preferred gauge dipped again to 2.6 per cent in May. But it still above its target.

However, the record of the meeting also revealed some policymakers’ concerns that unemployment could rise too quickly if rates remained too high for too long.

“Several participants specifically emphasised that with the labour market normalising, a further weakening of demand may now generate a larger unemployment response than in the recent past when lower demand for labour was felt relatively more through fewer job openings.”

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The Bureau of Labor Statistics will publish a closely watched report on the job market on Friday. Economists polled by Bloomberg predict that 190,000 jobs were added in June, which would be a sharp slowdown from the month before.

Officials indicated at the meting in June that they expect to cut borrowing costs just once this year, down from their previous forecast of three cuts.

Inflation and high borrowing costs have become a political problem for President Joe Biden, with polls showing voters remain unhappy with the cost of living in recent years and his handling of the economy.

Traders in the futures market are now pricing in a 70 per cent chance of a cut in September — the final policy decision ahead of the presidential election on November 5. Nearly two cuts are priced by year-end. The central bank next meets on July 31.

Rate-setters signalled in their statement after the last meeting that other factors including the effect of two years of high rates on consumer demand, easing of labour markets and boost to supplies would contribute to more disinflation.

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Reformist Pezeshkian wins Iran’s presidential election

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Reformist Pezeshkian wins Iran’s presidential election

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Reformist candidate Masoud Pezeshkian has won Iran’s presidential election after pledging to re-engage with the west to secure sanctions relief and to relax social restrictions in the Islamic republic.

The former health minister secured 16.3mn votes in Friday’s run-off, defeating hardliner Saeed Jalili who garnered 13.5mn votes, according to the interior ministry.

Pezeshkian’s success is a remarkable turnaround for the reformist camp, which has spent years in the political wilderness. It was bolstered by an increase in turnout which was officially put at 49.8 per cent, compared with a record low of 40 per cent in the first round.

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Reformist politicians hailed the result on social media while Pezeshkian supporters staged street celebrations in several cities.

Iran is now set to have its first reformist president in two decades, with the republic at a critical juncture, but Pezeshkian inherits massive challenges. The low turnout underscored the deep sense of disillusionment felt by many Iranians towards their leaders, both reformists and hardliners, and who are loath to be seen to be legitimising the theocratic system through the ballot box.

The republic faces simmering social and economic pressures at home and heightened tensions with the west, fuelled by the Israel-Hamas war and Tehran’s continued expansion of its nuclear programme. The ruling establishment is also preparing for the eventual succession to Ayatollah Ali Khamenei, the 85-year-old supreme leader.

Khamenei is the republic’s ultimate decision maker over key domestic and foreign affairs. But the president does have influence and can affect the tone and approach of government policies at home and overseas. He heads key state bodies, appoints ministers and manages the economy.

During the campaign Pezeshkian, 69 and a cardiac surgeon, said he would seek to negotiate with the west to end the long stand-off over Iran’s expansion of its nuclear programme, arguing that sanctions relief was crucial to reviving the economy and rein in inflation.

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He also suggested he would take a softer stance on social affairs, including restrictions on internet use and enforcement of wearing the hijab. This has been a dominant domestic issue since anti-regime protests swept across the republic after 22-year-old Mahsa Amini died in police custody in 2022 after being arrested for not properly covering her head.

However, he is considered predictable and not someone who will seek to rock the boat. Throughout the campaign, Pezeshkian emphasised his religious beliefs and reiterated that he would follow Khamenei’s guidelines.

“He will not touch the political aspects [of life], but the social and economic aspects of life will be better and he will support Khamenei to change from confrontation to competition,” said Saeed Laylaz, a reformist analyst.

Any push for reforms is likely to face stiff resistance from hardliners who have controlled the levers of the state since cleric Ebrahim Raisi was elected president in 2021. Raisi died in a helicopter crash in May, triggering the election.

Hardliners control the parliament, which approves ministers’ appointments and legislation, while the elite Revolutionary Guards and other powerful entities hold significant sway over domestic and foreign policy.

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Improving relations with the west will also face challenges, with the US in an election year and major western powers angered by Iran’s continued nuclear advances, its sale of armed drones to Russia and human rights abuses. The west will also be sceptical that Pezeshkian’s victory will bring meaningful change.

“The conditions [regarding the nuclear crisis] will be very similar to where we are now. It is the unelected elements of the regime who control the nuclear programme and decisions on whether to agree in negotiations,” said a western official. “We have seen time and time again that Iran’s elected officials have to do what they are told.”

Even those who voted for Pezeshkian are aware of the limited influence he will have. “He’s the only person who can give us what we want. He will have the power to do things, but with others he will make a small difference,” said Ali, a 23-year-old mechanical engineer.

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'Senseless death': Three men charged with killing New Zealand tourist during Newport Beach robbery

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'Senseless death': Three men charged with killing New Zealand tourist during Newport Beach robbery

Orange County prosecutors charged a third-strike offender and two other men with murder on accusations of running a car over a 68-year-old New Zealand woman and dragging her nearly 65 feet during a robbery at Newport Beach’s Fashion Island.

Prosecutors charged third-striker Leroy Ernest Joseph McCrary, 26, of Los Angeles; Malachi Edward Darnell, 18, also of Los Angeles; and Jaden Cunningham, 18, of Lancaster with special-circumstances murder. They could be sentenced to death if they are convicted of killing Patricia McKay in the commission of a robbery, with a felony enhancement of causing the death of a person over the age of 65. The trio were captured after leading police on a high-speed chase into L.A. County.

The incidents Tuesday raised questions about why McCrary hadn’t served prison time for his previous felony convictions.

California has had a moratorium on carrying out the death penalty since 2019 and has not executed anyone since 2006.

McCrary also faces charges of felony attempted second-degree robbery and evading while driving recklessly. He was previously convicted of the felonies of residential burglary in 2018, criminal threats in 2020, and robbery in 2023, all in L.A. County. Records show he was also convicted of being a narcotics addict in possession of a firearm in 2023.

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In addition to the murder charge, Darnell faces charges of second-degree attempted robbery, attempted murder, and personal use of a firearm, as well as a felony enhancement of personal discharge of a firearm.

Cunningham is also charged with attempted second-degree robbery in addition to murder.

Patricia McKay and husband Douglas McKay, a well-known Auckland businessman and leader, were waiting for a ride after shopping at Newport Beach’s Fashion Island on Tuesday when a white Toyota Camry pulled up outside the mall next to the couple, and two men in masks jumped out. One of the men put a gun to Douglas McKay’s head and demanded his watch as they forced him to the ground, according to prosecutors.

Cunningham is accused of tossing Patricia McKay to the ground as she held several shopping bags, and then allegedly dragged her into the street in front of the Camry while grabbing the bags.

Douglas McKay jumped in front of the vehicle in an effort to stop it from running over his wife, but McCrary allegedly drove it forward, pushing him out of the way and running over the woman, then dragging her body 65 feet under the car.

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As Cunningham ran after the getaway car, another man seeking to intervene gave chase. Darnell, who by then was back inside the car, is accused of firing three shots at the Good Samaritan.

After the incident, police pursued the Camry as it sped north, reaching speeds of up to 110 mph. A television news helicopter captured video of the car speeding on the left shoulder of the 105 Freeway and at one point grazing the concrete median.

Cunningham was arrested after he bailed out of the vehicle in the city of Cypress. McCray and Darnell were arrested later in South Gate. All three defendants were being held without bail Friday.

“Our entire community extends its deepest sympathies to the loved ones of Patricia McKay and to the entire country of New Zealand as we mourn her senseless death in the commission of a crime that should have never happened,” Orange County Dist. Atty. Todd Spitzer said in a statement announcing the charges. “Lawlessness and violence will not be tolerated in our society.”

New Zealand Prime Minister Christopher Luxon described Patricia McKay’s death as “an absolute tragedy,” and extended condolences to family members, whom he knows personally. Douglas McKay is a prominent energy and business executive who served for several years as chair of the Bank of New Zealand and three years as the first chief executive of the Aukland Council created in 2010 for the region’s “supercity.”

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In a statement, the McKay family said: “No words can express our sadness as we try to come to terms with the loss of our mother, wife, and friend Patricia. We ask for privacy at this time as we work through this as a family.”

In 2023, McCrary pleaded no contest to charges of robbery and being a narcotics addict in possession of a firearm. He was sentenced to two years of probation with three years in state prison suspended.

Asked to explain the lack of prison time for McCrary, L.A. County Dist. Atty. George Gascón said in a statement: “The case against [him] had significant problems with proof. As a result of these issues, the management team at the Airport Court authorized a plea offer that allowed Mr. [McCrary] to be placed on probation with a suspended state prison sentence.”

Still, Gascón’s office called the latest crimes that McCrary is accused of “reprehensible.”

In announcing this week’s charges, Spitzer, the Orange County prosecutor, put some of the blame on Gov. Gavin Newsom and other California Democrats.

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“Our shopping centers and malls have become hunting grounds for criminals who are stalking innocent shoppers to rob them blind,” he said in a statement, “because our Governor and our Legislature refuse to hold anyone accountable for their actions.”

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Biden rules out quitting at start of make-or-break trip to battleground states

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Biden rules out quitting at start of make-or-break trip to battleground states

Joe Biden said he was “completely ruling out” ending his re-election bid on Friday at the start of a make-or-break weekend of public appearances intended to quell calls from within his party to drop out of the presidential race.

Biden sat for his first television interview since his disastrous performance in last week’s presidential debate, which sparked panic in the Democratic party.

In a clip of the interview released by ABC News, Biden said the debate was a “bad episode”, claiming he was “exhausted” and “sick” on the night.

But amid reports that members of Biden’s family are blaming his top campaign staff for the president’s halting performance, he said his appearance on the debate stage was “nobody’s fault but mine”.

The interview came shortly after Biden delivered a defiant speech in Wisconsin, a swing state, telling a crowd of supporters that he would not bow to the mounting pressure on him to quit.

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“Guess what? They’re trying to push me out of the race. Let me say this as clearly as I can: I’m staying in the race. I’ll beat Donald Trump.”

But Biden’s bullishness was undercut by a report that an influential Democratic senator was attempting to assemble a group of the party’s senators to urge the president to drop his re-election bid.

Mark Warner, a senator from Virginia, told colleagues that Biden could no longer remain in the race for the White House, The Washington Post reported on Friday. A spokesperson for Warner did not respond to a request for comment. When Biden was later asked by a reporter about Warner, the president said the senator was “the only one considering that”.

Separately, Maura Healey, the Democratic governor of Massachusetts, became the first state governor to suggest Biden step aside. Healey was among governors who met the president for emergency talks at the White House this week.

She issued a statement on Friday afternoon saying she was “deeply grateful” for Biden’s leadership, but urged him to “listen to the American people and carefully evaluate whether he remains our best hope to defeat Donald Trump”.

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But Biden brushed aside the concerns again on Friday evening, telling reporters that he was “completely ruling . . . out” leaving the race. When a reporter asked him if he was the best candidate to beat Trump, Biden replied: “I did it before.” When the reporter asked a follow-up, he replied: “You’ve been wrong about everything so far. You were wrong about 2022 . . . you were wrong about 2023 . . . so look, we’ll see.”

Reporters travelling with Biden noted several people standing outside the venue where he spoke in Wisconsin holding signs urging him to “bow out” and “pass the torch”. Another sign read: “Give it up, Joe,” while one said: “Pres Biden — serve your country — not your ego.”

On Sunday, Biden will make a campaign stop in another swing state, Pennsylvania. The trip through critical states comes as he battles to quell deep discontent in his party about his determination to stay in the race. Despite Democratic governors publicly voicing support for Biden this week, scores of lawmakers, party operatives and influential donors are now agitating for him to be replaced with a younger candidate.

The pre-recorded interview with ABC News’s George Stephanopoulos, a former adviser to Democratic president Bill Clinton, was being billed as a chance for the president to allay concerns about his mental acuity.

But White House press secretary Karine Jean-Pierre sought to downplay the significance of the interview, telling reporters on Air Force One on Friday that Biden was preparing for the conversation “like he does with any other interview”.

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Some donors have pushed California Governor Gavin Newsom and Michigan Governor Gretchen Whitmer to replace the president as the Democratic candidate, the Financial Times reported on Thursday. Vice-president Kamala Harris is in pole position to replace Biden if he drops out.

A handful of Democratic lawmakers have come out publicly in recent days calling for Biden to end his re-election bid. An increasing number of megadonors — including media heiress Abigail Disney and Hollywood agent Ari Emanuel — have said they would not give Biden any more money.

Biden has also been weakened by damaging public opinion polls that show him trailing Trump by several points both nationwide and in the battleground states that are likely to determine the outcome of November’s election.

But Biden and his campaign have refused to blink in the face of the pressure. His campaign on Friday said it would spend another $50mn on advertising in the month of July, including for ad spots that would run during this month’s Republican National Convention and the Olympics.

Harris, Newsom and Whitmer have remained publicly loyal to the president’s campaign. At a July 4 celebration at the White House on Thursday evening, Biden joined hands with his vice-president as some people in the crowd chanted, “four more years”.

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But other prominent Democrats are more reluctant to share the stage with the president. When Biden visited Wisconsin on Friday, he was joined by the state’s Democratic governor, Tony Evers — but not Tammy Baldwin, the state’s Democratic senator, who is polling far ahead of the president.

The latest FiveThirtyEight polling average shows Trump leading Biden by just shy of two points in Wisconsin.

Trump has kept a relatively low profile since the debate, allowing media attention to remain on Biden’s difficulties and Democratic disarray.

But the former president has slammed Harris in recent days, and on Thursday night challenged Biden to another “no holds barred” debate. A second debate between them is already scheduled for September.

“What a great evening it would be, just the two of us, one on one, in a good, old fashioned debate, the way they used to be,” Trump said in a post on his Truth Social platform. “ANYTIME, ANYWHERE, ANYPLACE!!!”.

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Biden said on Friday that he remained “committed” to attending the September debate.

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