‘Time has come’ for rate cuts: Fed chair Powell
US Federal Reserve chairman Jerome Powell today told a central bank symposium that the "time has come" for the Fed to begin lowering borrowing costs, just weeks before the next Fed policy meeting in mid-September.
"The time has come for policy to adjust," he told an audience of central bankers and economists at the annual symposium at Jackson Hole, Wyoming. "The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks."
Powell's remarks today are the clearest signal that the Fed is ready to begin lowering borrowing costs, a move that would help spur economic activity as the economy has shown signs of slowing. The move would also come a little over two months before the presidential election in the US.
After the 31 July Fed policy meeting that kept the rate unchanged, Powell said that if economic data continued to come in as expected, a rate cut "could be on the table" for the September meeting.
After Powell's remarks today, the CME's FedWatch tool was signaling 65.5pc odds of a quarter point rate cut at the next Fed meeting and 34.5pc probability of a 50 basis point cut. That compares with 76pc for a quarter point cut and 24pc for a half point cut Thursday.
"With an appropriate dialing back of policy restraint, there is good reason to think that the economy will get back to 2pc inflation while maintaining a strong labor market," he said today in the text of his speech. "The upside risks to inflation have diminished. And the downside risks to employment have increased."
The Fed — which has a dual mandate of pursuing maximum employment and price stability — has been battling to bring down inflation for the last two years after it peaked at 9.1pc in June 2022. In the sharpest course of rate hikes in four decades, the Fed pushed up its target rate by more than five percentage points to a range of 5.25-5.5pc from early 2022 through July 2023.
The Fed has maintained the target rate at that level since then, which has pushed the consumer price index to 2.9pc in the year through July, its lowest in three years. While inflation has slowed markedly, the economy has largely proven resilient.
Still, the labor market has shown signs of weakening recently, especially as a much weaker-than-expected employment report for July caused a brief meltdown on financial markets several weeks ago. This prompted some economists to warn that the Fed had been too slow in adjusting its policy as recession fears had mounted.
"We will do everything we can to support a strong labor market as we make further progress toward price stability," Powell said. "The current level of our policy rate gives us ample room to respond to any risks we may face."
Powell noted that the labor market "has cooled considerably from its formerly overheated state," pointing out that unemployment had risen by nearly one percentage point to 4.3pc in July from early 2023, "still low by historical standards… Even so, the cooling in labor market conditions is unmistakable."
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Union plans new rail strike despite arbitration order
Union plans new rail strike despite arbitration order
Washington, 23 August (Argus) — The status of rail freight in Canada remains uncertain after a Canadian labor union today issued a new strike notice to Canadian National (CN), less than a day after the federal government forced all parties to participate in binding arbitration. The Teamsters Canada Rail Conference (TCRC) today issued notice to CN that members will go on strike at 10am ET on 26 August. The union had not issued a strike notice to CN earlier this week, but employees could not work yesterday after the CN and Canadian Pacific Kansas City (CPKC) locked them out. "We do not believe that any of the matters we have been discussing over the last several days are insurmountable," the union said today in its notice to CN. It said it would be available to discuss issues to avoid another work stoppage. CN indicated it was frustrated with the union's action. "While CN is focused on its recovery plan to get back to powering the economy, the Teamsters are focused on returning to the picket line and holding the country hostage to their demands," the railroad said. CN last night had begun implementing a recovery plan to restore service . The union has not yet responded to inquiries about its action today. The office of labour minister Steven MacKinnon declined to comment. Rail operations at CN and CP stopped at 12:01am ET on Thursday after the union launched a strike at CPKC and both railroads locked out employees. That action ended late Thursday afternoon with the federal government directing the Canada Industrial Relations Board (CIRB) to manage binding arbitration on the railroads. CIRB, an independent agency, has not yet said if it will accept the government's order. CN began moving some freight early on 23 August, but the new strike order issued soon by the union today could disrupt those plans. The union has also challenged the constitutionality of MacKinnon's order regarding CPKC operations pending the outcome of a new ruling by the CIRB. CPKC's rail fleet remains parked in the meantime. CPKC said late Thursday it was disappointed in the minister's decision and sought to meet with CIRB to discuss resumption of service. CPKC said the union "refused to discuss any resumption of service, and instead indicated that they wish to make submissions to challenge the constitutionality of the Minister's direction." A case management meeting with CIRB occurred last night and another was scheduled for early today. By Abby Caplan Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Court endorses Maduro win amid warnings, violence
Court endorses Maduro win amid warnings, violence
Caracas, 23 August (Argus) — Venezuela's supreme court validated the reelection of President Nicolas Maduro to a third six-year term, maintaining he is the victor of the polemic 28 July vote. The court did not present any electoral material, ballots or tallies to support the claim, and no experts offered testimony. "This chamber declares ... the validity of the electoral material surveyed and validates the results of the presidential election," court chief justice Caryslia Rodriguez said. She also declared presidential candidate Edmundo Gonzalez to be in contempt of court for not attending the proceedings. Rodriguez's announcement came two hours after a UN mission questioned the official results. "We warn about the lack of independence and impartiality of the supreme court of justice and the national electoral council of Venezuela, which have played a role within the repressive machinery of the state," the UN fact-finding mission on Venezuela posted on social media. Gonzalez has produced electoral material, including tallies printed by voting machines and signed by witnesses on election day, giving him the victory by almost 70pc to 30pc. The "actas," as the tallies are known in Venezuela, were validated by several independent parties, including the Carter Center, the UN and the Organization of American states. The CNE electoral agency has also failed to present any of the other sets of these documents. Audits were never conducted. The Maduro government confirmed this week that 27 Venezuelans were killed in post-electoral violence, for which it blamed the opposition. Human rights non-government organization Provea said the bulk of the violence came from police and the military. Six anti-Maduro demonstrators were killed on 29 July near an army base. By Carlos Camacho Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
UK HRC quota recommendation 'unworkable': Stemcor
UK HRC quota recommendation 'unworkable': Stemcor
London, 23 August (Argus) — The UK Trade Remedies Authority's recommendation to change hot-rolled coil (HRC) import quotas is "unworkable", according to steel trader Stemcor. In a letter to the TRA, Stemcor questioned the "fairness" of a global non-country specific quota for category 1B, while keeping a "very restrictive" and "unworkable" country specific quota for 1A — the TRA has recommended splitting the current HRC quota into two, adding a larger global quota for downstream processing under 1B . The TRA's recommendation is highly aligned with Tata Steel's requests , to the chagrin of other importers, including service centres. "We strongly believe it is incorrect and inequitable to use historical, out-of-date statistics for the purposes of calculating a TRQ on 1A when giving no restriction whatsoever on 1B," Stemcor told the TRA. It also said it is "concerned" there is no provision in the recommendation restricting domestic producers from using 1A. This leaves the quota "open to abuse", the trader suggested. Traders and importers have said Tata Steel should not have access to 1A, given the quota of around 1.9mn t granted for 1B, which will largely be utilised by Tata Steel, although a few other companies can access it too. Under its own proposal, Tata's distribution business would still be importing HRC under 1A. Tata said 1B should be policed to prevent it being abused by companies who do not use it for "downstream processing". In its filing to the TRA, Tata said "downstream processing" involves the transformation of HRC into cold-rolled, metallic coated sheet, organic coated sheet, tin mill, gas pipes, hollow sections, large welded tubes and other welded pipes. "TSUK notes that there is a limited number of UK companies that have the capabilities to carry out downstream processing as defined above. TSUK respectfully suggest that this factor is taken into account when assessing applications for authorisation from other UK companies," it said. The International Steel Trade Association (ISTA) has argued that other products manufactured from imported HRC, such as cold-formed sections and corrugated steels, should also be given access to 1B. Traders also question whether one company should be able to define "downstream processing". As with its member Stemcor, ISTA said the 1A quota should be global, in line with 1B — much of the existing quota is comprised of European material, which is costlier than material from elsewhere that will be freely accessible to Tata under a global 1B quota. By Colin Richardson Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Mine developer signs new deal for potential refinery
Mine developer signs new deal for potential refinery
Houston, 22 August (Argus) — Canada-based mine developer Fortune Minerals entered into a new option agreement with JFSL Field Services to purchase a brownfield industrial site to build a refinery that would turn out cobalt, bismuth and copper products. Fortune can acquire the property in Alberta's Lamont County by paying C$6mn ($4.4mn) before November 2025, the company said this week. It must make monthly payments of C$100,000 that will go toward the purchase price, as a condition of the deal. Fortune has paid JFSL a little more than C$1.4mn for the site so far, and that total will be deducted from the overall purchase price as well. The two had entered into a previous option agreement that expired in July after being extended more than once. JFSL will be allowed to market the site to other prospective buyers during the option period, but Fortune will have a 90-day right of first refusal to match any offer. Additionally, JFSL has the right to continue using the property and its existing facilities for 18 months following a sale to Fortune. Fortune touts that the 77-acre property, which previously contained a steel fabrication plant, is near rail lines, reagents key to the potential refinery's function and skilled labor from the existing petrochemicals industry in the area. Fortune expects to refine concentrates from its NICO critical minerals project in the Northwest Territories into 8,780 metric tonnes/yr of cobalt sulphate, 1,700 t/yr of bismuth ingots and 300 t/yr of copper in cement precipitate. Fortune also has a collaboration in place to potentially extract cobalt and bismuth from waste streams from mining conglomerate Rio Tinto's smelter in Utah that pulls ore from its Kennecott copper mine. Development of the mine, which is anticipated to utilize open-pit and underground mining methods, has yet to begin with Fortune awaiting a final project construction decision. Fortune received federal funding from both the Canadian and US governments to complete a new feasibility study and other work that is needed before that determination can be made. That process is expected to take 20 months. Fortune also still needs to line up construction financing for the mine and refinery, which are estimated to cost C$770mn. It predicts establishing the mine would take two years, while the refinery would take 18 months. By Alex Nicoll Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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