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Fed minutes: Rate hike possible if inflation persists
Federal Reserve officials indicated at their July meeting that interest rates may need to rise if inflation fails to cool further, according to minutes released on Wednesday. “Many participants assessed that policy tightening would likely be necessary if inflation did not decline,” the minutes said. “Some participants commented that financial conditions might not currently be sufficiently restrictive to facilitate a return of inflation to 2 percent.” The Federal Open Market Committee voted 9-3 to keep interest rates steady in a target range of 3.5%-3.75%, where it has remained throughout the year. The three dissenting officials favoured a 25-basis-point rate increase. The minutes said the dissenters “judged that doing so would likely help forestall the need for a steeper and potentially more costly sequence of tightening moves at a later stage”. The three dissenting votes came from regional Fed presidents Beth Hammack of Cleveland, Lorie Logan of Dallas and Neel Kashkari of Minneapolis. Since the July meeting, inflation data have generally shown modest monthly price increases, although key measures remain above the Fed's 2% target. The personal consumption expenditures price index, the central bank's prefer
Outlook
Pressure mounts on Warsh's Fed as officials flag hikes
Recent comments from United States Federal Reserve officials have raised the prospect of further interest rate increases, even as this week's inflation data pointed to easing price pressures and reduced market expectations for a September hike. U.S. consumer prices rose 3.4% annually in July, down from 3.5% in June, while core CPI eased to 2.5%. Producer prices were unchanged during the month, below expectations for a 0.2% increase. However, inflation remains well above the Fed's 2% target, while the ongoing US-Iran conflict has created uncertainty over the outlook for energy prices and broader inflation. Markets had initially hoped the increase in energy prices associated with the conflict would prove transient. However, with the war continuing and the Strait of Hormuz largely closed, the risk of a more persistent inflation shock appears to be rising.Credit: Federalreserve / flickrHammack calls for immediate rate hikeCleveland Federal Reserve President Beth Hammack reiterated on Thursday that the central bank should raise interest rates to curb inflation and restrain business growth and investment. "When I'm talking to businesses, I hear that businesses are excited to raise funds, they're excited to borrow so th
Outlook
Renewed Iran war raises global rate hike risks
The resurgence of the United States-Iran conflict has reignited fears of a global inflation shock, forcing central banks to reconsider their interest rate paths as higher energy prices threaten to prolong price pressures and weaken economic growth. Markets had been positioning for a softer inflation environment after a fragile ceasefire between Washington and Tehran briefly eased concerns over oil supply disruptions. However, renewed military escalation has pushed crude prices sharply higher, reviving the prospect of a stagflationary shock similar to previous energy crises. The conflict has placed central banks in a difficult position: raising rates could help contain inflation expectations but risks worsening already fragile growth conditions. The Reserve Bank of Australia (RBA) is among those facing renewed pressure. The Guardian reported, citing ANZ forecasts, that market pricing now suggests the probability of a rate increase has almost doubled, with traders assigning a nearly 30% chance of a hike on 12 August, up from 16% two weeks earlier. The probability of a rate increase by November has risen to 80%, according to the forecasts. Brent crude has climbed around 23% over the past two weeks, approaching US$90
Outlook
Warsh vows Fed 'regime change' to tackle inflation
Federal Reserve Chair Kevin Warsh on Tuesday reaffirmed his commitment to overhauling the United States central bank's approach to monetary policy, describing inflation as an "unfair burden" on households and businesses and pledging what he called a "regime change" at the Federal Reserve. Warsh, who took office two months ago, said the central bank has already begun implementing broad reforms, including the creation of five internal task forces to review key areas of the Federal Reserve's operations. The groups will examine the Fed's communications strategy, technology, balance sheet, economic data collection and analysis, and its framework for assessing inflation. “In six weeks, we have caused, I think, a sea change in new thinking-the beginning of a set of reforms that are going to be put in place across at least five dimensions in monetary policy,” he said. “We made a lot of progress in six weeks, but I think it’s important to use this opportunity wisely.” Fed chairs are required to testify before Congress twice each year to present the central bank's monetary policy report and answer lawmakers' questions. Addressing lawmakers, Warsh said the current period represents a pivotal moment for the institution. “
Outlook
IMF cuts 2026 outlook; war and AI reshape economy
The International Monetary Fund (IMF) has lowered its 2026 global growth forecast, warning that the world economy faces continued risks from the Middle East conflict, trade fragmentation and a potential correction in artificial intelligence-driven market expectations. The IMF now expects the global economy to expand 3.0% in 2026, down from its April forecast of 3.1%, before growth rebounds to 3.4% in 2027. The forecast remains below the 3.5% average growth recorded in 2024 and 2025. The lender said the global economy had so far avoided a sharper slowdown, with strong demand for artificial intelligence and related technologies helping offset the economic impact of disruptions to energy supplies caused by the war in the Middle East. However, the IMF warned that inflation pressures were likely to remain elevated, raising its 2026 global headline inflation forecast by 0.3 percentage points to 4.7% from April. Inflation is expected to ease to 3.9% in 2027. Energy prices remain a key driver of the outlook, with the IMF noting that prices were around 25% higher than before the war began on 28 February and expected to remain elevated. The updated forecast assumes the Strait of Hormuz will begin reopening in mid-July, with s

Outlook
World Bank warns on slowing growth, AI divide
Global economic growth is set to slow to 2.5% this year, marking its weakest pace since the Covid-19 pandemic, as geopolitical tensions and rising inflation continue to weigh on the outlook, according to the World Bank Group. In its latest Global Economic Prospects report, the Washington-based institution downgraded growth forecasts for two-thirds of countries, warning that higher borrowing costs and disruptions linked to conflict in the Middle East are threatening to drag on global activity. The World Bank estimates global growth at 2.7% in 2025, with a further slowdown expected this year. Inflation is projected to rise to 4% in 2026, up from 3.3% in 2025, as energy and commodity markets remain vulnerable to supply shocks. Average fertiliser prices are also forecast to climb sharply, with increases of up to 38% expected due to disruptions in supply chains linked to the Strait of Hormuz and broader energy market instability. The World Bank warned that developing economies, excluding major Asian growth engines such as India and China, risk a prolonged period of weak convergence with advanced economies. It described the 2020s as potentially a “lost decade” for much of the developing world if structural constraints
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Fed officials see inflation easing despite risks
Two senior Federal Reserve officials expressed cautious optimism this week that inflation will moderate in the coming years, although both indicated there was little urgency to adjust United States interest rates in the near term. Chicago Federal Reserve President Austan Goolsbee said inflation remains the central bank's primary challenge despite some encouraging signs in recent data, while New York Federal Reserve President John Williams said he expects price pressures to gradually ease as several temporary factors fade. The remarks came after the Commerce Department reported that the Federal Reserve's preferred inflation gauge, the core personal consumption expenditures (PCE) price index, rose 3.4% in May from a year earlier, the highest annual reading since October 2023. Monthly data showed goods prices rose 0.4% while services increased 0.5%, the strongest monthly gain in services since January. Higher energy costs, which climbed 6.5%, drove much of the increase in goods prices, while transportation services, a category sensitive to fuel prices, rose 0.8%. Speaking during a live CNBC interview from the trading floor of the Cboe, Goolsbee declined to speculate on the future path of interest rates, saying his focus r
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Counting down to the survey that profiles a nation
It may not stop the nation like the Melbourne Cup but it does give Australians pause for thought every five years. The Census of Population and Housing is this nation’s biggest logistical undertaking outside of wartime, according to Dr Liz Allen of the Australian National University’s Centre for Social Policy Research. Completing the Census may seem like an unavoidable chore for Australia’s 11 million households but members of one group can barely hide their excitement as it approaches on Tuesday, 11 August: demographers like Allen and Mark McCrindle. “I get pretty charged up about it,” McCrindle, the founder and principal of the Australian social research, demographics and trends consultancy McCrindle told the recent Morningstar Investment Conference 2026. “It's exciting every time there's new Census data coming out. Put it in the diary.”More than a headcountAustralia’s population came in at 25,422,788 people at the time of the last Census on August 2021, but it is more than a statistical headcount. McCrindle, Allen and their fellow population researchers see the results of the questionnaire as a national snapshot, while policymakers use it as a planning tool. Not far behind them in terms of interest are economi
Outlook
Fed officials signal policy divide as Warsh era begins
Recent speeches and policy remarks from current and former Federal Reserve officials have cast a spotlight on growing tensions over the direction of United States monetary policy, as inflation concerns persist and the central bank enters a new leadership era under Chair Kevin Warsh. Former Federal Reserve Chair Jerome Powell warned that rising political pressure on the central bank could undermine public trust in its independence, describing the situation as a political “stress test” during remarks at the John F. Kennedy Library Foundation in Boston. Powell, whose tenure as chair ended on 15 May, pointed to efforts by the Trump administration to influence Fed personnel decisions and policy direction, including calls for his resignation and attempts to remove Fed Governor Lisa Cook. “If any administration finds a way to remove Fed officials over policy differences, then ⁠future administrations will do so as well,” Powell said while accepting the John F. Kennedy Profile in Courage Award. “The public would lose faith that the central bank will make decisions based only on what’s best for all Americans.” Powell also referenced a now-dropped Department of Justice inquiry into a US$2.5 billion renovation of the Fed’s Wash