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K-shaped economy: NY Fed flags rising food insecurity
The Federal Reserve Bank of New York has warned that lower- and middle-income households are facing mounting financial strain and a “remarkable increase in food insecurity” as the divide within the United States economy continues to widen. In a recent blog post, New York Fed researchers said the increasingly pronounced “K-shaped” economy has left many lower-income Americans struggling with rising living costs even as wealthier households continue to benefit from strong asset prices and economic growth. Drawing on data from the central bank’s Survey of Consumer Expectations, the researchers said prolonged inflation has disproportionately affected lower- and middle-income households because a larger share of their spending is directed toward essentials such as housing, food and utilities. As prices in those categories have surged since the pandemic, many households have been forced to reduce grocery spending and cut back on other necessities. “The greater financial strain due to the high cost of living, combined with the expiration of pandemic-era aid (such as expanded SNAP benefits), have led to renewed concerns about food insecurity among those at the bottom of the K-shape,” the researchers wrote. The report noted t
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IMF warns that EU must reform in face of joint debt
European Union countries will face large bills for defence, energy and pensions in the next 15 years, the International Monetary Fund told EU finance ministers on Saturday, suggesting a mix of reforms, consolidation and joint borrowing to manage them. "If left unchecked, public debt will be on an unsustainable path. Under unchanged policy, debt of the average European country would reach 130 percent of GDP by 2040 — roughly doubling from today," the IMF said in a paper ⁠used as a basis for the ministers' discussions at an informal meeting in Nicosia. The paper said that to prevent such a scenario, EU countries must improve incentives for citizens to move around the 27-nation bloc to find work and for companies to hire them. The EU should also integrate its energy markets, make it easier for citizens' savings to flow across the bloc into profitable investments and unify laws that now often differ from country to country. Pension reforms and a higher retirement age would also help, as would government guarantees for riskier investments in low-carbon and climate-resilient projects that would help attract private capital. Finally, governments should agree ‌that ⁠innovation, energy and defence are European public g
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Warsh sworn in as Fed chair amid inflation risks
Kevin Warsh has been sworn in as chair of the Federal Reserve at a pivotal moment for the United States economy, as policymakers grapple with rising inflation pressures linked to the conflict involving Iran and Israel and growing concerns over consumer confidence. Warsh signalled an intention to pursue major reforms at the central bank shortly after taking the oath of office. “I will lead a reform-oriented Federal Reserve, learning from past successes and mistakes, both escaping static frameworks and models and upholding clear standards of integrity and performance,” Warsh said. Warsh, who was selected by United States President Donald Trump in January when expectations pointed toward moderating inflation and stable economic growth, now assumes leadership of the central bank amid a much more challenging environment. The economic outlook has deteriorated as surging oil prices tied to the conflict in the Middle East have pushed petrol prices sharply higher, mortgage rates to their highest level in nine months, and overall inflation to its highest level in three years. Despite mounting price pressures, American consumers have continued spending, helping shield the economy from a broader downturn. However, affordabil
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Fed minutes reveal growing hawkish shift
Federal Reserve officials grew increasingly concerned last month that inflation pressures stemming from the Iran war could require additional interest rate increases, according to minutes from the central bank’s latest policy meeting. Policymakers ultimately voted to keep the federal funds rate unchanged within a range of 3.5% to 3.75%, though the minutes revealed a growing divide within the committee over the future direction of monetary policy. While some officials continued to support eventual rate cuts should inflation ease or labour market conditions weaken, a larger number indicated they were increasingly open to tighter policy if inflation remained elevated. The minutes stated: “A majority of participants highlighted, however, that some policy firming would likely become appropriate if inflation were to continue to run persistently above 2 percent. "To address this possibility, many participants indicated that they would have preferred removing the language from the postmeeting statement that suggested an easing bias regarding the likely direction of the Committee's future interest rate decisions. "Participants noted that monetary policy was not on a preset course and that future policy decisions would be mad
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Warsh to be sworn in as leader of Fed on Friday
Kevin Warsh will be sworn in to lead the Federal Reserve by President Donald Trump on Friday. Warsh was Trump’s top pick for the job and will succeed Jerome Powell, whose term expires Friday. Powell intends to remain on the Board of Governors until he is satisfied that a Trump administration criminal probe of him is fully wound down. Powell was sworn in as temporary chair on Friday to bridge the leadership gap until Warsh is formally installed. Once seated, Warsh will become the 11th chair in the modern era and will be the wealthiest person to ever hold the seat based on financial disclosures he filed ahead of confirmation. He will have to divest himself of much of the investments that he has accrued in his portfolio to comply with the stringent new regulations adopted for Fed officials. Trump nominated Warsh for the job with expectations that the post-Powell Fed would resume lowering interest rates, as it did three times in 2025. However, markets expect that elevated levels of inflation and a stable labour market likely will discourage further easing until there’s ample evidence that the pace of price increases is again headed back to the Fed’s 2% goal. Powell presided over a Fed that has missed the targ

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The UK economy grew 0.6% in the first quarter of 2026
The U.K. economy grew 0.6% in the first quarter of 2026, according to figures from the Office for National Statistics. This matches Reuters’ expectations for the period and follows revised growth of 0.2% in the fourth quarter. Director of economic statistics Liz McKeown said wholesale, computer programming and advertising performed particularly well, and that production also grew slightly. “Growth picked up in the first quarter of the year, led by board-based increases across the services sector,” she said. The services sector grew 0.8%, while the production sector rose 0.2%, and the construction sector increased 0.4%. Despite the positive increases in the January to March period, the Iran war is expected to weigh on macroeconomic data going forward. The conflict in the Middle East has put massive strains on energy supply chains because of the effective closure of the Strait of Hormuz, where around 20% of the world’s oil and gas is transited through. The Bank of England said the severity of the hit to the British economy will depend on how long the war lasts and is expected to hike interest rates later this year. This comes as the International Monetary Fund predicted that the U.K. could experience the bigg
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Goolsbee urges Fed caution after inflation rise
Chicago Federal Reserve President Austan Goolsbee said recent inflation data represented “bad news” for the United States central bank and underscored the need for policymakers to remain cautious about cutting interest rates until there is clearer evidence that inflation is moving back towards target. Speaking on Fox News’ “The Journal Editorial Report” on Saturday, Goolsbee pointed to persistent inflation pressures as a reason for restraint in monetary policy decisions. "The inflation side was bad news, in the last twelve months we are running higher than 3% inflation." The comments followed data released last week showing the personal consumption expenditures (PCE) price index, the Federal Reserve’s preferred inflation gauge, rose at an annual rate of 3.5% in March, well above the Fed’s 2% objective. “We have got to get some assurance that we are on a path back to the 2% inflation target,” Goolsbee said. When asked whether the Federal Reserve had been too accommodative for too long, Goolsbee defended his long-held concerns about easing policy prematurely. "I didn't want to front load the rate cuts, presuming that inflation is going to be transitory, it felt like the fed made that mistake before … I ended up dis
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UK retail sales volumes hit lowest levels in 40 years
United Kingdom monthly retail sales volumes dropped to their lowest level since 1983 in April, according to a CBI survey. According to the survey, retail sales volumes for this time of year were judged to be ‘poor’, dropping to -68 from -52 in March. Sales are expected to continue to decline at a sharp pace next month. According to Reuters, 77% of firms reported that sales were down compared to a year ago, while only 9% reported a sales increase. Retail sales for the time of year were judged to be “poor” in April, reaching -32 and are set to plunge even further to -43. Online retail sales volumes had the most negative outlook of -68 from -58 in March, but are expected to recover at a modest pace next month. CBI lead economist Martin Sartorius said many firms reported headwinds from high costs and muted demands following the war in Iran, and that conditions deteriorated in April on the back of weaker consumer confidence. “With the economic impact of the Iran conflict becoming clearer, firms will be looking to government to recognise that easing cost of living pressures depends on tackling the cost of doing business,” Sartorius said. “For the distribution sector, that means securing appropriate landing zones on
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Warsh backs Fed independence, narrows focus
Federal Reserve chair nominee Kevin Warsh has stressed the importance of central bank independence while warning policymakers to remain focused on core monetary objectives. In prepared remarks set to be delivered to the Senate Banking Committee, Warsh said the Federal Reserve must remain largely insulated from political pressure but also avoid straying beyond its mandate. His comments come as scrutiny intensifies over the role of politics in shaping U.S. monetary policy. “Simply stated, Fed independence is largely up to the Fed,” Warsh said. Warsh reiterated his commitment to tackling inflation, with his remarks placing far greater emphasis on price stability than on employment conditions. The balance between these dual mandates has been a focal point for policymakers in recent years. A central theme of his speech was criticism that the Fed has expanded its remit into areas beyond its traditional scope, including climate change and social inequality. “The Fed must stay in its lane. Fed independence is placed at greatest risk when it strays into fiscal and social policies where it has neither authority nor expertise,” he added. Warsh was nominated in January by U.S. President Donald Trump to succeed current Fed