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Traders work as screens broadcast a news conference by US Federal Reserve Chair Jerome Powell following the Fed rate announcement, on the floor of the New York Stock Exchange (NYSE) in New York City, USA, on May 7, 2025.
Hard Numbers: Federal Reserve holds interest rates steady, US Navy jets skid into the sea, The one-percent impact on the climate, Feathery “mass cannibalism” in South Africa
4.5: The US Federal Reserve on Wednesday left its key interest rate unchanged for the third time in a row, keeping it at 4.25%-4.5%, where it’s been since December. President Donald Trump has publicly pressured Federal Reserve Chair Jerome Powell to lower rates. “The economy itself is still in solid shape,” Powell told reporters Wednesday, but he said a “great deal of uncertainty” remains about the impact of Trump’s global tariffs and wider trade wars.
2: Speaking of uncertainty, why are US warplanes falling into the sea? According to reports, two F/A-18 Super Hornet fighter jets have slid off the deck of the USS Harry S. Truman carrier into the Red Sea over the past week alone. The first plunged into the water when the warship made a hard turn to evade fire from Houthi rebels. The second may have experienced a landing problem. Each jet costs a cool $60 million – cue Commander Stinger, “you don’t own that plane, the taxpayers do!”
10: The richest 10% of the global population are responsible for two-thirds of the global temperature rise since 1990, according to new research published by Nature Climate Change. The study also claims that compared to the average person, the world’s richest 1% contributed 26 times more to extreme heat globally and 17 times as much to droughts in the Amazon. Private jets are not, as it happens, great for the environment.
350,000: Animal welfare officers in South Africa euthanized more than 350,000 chickens after a state-owned poultry company ran out of funds to feed them. Officials couldn't estimate how many other chickens had died before this intervention due to “mass cannibalism” at the farm (yes, chickens eating each other). Still, on the plus side, the NSCPA’s action saved more than 500,000 chickens who may now be… eaten by people anyway.US President Donald Trump alongside Federal Reserve Chairman Jerome Powell, back when the latter was the nominee for his current position, in Washington, D.C., USA, on November 2, 2017.
Could the Fed’s independent streak be over?
The United States’ judicial branch is set to reexamine an old decision that could have huge new consequences for the credibility and stability of the world’s largest economy.
The Supreme Court has requested briefs in a case that concerns the so-called “Humphrey’s Executor” precedent, a 90-year-old ruling that stops presidents from firing the leaders of quasi-governmental institutions without cause.
The Trump administration, which wants more power to sack appointees,says the precedent wrongly limits executive authority, and should be reversed.
What this is really about. Though the case concerns members of the National Labor Relations Board and the Merit Systems Protection Board, the Supreme Court’s decision could allow the president to fire a much more important figure: Fed Chairman Jerome Powell. That’s because the Federal Reserve, like the NLRB and MSPB, is also a quasi-governmental organization, meaning that it works for the public interest but is independent of the executive branch.
With Donald Trump’s trade war already putting US financial and bond markets on edge, the last thing the central bank wants is a loss of independence, which would compromise markets’ confidence that the regulator is acting based on its economic mandates rather than Trump’s political whims.
Carveout possible. The top US court is reportedly skeptical of the Humphrey’s Executor precedent, but there is a world where it overturns this 1935 ruling while explicitly safeguarding the Federal Reserve’s independence.
There’ll be a new sheriff. Whatever happens, Powell’s term ends in May 2026, giving Trump the chance to nominate a successor. We’ll be keeping an eye on whether Treasury Secretary Scott Bessent, who has emerged as a leading voice in the White House, starts interviewing potential candidates sooner than that...Flags of Canada and China.
HARD NUMBERS: China executes Canadians, Tariffs slow economic growth, Canada buys Australian tech, Fed keeps rates steady, Egg seizures escalate while drug busts drop
4: The Canadian government has strongly condemned China’s use of the death penalty, following revelations the country executed four Canadian citizens for drug-related offenses, despite appeals for clemency. China carries out more executions than any other country and has a conviction rate of over 99%.
2.2: US President Donald Trump's tariff tiff with Canada is dampening economic growth on both sides of the border. Canada’s GDP was set to rise by 2% in 2025, and America’s by 2.4%. An OECD analysis has revised those figures to 0.7% and 2.2%, respectively, as a result of the trade war.
6 billion: Canadian Prime Minister Mark Carney announced a CA$6 billion purchase of an Over-the-Horizon Radar system from Australia to enhance Arctic early warning capabilities. Carney’s move both asserted Canada’s northern sovereignty and allowed Australia to find a buyer for its technology after DOGE cuts impacted possible US spending on the project.
4.5: The US Federal Reserve held overnight interest rates steady on Wednesday, in the target range of 4.25 to 4.5 %. But the Fed also signaled a willingness to cut borrowing costs by half a percentage point later this year, anticipating economic growth to slow to 1.7% and inflation to rise to 2.7%.
116: US Customs and Border Protection says it made 3,254 egg-related seizures in January and February 2025, a 116% increase compared to the same period one year ago. US egg prices have ballooned 59% since February 2024 because of the culling of flocks due to bird flu. In comparison, fentanyl seizures at the border dropped by 32% during the same period compared to the previous year.US Federal Reserve Chair Jerome Powell speaks to the media during a press conference at the Federal Reserve, in Washington, DC, on Wednesday, Jan. 29, 2025.
A tale of two central banks
North of the border, though, the Bank of Canada went ahead with its sixth cut in a row, this one a modest 25 basis points, bringing its interest rate down to 3%. The bank noted an inflation rate of about 2%, a soft labor market, and an unemployment rate of 6.7% in December – and looked ahead to a potentially rocky 2025 for the country economically, even as it expects GDP growth to pick up this year. Maybe.
Immigration rates are slowing in Canada, and the threat of Trump tariffs could drive the country into a recession and send inflation soaring. The Canadian Chamber of Commerce warns that a 25% duty alongside retaliatory tariffs would cost Canada 2.6% of GDP per year – roughly CA$78 billion, while the US economy would take a 1.6% percent hit, coming in at US$467 billion.
Should that happen, the two central banks may quickly align themselves on the need for more, perhaps steeper, rate cuts.
A trader works on the trading floor at The New York Stock Exchange (NYSE) following the Federal Reserve rate announcement, in New York City, U.S., September 18, 2024.
The Fed goes big for its first rate cut since 2020
The Federal Reserve dropped interest rates by half of a percentage point on Wednesday, its first cut since 2020. The move – larger than the .25 bps that was also under consideration – is a show of confidence that inflation is moving sustainably toward 2%, and it aims to boost to the labor market. The cut will bring the benchmark federal-funds rate to a range between 4.75% and 5%.
The Fed decided that keeping rates high “was becoming restrictive and worried the labor market could turn sour quickly,” according to Robert Kahn, Eurasia Group’s managing director of macro-geoeconomics. “They didn't want to fall behind the curve and decided to get a quick start at easing.”
In the short term,anticipation of rate cuts boosted Wall Street, with the Dow Jones Industrial Average hitting a new record on Wednesday. Yields on the 10-year Treasury note stood at 3.64% on Tuesday, up slightly from a 52-week low recorded on Monday. It also bodes well for Kamala Harris’ campaign, since high interest rates had been souring voters’ views on the economy.
In the long term, the Fed “looks like they will move gradually from here,” says Kahn. “It's a quick start to a long journey.” Inflation expectations are also unlikely to be affected because “inflation has been coming down recently, so any new risks will take time to show themselves.”
Fed poised for 50 basis point rate cut
Breaking: Fed poised for 50 basis point rate cut
The Federal Reserve appears set to drop its benchmark interest rate by 50 base points today. That lending rate – which influences borrowing costs broadly – can put the economy in a chokehold when rates are high, or stimulate it when lowered.
According to Eurasia Group’s Managing Director of Global Macroeconomics Robert Kahn, “enough progress has been made on inflation to begin the process of easing financial conditions with a big first move to protect against recession.”
Lawmakers have repeatedly called on the Fed to lower rates over the past year. Still, the independent body has resisted, waiting for economic data to indicate that a soft landing – where inflation is tamed without a recession – appeared to be in sight. Inflation currently stands at 2.5%, down from its peak of 9.1% in 2022 and nearing the Fed’s 2% target.
Election effect: It takes time for monetary policy to make an impact, so any rate cut is unlikely to have a material effect on the economy before the election, but it will still have influence.
“It's possible that the cut, and the boost to markets that it could provide, gives a lift to sentiment surrounding the economy that helps the Harris campaign,” says Kahn. But, on the downside, “it will validate Donald Trump’s belief that the Fed is political and the move is being done to help his opponent.”Federal Reserve Chair Jerome Powell testifies during a U.S. House Oversight and Reform Select Subcommittee hearing on coronavirus crisis, on Capitol Hill in Washington, U.S., June 22, 2021.
August jobs report raises uncertainty ahead of Fed meeting
Friday’s new US jobs report showed that unemployment ticked down to 4.2% and employers added 142,000 jobs in August, lower than the 161,000 expected. The weaker-than-expected report is a continuation of a labor market cooling trend that has set off alarm bells that interest rates may have been too high for too long.
Look inside the numbers: The sector that saw the most job growth was construction, which gained 34,000 jobs, likely due to the Biden administration’s infrastructure spending. It was followed by health care, which added 31,000 jobs, and the public sector’s 24,000 new jobs.
Why it matters: The report was highly anticipated after unemployment spiked in July, leaving many wondering whether we were heading for a broader slowdown in the labor market – a key metric of how the Federal Reserve will steer interest rates when it meets later this month.
“Despite the headline unemployment number ticking down as expected, the details behind the jobs data were mixed,” says Eurasia Group’s global macroeconomics expert Babak Minovi. “Fed Gov. Christopher Waller gave some remarks later saying the jobs data now ‘requires action’ instead of patience, increasing the market's level of concern on the health of the economy.”
Although the jobs numbers were weaker than expected, the market didn’t miss the target enough to change projections, which still predict that the Fed will drop interest rates by at least 25 basis points when it meets later this month.
Federal Reserve Chair Jerome Powell testifies during a U.S. House Oversight and Reform Select Subcommittee hearing on coronavirus crisis, on Capitol Hill in Washington, U.S., June 22, 2021.
25 or 50? Jobs report likely to influence magnitude of Fed’s rate cut
Background: Unemployment has risen for four months in a row and is up almost a percent from its lows last year, which, according to Eurasia Group’s global macroeconomics expert Babak Minovi, is worrying because “rises in unemployment like this usually go hand in hand with recessions, and that’s certainly not our (or the market’s) base case.”
Why it matters: Fed Chair Jerome Powell has put the labor market at the heart of the central bank’s decision on when and how quickly to ease interest rates.
“Economists are expecting unemployment to stop its losing streak in August with a modest recovery, but another surprise worsening would be a warning sign to the Federal Reserve that the US economy is slowing down faster than intended,” says Minovi, who believes that under this scenario the Fed would cut interest rates by 50 basis points from its current 5.5% target rate, as opposed to 25. But, if the unemployment rate does improve as expected? “Markets will breathe a sigh of relief — for the time being,” says Minovi.