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Federal Reserve Governor Lisa Cook attends the Federal Reserve Bank of Kansas City's 2025 economic symposium in Jackson Hole, Wyoming, USA, on August 23, 2025.
What We’re Watching: Trump says he’s firing a Fed governor, French PM faces the guillotine, Botswana declares public health emergency
In latest attack on Fed, Trump says he’s firing a governor
US President Donald Trump said he’s firing Federal Reserve governor Lisa Cook, citing alleged false statements on her mortgage agreement as cause for her sacking. The legal authority for this move is unclear. Cook, the first Black woman to be on the Fed’s board of governors, said the president has no authority to remove her, and her lawyer vowed to reverse her dismissal. The president had repeatedly targeted Cook in recent days, the latest move in a series of extraordinary attacks on the Fed’s independence since he returned to office. The move prompted a sell-off of long-term US government bonds.
French Prime Minister faces likely ouster, markets reel
Prime Minister François Bayrou has called a confidence vote for Sept 8 on his €44 billion deficit-cutting budget — a move widely expected to topple his minority government, as key opposition factions have vowed to vote against him. If Bayrou loses, France would face another government collapse, prolonging political gridlock and raising the risk of snap elections that could hand the right wing an outright majority. Markets reacted immediately: France’s 10-year borrowing costs surged to 3.53%, and the CAC 40, France’s benchmark stock index, fell for a second straight day.
Botswana declares public health emergency
A shortage of medicines and medical equipment, including for cancer and tuberculosis treatments, prompted Botswana President Duma Boko to declare a nationwide public health emergency yesterday. A country of 2.5 million people in southern Africa, Botswana has suffered badly from a downturn in the diamond industry, fueling unemployment and poverty. US aid cuts have exacerbated these issues: the United States used to fund a third of Botswana’s aid response, per UNAIDS. The shortages are a major test for Boko, who is in his first year office after ousting the party that had governed for 58 straight years.Three presidents have visited the Federal Reserve before Donald Trump
Graphic Truth: Donald Trump visits the Federal Reserve
Donald Trump is set to visit the US Federal Reserve building on Thursday to inspect its recent $2.5 billion structural renovation, amid an intensifying White House pressure campaign on Fed Chair Jerome Powell. Trump has been publicly urging Powell to slash interest rates by three points from the current level of 4.5%, and recently accused the Fed of mismanaging the renovation project — just days after briefly threatening to fire Powell. This marks only the fourth time in history that a sitting president has visited the central bank, which is meant to operate independently to ensure its decisions are driven by economic data, not political influence.
Chair of the Federal Reserve Jerome Powell testifies during a House Financial Services Committee hearing.
There’s no party like a rate hike party
Rate hikes will continue … until morale declines or a recession hits. That’s the message market watchers expect, despite slowing inflation, from the Bank of Canada’s next meeting on July 12. The Canadian economy has stayed hot despite the Bank’s effort to cool it with increased interest rates, including a 25-point increase in June.
Federal Reserve Chairman Jerome Powell has indicated the US should expect more hikes, too. And with economists now believing the odds of a US recession are dropping, thanks to a strong labor market and strong consumer demand, the Fed may have no choice but to continue driving up borrowing costs.
Both central banks have signaled that rate hikes have had an effect, but wage growth rates aren’t cooling fast enough, and employment rates remain high. Predictions of a recession on both sides of the border have gone back and forth for months.
The US is Canada’s largest trading partner, so Fed decisions are being watched closely by Canadian economists.
Consider that 70% of Canadian exports go to the US, while only 17.5% of US exports go to Canada. US interest rate hikes, and how they impact exchange rates, can have an outsized impact on the Canadian economy. And if interest hikes lead to a US recession, this could push Canada closer to the brink by driving down demand, contracts, and prices.
Traders react to Fed rate announcement on the floor of the NYSE in New York.
US economy’s slowing growth
The US economy grew by just 1.1% year-on-year in the first quarter of 2023, suggesting that the Federal Reserve’s tightening of monetary policy to stamp out inflation is indeed slowing down the biggest economy in the world.
It’s a big drop from the 2.6% growth rate recorded in the last quarter of 2022 and suggests that the Fed’s spree of interest rate hikes since last year — raising the benchmark policy rate from around zero to 5% — is starting to have an impact despite consumer demand, which had so far remained strong due to a tight labor market and steady wage growth.
Ahead of next week’s policy meeting, Fed Chair Jerome Powell will be weighing up whether to keep tightening or to hit the brakes so as not to send the economy into a recession.
But there are still many unknowns on the horizon, including a looming crisis in Congress over raising the debt ceiling that could send markets into a tizzy, as well as more fallout from the ongoing banking crisis. This comes as many analysts, including Fed officials, say that the US will enter a recession later this year before the economic recovery can begin.Turkish President Recep Tayyip Erdogan.
What We’re Watching: Three ways to address inflation … with varying degrees of success
Erdonomics: Growth > stability
Turkey has long had a hyperinflation problem, but that doesn’t mean that its central bank has sought to raise interest rates to bring prices down. In fact, Turkey’s President Recep Tayyip Erdogan, whose unorthodox economic approach has been dubbed Erdonomics, has even sought to lower interest rates during inflationary times. Why?
Central to his approach is the belief that economic growth trumps all, including price stability. So Turkey’s central bank has been unwilling to raise interest rates to reverse hyperinflation, and Erdogan has even called himself an “enemy” of interest rates.
As the Turkish president explains it, keeping interest rates low – and static – stimulates demand, driving economic growth.
But that hasn’t panned out. Inflation in Turkey soared to a quarter-century high of 85% in October – largely due to roaring food and fuel prices. Crucially, analysts think the official number was closer to 186%, meaning prices would have almost tripled. As a result, the average Turk has far less disposable cash to inject into the economy. What’s more, Turkey has seen its currency, the lira, plummet a whopping 90% since 2008.
What do Turks think of the cost-of-living crunch? They will get to weigh in on May 14, when the country heads to the polls. Erdogan is facing a united opposition that has been pushing the message that he has wrecked the economy.
Price controls and unintended consequences
Inflation = prices going up. But what if they just … didn’t?
That’s basically the thought process behind price controls, an alternative tactic for fighting inflation where the government mandates maximum prices for goods. While this might sound good, price controls remove the magical balance of supply and demand: When something is expensive, it signals to producers that they can profit by increasing supply. But if the government artificially holds down prices, producers aren’t incentivized to meet demand, which leads to supply shortages, inefficiencies, and unintended consequences.
Most economists believe that monetary policies can tame inflation without capping prices. But with inflation now running rampant, some left-wing policymakers and economists are revisiting the idea. In 2022, US Sen. Elizabeth Warren proposed a bill to outlaw “abusive price gauging” during market shocks. Progressives argue that price caps help the poor, but there’s a catch.
The thing about price controls is that they tend to work in the beginning. In 1971, President Richard Nixon tried to nip inflation in the bud by implementing a 90-day freeze on most wages, prices, and rents. The result: Inflation fell by 50% ... at first. But as soon as the government eased restrictions, prices shot back up, requiring another round of caps that barely made a dent. The takeaway: Price controls might help in the short run, but not in the long run.
Argentina has long been addicted to using price controls for political gain. In late 2021, after an electoral loss attributed to 53% inflation, the ruling party slapped price controls on over 1,400 products. But like the last time the government did this in 2013, it’s only making inflation worse — currently over 100% year-on-year.
The historical upshot of price controls: When the precise balance of supply and demand is replaced by the blunt axe of government policy, the solution is more likely than not to be worse than the problem.
The Goldilocks approach to adjusting interest rates
Western central banks are, broadly speaking, focused on two key things: Keeping inflation down and employment up. To strike the right balance, and, like Goldilocks, ensure that the economy is neither too hot nor too cold, many central banks adjust interest rates to prevent the economy from overheating.
Given the inflationary pressures of the past year – as a result of the war in Ukraine, supply chain kinks, and pandemic stimulus – the US Federal Reserve, European Central Bank, Bank of England, Bank of Canada, and others, have aggressively raised interest rates to increase the cost of credit within their respective economies.
While interest-rate policy aims to keep consumer prices steady (global food prices, in particular, have soared), central banks’ policies also influence – and are influenced by – financial behaviors.
For example, market turmoil in the US in recent times has tampered with investors’ appetite for risk. This has partly contributed to mass layoffs in the tech sector, something the Fed is watching closely as it adapts its interest-rate policy.
But not all wealthy countries are adopting this approach. For instance, the Bank of Japan, which has long focused on keeping interest rates low to stimulate growth, has left interest rates at - 0.1%, leading to stubbornly high prices for consumers.
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Not everyone hates inflation – just ask the dinosaur skeletons
Rising prices are a headache for most people, but not everyone is unhappy. People who have low fixed-rate mortgages or other fixed-cost debts, for example, actually get a break from inflation, because it has the effect of reducing the burden of repaying or servicing what they’ve borrowed. Paying what they owe costs less because the currency has lost value compared to when they took out the mortgage.
Meanwhile, there are folks who hold assets that tend to rise in value when inflation goes up, such as stocks in energy or food production companies. Another is gold, which generally rises in value during bouts of inflation because it’s seen as a more stable store of value — after all, it’s been used as money for 2,500 years.
But the most colorful beneficiaries of inflation may be hoarders or other collectors of items like Rolex watches, fine art, classic cars, designer handbags, sports memorabilia, fine wines, and even dinosaur skeletons!
As inflation drives down the value of money, people invest in items like these, which are seen to hold value more predictably than cash. Not everyone has access to a fine wine cellar or a classic car garage, but surely you’ve got an unexpected inflation hedge lurking in some old shoebox somewhere, don’t you?
Tell us what you collect/hoard for rainy days here.
Russian reservists recruited during a partial mobilization of troops attend a ceremony before departing to the Russia-Ukraine conflict zone, in the Rostov region, Russia October 31, 2022.
What We're Watching: Russian draft goes online, abortion pill ruling, US inflation slows, Taiwan gets new presidential candidate, Biden bets big on EVs
Russia’s digital draft
If you’re a young male citizen of Russia, it just got harder for you to hide from the war in Ukraine. The State Duma, Russia’s parliament, approved legislation on Tuesday that allows the government to send a military summons online instead of serving the papers in person. The upper house swiftly passed it into law on Wednesday.
“The summons is considered received from the moment it is placed in the personal account of a person liable for military service,” explains the chairman of the Duma’s defense committee, though the Kremlin insists no large-scale draft is imminent. If the person summoned fails to report for service within 20 days of the date listed on the summons, the state can suspend his driver’s license, deny him the right to travel abroad, and make it impossible for him to get a loan.
The database that provides names of potential draftees is assembled from medical, educational, and residential records, as well as insurance and tax data. Thousands of young Russians have already fled their country. Many more may soon try to join them.
Abortion pill stays on the market, but access rolled back
As the battle over abortion medication continues in the US, a federal appeals court has ruled that mifepristone – a drug approved by the Food and Drug Administration in 2000 – can remain on the market until the full case can be heard, likely by the Supreme Court.
Still, the court – made up of three appellate judges all appointed by Republican presidents – ruled that mifepristone cannot be sent by mail and rolled back a 2016 rule allowing it to be used up to 10-weeks gestation, dropping it back to seven weeks. It also rolled back other measures enforced by the Biden administration to enhance access after the gutting of Roe v. Wade.
This decision comes after a Trump-appointed, pro-life judge in Texas recently ordered a temporary stay on approval of mifepristone. Less than an hour later, another federal judge in Spokane, Washington, ruled that the drug must remain available in 17 Democratic-run states plus Washington, DC.
Importantly, the appeals court appeared to back the government's view that taking an approved drug off the market that accounts for more than half of all abortions nationwide would have “significant public consequences.”
As expected, abortion rights are shaping up to be one of the biggest political issues in the country. In Florida, Republicans are trying to fight a recently passed law banning abortion at six weeks, pushing for an outright ban.
US inflation cools — smartphones FTW
Good news for American households as US inflation fell to its lowest level in nearly two years in March. Prices grew at an annual clip of 5%, according to the latest figures released Wednesday. That’s down from 6% in February, marking the ninth consecutive month of falling inflation.
The highlights? Well, if you want to do some shopping in the US, now’s the time to cop a new smartphone, which will cost you 24% less than a year ago. And that summer road trip is on – gas prices are down more than 17%. At the same time, we remain “yolked,” as it were, to the Great Egg Crisis of 2023 — prices are up more than 30% despite easing a bit since February.
More broadly, that headline figure of 5% is still more than twice the pre-pandemic norm, and core inflation — which excludes volatile prices for fuel and food — is running at a toasty 5.6%.
That’ll keep the US Fed in the hot seat as it meets again in early May. Will they raise interest rates once more in a bid to finish off inflation? Or will they stand pat, worried about tipping the economy into a recession?
Will this man become Taiwan's next president?
Taiwan's ruling Democratic Progressive Party on Wednesday nominated VP William Lai as its candidate in the January 2024 presidential election.
Lai is widely viewed as a stand-in for term-limited President Tsai Ing-wen, reelected by a landslide in 2020. That means a tough line on China, which has made Tsai a darling in the West and reviled by Beijing. Lai used to support Taiwanese independence openly but has since moderated his position to align with the DPP's: We don’t need to formally break with the mainland because we’re already de-facto independent.
It's unclear who Lai will face, since the opposition Kuomintang Party — which, officially, is not pro-China but favors closer ties with China than the DPP — has yet to pick its candidate. (Terry Gou, the billionaire founder of Foxconn, the Taiwanese company that makes iPhones in China for Apple, is mulling another run.)
The vote will be Taiwan's most closely watched presidential election since 1996, when the self-ruled island ended decades of authoritarian rule. China responded to the democratic vibes by flexing its then-weak military muscles … until the US made it back off. This time, though, expect major Chinese fireworks if Beijing's candidate doesn't come out on top.
Biden’s ambitious new EV proposal
The Biden administration has proposed a new measure that would sharply accelerate the American auto industry’s transition to electric vehicles, and not everyone is happy about it.
The draft marks a big shift from Washington’s current carrots-based approach to boosting EV production to one that relies more on sticks. It would require carmakers to derive 60% of their sales revenue from electric vehicles by 2030, or face penalties. Currently, under a 2021 plan, the target is closer to 50% and manufacturers are allowed to opt in only if they want to. Under that plan, a range of subsidies and tax breaks aimed to incentivize consumers and manufacturers to ditch dirty fuel guzzlers.
Carmakers are already pushing back, saying that changes to assembly lines and supply chains will be expensive and take years to implement. But the Biden administration says the necessary funds were included in the Inflation Reduction Act, which earmarked $31 billion in subsidies for EV’s and tax credits for EV manufacturers.
Expect this to become a heated political issue in the coming months. Texas, despite being a leading investor in EV networks, has sued the federal government over the current EV standards, arguing that they are an overreach that violates states’ rights.
Car drivers queue to fill their fuel tank at a TotalEnergies gas station in Nice as petrol supplies are disrupted by a strike of French refineries and depots, France, March 20, 2023.
Hard Numbers: French oil refinery blockades, China’s mRNA milestone, Moscow comes to Bali, IMF tweaks rules for Ukraine, TikTok hearing
13: As French protesters continue to strike and block oil refineries in response to the government’s recently passed pension reform, 13% of petrol stations around the country are running short on gas. What’s more, a lack of shipments from LNG terminals is raising fears of shortages – and elevated prices – across Europe.
1: China has finally approved its first mRNA COVID vaccine for emergency use. Beijing says that the drug shows high rates of protection when administered as a booster, though it provided few other details.
22,000: Most Russians fleeing conscription and oppression have gone to Georgia, Armenia, and even Turkey. But many have also fled to faraway … Bali. Now, Bali’s governor has asked Indonesia’s central government to rescind a rule allowing Russians and Ukrainians to apply for visas upon arrival, pointing to the fact that 22,000 Russians arrived on the island in January alone. Jakarta introduced the measure to get a post-COVID tourism bump, but some say the newcomers are ruining the island’s zen.
15.6 billion: The IMF has agreed to a preliminary loan for Ukraine worth a whopping $15.6 billion, the biggest package for Kyiv since Russia’s invasion began in Feb. 2022 – though it still needs to be approved by the board. In order to get this deal across the line, the IMF, whose main shareholder is the US, recently changed a rule to allow loans to go to countries facing “exceptionally high uncertainty.”
5: The Federal Reserve hiked interest rates by a quarter point, bringing its key short-term interest rate up to 5%. The decision signals that the Fed is continuing its campaign to temper inflation and consumer price increases, even after the recent banking turmoil.
150 million: That’s how many of its users TikTok claims are US-based, according to its CEO, Shou Zi Chew. On Thursday, Sou will testify before a US House committee hearing to answer questions about the suspected ties of ByteDance, TikTok’s parent company, to China’s ruling Communist Party amid growing calls for a US ban.
The Federal Reserve building is pictured in Washington, U.S.
SVB collapse & interest rates: What’ll the Fed do?
US markets rebounded Tuesday, temporarily calming fears that the collapse of Silicon Valley Bank might trigger a domino effect that makes both investors and ordinary Americans lose confidence in the banking system. But the uncertainty ain’t over yet.
With the stakes so high, who you gonna call? No, not those guys. We mean the Federal Reserve.
Many of SVB's problems can be traced back to interest rates, which are the Fed’s thing. If you lean right, you probably think SVB’s financial ruin is the result of near-zero rates that made lending too cheap. But if you’re on the left of the political spectrum, you likely blame the bank's demise on the Fed reversing that policy and jacking up rates too much, too fast, which pushed up the cost of borrowing and ultimately killed SVB’s balance sheet.
That's all water under the bridge. What matters now is the Fed's next move.
The US central bank will decide on March 21-22 whether to hike rates further or leave them be. And the Fed is coming under growing pressure to do the latter to calm down jittery investors, Americans worried about the safety of their deposits, and uneasy foreign markets.
On the one hand, a fresh hike would make sense because inflation — the whole reason to increase rates in the first place — remains too high. Indeed, the US Consumer Price Index, which dropped Tuesday, showed that year-on-year inflation eased last month to 6%. Not bad, but still far from the Fed's 2% target.
Yet, holding off (for now) on rate hikes might signal that the Fed is bullish on US regional banks surviving the SVB fallout. Also, the job market is still tight, which reduces the odds of a US recession in 2023.
Don’t forget: A lot has happened in the financial world since SVB crumbled last Friday. And a lot more can still happen by the time the Fed has to make its call.