Fed Chair Jerome Powell has made an unprecedented statement, accusing Donald Trump of trying to intimidate the Fed into cutting rates. Gold surges to new highs, but stocks and bonds hold their nerve. For now.
In our Deep-Dive interview, ANZ Head of Asia Research’s Khoon Goh explains why the AI boom is so important for Asia’s economies.
5 things to know in 5 minutes:
An unprecedented conflict has broken out over the independence of the world’s most important financial institution, the US Federal Reserve. Chair Powell issued a video statement yesterday after he learned the US Department of Justice had lodged criminal charges against him over his direction of the renovation of the Fed’s headquarters. Powell said the criminal charges were a pretext for an attack on the Fed’s independence.
ANZ Group Chief Economist Richard Yetsenga says Powell’s comments and the conflict they illustrate over the Fed’s independence are unprecedented.
Richard says one example of a central bank that had lost its independence was Turkey, where markets have lost confidence in its data, and it now has much higher interest rates and a much lower currency.
ANZ’s Head of G3 Economics Brian Martin says the relatively subdued reaction in bond markets, stock markets and currency markets may be linked to reaction from the US Senate, which is threatening to block Trump’s nominees for Fed Chair and FOMC members.
Brian says if that confidence about the checks and balances dissolved, bond prices and the US dollar would slump as investors pulled capital out of the world’s largest economy.
Cheers,
Bernard.
Catch you tomorrow with the results due tonight of US inflation data.
