U.S. Federal Aviation Administration (FAA) representatives told members of the United Nations’ aviation agency they expect approval of Boeing Co’s 737 MAX jets to fly in the United States as early as late June, three people with knowledge of the matter said, although there is no firm timetable for the move.
FAA and Boeing representatives briefed members of the International Civil Aviation Organization’s (ICAO) governing council in Montreal on Thursday on efforts to return the plane to service.
The three people spoke on condition of anonymity to discuss the private briefing.
The MAX was grounded worldwide in March following two crashes involving the model that killed a combined 346 people.
FAA officials who briefed the council said they expected the ungrounding would take place in the United States as early as late June, but it was not clear when other countries would clear the flights, said two of the sources.
Canada and Europe said on Wednesday they would bring back the grounded aircraft on their own terms.
The FAA declined to comment on Thursday, referring to acting administrator Dan Elwell’s statement on Wednesday that he does not have a timetable for making a decision.
“It’s taking as long as it takes to be right,” he said. “I’m not tied to a timetable.”
Boeing did not immediately respond to a request for comment. Its shares pared earlier losses to close down 0.6 per cent at $350.55 US.
The ICAO gathering comes as the FAA is meeting with international air regulators in Texas to discuss what steps are needed to return the 737 MAX to service, while the International Air Transport Association (IATA) is hosting MAX airline operators from across the world in Montreal.
Montreal-based ICAO cannot impose binding rules on governments, but wields clout through its safety and security standards which are approved by its 193 member states.
U.S. stock indexes fell more than one per cent on Thursday, as investors sold off technology, industrials and energy stocks on fears that a spiraling trade war between the United States and China would crimp global growth.
Technology, among sectors most exposed to China, was the hardest hit. Microsoft Corp and Apple Inc were down more than one per cent, dragging the sector lower, while the chip index dropped 2.3 per cent.
Oil prices plunged more than five per cent on trade fears, leaving the energy index down 3.2 per cent, the biggest decliner among the major 11 S&P sectors.
Materials, financial and consumer discretionary sectors also posted losses of more than one per cent in a broad-based decline.
“This is a textbook defensive move,” said Shawn Cruz, manager of trader strategy at TD Ameritrade in New Jersey.
“The one thing that can give markets some reprieve is that if the U.S. and China come back to the negotiating table and delay the tariffs they have already put in place.”
In Toronto, the benchmark S&P/TSX composite index was down 0.9 per cent to 16,182.07 points.
Beijing said on Thursday Washington needs to correct its “wrong actions” for trade talks to continue after the United States blacklisted Huawei Technology Co Ltd last week.
In further evidence of the trade war hitting domestic economy, data from IHS Markit showed U.S. manufacturing growth measured its weakest pace of activity in nearly a decade and new orders fell for the first time since August 2009.
The newest round of U.S. tariffs on Chinese imports will cost the typical American household $831 US annually, according to a Federal Reserve Bank of New York research.
Stocks have succumbed to selling pressure in May after Washington and Beijing engaged in tit-for-tat tariffs and other retaliatory measures, with the S&P 500 on track to post its worst monthly decline since the December sell-off.
The Dow Jones Industrial Average was down 1.7 per cent at 25,351.12. The S&P 500 was down 1.5 per cent at 2,813.07, and the Nasdaq composite was down more than two per cent at 7,593.09 points.
U.S. Treasury yields dropped, and two yield curve indicators briefly inverted on Thursday, sending the banking index down two per cent.
Defensive utilities was up 0.2 per cent, while real estate was flat.
Among other stocks, NetApp Inc slumped 11.9 per cent, the most on the S&P 500, after the data storage equipment maker forecast current-quarter profit and revenue below Wall Street estimates.
In a bright spot, L Brands Inc jumped 12.5 per cent after the retailer reported better-than-expected quarterly earnings.
Facebook removed more than three billion fake accounts from October to March, twice as many as the previous six months, the social networking company said Thursday.
Nearly all of them were caught before they had a chance to become “active” users.
In a new report, Facebook said it saw a “steep increase” in the creation of abusive, fake accounts in the past six months. While most of these fake accounts were blocked “within minutes” of their creation, the company said this increase of “automated attacks” by bad actors meant not only that it caught more of the fake accounts, but that more of them slipped through the cracks.
As a result, the company estimates that five per cent of its 2.4 billion monthly active users are fake accounts. This is up from an estimated three to four per cent in the previous six months when Facebook blocked 1.5 billion accounts.
The increase in removals shows the challenges Facebook faces in removing accounts created by computers to spread spam, fake news and other objectionable material. As Facebook’s detection tools get better, so do the efforts by creators of these fake accounts.
The new numbers come as the company grapples with challenge after challenge, ranging from fake news to Facebook’s role in elections interference, hate speech, and incitement to violence in the U.S., Myanmar (Burma), India and elsewhere.
Facebook also said Thursday that it removed more than seven million posts, photos and other material because it violated rules against hate speech.
Facebook employs thousands to review posts, photos, comments and videos for violations. Some things are also detected without humans, using artificial intelligence. Both humans and AI make mistakes, and Facebook has been accused of political bias as well as ham-fisted removals of posts discussing — rather than promoting — racism.
Facebook says accounts blocked quickly
CEO Mark Zuckerberg has called for government regulation to decide what should be considered harmful content and on other issues. But at least in the U.S., government regulation of speech could run into First Amendment hurdles.
A thorny issue for Facebook is its lack of procedures for authenticating the identities of those setting up accounts. Only in instances where a user has been booted off the service and won an appeal to be reinstated does it ask to see ID documents.
While some have argued for stricter authentication on social media services, the issue is thorny. People including UN free expression rapporteur David Kaye say it’s important to allow pseudonymous speech online for human rights activists and others whose lives could otherwise be endangered.
Of the 3.4 billion accounts removed in the six-month period, 1.2 billion came during the fourth quarter of 2018 and 2.2 billion during the first quarter of this year. More than 99 per cent of these were disabled before someone reported them to the company. Facebook says most of the fake accounts were blocked “within minutes” of their creation.
Facebook attributed the spike in the removed accounts to “automated attacks by bad actors who attempt to create large volumes of accounts at one time.” The company declined to say where these attacks originated, only that they were from different parts of the world.
Federal prosecutors on Thursday unsealed criminal charges against Federal Savings Bank CEO Stephen Calk, accusing him of corruptly approving high-risk loans to U.S. President Donald Trump’s former campaign chair, Paul Manafort, in exchange for trying to secure a top job in the Trump administration.
The indictment against Calk was issued in New York. It doesn’t name Manafort directly, but Calk’s name repeatedly came up during Manafort’s 2018 financial fraud trial in Virginia in which prosecutors said Calk and Manafort engaged in a scheme to exchange the $16 million US in loan approvals for an administration post.
Calk, 54, faces one count of financial institution bribery, which carries a maximum prison term of 30 years.
Federal Savings Bank, based in Chicago, said in a statement it is a victim of bank fraud perpetrated by Manafort. It added that Calk “has been on a complete leave of absence and has no control over or involvement with the bank,” and the bank is “not a party to the federal criminal case.” It described Calk as its “former chairman.”
Calk could not be immediately reached for comment.
Calk provided Manafort with a ranked wish list of government jobs that he wanted, starting with treasury secretary and followed by other top jobs in the Treasury, Commerce and Defence Departments, prosecutors said. Federal Savings Bank is based in Chicago.
Manafort was one of the first people in Trump’s inner circle to face charges brought by special counsel Robert Mueller as part of his now-completed investigation into Russian interference in the 2016 U.S. election and Trump campaign contacts with Moscow.
Manafort was convicted of bank and tax fraud in the Virginia trial, and pleaded guilty to other charges in Washington. He is now serving a 7½-year sentence in a federal prison in Pennsylvania.
Recommended by Manafort to Kushner
Evidence at the trial included a November 2016 email sent by Manafort to Jared Kushner, Trump’s son-in-law, after Trump won the presidential election. In the email, Manafort recommended three candidates for administration posts, including Calk.
Kushner responded within minutes to Manafort’s recommendations by email: “On it!”
The prospect of Calk facing charges emerged in a transcript of a bench discussion during the Manafort trial.
“Mr. Calk is a co-conspirator,” Greg Andres, a prosecutor on Mueller’s team, said during a discussion with the judge at the bench, according to a transcript of the discussion. “And he participated in a conspiracy to defraud the bank.”
“There was an agreement between Mr. Manafort and Mr. Calk to have the loans approved,” Andres said. “They were approved and, in turn, Mr. Manafort proposed Mr. Calk for certain positions within the administration.”
Calk appeared on Fox News and Fox Business News several times in 2016, billed as an economic adviser to Trump.
He reportedly did secure an interview during the Trump administration transition for undersecretary of the army, but was not chosen.
Bank CEO Stephen Calk charged with corruptly soliciting a presidential administration position in exchange for approving $16 million in loans <a href=”https://t.co/AdK8DfKlad”>https://t.co/AdK8DfKlad</a>
The exchanges between Manafort and Calk caught the attention of House Democrats who sat on that body’s financial services committee in April 2018.
“Although Mr. Calk ultimately was not given a position … reports that he was being considered for a high-level and highly sensitive national security position within the Trump administration as part of a quid pro quo with Mr. Manafort raise serious concerns that, completely apart from special counsel Robert Mueller’s investigation, warrant scrutiny by our Committee,” Democrats Stephen Lynch and Maxine Waters wrote at the time.
Canada’s two biggest banks posted profits of more than $3 billion dollars each in the second quarter, exceeding analyst expectations.
Royal Bank of Canada earned $3.23 billion, helped by growth in its capital markets, personal and commercial banking and wealth management businesses.
The bank says the profits rose six per cent for the quarter ended April 30.
The result compared with a profit of $3.06 billion a year ago.
TD Bank Group earned a second-quarter profit of $3.17 billion, up from $2.92 billion in the same quarter last year.
The Toronto-based lender says its profit increased by 6.7 per cent compared to the same time period one year ago.
At RBC, total provisions for credit losses climbed to $426 million, up from $274 million in the same quarter last year, due to higher provisions in personal and commercial banking, wealth management and capital markets.
On an adjusted basis, RBC reported $2.23 in diluted cash earnings per share for the quarter, up from $2.10 per share a year ago.
Analysts on average had expected a profit of $2.21, according to Thomson Reuters Eikon.
Provisions for credit losses in the quarter totalled $633 million, up from $556 million a year ago.
On an adjusted basis, TD says it earned $1.75 per share in the quarter, up from an adjusted profit of $1.62 per share in its second quarter last year.
Analysts on average had expected a profit of $1.67 per share, according to Thomson Reuters Eikon.
TD reported its Canadian retail business earned $1.85 billion, up from $1.83 billion a year ago, while its U.S. retail business earned $1.26 billion, up from $979 million. Profit at its wholesale banking business fell to $221 million, compared with $267 million a year ago.
New regulations restricting the amount of alcohol allowed in potent, sugary, premixed drinks take effect today across Canada, confirmed the federal health minister’s office in an email to CBC on Thursday.
Until now, a 568-millilitre can of the drink, which Health Canada refers to as a “flavoured purified alcoholic beverage,” could contain up to 11.9 per cent alcohol, the equivalent of about four standard alcoholic drinks, such as four regular beers or four five-ounce glasses of wine.
Under the new regulations, a drink of the same size can’t contain more than 4.5 per cent alcohol by volume, Health Minister Ginette Petitpas Taylor’s office said in an email.
Earlier this year, a Quebec coroner concluded that consuming several cans of the malt-liquor drink FCKD UP contributed to the death of 14-year-old Quebec high school student Athéna Gervais.
In February 2018, Gervais drowned in a small creek behind her high school in the Montreal suburb of Laval after she reportedly drank several cans of the beverage, which contained 11.9 per cent alcohol, on her lunch break.
Coroner Martin Larocque said Gervais and her friends drank the equivalent of about 12 glasses of wine in under 30 minutes.
He also said Health Canada needed to do more to prevent teenagers from consuming the drinks, which use bright colours and vibrant ads to attract young consumers.
In the weeks following Gervais’s death, the company that produces FCKD UP, Geloso Group, halted production and removed cans from store shelves in Quebec, the only province where the drink was sold.
In June 2018, the Quebec government also adopted legislation that limits the alcohol content of the sugary drinks sold in convenience and grocery stores to seven per cent.
In December 2018, Health Canada announced it would take steps to reduce the amount of alcohol allowed in premixed purified alcohol beverages, but didn’t say when the restrictions would be enacted.
Four Loko, an American beverage similar to FCKD UP that has 11.9 per cent alcohol in a 568-millilitre can, is still available in The Beer Store across Ontario, according to the drink’s website.
A Health Canada analysis published in December 2018 of the potential impact of new regulations found that although provinces and territories outside Quebec supported the new legislation, “many indicated that they were not aware of these types of products being sold in their jurisdictions.”
The exception appears to be Ontario, according to the document, which reads: “the products … are entering stores in Ontario, where there are no such restrictions,” referring to the Quebec legislation that restricts their alcohol content to seven per cent.
Health Canada faced criticism following Gervais’s death for not enacting regulations sooner.
Here are the new limits to alcohol content, according to container size:
7.2 per cent in a 355-millilitre container
5.4 per cent in a 473-millilitre container
4.5 per cent in a 568-millilitre container
3.6 per cent in a 710-millilitre container
Hubert Sacy says he’s not satisfied with Health Canada’s new regulations, calling them “extremely disappointing and totally irresponsible.”
As head of Éduc’alcool, a non-profit that promotes moderate alcohol consumption in Quebec, Sacy and his organization have been petitioning the federal government to restrict the alcohol content of flavoured purified alcoholic beverages since they entered the Quebec market, before Gervais’s death.
Éduc’alcool wanted Health Canada to limit the alcohol percentage per container to the equivalent of one standard drink, but Sacy says the new limits represent the equivalent of 1.5 drinks.
“Obviously, they didn’t listen to anything we said,” Stacy told CBC on Thursday.
Stacy had also pushed for a federal ban on the drinks’ labelling and marketing geared to young people.
As Alberta’s new government considers how to boost its traditional fossil fuel economy, research released today claims politicians and other Canadians have a blind spot when it comes to the job-creating power of green business.
The report declares that while Canadians obsess about pipelines and shrinking employment in coal, oil and gas, they and their leaders have been ignoring a sector that is outgrowing the rest of the economy, attracting billions of dollars in investment and creating more jobs than either the fossil fuel or mining sectors.
This isn’t the effects of some fancy Green New Deal. Instead, the report, called Missing the Bigger Picture consists of a relatively prosaic tabulation of the growing contribution of clean energy to the existing Canadian economy.
It estimates the clean energy industry accounts for about three per cent of Canada’s GDP, more than agriculture and forestry or the hotel and restaurant industry, and employed 298,000 people in 2017.
“It’s the most comprehensive look at Canada’s clean energy sector that’s been done to date, so it looks at the number of Canadians that are employed in this sector and the economic contribution the sector provides,” said Joanna Kyriazis, with Clean Energy Canada, a non-profit think-tank based at Simon Fraser University in Vancouver.
What it finds is revealing. As well as being big and growing, attracting more than $35 billion in investment in 2017, the clean energy business sector is invisible to most Canadians and not even classified in most statistics as a sector at all.
Today’s report is compiled from data assembled by Navius Research, a Vancouver-based business that has a reputation for collecting reliable data to guide companies exploring developments in the green sector. In any business, fudged data is a recipe for ruin, and the environmental sector is no exception.
Part of what Navius has done is to try to create strict rational criteria for what to include in its assessment of the clean energy economy, exclusively targeting firms where the primary business was clean energy, whether in energy production or in improving energy efficiency.
As the executive director of Clean Energy Canada, Merran Smith says in her introduction to the report, “Put simply, it’s made up of companies and jobs that help to reduce carbon pollution — whether by creating clean energy, helping move it, reducing energy consumption, or making low-carbon technologies.”
Whereas fossil fuel energy data has been accumulated for more than a century, and is clearly identified in government and market statistics, companies contributing to the green energy economy have never been classified as a group. As such, what’s in the category, such as traditional hydroelectric production or power storage or public transit alternatives to cars, or what’s out, may yet be disputed.
That will work itself out over time, but the concern of Smith and her group, and the reason for assembling today’s report, is the blinkered view of many Canadians that the energy industry and the economy are somehow in conflict with green principles.
Instead, as long predicted by advocates of the green economy, businesses that may initially have been motivated by regulation have begun to find new market-based incentives as the world seeks low-carbon alternatives.
“Instead of being in the compliance part of a company’s brain, all of a sudden it becomes part of the profit part of a company’s brain,” Stewart Elgie, professor of law and economics at the University of Ottawa, told me in a 2015 interview on the future of the business-led green economy.
This has certainly happened as demand in the global green power sector, from components of electric cars to tools and techniques for energy efficiency, reach critical mass.
Economic research has shown that making the world more energy efficient is exactly what successful businesses have done throughout history, because energy is a cost, and cutting costs is what thriving businesses do.
“The clean energy sector isn’t just about fighting climate change — it’s also about using Canadian innovation to create better and cheaper solutions for everyday life,” said Smith.
If current trends continue, the Navius research says that the effect of the green energy sector will become harder to miss in the economy. Studying the period from 2010 to 2017, not only did the sector outgrow the entire economy by more than one full percentage point, but jobs in that component of the economy increased by 2.2 per cent a year, compared to an annual increase of 1.4 per cent in jobs overall.
Part of the reason why the clean energy sector is not visible is because we think of it under different categories such as public transit or hydroelectric generation. But a second reason is that as a sector, clean energy is fractured into smaller players. It is unlike the fossil fuel industry, which is backed by decades of lobbying success and established connections to political elites.
The clean energy category has no giant business voice or industry group to represent it. Even the firms defined in this report as being clean energy businesses may not see themselves as part of this sector. Perhaps the report will help change that, and will help them get the economic respect they deserve.
Kyriazis says she hopes today’s report will make people more optimistic. Usually when we hear about energy in the media, it is bad news such as a lack of pipelines, falling prices, shrinking jobs or gloom over the effects of climate change, she says.
“The clean energy sector, here, it’s obviously a big success story that is not making the headlines,” she said.
Some of the greatest concern is over corn and soybeans.
As the week began, only 49 per cent of corn crops in 18 key states had been planted when more typically it might be 80 per cent. Less than a fifth of soybeans had been planted when it might normally be closer to half, according to the United States Department of Agriculture.
While it’s still too early to tell if the poor conditions will persist or exactly how crop yields will be affected, one analyst says the impact of the flooding is already rippling into the market.
“In the last couple of weeks,we sort of have a market that’s … almost maybe woken up to some of the weather threats here that were building,” said Jonathon Driedger, a senior market analyst with FarmLink in Winnipeg.
Corn and soybeans are key to the American farm sector.
Corn is widely used in grocery products, animal feed and fuel. Soybeans are a leading agricultural export in the U.S., worth $22 billion US in 2017.
Though the outlook for both crops could improve in the coming weeks if weather improves, the poor conditions in the U.S. have traders considering what the supply picture might look like later in the year.
For example, the Wall Street Journal reported this week that the July contract for U.S. corn recently climbed by 13 per cent in just seven sessions.
“The U.S. corn crop is so integral to the world markets that, you know, they get a sniffle and we all get pneumonia,” said Barry Prentice, a professor of supply chain management at the University of Manitoba.
Canada exports only a fraction of the corn and soybeans that its southern neighbour does, though they’re still important crops for a number of Canadian farmers.
More broadly, as Driedger explains, farmers on the Prairies could benefit from what he calls the “spillover” effect.
While poor weather has had an adverse effect in parts of Ontario, Driedger said that, generally, seeding progress in Western Canada has not been far outside what farmers might expect at this time of year.
“Corn is so influential on pricing, soybeans are influential on pricing, that as those prices rise for those crops, it sort of helps elevate other other crops as well,” Driedger said.
For example, the price of barley could also climb with corn as it is a direct substitute into livestock feed, he said.
“That’s sort of the domino effects that I think traders are trying to assess and process right now, because at this stage of the game, in terms of the production side, we’re still playing a game of ‘what if,'” Driedger said.
Where there may be a more direct impact for Canadian farmers is on wheat, he added. There are concerns about the impact heavy rain has had on the U.S. winter wheat crop and the planting of spring wheat, he said.
He said wheat prices have been improving in Western Canada over the last couple of weeks.
Derek Brewin, head of the department of agricultural economics at the University of Manitoba, said wheat prices also move up and down with corn because some grades of wheat compete with corn as livestock feed.
“And then there’s the higher quality wheat,” Brewin added. “If there is a shortage of that, the difference between the high quality and the low quality gets wider. They get really good prices.”
Some believe canola prices could get a small lift if soybean prices rise.
Canadian canola farmers are already feeling pressure because of China’s boycott of the crop. If soybean prices improve, it could also drag canola prices up “a little bit,” Driedger said.
However, Prentice thinks poor U.S. weather could ultimately be a drag on canola prices. He said if American farmers switch from planting corn to soybeans, which take less time grow, that could affect oilseed prices.
“If the Americans grow more soybeans, that means that we’re likely to see lower prices for canola,” Prentice said.
It will take weeks — or even months — for the situation to unfold as farmers, traders and analysts get a clearer picture of the impact on the number of acres planted and the health of those crops, Driedger said.
“Maybe we wake up six weeks from now and all the weather cleared, the crop got in a little bit late but conditions were excellent, and so maybe that so-called scare isn’t so much of a scare,” he said.
“Or, you know, things [could] get progressively worse.”
As Prime Minister Justin Trudeau announced his government’s plan to spend $15.7 billion to build up to 18 new coast guard ships, stakeholders in the industry, which has experienced its share of ups and downs, breathed a palpable sigh of relief.
George MacPherson, who has been president of the Shipyards General Workers Federation since 1989, said he’s “never seen anything as big as this.”
“We’re going to see generations of shipbuilders trained and come into the industry — so good news for the province, good news for the industry,” he said.
“I think they’re showing confidence that the West can really do this work and get it done well.”
Trudeau made the announcement in Vancouver’s Stanley Park, outlining a plan that would see 16 of the 18 ships built in a fleet-renewal project anchored in Seaspan’s Vancouver Shipyards.
Two others — Arctic patrol ships that will be modified for the Canadian Coast Guard — will be built at Irving Shipyards in Halifax, Nova Scotia.
“Canadians deserve better than to have this fleet rust out,” said Trudeau.
“This fleet renewal is going to create jobs in everything from ship design and engineering to construction, welding and inspection while strengthening this world-class Canadian industry.”
Vancouver’s shipbuilding industry thrived in the 1970s and into the mid 1980s, according to MacPherson, but had reached a breaking point in 2011 when Seaspan was granted an $8-billion contract by the federal government at the 11th hour.
“The announcement in 2011 was huge. This is bigger, this is much bigger. This is really great news,” he said.
‘Ship after ship after ship’
MacPherson said the shipyard previously had enough work to sustain it until 2034, but he expects this announcement will push it far beyond that.
“For people on the ground it gives them a lot of security, they know that their jobs are secure. They don’t need to worry about a lull between the vessels … It’s going to be ship after ship after ship,” he said.
MacPherson said that while Seaspan has the contract, he expects smaller yards will benefit as well. He also said he expects an influx of workers, potentially from Alberta’s ailing oilsands.
“Anybody that’s looking for work, we’re going to put them to work,” he said.
But while most industry workers expressed relief at the promise of easier times on the horizon, there was some anxiety around the announcement.
The current National Shipbuilding Strategy designates two shipyards, one in Halifax, the other in Vancouver. But on Wednesday the federal government announced it would also be launching a competitive process to add a third Canadian shipyard as a partner under the National Shipbuilding Strategy.
Tim Page, vice-president of government relations with Seaspan, said there’s some concern about the increased competition.
“We were disappointed to learn that today because of the investments we’ve made out here and the expectations we’ve had from the earliest days of the National Shipbuilding Strategy that this was about two shipyards,” he said.
Page said he hopes to sit down with the Trudeau government as soon as possible to discuss how a third shipyard would fit into current arrangements though he’s still pleased with the cash windfall.
“It’s good news for our workforce. It’s good news for our apprentices we have here and in Victoria,” he said.
Aside from the shipbuilding plan, the federal government is providing an additional $351.3 million to enhance capacity of the coast guard, strengthen management and oversight and promote a greener way of doing business.
According to a government statement, the $15.7 billion figure is an “early estimate” of the cost for construction, support, infrastructure, project management and cost overruns, or contingency funding.
The costs of each ship will be announced after contract negotiations have been completed.
Federal Reserve officials at their recent meeting believed the central bank could remain “patient” in deciding when to adjust interest rates, though some officials thought future rate hikes might still be needed.
In minutes of the April 30-May 1 discussions released Wednesday, Fed officials noted that prospects for the U.S. and global economy had been improving, while inflation had fallen farther below the Fed’s two per cent target.
Financial markets and President Donald Trump are hoping that the central bank will start cutting rates soon to bolster growth further. The Fed minutes, however, indicated little sentiment for rate cuts.
Instead, the minutes revealed “a few” participants say they thought more rate increases might be needed to keep low unemployment from triggering unwanted inflation.
At its last meeting, the Fed kept its key policy rate unchanged in a range of 2.25 per cent to 2.5 per cent, where it has been since the Fed hiked rates for a fourth time last year.
That December rate boost contributed to a nosedive in financial markets as investors began to worry that the central bank was in danger of over-doing its credit tightening and could send the country into a recession.
Leading the criticism was Trump, who labeled the Fed his “biggest threat” and attacked Fed Chairman Jerome Powell and other Fed officials for not understanding financial markets.
In January, the Fed did an about-face in response to a worsening global outlook and other risks to growth and began signaling they would be “patient” in changing interest rates. While they had projected in December two more rate hikes this year, they now expect to hold steady for the year.
However, Trump has complained that the Fed needs to go further to support the economy by cutting rates and restarting a program to buy bonds to put downward pressure on long-term rates. In contrast, the Fed has been trimming its bond holdings although it has announced these reductions will come to an end later this year.
The minutes did not reveal support for the type of dramatic credit easing suggested by Trump. But there was discussion among Fed officials about the fact that inflation this year has moved further below the Fed’s two per cent target.
“In light of recent, softer inflation readings, some (Fed officials) viewed the downside risks to inflation as having increased,” the minutes said.
But the minutes said that Fed officials still believed a return of inflation to the Fed’s two per cent target was “the most likely outcome.”
At his May 1 press conference, Powell said Fed officials believed the recent slowdown in inflation was likely due to transitory issues, with inflation in coming months resuming its climb toward the Fed’s target.