Washington — The post-pandemic spike in U.S. inflation eased further last month as year-over-year price increases reached a three-year low, clearing the way for the Federal Reserve to cut interest rates next week.

Wednesday’s report from the Labor Department showed that consumer prices rose 2.5% in August from a year earlier. It was the fifth straight annual drop and the smallest such increase since February 2021. From July to August, prices rose just 0.2%.

Excluding volatile food and energy costs, so-called core prices rose 3.2% in August from 12 months earlier, the same as in July. On a month-to-month basis, core prices rose 0.3% last month, a pickup from July’s 0.2% increase. Economists closely watch core prices, which typically provide a better read of future inflation trends.

For months, cooling inflation has provided gradual relief to America’s consumers, who were stung by the price surges that erupted three years ago, particularly for food, gas, rent and other necessities. Inflation peaked in mid-2022 at 9.1%, the highest rate in four decades.

Fed officials have signaled that they’re increasingly confident that inflation is falling back to their 2% target and are now shifting their focus to supporting the job market, which is steadily cooling. As a result, the policymakers are poised to begin cutting their key rate from its 23-year high in hopes of bolstering growth and hiring.

A modest quarter-point cut is widely expected next week. Over time, a series of rate cuts should reduce the cost of borrowing across the economy, including for mortgages, auto loans and credit cards.

The latest inflation figures could inject themselves into the presidential race in its final weeks. Former President Donald Trump has heaped blame on Vice President Kamala Harris for the jump in inflation, which erupted in early 2021 as global supply chains seized up, causing severe shortages of parts and labor. Harris has proposed subsidies for home buyers and builders in an effort to ease housing costs and backs a federal ban on price-gouging for groceries. Trump has said he would boost energy production to try to reduce overall inflation.

A key reason why inflation eased again in August was that gas prices tumbled by about 10 cents a gallon last month, according to the Energy Inflation Administration, to a national average of about $3.29.

Economists also expect the government’s measures of grocery prices and rents to rise more slowly. Though food prices are roughly 20% more expensive than before the pandemic, they have barely budged over the past year.

Another potential driver of slower inflation is that the cost of new apartment leases has started to cool as a stream of newly built apartments have been completed.

According to the real estate brokerage Redfin, the median rent for a new lease rose just 0.9% in August from a year earlier, to $1,645 a month. But the government’s measure includes all rents, including those for people who have been in their apartments for months or years. It takes time for the slowdown in new rents to show up in the government’s data. In July, rental costs rose 5.1% from a year ago, according to the government’s consumer price index.

Americans’ paychecks are also growing more slowly — an average of about 3.5% annually, still a solid pace — which reduces inflationary pressures. Two years ago, wage growth was topping 5%, a level that can force businesses to sharply raise prices to cover their higher labor costs.

In a high-profile speech last month, Fed Chair Jerome Powell noted that inflation was coming under control and suggested that the job market was unlikely to be a source of inflationary pressure.

Consumers have propelled the economy for the past three years. But they are increasingly turning to debt to maintain their spending and credit card, and auto delinquencies are rising, raising concerns that they may have to rein in their spending soon. Reduced consumer spending could lead more employers to freeze their hiring or even cut jobs.
…

HONG KONG — China must reprioritize economic growth and reforms and boost investor confidence by leveling the playing field for all companies in the country, a European business group said Wednesday. 

With “business confidence now at an all-time low” over lagging domestic demand and overcapacity in certain industries, the annual European Business in China Position Paper called on China to open its economy and allow a more free market to determine resource allocation. It also recommended introducing policies to boost domestic demand. 

Profit margins in China are at or below the global average for two-thirds of the companies surveyed earlier in the year, according to the paper published Wednesday by the European Chamber of Commerce in China. 

In August, China filed a complaint with the World Trade Organization over European Union tariffs on electric vehicles made in China. It also launched anti-dumping and subsidies investigations of European dairy products, brandy and pork exports. The tit-for-tat actions have raised fears that a trade war may break out. 

Many European businesses are deciding that the returns on investments in the world’s second-largest economy are not worth the risks, due to issues including China’s economic slowdown and a politicized business environment. 

“For some European headquarters and shareholders, the risks of investing in China are beginning to outright the returns, a trend that will only intensify if key business concerns are left unaddressed,” Jens Eskelund, president of China’s European Union Chamber of Commerce, said in a message at the beginning of the paper. 

The European Chamber’s paper proposes over 1,000 recommendations for China to resolve challenges and problems faced by European businesses operating in the country and boost investor confidence. Among them are calls for China to refrain from punishing companies for the actions of their home governments. Others include ensuring that policy packages for attracting foreign investment are followed by implementation, and refraining from “erratic policy shifts.” 

The report also recommended that the EU proactively engage with China and keep its responses “measured and proportionate” when disagreements arise. 
…

Nairobi, Kenya — Central banks in Africa are turning to gold to protect themselves from economic and geopolitical instability and to diversify their financial portfolios.

In September 2023, the price of gold per ounce was $1,900. A year later, it is selling for $2,500. According to the World Gold Council, an international trade association for the gold industry, demand for the metal is expected to increase in the next 10 months despite the soaring prices.

Some experts, such as Carlos Lopes, a professor at the Nelson Mandela School of Public Governance in South Africa, attribute the African central banks’ gold rush to the need to protect their local currencies.

“In the last few years, because of inflation and all these movements for stimulation packages and the rest, the returns are extremely low,” Lopes said. “On the other hand, gold is going up in terms of price because these big banks are also going after gold as a protection. So, it is a very good investment to go to gold.”

It helps that African gold production has grown by 60% since 2010, according to the World Gold Council, higher than a global increase of 26%.

In 2022, Zimbabwe launched a gold-backed currency to curb inflation and volatility in foreign exchange rates.

Ghana and Uganda have been buying gold from artisanal miners to bolster their shrinking foreign currency reserves.

Ghana, Africa’s largest gold producer, plans to buy oil from other countries and pay them in gold to ease pressure on local currency and lower high fuel prices.

Some economists say gold cannot solve the economic problems of some African countries.

According to the World Gold Council, countries should hold onto gold for its long-term value, performance during crises and its role as an effective portfolio diversifier.

Bright Oppong Afum, a senior lecturer at the University of Mines and Technology in Ghana, said some African countries want to use gold to reduce their reliance on the global financial system.

“If sanctions are laid on you, an African country, we know the devastating effects that it will have,” he said. “The African countries are developing, or they are young, and they do not want to receive some harsh sanctions that will negatively or strongly impact the economics. And because of that, they are strategically reducing their dependencies on these external countries.”

Afum said that although some Africans know and understand the value of gold, many trade away the metal to satisfy their daily needs.

“So, they just find a mere buyer who will … exploit them,” he said.

The African Continental Free Trade Area introduced the Pan-African Payment and Settlement System, enabling countries to trade in local currencies. Experts say some continental payment systems, if implemented, can ease the economic pressures some countries are grappling with.

That, in turn, might make them less dependent on gold.
…

London — Google lost its final legal challenge on Tuesday against a European Union penalty for giving its own shopping recommendations an illegal advantage over rivals in search results, ending a long-running antitrust case that came with a whopping fine. 

The European Union’s Court of Justice upheld a lower court’s decision, rejecting the company’s appeal against the $2.7 billion penalty from the European Commission, the 27-nation bloc’s top antitrust enforcer. 

“By today’s judgment, the Court of Justice dismisses the appeal and thus upholds the judgment of the General Court,” the court said in a press release summarizing its decision. 

The commission’s punished the Silicon Valley giant in 2017 for unfairly directing visitors to its own Google Shopping service to the detriment of competitors. It was one of three multibillion-dollar fines that the commission imposed on Google in the previous decade as Brussels started ramping up its crackdown on the tech industry. 

“We are disappointed with the decision of the Court, which relates to a very specific set of facts,” Google said in a brief statement. 

The company said it made changes in 2017 to comply with the commission’s decision requiring it to treat competitors equally. It started holding auctions for shopping search listings that it would bid for alongside other comparison shopping services. 

“Our approach has worked successfully for more than seven years, generating billions of clicks for more than 800 comparison shopping services,” Google said. 

At the same time, the company appealed the decision to the courts. But the EU General Court, the tribunal’s lower section, rejected its challenge in 2021 and the Court of Justice’s adviser later recommended rejecting the appeal. 

European consumer group BEUC hailed the court’s decision, saying it shows how the bloc’s competition law “remains highly relevant” in digital markets. 

“Google harmed millions of European consumers by ensuring that rival comparison shopping services were virtually invisible,” director general Agustín Reyna said. “Google’s illegal practices prevented consumers from accessing potentially cheaper prices and useful product information from rival comparison shopping services on all sorts of products, from clothes to washing machines.” 
…

beijing — Chinese President Xi Jinping on Monday urged visiting Spanish Prime Minister Pedro Sanchez to play a “constructive role” in improving strained ties between Bejing and the European Union. 

Sanchez for his part said he hoped the EU could avoid a trade war with China, even as Brussels weighs imposing tariffs on China-manufactured electric vehicles.

In their meeting, Xi also talked up deepening commercial ties between China and Spain in sectors such as artificial intelligence, digital economy, new energy and other high-tech fields.

The Chinese leader said Beijing wanted to work with Brussels to further develop a China-EU relationship where the two maintain their independence and autonomy but also succeed together and bring benefit to the world, a Chinese readout said. 

“It is hoped Spain will continue to play a constructive role in this regard,” Xi added. 

Sanchez responded: “Spain wants to work constructively so that relations between the two are closer, richer and more balanced.” 

Beijing in June said that frictions with the EU over its plans to impose tariffs of up to 36.3% on its electric vehicles (EVs) could trigger a trade conflict, days after China announced a retaliatory anti-dumping probe into European pork imports. 

China in August then raised the stakes by opening an investigation into the bloc’s dairy subsidies. 

Prior to meeting Xi, Sanchez said at business events that Spain would work for a negotiated consensus to the EV dispute within the World Trade Organization and that a “trade war would benefit no one,” a government source said.  

Spain in 2023 exported $1.5 billion worth of the pork products that China will investigate, Chinese customs data showed, dwarfing the outbound shipments from the Netherlands and Denmark, which rank second and third. 

Spain also sold just under $50 million worth of targeted dairy products to China last year. 

But in a promising sign for Spain’s pork producers, a separate source with direct access to Xi’s meeting with Sanchez said the two leaders had “found harmony and understanding,” when asked about possible curbs on Spain’s outbound pork shipments. 

“The meeting went extremely well,” the source said, adding that both defended their positions while seeking agreements. 

Fair trade 

“We want to build bridges together to defend a trade order that’s fair,” Sanchez told China’s second-ranking official, Premier Li Qiang, before meeting Xi.  

Spain had a trade deficit of 17.27 billion euros ($19.07 billion) in the first half of this year, according to government statistics.  

Sanchez will also want reassurance that China will not strike back at Brussels by raising its own tariffs on imported large-engined gasoline-powered vehicles, as state Chinese media have suggested it might.  

Spain could also be impacted by the Chinese EV tariffs. Last week SEAT-CUPRA’s CEO said that an electric vehicle made in China and designed in Spain by CUPRA, which is owned by Germany’s Volkswagen, would be “wiped out” if the European Commission followed through with planned import tariffs on Chinese-made vehicles.  

Sanchez on Tuesday is expected to meet representatives of SAIC Motor, one of the Chinese automakers most affected by the EU tariffs, and sign a Memorandum of Understanding with greentech company Envision, which is building an EV battery plant in Spain. 

“In this increasingly geopolitical and economic context, as you have pointed out, we must work together to resolve differences through negotiation,” Sanchez told Xi. 

In an advisory vote in July, Spain, France and Italy supported the European Commission’s proposal to adopt additional duties on Chinese-made EVs on top of the bloc’s standard 10% tariff.  

But Beijing has been urging the EU’s member states to reject the curbs at a final vote on it in October.  

The tariffs would be implemented in addition to the EU’s standard 10% import tariff unless a qualified majority of 15 EU members representing 65% of the EU population vote against them.
…

A lack of opportunities has resulted in underrepresentation of Black designers, stylists and other creatives in the fashion industry. It’s also created a new wave of Black entrepreneurs who are passing on lessons of the business. Tina Trinh reports. (Camera and Produced by: Tina Trinh)
…

ALEXANDRIA, Va. — One month after a judge declared Google’s search engine an illegal monopoly, the tech giant faces another antitrust lawsuit that threatens to break up the company, this time over its advertising technology.

The Justice Department and a coalition of states contend that Google built and maintains a monopoly over the technology that matches online publishers to advertisers. Dominance over the software on both the buy side and the sell side of the transaction enables Google to keep as much as 36 cents on the dollar when it brokers sales between publishers and advertisers, the government contends in court papers.

Google says the government’s case is based on an internet of yesteryear, when desktop computers ruled and internet users carefully typed precise World Wide Web addresses into URL fields. Advertisers now are more likely to turn to social media companies like TikTok or streaming TV services like Peacock to reach audiences.

In recent years, Google Networks, the division of the Mountain View, California-based tech giant that includes such services as AdSense and Google Ad Manager that are at the heart of the case, actually have seen declining revenue, from $31.7 billion in 2021 to $31.3 billion in 2023, according to the company’s annual reports.

The trial over the alleged ad tech monopoly begins Monday in Alexandria, Virginia. It initially was going to be a jury trial, but Google maneuvered to force a bench trial, writing a check to the federal government for more than $2 million to moot the only claim brought by the government that required a jury.

The case will now be decided by U.S. District Judge Leonie Brinkema, who was appointed to the bench by former President Bill Clinton and is best known for high-profile terrorism trials including Sept. 11 defendant Zacarias Moussaoui. Brinkema, though, also has experience with highly technical civil trials, working in a courthouse that sees an outsize number of patent infringement cases.

The Virginia case comes on the heels of a major defeat for Google over its search engine. which generates the majority of the company’s $307 billion in annual revenue. A judge in the District of Columbia declared the search engine a monopoly, maintained in part by tens of billions of dollars Google pays each year to companies like Apple to lock in Google as the default search engine presented to consumers when they buy iPhones and other gadgets.

In that case, the judge has not yet imposed any remedies. The government hasn’t offered its proposed sanctions, though there could be close scrutiny over whether Google should be allowed to continue to make exclusivity deals that ensure its search engine is consumers’ default option.

Peter Cohan, a professor of management practice at Babson College, said the Virginia case could potentially be more harmful to Google because the obvious remedy would be requiring it to sell off parts of its ad tech business that generate billions of dollars in annual revenue.

“Divestitures are definitely a possible remedy for this second case,” Cohan said “It could be potentially more significant than initially meets the eye.”

In the Virginia trial, the government’s witnesses are expected to include executives from newspaper publishers including The New York Times Co. and Gannett, and online news sites that the government contends have faced particular harm from Google’s practices.

“Google extracted extraordinary fees at the expense of the website publishers who make the open internet vibrant and valuable,” government lawyers wrote in court papers. “As publishers generate less money from selling their advertising inventory, publishers are pushed to put more ads on their websites, to put more content behind costly paywalls, or to cease business altogether.”

Google disputes that it charges excessive fees compared to its competitors. The company also asserts the integration of its technology on the buy side, sell side and in the middle assures ads and web pages load quickly and enhance security. And it says customers have options to work with outside ad exchanges.

Google says the government’s case is improperly focused on display ads and banner ads that load on web pages accessed through a desktop computer and fails to take into account consumers’ migration to mobile apps and the boom in ads placed on social media sites over the last 15 years.

The government’s case “focuses on a limited type of advertising viewed on a narrow subset of websites when user attention migrated elsewhere years ago,” Google’s lawyers write in a pretrial filing. “The last year users spent more time accessing websites on the ‘open web,’ rather than on social media, videos, or apps, was 2012.”

The trial, which is expected to last several weeks, is taking place in a courthouse that rigidly adheres to traditional practices, including a resistance to technology in the courtroom. Cellphones are banned from the courthouse, to the chagrin of a tech press corps accustomed at the District of Columbia trial to tweeting out live updates as they happen.

Even the lawyers, and there are many on both sides, are limited in their technology. At a pretrial hearing Wednesday, Google’s lawyers made a plea to be allowed more than the two computers each side is permitted to have in the courtroom during trial. Brinkema rejected it.

“This is an old-fashioned courtroom,” she said.
…

Athens — Greece plans to impose a 20-euro ($22) levy on cruise ship visitors to the islands of Santorini and Mykonos during the peak summer season, in a bid to avert overtourism, Prime Minister Kyriakos Mitsotakis said Sunday. 

Greece relies heavily on tourism, the main driver of the country’s economy which is still recovering from a decadelong crisis that wiped out a fourth of its output. 

But some of its most popular destinations, including Santorini, an idyllic island of quaint villages and pristine beaches with 20,000 permanent residents, risk being ruined by mass tourism. 

Speaking at a news conference a day after outlining his main economic policies for 2025, Mitsotakis clarified that excessive tourism was only a problem in a few destinations. 

“Greece does not have a structural overtourism problem… Some of its destinations have a significant issue during certain weeks or months of the year, which we need to deal with,” he said. 

“Cruise shipping has burdened Santorini and Mykonos, and this is why we are proceeding with interventions,” he added, announcing the levy. 

Greek tourism revenues stood at about 20 billion euros ($22 billion) in 2023 on the back of nearly 31 million tourist arrivals. 

In Santorini, protesters have called for curbs on tourism, as in other popular holiday destinations in Europe, including Venice and Barcelona. 

Part of the revenues from the cruise shipping tax will be returned to local communities to be invested in infrastructure, Mitsotakis said. 

The government also plans to regulate the number of cruise ships that arrive simultaneously at certain destinations, while rules to protect the environment and tackle water shortages must also be imposed on islands, he said. 

Greece also wants to increase a tax on short-term rentals and ban new licenses for such rentals in central Athens to increase the housing stock for permanent residents, Mitsotakis said Saturday. 

The government will provide more details on some of the measures Monday.
…

FRANKFURT, Germany — Volkswagen is considering closing some factories in its home country for the first time in the German automaker’s 87-year history, saying it otherwise won’t meet the cost-cutting goals it needs to remain competitive.

CEO Oliver Blume also told employees Wednesday that the company must end a three-decade-old job protection pledge that would have prohibited layoffs through 2029.

The statements have stirred outrage among worker representatives and concern among German politicians.

Here are some things to know about the difficulties at one of the world’s best-known auto brands:

What is Volkswagen proposing and why?

Management says the company’s core brand that carries the company’s name needs to achieve 10 billion euros in cost savings by 2026. It recently became clear the Volkswagen Passenger Car division was not on track to do that after relying on retirements and voluntary buyouts to reduce the workforce in Germany.

With Europe’s car market smaller than before the coronavirus pandemic, Volkswagen says it now has more factory capacity than it needs — and carrying underused assembly lines is expensive.

Chief Financial Officer Arno Antlitz explained it like this to 25,000 workers who gathered at the company’s Wolfsburg home base: Europeans are buying around 2 million cars per year fewer than they did before the pandemic in 2019, when sales reached 15.7 million.

Since Volkswagen has roughly a quarter of the European market, that means “we are short of 500,000 cars, the equivalent of around two plants,” Antlitz told the workers.

“And that has nothing to do with our products or poor sales performance. The market simply is no longer there,” he said.

Does Volkswagen make money?

The Volkswagen Group, whose 10 brands include SEAT, Skoda, CUPRA and commercial vehicles, turned an operating profit of 10.1 billion euros ($11.2 billion) in the first half of this year, down 11% from last year’s first-half figure.

Higher costs outweighed a modest 1.6% increase in sales, which reached 158.8 billion euros but were held down by sluggish demand. Blume called it “a solid performance” in a “demanding environment.” Volkswagen’s luxury brands, which include Porsche, Audi and Lamborghini, are selling better than VW models.

So why is Volkswagen struggling?

The discussion about reducing costs focuses on the core brand and its workers in Germany. Volkswagen’s passenger car division recorded a 68% earnings drop in the second quarter, and its profit margin was a bare 0.9%, down from 4% in the first quarter.

One reason is the division took the bulk of the 1 billion euros that went to job buyouts and other restructuring costs. But growing costs, including for higher wages, and sluggish sales of the company’s line of electric vehicles are a deeper problem. On top of that, new, competitively priced competitors from China are increasing their share of the European market.

Volkswagen must sell more electric cars to meet ever-lower European Union emission limits that take effect starting next year. Yet the company is seeing lower profit margins from those vehicles due to high battery costs and weaker demand for EVs in Europe due to the withdrawal of consumer subsidies and the slow rollout of public charging stations.

Meanwhile, VW’s electric vehicles also face stiff competition in China from models made by local companies.

The world’s automakers are in a battle for the future, spending billions to pivot to lower-emission electric cars in a race to come up with vehicles that are competitive on price and have enough range to persuade buyers to switch. China has dozens of carmakers making electric cars more cheaply than their European equivalents. Increasingly, those cars are being sold in Europe.

Profits have also declined at Germany’s BMW and Mercedes-Benz thanks to the same pressures.

Why are VW’s proposed factory and job cuts a big deal in Germany?

Volkswagen has 10 assembly and parts plants in Germany, where 120,000 of its 684,000 workers worldwide are based. As Europe’s largest carmaker, the company is a symbol of the country’s consumer prosperity and economic growth after World War II.

It has never closed a German factory before. VW last closed a plant in 1988 in Westmoreland, Pennsylvania; its Audi division is in discussions about closing an underutilized plant in Belgium.

Far-right parties fueled by popular disenchantment with German Chancellor Olaf Scholz’s quarreling, three-party coalition government scored major gains in Sept. 1 elections in Thueringia and Saxony states, located in the former communist East Germany. Nationwide polls show the government’s approval rating at a low point. Plant closings are the last thing the Scholz government needs.

The chancellor spoke with VW management and workers after the possible plant closings became known but was careful to stress that the decision is a matter for the company and its workers.

Why hasn’t Volkswagen already made the cost cuts management wants?

Employee representatives have a lot of clout at Volkswagen. They hold half the seats on the board of directors. The state government, which is a part-owner of the company, also has two board seats — together with the employee representatives a majority — and 20% of the voting rights at the company. Lower Saxony Gov. Stephan Weil has said the company needs to address its costs but should avoid plant closings.

That means management will have to negotiate — a process that will take months.

What does the employee side say?

Managers at the employee assembly faced several minutes of boos, whistles and tooting horns before they could start their presentation on the potential explanation. “We are Volkswagen, you are not,” workers chanted.

Daniela Cavallo, who chairs the company works council representing employees, said the council “won’t go along with plant closings.” Reducing labor costs won’t turn around Volkswagen’s financial situation, she argued.

“Volkswagen’s problem is upper management isn’t doing its job,” Cavallo said. “There are many other areas where the company is responsible… We have to have competitive products; we don’t have the entry-level models in electric cars.”
…

…

Johannesburg — After pledging $51 billion in financial support for Africa over the next three years and positioning China as a fellow developing country in contrast to the West’s colonialist past, President Xi Jinping told dozens of African leaders gathered in Beijing this week that “the China-Africa relationship is now at its best in history.”

This year’s Forum on Africa-China Cooperation, held every three years, was the first since the pandemic and China’s own economic slowdown. It comes amid growing geopolitical rivalry between Beijing and the West, and Xi was blunt in his assessment of the latter’s influence on the continent.

“Modernization is an inalienable right of all countries,” he said in his opening speech to more than 50 African leaders. “But the Western approach to it has inflicted immense sufferings on developing countries.”

Lucas Engel, an analyst with the Global China Initiative at Boston University, said China is reacting to increased competition in the region.

“Xi’s reminder of the ‘immense suffering’ inflicted on Africa by the West in his keynote speech this year is a sharper rebuke of Africa’s Western partners than we’ve seen in the past,” he told VOA. “It is likely that China is feeling the heat as Western partners ramp up cooperation with Africa.”

The theme of FOCAC 2024 was “joining hands to promote modernization,” and analysts told VOA beforehand they expected China to focus on green technology and the green energy transition, agricultural modernization and trade, and education and training.

The money announced was an increase on the $40 billion pledged at the last FOCAC, in 2021, but still fell short of previous pledges, such as the $60 billion earmarked for Africa in 2018 and 2015.

For some time, China has been seen to be moving away from the massive infrastructure projects of the early years of Xi’s trademark Belt and Road Initiative and toward what it has dubbed “small is beautiful projects.”

Some of the announcements made at FOCAC, however, surprised analysts by bucking that trend.

Xi announced China would be undertaking a $1 billion upgrade of the TAZARA railway, which will link mineral-rich, landlocked Zambia with Tanzania’s coast. He signed an agreement with the presidents of those two countries on Wednesday.

“There was already a sense that infrastructure would be one of those asks that would not be entertained by the Chinese side, so I think that has come as a bit of a surprise,” Paul Nantulya, a research associate with the Africa Center for Strategic Studies in Washington, told VOA.

“I think African countries were also quite concerned about infrastructure financing. … Now it seems like the Chinese side may have finally backed down,” said Nantulya, who was in Beijing for FOCAC. “That would indicate that China does not want to be locked out of the infrastructure game, given what the U.S. is doing with the Lobito Corridor.”

Nantulya was referring to the G7-backed strategic economic corridor that Washington says is designed to create jobs and enhance export potential for resource-rich Angola, the Democratic Republic of the Congo and Zambia. As the first big infrastructure project in Africa the U.S. has undertaken in a generation, Washington recently announced it could extend the railway to Tanzania and on to the Indian Ocean.

“China’s offer to refurbish the TAZARA railway connecting copper-rich Zambia with Tanzania on Africa’s eastern coast appears to be a direct answer to the Western-led Lobito Corridor,” said Engel of Boston University.

Did African leaders get what they wanted?

China was not the only country with an agenda at FOCAC, as African leaders also laid out their priorities for relations with their largest trading partner.

For South African President Cyril Ramaphosa, who leads the continent’s most developed economy, the primary aim was to reduce a long-standing trade imbalance and to get China to import more agricultural products. He also wants to see more value-added exports made in South Africa.

Ramaphosa embarked on a state visit to China ahead of FOCAC and made several announcements, including that South Africa would sign up for China’s Beidou satellite navigation system and inviting Chinese electric vehicle company BYD to use South Africa as a manufacturing hub.

Xi said China would in turn expand market access to African agricultural products and exempt 33 countries from import tariffs. He also announced that China would support 60,000 vocational training opportunities for Africans.

Nantulya said there seemed to be a lot of attention to detail regarding this year’s announcements.

“What that tells me is that the Chinese side has been responding to the African side,” he said. “You know, the African delegates are very mindful of the fact that one of the big criticisms of FOCAC is that it’s very high on pledges and very low on actual concrete tasks.”

Yunnan Chen, a researcher at London-based research group ODI, told VOA the pledged areas of cooperation spanned almost every sector.

“I think what’s interesting to note about them is this very striking emphasis on areas of technological cooperation — in industry, in agriculture, in science and technology,” she said.

“There’s a lot of emphasis on training and initiatives that would support knowledge transfer from China to African parties, and I think this is something that’s been very much an African demand for many years,” she added.

“Even though we have seen a decline in Chinese financing in Africa and we know that China is experiencing a lot of domestic financial troubles, there’s still a very clear and very emphatic political commitment,” she said.

Aside from Ramaphosa’s trade demands, other African leaders who held bilateral meetings with Xi had specific areas of concern.

Kenyan President William Ruto had infrastructure at the top of his list, asking that Beijing fund an extension of Kenya’s Chinese-built Standard Gauge Railway. It marked a sharp change from Ruto’s campaign rhetoric, in which he criticized his predecessor’s policy of taking Chinese loans.

Ruto made the request even though Kenya is heavily in debt to Western financial institutions such as the IMF and lenders such as China and has been experiencing violent anti-government protests.

Other key areas of cooperation announced at the conclusion of FOCAC included the military and security sectors, with Beijing vowing to allocate some $140 million in military assistance grants alongside training programs for thousands of military personnel from across the continent.

Green energy was also a focus, with Xi announcing China would launch 30 new clean energy projects on the continent.
…

Washington — The U.S. Treasury and Internal Revenue Service said on Friday that they have recovered $1.3 billion in unpaid taxes from wealthy individuals under new enforcement initiatives funded by $60 billion in IRS modernization spending from the climate-focused Inflation Reduction Act.  

Why it’s important 

Republicans in Congress have long vowed to rescind the 10-year IRS funding passed in 2022, arguing that it would unfairly harass Americans on their taxes. Republican presidential candidate Donald Trump vowed on Thursday to rescind all unspent funds from the Inflation Reduction Act, which include billions of dollars earmarked for the IRS.  

The IRS has planned to spend about $10.6 billion of those funds through end of the 2024 fiscal year, which concludes on Sept. 30, leaving nearly $50 billion that could be recouped. But budget forecasters say that doing so would increase the federal budget deficit by more than $100 billion over a decade because the agency would forego stepped-up enforcement.  

By the numbers  

The Treasury said that in the first six months of a new initiative to target 125,000 wealthy individuals who have not filed tax returns since 2017, it has collected $172 million from 21,000 non-filing taxpayers.  

Another initiative to target wealthy individuals with more than $1 million in income and $250,000 in unpaid, recognized tax debts has brought in $1.1 billion to Treasury coffers.   

U.S. Treasury Secretary Janet Yellen said the audit rate for millionaires fell by 80% due to budget cuts at the IRS.  

“During the previous [Trump] administration, as audit rates on high-income taxpayers fell, the share of audits on taxpayers with incomes under $200,000 increased,” Yellen said in remarks to be delivered at an IRS service center in Austin, Texas. “In 2019, the top one percent of Americans was estimated to owe over one-fifth of unpaid taxes, leaving ordinary Americans to shoulder the burden.” 
…

Washington — U.S. employment increased less than expected in August, but a drop in the jobless rate to 4.2% suggested an orderly labor market slowdown continued and probably did not warrant a big interest rate cut from the Federal Reserve this month.  

Nonfarm payrolls increased by 142,000 jobs last month after a downwardly revised 89,000 rise in July, the Labor Department’s Bureau of Labor Statistics said on Friday. Economists polled by Reuters had forecast payrolls increasing by 160,000 jobs after a previously reported 114,000 gain in July. Estimates ranged from 100,000 to 245,000 jobs.  

The smaller-than-expected increase in payrolls likely does not signal a deterioration in labor market conditions.  

August payrolls have a tendency to initially print weaker relative to the consensus estimate and recent trend before being revised higher later. Hiring typically picks up in the education sector, which is anticipated by the model that the government uses to strip out seasonal fluctuations from the data.  

The start of the new school year, however, varies across the country, which can throw off the so-called seasonal factors. The initial August payrolls counts have been revised higher in 10 of the last 13 years. Layoffs remain at historic low levels.  

The drop in the unemployment rate followed four straight monthly increases, which had lifted it near a three-year high of 4.3% in July. Early on Friday, financial markets saw a roughly 43% probability of a half-point rate cut at the Fed’s Sept. 17-18 policy meeting, according to CME Group’s FedWatch Tool. The odds of a 25 basis point rate reduction were around 57%.  

Average hourly earnings increased 0.4% in August after falling 0.1% in July. Wages increased 3.8% year-on-year after advancing 3.6% in July. Still-solid wage growth continues to underpin the economy through consumer spending. 
…

…

WASHINGTON — The U.S. trade deficit widened to the highest level in more than two years in July as businesses likely front-loaded imports in anticipation of higher tariffs on goods, suggesting trade could remain a drag on economic growth in the third quarter.

While the surge in imports reported by the Commerce Department on Wednesday would subtract from gross domestic product, it was an indication of strong domestic demand and inconsistent with financial market fears of a recession.

“The July trade data suggest that net trade will weigh on third-quarter GDP growth, but that is hardly cause for concern when it reflects the continued strength of imports, painting a better picture of domestic demand than renewed recession fears would suggest,” said Thomas Ryan, North America economist at Capital Economics.

The trade gap increased 7.9% to $78.8 billion, the widest since May 2022, the Commerce Department’s Bureau of Economic Analysis said.

The government revised the trade data from January through June 2024 to incorporate more comprehensive and updated quarterly and monthly figures.

Imports increased 2.1% to $345.4 billion. Goods imports rose 2.3% to $278.2 billion, the highest since June 2022. They were boosted by an increase in capital goods, which increased $3.3 billion to a record high, mostly reflecting computer accessories.

Imports of industrial supplies and materials, which include petroleum, increased $2.8 billion. There were also rises in imports of nonmonetary gold-finished metal shapes.

President Joe Biden’s administration has announced plans to impose steeper tariffs on imports of Chinese electric vehicles, batteries, solar products and other goods.

The government said last week a final determination will be made public in the “coming days.” There are also fears of even higher tariffs on Chinese imports should former President Donald Trump return to the White House after the November 5 election.

The politically sensitive goods trade deficit with China increased $4.9 billion to $27.2 billion. Exports to China fell $1.0 billion while imports advanced $3.9 billion.

“Imports of goods from China increased, which shows how difficult it will be to direct U.S. manufacturers away from their dependence on lower-cost goods originating from China if that is what Congress and political candidates wish to do,” said Christopher Rupkey, chief economist at FWDBONDS.

Exports gained 0.5% to $266.6 billion. Goods exports climbed 0.4% to $175.1 billion. Exports of motor vehicles, parts and engines decreased $1.7 billion to the lowest since June 2022. Consumer goods exports fell $800 million.

Exports of capital goods surged $1.8 billion to a record $56.1 billion, boosted by semiconductors.

The goods trade deficit increased 6.9% to $97.6 billion after adjusting for inflation.
…

Geneva — Workers have seen their slice of the global income pie shrink significantly over the past two decades, swelling inequality and depriving the combined labor force of trillions, the U.N. said Wednesday. 

The United Nations’ International Labor Organization said that the global labor income share — or the proportion of total income in an economy earned by working — had fallen by 1.6 percentage points since 2004. 

“While the decrease appears modest in terms of percentage points, in 2024 it represents an annual shortfall in labor income of $2.4 trillion compared to what workers would have earned had the labor income share remained stable since 2004,” the ILO said in a report. 

The study highlighted the COVID-19 pandemic as a key driver of the decline, with almost half of the reduction in labor income share taking place during the pandemic years of 2020-2022.  

The global crisis exacerbated existing inequalities, particularly as capital income has continued to concentrate ever more among the wealthiest, it said. 

“Countries must take action to counter the risk of declining labor income share,” Celeste Drake, the ILO deputy director-general, said in a statement. 

“We need policies that promote an equitable distribution of economic benefits, including freedom of association, collective bargaining and effective labor administration, to achieve inclusive growth, and build a path to sustainable development for all.” 

Deepening inequality

The ILO stressed that technological advances, including automation, were a key driver of the declines in labor income share. 

“While these innovations have boosted productivity and output, the evidence suggests that workers are not sharing equitably from the resulting gains,” the U.N. labor agency said. 

It voiced particular concern that the artificial intelligence boom risked deepening inequality further.  

“If historical patterns were to persist… the recent breakthroughs in generative AI could exert further downward pressure on the labor income share,” the report said, stressing “the importance of ensuring that any benefits of AI are widely distributed”. 

The ILO found that workers currently rake in just 52.3 percent of global income, while capital income — earned by owners of assets like land, machines, buildings and patents — accounts for the rest. 

Since capital income tends to be concentrated among wealthier individuals, the labor income share is widely used as a measure of inequality. 

It also helps measure progress towards the U.N. sustainable development goal aimed at significantly reducing inequality between and within countries between 2015 and 2030. 

“The report indicates slow progress as the 2030 deadline approaches,” ILO said. 

The report also emphasized the stubbornly high incidence of young people who are not in employment, education or training (NEET). 

Since 2015, the global percentage has slipped slightly, from 21.3% to 20.4% this year. 

But there are major regional differences, with a third of youth in Arab states and nearly a quarter in Africa falling into the NEET category.  

The report also highlighted a large gender gap, with the global NEET incidence among young women standing at 28.2% — more than double the 13.1% seen among young men. 
…

Abuja, Nigeria — Barely 48 hours after Nigeria’s state-owned oil company made a startling revelation, hundreds of commuters joined a line stretching many kilometers for fuel at an NNPC outlet in the capital.

In a statement Sunday, Nigeria’s state oil firm, NNPC Limited, said that financial constraints are hampering its ability to import gasoline.

The statement acknowledged local media reports in July that the oil regulator owed oil traders more than $6 billion — double its debt compared with April.

Nigeria depends on imports to meet its daily demand for gasoline — more than 66 million liters — and NNPC is the sole importer of fuel.

Abuja resident John Prince said he’d been waiting in line for hours.

“When I came in the morning, they were not selling [gasoline]. They said they were waiting for orders from above. [Now] I’ve been here for the past two hours,” he said.

Prince said that while customers waited, the gasoline station increased prices by nearly 30%.

NNPC said the situation could worsen supply in coming days but also said it is working with the government and other partners to fix the problem.

Fuel shortages have been recurring in Nigeria since last year, despite Nigerian President Bola Tinubu scrapping the fuel subsidy.

Tinubu doubles as petroleum minister, but authorities later reinstated a partial subsidy to curb inflation, the high cost of living and growing public tensions triggered by economic reforms.

But the founder of the Center for Transparency Advocacy, Faith Nwadishi, said corruption and incompetence are to blame.

“It’s just a cocktail of corruption, impunity and no regard for the people of the country,” she said. “I think it’s just another ploy to make Nigerians pay for impunity. It’s quite disheartening. This morning, I had to queue so that I could get fuel to come out. You know — man hours lost, no productivity, and nobody is making any compensation for that. It’s unfortunate.”

Last month, NNPC announced a record $1.9 billion in profits for 2023 but said it was covering for shortfalls in the government’s petrol import bill.

Ogho Okiti, an economic analyst, said, “Every other oil-producing country is smiling now except Nigeria. So, it’s a transparency problem. There’s so much uncertainty. And that heightened uncertainty and volatility will continue to drive the price and, of course, drive the conditions that we see.

“As it is, we’re losing in all ramifications — we’re paying exorbitant prices for fuel, the government is not getting the resources, and the exchange rate is worsening,” Okiti said.

Meanwhile, authorities say the Dangote Oil Refinery in the Lagos area has begun gasoline production and could supply up to 25 million liters this month.

On Tuesday, the Nigerian Midstream and Downstream Petroleum Regulatory Authority entered an agreement with the NNPC to sell crude oil to Dangote refinery in the local currency, the naira.

If that happens, it could significantly address local supply issues and save the country several billions of dollars in foreign exchange.
…

Nairobi — Kenyan officials have long pushed for milk to be pasteurized before it reaches the marketplace, but much of the milk sold is not pasteurized because small-scale vendors and producers can’t afford the expensive machines used in the process. Now, Canadian university graduates have developed a portable, affordable pasteurization machine that could help African farmers cheaply sterilize the dairy product and reduce milk-related disease.

In Kenya, smallholder farmers produce 56% of the milk, with five million dairy cattle generating five billion liters annually. According to Kenya’s Dairy Board, only 28% of that milk is processed by dairy companies, which pasteurize it to kill harmful bacteria.

The remaining 72% is sold directly to consumers by vendors who traditionally heat and reheat the milk over a fire, a method that fails to ensure complete safety.

To address the challenge faced by millions of farmers in Africa and around the world, a group of recent university graduates from Canada has developed a portable pasteurizer machine to help farmers sterilize milk cheaply and in a healthy way.

Miraal Kabir is the head of the startup Safi, which means “pure” in Swahili. She said her technology provides health and economic benefits to users and milk consumers.

“It solves two problems. The main one being the problem of unsafe milk. It allows all of the milk being sold in the market to be safe, which isn’t the case right now. That’s leading to a lot of deaths, a lot of diseases, especially for children under five. And then on a secondary problem that it’s solving, right now in the dairy supply chain, the people who are winning the most are these large processors,” she said.

“They sell milk extremely cheap to these processors who then sell it at a huge premium. And so by allowing small scale farmers to pasteurize the milk themselves and earn the premium of pasteurized milk themselves, we’re actually empowering them financially as well.”

The device is placed on top of a pot. It has a whisk to stir the milk and ensure that it is heated uniformly. It also has a screen and LED lights, which guide the user through pasteurization. A temperature sensor tells the user when the milk is ready.

Moses Sitati is a dairy farmer in western Kenya. His cows produce 60 liters of milk per day, of which 10 liters spoil, meaning it is not suitable for human consumption.

The 40-year-old farmer has been using the pasteurizer for the past 12 months.

“I can sell milk, people can just buy milk and take it at the same time without going and boiling it fast. Now you know when you boil, wait until again by tomorrow so you boil, you are losing the milk, the first thing and also the nutrients. Now the pasteurizer helps to at least store the milk, it helps at least to preserve the milk for a long time,” he said.

In addition to farmers losing their income, raw and unpasteurized milk contains harmful bacteria like salmonella, E. coli, Brucella, tuberculosis, and Q fever.

Sitati is among the 20 farmers and vendors in Kenya and Rwanda who have purchased the pasteurizer.

The father of three happened to get the first product developed by the Safi team, which didn’t satisfy him, but he says he is happy with the final product for its safety and energy consumption.

“The first one could pasteurize milk from two to 10 liters, but this one pasteurized milk from two to 20 liters. The first one didn’t have a lid, so when pasteurizing the milk, it could spill out, so they improved this to put a lid so that there is no milk spilling out when you are pasteurizing. The first one used electricity, and this one uses solar energy. When you charge, you can use it for four hours,” he said.

Last month, the Safi company said it partnered with the Rwandan government, which helped them open for commercialization after taking part in pilot programs.

Kabir said the device tracks pasteurization data, letting farmers prove milk safety and helping regulators monitor it.

“We’ve also incorporated the data software side of things. Our device is actually able to capture all the key pasteurization data and provide it to the farmer themselves or the vendors so that they can prove that they have pasteurized their milk to their customers, but then we’re also able to aggregate all of this data and provide it to governments. Governments and regulators, they’re able to see where milk has been pasteurized, when it was pasteurized, where safe milk is being sold,” said Kabir.

The innovators say they hope to find a good manufacturer to start producing the device next year and make billions of liters of milk disease-free.
…

Berlin, Germany — EU chief Ursula von der Leyen has made her first picks for her top team, with the key economy vice-president job going to Italy’s far-right nominee, German newspaper Die Welt reported Tuesday.

Von der Leyen, who secured a second term as commission chief in July, is expected to unveil her proposed lineup following a Friday deadline for states to name their nominees.

Die Welt, citing senior EU diplomats and European Commission insiders, said she is set to give Raffaele Fitto from the far-right Brothers of Italy party the executive vice-president portfolio in charge of the economy and post-pandemic recovery.

The job would oversee how the bloc’s pandemic recovery fund worth hundreds of billions of euros is deployed.

Fitto is Rome’s minister for European affairs.

Others to be named EU vice presidents include Valdis Dombrovskis, from Latvia and currently EU’s trade chief. His role will be EU expansion and Ukraine reconstruction, according to the report.

France’s Thierry Breton, the bloc’s internal market commissioner, will take on industry and strategic autonomy according to Die Welt.

Spain’s Environment Minister Teresa Ribera has been chosen for a “transition” portfolio which will include ecology and digital affairs. 

The nominee for the EU’s foreign policy chief, Estonia’s outgoing leader Kaja Kallas, will also be named an executive vice president.  

Each European member state put forward nominees for von der Leyen’s 26-person team.

Slovakia’s Maros Sefcovic, currently an executive vice president, is set to remain as a commissioner in charge of inter-institutional affairs.

Czech Industry and Trade Minister Jozef Sikela will be in charge of energy, while Poland’s ambassador to the EU, Piotr Serafin, will handle budgetary issues.

After the Commission president names her line-up, the candidates undergo confirmation hearings in the European Parliament in September and October. 
…

Washington — When Jerome Powell delivered a high-profile speech last month, the Federal Reserve chair came the closest he ever had to declaring that the inflation surge that gripped the nation for three painful years was now essentially defeated.

And not only that. The Fed’s high interest rates, Powell said, had managed to achieve that goal without causing a widely predicted recession and high unemployment.

Yet most Americans are not in the same celebratory mood about the plummeting of inflation in the face of the high borrowing rates the Fed engineered. Though consumer sentiment is slowly rising, a majority of Americans in some surveys still complain about elevated prices, given that the costs of such necessities as food, gas and housing remain far above where they were before the pandemic erupted in 2020.

The relatively sour mood of the public is creating challenges for Vice President Kamala Harris as she seeks to succeed President Joe Biden. Despite the fall of inflation and strong job growth, many voters say they’re dissatisfied with the Biden-Harris administration’s economic record — and especially frustrated by high prices.

That disparity points to a striking gap between how economists and policymakers assess the past several years of the economy and how many ordinary Americans do.

In his remarks last month, given at an annual economic symposium in Jackson Hole, Wyoming, Powell underscored how the Fed’s sharp rate hikes succeeded much more than most economists had predicted in taming inflation without hammering the economy — a notoriously difficult feat known as a “soft landing.”

“Some argued that getting inflation under control would require a recession and a lengthy period of high unemployment,” Powell said.

Ultimately, though, he noted, “the 4-1/2 percentage point decline in inflation from its peak two years ago has occurred in a context of low unemployment — a welcome and historically unusual result.”

With high inflation now essentially conquered, Powell and other central bank officials are preparing to cut their key interest rate in mid-September for the first time in more than four years. The Fed is becoming more focused on sustaining the job market with the help of lower interest rates than on continuing to fight inflation.

Many Americans ‘have taken a big hit’

Many consumers, by contrast, are still preoccupied most by today’s price levels.

“From the viewpoint of economists, central bankers, how we think about inflation, it really has been a remarkable success, how inflation went up, has come back, and is around the target,” said Kristin Forbes, an economist at MIT and a former official at the United Kingdom’s central bank, the Bank of England.

“But from the viewpoint of households, it has not been so successful,” she added. “Many have taken a big hit to their wages. Many of them feel like the basket of goods they buy is now much more expensive.”

Two years ago, economists feared that the Fed’s ongoing rate hikes — it ultimately raised its benchmark rate more than 5 percentage points to a 23-year high in the fastest pace in four decades — would hammer the economy and cause millions of job losses. After all, that’s what happened when the Fed under Chair Paul Volcker sent its benchmark rate to nearly 20% in the early 1980s, ultimately throttling a brutal inflationary spell.

In fact, at Jackson Hole two years ago, Powell himself warned that using high interest rates to defeat the inflation spike “would bring some pain to households and businesses.”

Yet now, according to the Fed’s preferred measure, inflation is 2.5%, not far above its 2% target. And while a weaker pace of hiring has caused some concerns, the unemployment rate is at a still-low 4.3%, and the economy expanded at a solid 3% annual rate last quarter.

While no Fed official will outright declare victory, some take satisfaction in defying the predictions of doom and gloom.

“2023 was a historic year for inflation falling,” said Austan Goolsbee, president of the Chicago Fed. “And there wasn’t a recession, and that’s unprecedented. And so we will be studying the mechanics of how that happened for a long time.”

Measures of consumer sentiment, though, indicate that three years of hurtful inflation have dimmed many Americans’ outlook. In addition, high loan rates, along with elevated housing prices, have led many young workers to fear that homeownership is increasingly out of reach.

‘Inflation overhang’

Last month, the consulting firm McKinsey said that 53% of consumers in its most recent survey “still say that rising prices and inflation are among their concerns.” McKinsey’s analysts attributed the escalated figure to “an ‘inflation overhang.” That’s the belief among analysts that it can take months, if not years, for consumers to adjust emotionally to a much higher level of prices even if their pay is keeping pace.

Economists point to several reasons for the wide gap in perceptions between economists and policymakers on the one hand and everyday consumers and workers on the other.

The first is that the Fed tailors its interest rate policies to manage inflation — the rate of price changes — rather than price levels themselves. So when inflation spikes, the central bank’s goal is to return it to a sustainable level, currently defined as 2%, rather than to reverse the price increases. The Fed’s policymakers expect average wages to catch up and eventually to allow consumers to afford the higher prices.

“Central bankers think even if inflation gets away from 2% for a period, as long as it comes back, that’s fine,” Forbes said. “Victory, mission accomplished. But the amount of time inflation is away from 2% can have a major cost.”

Research by Stefanie Stantcheva, a Harvard economist, and two colleagues found that most people’s views of inflation are very different from those of economists. Economists in general are more likely to regard inflation as a consequence of strong growth. They often describe inflation as a result of an “overheating” economy: Low unemployment, strong job growth and rising wages lead businesses to sharply increase prices without necessarily losing sales.

By contrast, a survey by Stantcheva found, ordinary Americans “view inflation as an unambiguously bad thing and very rarely as a sign of a good economy or as a byproduct of positive developments.”

Her survey respondents also said they believed that inflation stems from excessive government spending or greedy businesses. They “do not believe that (central bank) policymakers face trade-offs, such as having to reduce economic activity or increase unemployment to control inflation.”

Perceived recession

As a result, few consumers probably worried about the potential for a downturn as a result of the Fed’s rate hikes. One opinion survey, in fact, found that many consumers believed, incorrectly, that the economy was in a recession because inflation was so high.

At the Jackson Hole conference, Andrew Bailey, governor of the Bank of England, argued that central banks cannot guarantee that high inflation will never appear — only that they will try to drive it back down when it does.

“I get this question quite often in Parliament,” Bailey said. “People say, ‘Well you failed to control inflation.’ I said no.”

The test of a central bank, he continued, “is not that we will never have inflation. The test of the regime is how well, once you get hit by these shocks, you bring it back to target.”

Still, Forbes suggested that there are lessons to be learned from the post-COVID inflation spike, including whether inflation was allowed to stay too high for too long, both in the U.S. and the U.K. The Fed has long been criticized for having taken too long to start raising its benchmark rate. Inflation first spiked in the spring of 2021. Yet the Fed, under the mistaken impression that high inflation would prove “transitory,” didn’t begin raising rates until nearly a year later.

“Maybe should we rethink … where we seem to be now: ‘As long as it comes back four to five years later, that’s fine,’ ” she said. “Maybe four to five years is too long.

“How much unemployment or slowdown in growth should we be willing to accept to shorten the length of time that inflation is too high?”
…