Thursday, 11 August, 2022
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US Fed ready to act to sustain expansion if trade wars hit economy

German industry body shows disapproval of Chancellor Angela Merkel’s government, says ‘lost all confidence’.

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Amid trade wars, Fed chairman Jerome Powell hints at possible rate cut

As the US-China trade war continues, coupled with the threat of a looming US-Mexico dispute, Federal Reserve chairman Jerome Powell Tuesday indicated that the central bank might cut interest rates “to sustain the expansion”.

“We do not know how and when these issues will be resolved. We are closely monitoring the implications of these developments for the US economic outlook,” a Financial Times report said quoting Powell.

He said the Fed would “act as appropriate to sustain the expansion, with a strong labour market and inflation near our symmetric 2 per cent objective”.

US President Donald Trump has threatened to hike tariffs against Mexican imports in retaliation to the unresolved immigration issue between the two countries.

According to a report in the Financial Times, if the Trump administration hikes the tariffs, it would cost the US consumers $17.3 billion per year. Moreover, with deeply integrated supply chains, both the economies are expected to take a hit if the tariffs go up.

Have ‘lost’ trust in Merkel coalition, says German industry body

In a strong show of disapproval, Germany’s chief industrial lobby BDI Tuesday said it has “lost all confidence” in the coalition run by Chancellor Angela Merkel, reported The Financial Times.

Speaking at the lobby’s annual gathering in Berlin, BDI chief Dieter Kempf launched a scathing attack on the Merkel government.

“The coalition has squandered a large part of the trust people placed in you,” Kempf said to Merkel, who was also present at the event.

German businesses complain about rising energy costs, heavy tax burden, and poor digital infrastructure. The German economy is expected to grow at just 0.5 per cent this year.

Merkel has been under tremendous political pressure in the last few weeks after the resignation of Andrea Nahles, the leader of Social Democrats, her junior ally. While the rest of Social Democratic leaders have agreed to remain in the coalition, it has led to a considerable political risk.

In other news

Thousands descend on Prague seeking PM’s resignation, Financial Times

Sudan crisis: Death toll from crackdown rises to 60, opposition says .

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