Overseas Headlines- October 25, 2019

October 25, 2019

United States:

Fed Seen Cutting Rates Next Week and Then Hitting Pause Button

“Federal Reserve officials will signal they’re likely to take a break from cutting interest rates after lowering them again next week, according to a majority of economists surveyed by Bloomberg. In an Oct. 21-24 poll of 40 economists, 85% said they anticipate the Federal Open Market Committee will reduce rates by a quarter percentage point when it wraps up a two-day meeting in Washington on Wednesday. That would lower the target range for the Fed’s benchmark rate to 1.5%-1.75%. In addition, 56% of respondents said in the event of such a cut, policy makers would telegraph, either in their policy statement or through Chairman Jerome Powell’s post-meeting press conference, that they are likely to pause for some time before making another rate move. “It might well be a hawkish cut as Powell will likely signal some resistance to cut rates more,” said Thomas Costerg, senior U.S. economist at Pictet Wealth Management in Geneva. The Fed has already lowered rates twice this year — in July and September — not because officials forecast a steep downturn but because the risks of such a slump have mounted. Powell last month compared that to taking out “insurance.” Though U.S. unemployment is low, hiring strong and consumer spending solid, he cited slowing global growth, uncertainty around trade tensions and below-target inflation as reasons to nudge rates lower.”



Macron Blocked EU’s Decision to Delay Brexit for Three Months

“French President Emmanuel Macron blocked the European Union’s attempt to delay Brexit for three months, raising the prospect the U.K. might not know whether it will get an extension until just hours before it is scheduled to be ejected on Oct. 31, even without a deal. At a meeting in Brussels on Friday morning, diplomats from the EU’s 27 remaining countries deferred a decision on the postponement. While none of them want to be seen interfering in the U.K.‘s domestic politics, France is at loggerheads with the others. Macron wants to grant a delay until Nov. 30, or even sooner, to put pressure on the House of Commons to back Boris Johnson’s deal. Other EU governments see that as too much of a gamble because it could lead to a no-deal Brexit. They are pushing to postpone Brexit until Jan. 31 to allow time for a general election. On Thursday, Johnson said he will seek an election on Dec. 12. But to hold it, he needs the support of two-thirds of members of Parliament, and the opposition Labour party has said it will block it. The diplomats have given themselves until Tuesday to make a decision. If they don’t, the EU could convene an emergency summit of EU leaders that would leave the U.K. hanging as time ticks down toward the country’s scheduled departure. Without a deal or an extension, the U.K. would crash out of the bloc without the economic safety net of an agreement at the end of the month. No EU government will refuse a delay of some sort — the question is when they will decide to grant it, officials said.”




China Fires Back at Pence, Says U.S. Should Get House in Order

“China fired back at Vice President Mike Pence’s criticism on human rights, calling his speech “lies” and chiding him for ignoring U.S. problems like racism and wealth disparity. Pence on Thursday gave a long-anticipated speech in which he criticized China’s actions against protesters in Hong Kong while calling for greater engagement between the world’s two biggest economies. He said the U.S. stands with demonstrators in Hong Kong and accused Beijing of curtailing the rights and liberties of the city’s residents. Hua Chunying, a spokeswoman for China’s foreign ministry, blasted Pence’s “arrogance” and said no force would stop the country’s progress. She accused him of seeking “to disrupt China’s unity or internal stability” and called Hong Kong, Taiwan and the far west region of Xinjiang “internal affairs.” “The U.S. has already abandoned and cast aside its morality and credibility,” Hua said. “We hope these Americans can look at themselves in the mirror to fix their own problems and get their own house in order.” Pence’s speech comes at a crucial time in the U.S.-China relationship as the two countries remain locked in a trade war and jostle for military and commercial dominance in the Pacific. White House officials have debated for weeks how critical Pence should be, underscoring the stakes of his remarks, which come just a day before negotiators talk about progress toward agreeing on a phase one agreement over trade. The vice president was careful to balance his criticism with an olive branch. Rather than “decoupling” the two countries, the U.S. “seeks engagement with China and China’s engagement with the wider world,” he said. “Despite the great power competition that is underway and America’s growing strength, we want better for China.” China also left the door open to cooperation, with Hua saying both countries have more to gain from cooperation than confrontation. The Communist Party’s Global Times said in an editorial that Pence offered a “positive attitude” toward getting a trade deal done even as he “slandered” China over Hong Kong, Taiwan and the treatment of Muslim minorities in Xinjiang. “China and the U.S. have different political systems. It means that it is impossible to change the political foundation of China,” the Global Times wrote in English. “However, China and the U.S. have many reasons to stick with peaceful co-existence and win-win cooperation.” Pence’s most stinging criticism of China was indirect, in remarks targeting Nike Inc. and the NBA. “Nike promotes itself as a so-called ‘social-justice champion,’ but when it comes to Hong Kong, it prefers checking its social conscience at the door,” Pence said.”


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