Global News December 18, 2017

  1. BBC
  2. Global News December 18, 2017

“Fed’s Kashkari Says Flatter Yield Curve Helped Motivate Dissent.”

Federal Reserve Bank of Minneapolis President Neel Kashkari said low inflation, continued weakness in wages and a flattening yield curve motivated his dissent last week against the U.S. central bank’s decision to raise interest rates for a third time in 2017.
“Continuing to raise rates in the absence of increasing inflation could needlessly hold down wage growth while potentially increasing the chance of a recession,” Kashkari said Monday in a statement explaining his third dissent this year. “While the yield curve has not yet inverted, the bond market is telling us that the odds of a recession are increasing.”
Kashkari and Chicago Fed President Charles Evans voted against the rate rise at the end of the Dec. 12-13 Federal Open Market Committee meeting in Washington. Evans said Friday he dissented over concerns that consumer inflation expectations — considered by economists a crucial determinant of future inflation — have fallen.
Fed officials have been struggling to understand a soft patch in inflation this year and generally tepid wage gains, despite a booming job market that has pushed unemployment to a 16-year low of 4.1 percent. Most policy makers, led by Chair Janet Yellen, have stuck with the view that inflation has been checked by transitory price drops, and that low unemployment will eventually push up wages.
Kashkari repeated his concern over low price growth, which he voiced in past dissents, but added his worries over the narrowing gap between the yields for long- and short-term Treasuries. Instances of long-term yields rising higher than the short end have been a reliable indicator in the past of impending recession, he said.
At her press conference following the conclusion of the FOMC meeting on Dec. 13, Yellen dismissed concerns over a flatter yield curve, saying it was mainly due to higher short-end rates and historically low long-term inflation expectations.


“U.S. taxpayers rush to claim deductions under threat from tax bill.”

Financial advisers and accountants are working overtime as many U.S. taxpayers scramble to pay the rest of their 2017 taxes before Jan. 1 when the proposed Republican tax overhaul would sharply cut the amount they can deduct on federal tax bills.
The tax legislation, which top U.S. Republicans said on Sunday they expected Congress to pass this week, caps the amount of state, local and property taxes individuals can deduct from their federal tax bills at $10,000.
The average American who itemized his or her tax bill in 2015 claimed more than $27,000 in deductions. While taxpayers have until Jan. 15 to pay the final installment of their 2017 taxes, Tom Holly of the accounting firm PwC said he received dozens of calls over the weekend from concerned clients eager to pay sooner.
Last week, according to media reports, state officials in New York received calls from residents asking to pay their 2018 state, local and property taxes before Jan. 1 in an effort to claim the higher amount of deductions before the Republican tax bill takes effect.
In response, the U.S. Treasury Department issued guidance over the weekend saying that any pre-payments for 2018 tax liabilities would not be deductible on federal tax bills.
If passed, the tax bill would be the biggest U.S. tax rewrite since 1986. The legislation would cut the corporate income tax rate to 21 percent from 35 percent but offer a mixed bag for individuals, including middle-class workers, by roughly doubling a standard deduction that does not require itemization, but eliminating or scaling back other popular itemized deductions and exemptions.


BBC News
“Austria protest as far right Freedom Party tastes power.”

Thousands of protesters rallied in central Vienna against Austria’s new coalition government of conservatives and far right, during its swearing-in. Among the banners were ones saying «Don’t let the Nazis govern». The Freedom Party (FPÖ) – the junior partner – is the only far-right party to get into power in the EU.
The FPÖ and People’s Party (ÖVP) plan to implement stricter rules for asylum seekers, after immigration proved a major concern for Austrian voters. The coalition says Austria will stay in the EU. The new chancellor is Sebastian Kurz, 31 – Europe’s youngest leader. About 6,000 people demonstrated against the new coalition, the BBC’s Bethany Bell reports. The FPÖ was founded by former Nazis in the 1950s, but today it denies any connection with Nazi ideology.
The FPÖ has a co-operation agreement with the ruling United Russia party of Russian President Vladimir Putin and the FPÖ says it wants to get the EU sanctions on Russia eased. The new foreign minister, Karin Kneissl, is a Middle East expert who speaks Arabic and Hebrew. The coalition plans to make asylum seekers hand over any cash they have when they submit an asylum claim, so that it funds their welfare. They will also have to hand over their mobile phones so that the authorities can see from their data how they reached Austria and whom they contacted. Phones will not be confiscated but there will be systematic checks.


“Trump in strategy document to cite China, Russia as competitors.”

President Donald Trump will declare that China and Russia are competitors seeking to challenge U.S. power and erode its security and prosperity, in a national security strategy he will lay out in a speech on Monday. “They are determined to make economies less free and less fair, to grow their militaries, and to control information and data to repress their societies and expand their influence,” according to excerpts of Trump’s strategy released by the White House.
The singling out of China and Russia as “revisionist powers” in the document reflects the Trump administration’s wariness of them despite Trump’s own attempts to build strong relations with Chinese President Xi Jinping and Russian President Vladimir Putin.
A senior administration official who briefed reporters said Russia and China were attempting to revise the global status quo – Russia in Europe with its military incursions into Ukraine and Georgia, and China in Asia by its aggression in the South China Sea.
The document will say, according to the excerpts, that competition with China and Russia requires Washington to rethink policies based on the assumption that engagement with rivals and including them in international institutions “would turn them into benign actors and trustworthy partners.”
“For the most part, this premise turned out to be false,” the document says.The strategy will also cite North Korea, Iran and Islamist militant groups as threats to U.S. interests and will single out Pyongyang for seeking biowarfare.