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31 August 2022
More US rate rises to stop 'greater pain'
US Federal Reserve Chair Jerome Powell sent a clear message to financial markets last week, saying interest rates will remain high until inflation falls and stays low.
On Wall Street, the S&P Index plummeted 3.4 per cent on Friday after Powell’s remarks and the trend flowed to Australia on Monday with 2 per cent market falls. The Australian markets rebounded this week as the nation’s inflation remained at 6.1 per cent in June quarter. US inflation in the year to July soared to 8.5 per cent yet this was less severe than June's 9.1 per cent level – the steepest since 1981. Powell made clear that he is not convinced inflation has peaked and does not see the Fed stopping its rate rises anytime soon.
The next US Fed meeting in late September could be critical in revealing the extent of how much rates will rise with the markets expecting a 50 basis point increase. “These are the unfortunate costs of reducing inflation. But a failure to restore price stability would mean far greater pain,” Powell said.
NEWS WRAP
Committing to a 'free and open Indo-Pacific'
- US warships travel through Taiwan Strait | Two US Navy warships entered the Taiwan Strait in what is the first US naval transit in the waterway since US-China tensions spiked this month over a visit to the island by House Speaker Nancy Pelosi. The US military said the manoeuvre demonstrates the United States’ “commitment to a free and
open Indo-Pacific”. READ MORE HERE
- MAGA philosophy is “semi-fascism” says Biden | President Biden plans to deliver a prime-time speech this week saying the November midterm elections are a “battle for the soul of the nation”. Biden’s stronger rhetoric follows his attack on former President Trump’s MAGA (Make America Great Again) philosophy calling it “semi-fascism” and stoking backlash from Republicans. READ MORE HERE
- Student loan forgiveness causes Democrat division | President Biden’s executive order to cancel thousands of dollars in college debt for millions of Americans has divided Democratic candidates in the lead-up to the November midterm elections. While younger and progressive voters are more likely to approve, centrist Democrats have been critical. READ MORE HERE
- Affidavit reveals Trump had information on spies | FBI agents reportedly found documents relating to the work of US intelligence operatives around the world in former President Donald Trump’s Mar-a-Lago home. US Director of National Intelligence Avril Haines told US Congress that an assessment of the documents for potential risk to national security is underway. READ MORE HERE
- NBA star supports Australian PM’s plan | Shaquille O’Neal lent his support to the Australian Government’s campaign for an Indigenous Voice to Parliament. Prime Minister Anthony Albanese said the former LA Lakers centre reached out to the government to inform himself about the proposal for the First Nations voice. READ MORE HERE
What we’re seeing now is the beginning or the death knell of an extreme MAGA philosophy. It’s not just Trump, it’s the entire philosophy that underpins the — I’m going to say something, it’s like semi-fascism.
US President Joe Biden | 26 August, 2022
On 23 May 2022, President Biden announced the Indo-Pacific Economic Framework (IPEF) in Tokyo alongside 12 Indo-Pacific partners. IPEF is unlike the Trans-Pacific Partnership — which President Trump withdrew the United States from in 2017 — and other conventional trade agreements in that it does not include any offers to foreign countries for increased market access and tariff reductions from the United States. Instead, the loosely defined economic framework entails four distinct pillars that participants will negotiate separately: digital trade; supply chains; climate and clean energy; and anti-corruption efforts.
To re-launch the USSC Debate Papers series, the United States Studies Centre invited Wendy Cutler, Vice President at the Asia Society Policy Institute and a veteran USTR trade negotiator, and Daniel M. Price, Managing Director at Rock Creek Global Advisors and a former senior White House official responsible for international trade and investment in the George W. Bush administration, to discuss the Biden administration's first major trade-related effort in the Indo-Pacific.
BY THE NUMBERS
Inflation impacts on United States, Australia
US inflation for July 2022 hit 8.5 per cent, however this was less severe than June's 9.1 per cent level - the steepest since 1981. The high inflation rate prompted US Federal Reserve Chair Jerome Powell to signal that more interest rate rises are on the way.
Australian inflation is also rising and doubled in the past 12 months. The Australian Consumer Price Index (CPI) was 3 per cent for the September 2021 quarter and rose to 6.1 per cent in the June 2022 quarter. While Australian inflation data is calculated quarterly, US figures are assessed on a monthly basis. The Australian Reserve Bank is expected to follow the US Fed's lead and implement its fourth consecutive 50 basis point increase in the official cash rate in early September.
VIDEO
The Crisis of American democracy: A conversation with Stephen Macedo
The January 6 Select Committee hearings highlight points of crisis in American democracy, yet the roots of these challenges undeniably precede the Capitol riots given US economic, social and cultural trends. Princeton University professor and political scientist Stephen Macedo's authoritative work on immigration, liberalism, populism, and democratic theory explores such trends.
To discuss these issues, the USSC hosted an event featuring Princeton University's Laurence S. Rockefeller Professor of Politics, Stephen Macedo in conversation with USSC Director of Research, Jared Mondschein, and Director of Engagement and Impact, Mari Koeck.
Catch more podcast and video analysis on the United States here.
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University of Sydney NSW 2006
