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Yahoo
4 hours ago
- Yahoo
Fed Is Set for Contentious Debate as Investors Eye Fall Rate Cut
(Bloomberg) -- Federal Reserve officials are determined to hold interest rates steady a little while longer, though an increasingly contentious debate at this week's policy meeting may bolster expectations for rate cuts in the fall. The High Costs of Trump's 'Big Beautiful' New Car Loan Deduction Can This Bridge Ease the Troubled US-Canadian Relationship? Trump Administration Sues NYC Over Sanctuary City Policy Fed Chair Jerome Powell is under intense pressure from President Donald Trump and his allies to reduce borrowing costs, and may face multiple dissents this week from officials who want to provide support to a slowing labor market. But the US central bank is widely expected to leave its benchmark rate unchanged at the conclusion of its two-day meeting on July 30 as policymakers await more data revealing the impact of tariffs on consumer prices. 'Even as we don't see any change in the policy rate, I think we see hints that we are at a turning point in the policy path,' said Sarah House, senior economist at Wells Fargo. 'But of course, most of the committee doesn't seem there yet — I think they're still wary of what happens with inflation regarding these tariffs.' Fed officials will publish a post-meeting statement Wednesday at 2 p.m. in Washington, and Powell will hold a press conference 30 minutes later. Interest-rate futures show investors are betting on a likely rate reduction at the next meeting, in September, and Fed-watchers will be listening for anything that helps ratify that view. The rate decision lands in the middle of a week jam-packed with key economic data releases, including a monthly employment report due Friday. Economists expect it to show a slowdown in hiring in July as uncertainty around Trump's trade policy continued to weigh on the outlook. Dissents Many analysts see a possibility of dissents from Fed Governor Christopher Waller and Fed Vice Chair for Supervision Michelle Bowman, two Trump appointees who have expressed concern that rates are too high given rising risks to employment. Waller hinted at a dissent earlier this month, saying the Fed should move now to support a labor market that is 'on the edge.' Bowman also said in June that she could support a rate cut as soon as this month if price pressures remain subdued. If both Waller and Bowman cast dissenting votes, it would be the first time two governors did so since 1993. Waller is considered to be among candidates Trump is considering to replace Powell when his term as chair expires in May. Some commentators have shrugged over divisions appearing in the vote. In a note to clients on Friday, Michael Feroli, chief US economist at JPMorgan Chase & Co., said he'd view two dissents as 'more about auditioning for the Fed chair appointment than about economic conditions.' Diane Swonk, chief economist for KPMG, noted that dissents are common close to policy turning points. 'One should expect dissent as the Fed gets closer to deciding when to cut rates, given the wide band of uncertainty over how tariffs play out,' she wrote in a note to clients on Thursday. While Waller and Bowman are increasingly focused on the central bank's employment mandate, most others are still more concerned about inflation. Uncertainty over how tariffs will affect prices and how the central bank should respond was evident in projections policymakers issued in June: Of the 19 officials, 10 wanted at least two quarter-point rate cuts this year, and seven officials penciled in no reductions. Recent inflation reports showed price increases for some goods affected by tariffs, including toys and appliances. But underlying inflation also rose by less than expected in June for a fifth straight month, according to the consumer price index, suggesting price pressures aren't yet becoming broad-based. 'Given the post-Covid inflation playbook, some Fed officials are more cautious that tariffs might take longer to show up,' said John Briggs, head of US rates strategy at Natixis North America. 'The problem is for the Fed, you're just pushing off that data clarity, and this constant delay is just delaying the Fed's resolve.' Natixis expect the Fed to resume its easing cycle in October and to continue with a series of quarter-point reductions through June 2026. Press Conference In his press conference, Powell will almost certainly face questions about tariffs and inflation. He's likely to remain cautious, repeating his message that officials have an obligation to maintain price stability with inflation still running above the Fed's 2% target. The Fed chair could also acknowledge that better-than-expected data and recently-announced trade deals reduce the likelihood of a worst-case scenario for inflation, echoing comments by other officials in recent weeks and opening the door to a September cut. By the time policymakers gather September 16-17, they'll have two more jobs reports in hand, along with more data on inflation, spending and housing. By then, according to Andrzej Skiba at RBC Global Asset Management, officials may be in a position to lower rates unless there's an aggressive escalation of tariffs or inflation data surprises to the high side. So far, however, economists have been left to puzzle over why tariffs haven't made a bigger impact on prices. A range of factors could be at play, including moves by businesses to build inventories before tariffs hit and burden-sharing across the supply chain, said Gregory Daco, chief economist for EY-Parthenon. 'I would anticipate that Chair Powell is going to highlight these mechanics and highlight that these cost pressures are starting to show up, but still maintain an even-keeled narrative,' Daco said. Powell has faced extraordinary pressure from Trump this year, including threats of termination. Republicans' attacks on the central bank in recent weeks have homed in on its $2.5 billion building renovation project, culminating Thursday in a tour of the construction site by Trump himself. The Fed chair will probably field questions from reporters Wednesday about the attacks, though he will likely keep his message focused on the economy. 'Chair Powell's binder of prepared answers to predictable questions will be thick with material that has nothing to do with monetary policy,' Feroli wrote in his note. 'We expect that all of these will be wasted opportunities by members of the press corps, as Powell will repeat that he is focused on the job Congress has given him.' --With assistance from Maria Eloisa Capurro, Michael Mackenzie and Ye Xie. Burning Man Is Burning Through Cash It's Not Just Tokyo and Kyoto: Tourists Descend on Rural Japan Confessions of a Laptop Farmer: How an American Helped North Korea's Wild Remote Worker Scheme Elon Musk's Empire Is Creaking Under the Strain of Elon Musk A Rebel Army Is Building a Rare-Earth Empire on China's Border ©2025 Bloomberg L.P. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
5 hours ago
- Yahoo
How ethereum rose to become a mainstream cryptocurrency
The Ether Machine, a new crypto venture formed through the merger of Ether Reserve and Dynamix Corporation (DYNX), is preparing to go public after raising over 400,000 ether (ETH-USD), equivalent to $1.5 billion, offering the public a new way to access cryptocurrency yields. The news came after a week when the ethereum cryptocurrency surged by over 20%, leading some to predict that it could pass $4,000 and sending long-term predictions into the $10,000s. Ether Machine isn't the first firm to do this. BitMine Immersion Technologies (BMNR), chaired by Fundstrat's Tom Lee, announced plans to begin stockpiling ether back in late June. SharpLink Gaming (SBET), a Nasdaq-listed sports-betting technology company, made a similar move in late May when it named Ethereum co-founder Joseph Lubin as its new chairman. Further adoption of the blockchain into the mainstream in recent months has supported ethereum's rise, including Robinhood's (HOOD) introduction of ethereum staking in the US and the passage of the stablecoin-focused GENIUS bill through the US Senate. Here's what to know about ethereum and what sets it apart from other blockchains. What sets ethereum apart? Ethereum is a decentralized blockchain platform that hosts programmable contracts and other cryptocurrencies. Its native crypto token, named ether but sometimes referred to as ethereum, is now the second-largest cryptocurrency by market cap, topped only by bitcoin (BTC-USD). A 'blockchain' is a digital record of transactions and other data. New 'blocks,' or batches of validated records, are added onto the publicly accessible chain, referencing previous ones, so that anyone using a blockchain agrees on the current state of finalized transactions. 'Transactions are entered, and then they are immutable," Algorand Foundation CEO Staci Warden told Yahoo Finance. "It is about integrity. You know when something is entered, nobody else can mess around with it.' In addition to ether and other popular cryptocurrencies, over 50% of all stablecoins in circulation are hosted on ethereum, and the platform can also be used to exchange NFTs and more, according to Galaxy. One major difference in how these transactions take place on ethereum compared to the bitcoin blockchain is that ethereum includes functionality for users to create and use so-called smart contracts. Smart contracts are programs that can execute financial operations when conditions are met, often used to develop applications known as decentralized finance or DeFi apps. These 'dapps' offer a variety of financial services without the middleman of traditional financial institutions. For example, a smart contract could be set up to automatically initiate a purchase once a cryptocurrency hits a certain price. For some, the fact that smart contracts can't be altered once put on the blockchain and that they operate based on code instead of being manually performed by an individual or institution are benefits of the system. How it began Ethereum launched on July 30, 2015, as 'Frontier' after raising $18 million in an initial coin offering (ICO) the year prior. The release followed a period when ethereum encouraged users to stress-test the blockchain by offering a prize of 25,000 ether. In 2016, ethereum network participants attacked a decentralized autonomous organization, or DAO, which had raised ether through crowdfunding. The users targeted a vulnerability in DAO's smart contracts and stole over $50 million worth of ether. To reverse the attack, ethereum created a controversial 'hard fork,' in which they rolled back the blockchain's history to before the theft. While most adopted this new blockchain, some refused and stuck with what is now known as Ethereum Classic. Since then, ethereum has continued rolling out updates, including a series known as 'The Merge' conducted in 2022. With it, ethereum switched from using proof-of-work for blockchain consensus to proof-of-stake, separating it from peers like bitcoin. Proof-of-work blockchains function through the work of 'miners,' or specialized computers that contribute computational power to validate transactions using cryptography. Miners are rewarded with newly issued cryptocurrency for the amount of computing power they contribute to verifying transactions. Under the proof-of-stake system, however, security comes from users locking a certain amount of the cryptocurrency they own into a smart contract as collateral before they can be selected to add new blocks of validated transactions to the blockchain. According to the Ethereum Foundation, this switch alone cut the platform's energy consumption by 99.5%, and co-founder Vitalik Buterin claimed that it would reduce the world's energy consumption by 0.2%. 'With climate concerns and ESG-investing remaining a major topic for institutional investors, ethereum's drastic energy reduction could open doors for additional capital flows and longer-term sustainability,' Tom Dunleavy, a senior research analyst with Messari, told Yahoo Finance. Broader adoption Since its launch, ethereum has drawn attention from investors and organizations alike. Visa (V) began settling transactions using the USD Coin (USDC-USD) stablecoin on the ethereum blockchain in 2021. 'The announcement today marks a major milestone in our ability to address the needs of fintechs managing their business in a stablecoin or cryptocurrency,' Visa chief product officer Jack Forestell said. 'It's really an extension of what we do every day, securely facilitating payments in all different currencies all across the world.' More recently, with stablecoin legislation passing this June, Wall Street executives, including JPMorgan Chase (JPM) CEO Jamie Dimon and Citigroup (C) CEO Jane Fraser, have indicated interest in working with crypto assets. Public figures have also joined the movement to adopt crypto. In February, Eric Trump posted to X, saying, 'In my opinion, it's a great time to add $ETH.' His words reflect a presidential administration that has been supportive of cryptocurrency. President Trump's Media & Technology Group filed to list an ETF that included ether, and the president celebrated the passage of the GENIUS Act on Truth Social. 'HAPPY CRYPTO WEEK!' Trump posted last week. 'This is our moment — Digital Assets, GENIUS, Clarity!' David Hollerith contributed to this post. — Nina is a data reporting intern for Yahoo Finance.
Yahoo
13 hours ago
- Yahoo
This Is the No. 1 Mistake Americans Make During a Recession, Says Financial Expert
When times get tough and headlines scream 'recession!' it's only natural to want to scale back and lay low. But according to financial experts, many Americans are making one major misstep that could actually hurt them and their money more in the long run. Be Aware: Consider This: GOBankingRates spoke with Emily Irwin, head of the Advice Center at Wells Fargo, to discuss the No. 1 mistake people make during a recession — and what you can do instead to stay smart and steady when the economy gets shaky. Here's what she had to say. Mistake: Letting Emotions Fuel Your Action or Inaction According to Irwin, the biggest mistake investors make during a recession is letting emotions fuel their action or inaction. In fact, CNN reports that recession fears are being blown out of proportion and it's more urgent to worry about inflation instead. 'As your portfolio is decreasing in value, it's human nature to want to sell assets to stop the pain,' Irwin said. She added this may not yield the desired results, however, because you're selling when the market is depressed, and many investors find it paralyzing to determine when to reenter the market. Explore More: This means that you're hit with a double whammy of exiting the market when it's down plus potentially missing out on the upside when there's a recovery. Irwin also noted this behavior can accelerate other investment decisions that can magnify the problem, such as overweighting in certain stocks or industries with the intention that this will speed up the process of recouping any losses. 'If you cannot resist the urge to exit the market, put a methodical plan in place to reenter it using a dollar cost averaging approach,' she said. 'A certain amount or percent on a recurring basis.' Solution: Have a Financial Plan in Place One of the best ways to prepare for a potential recession, according to Irwin, is having a financial plan in place. 'A financial plan can neutralize an investor's inclination to act on pure emotion during periods of marketing volatility or recession because the financial plan should incorporate the investor's goals, time horizon, and risk tolerance,' she noted. It may also highlight any potential portfolio risks that can be magnified during a recession, such as a concentrated position, as well as showcase potential opportunities, such as building up cash reserves that can be used for emergencies or investment opportunities. She said being proactive to understand your full balance sheet: Income, expenses, tax liabilities, and running at least one scenario illustrating decreased incoming cashflow and increased (or static) cash outflow. This can provide advance comfort to investors as to how much bandwidth exists to absorb a recession. More From GOBankingRates 3 Luxury SUVs That Will Have Massive Price Drops in Summer 2025 10 Cars That Outlast the Average Vehicle 7 Tax Loopholes the Rich Use To Pay Less and Build More Wealth This article originally appeared on This Is the No. 1 Mistake Americans Make During a Recession, Says Financial Expert
