Trump calls on Federal Reserve board to wrest full control of central bank from Fed Chair Powell
The Fed has the responsibility of stabilizing prices and maximizing employment. Powell has held its benchmark rate for overnight loans constant this year saying that Fed officials needed to see what impact Trump's massive tariffs had on inflation. If Powell doesn't substantially lower rates Trump said 'THE BOARD SHOULD ASSUME CONTROL AND DO WHAT EVERYONE KNOWS HAS TO BE DONE!' Trump sees the rate cuts as leading to stronger growth and lower debt servicing costs for the federal government and homebuyers. The president argues there is virtually no inflation even though the Fed's preferred measure is running at an annual rate of 2.6 percent slightly higher than the Fed's 2 percent target. Trump has called for slashing the Fed's benchmark rate by 3 percentage points bringing it down dramatically from its current average of 4.33 percent. The risk is that a rate cut that large could cause more money to come into the economy than can be absorbed possibly causing inflation to accelerate.
The Supreme Court suggested in a May ruling that Trump could not remove Powell for policy disagreements. This led the White House to investigate whether the Fed chair could be fired for cause because of the cost overruns in its 2.5 billion renovation projects. Powell's term as chair ends in May 2026 at which point Trump can put his Senate-confirmed pick in the seat.
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Arab News
an hour ago
- Arab News
Saudi fiscal results show stability, economic growth
Saudi Arabia's Ministry of Finance has released the fiscal results for Q2 and the first half of 2025. Total revenues stood at SR302 billion ($80.5 billion) in Q2, marking a 15 percent decline from SR354 billion in the same period of 2024. The drop is mainly due to reduced oil revenues from lower prices and a one-time collection of performance-related profits last year. Non-oil revenues reached SR150 billion, a 7 percent increase from SR141 billion in Q2 2024. Total expenditure was SR336 billion, down 9 percent from SR369 billion last year. As a result, the budget deficit widened to SR35 billion, compared to SR15 billion in Q2 2024. However, the Q2 2025 deficit shrank by SR24 billion from Q1 2025, largely due to higher non-oil revenues. In the first half of 2025, total revenues reached about SR565 billion, down 13 percent from SR647 billion in the same period last year. This decline was mainly due to lower oil prices and a non-recurring collection of performance-related profits in H1 2024. Non-oil revenues during the first half of 2025 totaled about SR264 billion, a 5 percent increase from SR252 billion during the same period last year. Total expenditures in the first half of 2025 amounted to about SR658 billion, a 2 percent decrease compared to the same period last year. Real gross domestic product grew by 3.4 percent in Q1 2025 compared to the same period last year, driven by a 4.9 percent increase in non-oil activities and a 3.2 percent rise in government activities. In conclusion, despite oil revenues declining by 29 percent in Q2 and 24 percent in the first half of 2025 — resulting in a fiscal deficit in both periods — the Saudi government remains committed to the economic and fiscal transformation outlined in Vision 2030. The growth in non-oil revenues during Q2 and the first half of 2025 reflects the success of the government's reform efforts to diversify the Kingdom's income sources in line with Vision 2030. This increase has helped to offset lower oil revenues, stabilizing overall revenue performance. The government reaffirms its commitment to fiscal sustainability over the medium and long term. These efforts are vital to strengthening the Kingdom's economic resilience amid evolving global challenges. The fiscal results show the government's adoption of a counter-cyclical fiscal policy aimed at stabilizing the economy rather than amplifying fluctuations. Consumer spending grew about 9.1 percent in the first two months of Q2 (April and May), reaching about SR304.4 billion, reflecting strong consumer confidence in the economy. The e-commerce index grew by about 63.1 percent, reflecting significant advancement in electronic transactions, supported by the government's drive to expand electronic payments and promote digital transformation. Money supply (M3) grew about 9.4 percent year-on-year in May 2025, reaching SR3.091 trillion, reflecting continued expansion across various economic activities. The budget deficit is not a concern given the strong fiscal position, as the government pursues an expansionary fiscal policy, accelerates projects with economic and social returns, and strives to achieve the ambitious goals of Vision 2030. Economic and financial reforms have helped to mitigate the impact of declining oil activity through income diversification, improvements to the business environment, and support for growth across promising sectors. These reforms will further diversify the economic base, sustain growth, advance infrastructure development, and enhance public services to improve citizens' quality of life. • Talat Zaki Hafiz is an economist and financial analyst. X: @TalatHafiz
Asharq Al-Awsat
6 hours ago
- Asharq Al-Awsat
Hamas Says it Won't Disarm Unless Independent Palestinian State Established
Hamas said on Saturday that it would not lay down arms unless an independent Palestinian state is established. In a statement, the Palestinian militant faction said its "armed resistance ... cannot be relinquished except through the full restoration of our national rights, foremost among them the establishment of an independent, fully sovereign Palestinian state with Jerusalem as its capital." Indirect negotiations between Hamas and Israel aimed at securing a 60-day ceasefire in the Gaza war and deal for the release of hostages ended last week in deadlock. In Tel Aviv, families of hostages protested and urged Israel's government to push harder for the release of their loved ones, including those shown in footage released by militant groups earlier this week. US President Donald Trump's special envoy Steve Witkoff joined them, a week after quitting ceasefire talks, blaming Hamas's intransigence and pledging to find other ways to free hostages and make Gaza safe. Of the 251 hostages who were abducted by Hamas-led militants, around 20 are believed to be alive in Gaza. Hamas and Islamic Jihad, the second-largest militant group in Gaza, released separate videos of individual hostages this week, triggering outrage among hostage families and Israeli society.
Asharq Al-Awsat
11 hours ago
- Asharq Al-Awsat
Suez Canal Chief: No Fee Exemptions, Even for US Ships
The head of Egypt's Suez Canal Authority (SCA) has dismissed US President Donald Trump's call to allow American ships to transit the vital waterway for free, insisting that Egypt remains committed to international treaties that prohibit preferential treatment. Speaking to Asharq Al-Awsat, SCA Chairman Osama Rabie said Egypt 'respects international maritime conventions,' referencing the 1888 Constantinople Convention, which guarantees free navigation through the canal under equal terms for all nations. 'There can be no distinction between ships in terms of services or commercial and financial preferences that favor one country over another,' Rabie said. 'This is not a stance against the United States, but rather a reflection of Egypt's commitment to impartiality — a principle that assures all nations of fair treatment.' Trump, who is seeking a return to the White House in November, argued in an April post on his Truth Social platform that US military and commercial vessels should be granted free access to both the Suez and Panama Canals. 'These canals wouldn't exist without the United States,' he wrote. The Suez Canal, a key source of foreign currency for Egypt, has suffered a sharp downturn in revenue and traffic since Yemen's Iran-aligned Houthi group began targeting ships in the Red Sea in late 2023, prompting many shipping lines to reroute via the longer and costlier Cape of Good Hope. 'We're facing a major crisis,' Rabie said, noting that daily transits have dropped to 30–35 vessels from more than 65 a day before the escalation. Annual canal revenue plunged 61% to $3.9 billion in the first half of 2024, down from $10.2 billion in 2023, Rabie added. A total of 13,213 ships passed through the canal in 2024, compared to 26,434 in 2023, before the outbreak of war in Gaza. Despite mounting pressure to safeguard maritime routes, Egypt has refused to join any military coalition targeting the Houthis. 'It is not Egypt's policy to engage in military alliances or attack an Arab country — after all, Yemen is a fellow Arab state,' Rabie said. Since November, the Houthis have carried out more than 150 missile and drone attacks on vessels they say are linked to Israel, in retaliation for the war in Gaza. The assaults have sunk four ships, damaged several others, and killed at least 10 seafarers. The Iran-backed group also hijacked the Galaxy Leader vessel in a high-profile act of piracy. In April, a US-led operation launched in December 2023 under the name 'Operation Prosperity Guardian' began leading strikes on Houthi targets from the northern Red Sea. Egypt declined to join both that initiative and Trump's earlier campaign, 'Operation Rough Rider,' unveiled in March. Rabie expressed frustration at the ongoing war in Gaza, warning that continued violence would prolong the canal's downturn. 'A few months ago, traffic showed slight improvement following a ceasefire, but then the Houthis resumed attacks — hitting two ships in the past fortnight alone,' he said. 'Now, with conditions in Gaza deteriorating, our situation is worsening as well.' On Monday, the Houthis declared a 'fourth phase' of their maritime blockade against Israel, vowing to target all ships linked to Israeli ports 'regardless of their nationality or destination.' Still, Rabie remains optimistic that shipping through the Suez Canal will rebound once the war ends. 'If the fighting stops, the Houthis will have no justification to attack vessels in the Red Sea. We're hopeful that peace comes soon,' he said. 'Major ships have diverted to the Cape of Good Hope because it's currently safer, despite the higher costs and longer transit times,' he added. 'They've told us they'll return as soon as the war ends because no alternative can match the Suez Canal's advantages. Global shipping firms know this.' Rabie urged international insurance companies to reduce premiums for vessels transiting the Red Sea, arguing that soaring insurance costs have contributed to the diversion of large ships away from the canal. 'Today, the total cost of passing through the Red Sea — including insurance — has exceeded the cost of the longer Cape route, driving many vessels to abandon the canal despite the longer journey,' he said. To lure shipping traffic back, Egypt has introduced incentives, including up to 15% discounts on transit fees for container ships weighing 130,000 tons or more, whether laden or empty. 'We're doing all we can,' Rabie said. 'But until the security situation stabilizes, we're facing an uphill battle.'
