AFP

The US Federal Reserve is poised to raise borrowing costs Wednesday amid the troubling acceleration of inflation, with the only question being whether officials will opt for the biggest hike in nearly three decades or a smaller step up.

The central bank seemed set to increase the benchmark interest rate again by 0.5 percentage points, but a resurgence of consumer and producer prices in May has fueled growing speculation of a 75-basis-point hike.

While some economists continue to argue that such an aggressive step would indicate rising panic among policymakers who are usually reluctant to surprise financial markets, others argue that the Fed is behind the curve and needs to react strongly to prove its resolve to combat inflation

“It is possible that by Wednesday the only way for the Fed to surprise markets would be to raise rates by 50 bp,” Harvard economist and former White House advisor Jason Furman tweeted.

If policymakers decide on a giant step, it would be the first 75-basis-point increase since November 1994.

The policy-setting Federal Open Market Committee is due to announce the rate decision at 1800 GMT at the conclusion of two days of deliberations. 

Fed Chair Jerome Powell will hold a press conference after the meeting to provide more details on the central bank’s plans.

President Joe Biden has fully endorsed the Fed’s battle against the steepest rise in prices in more than 40 years, as he watches inflation erode his popularity and deflect attention from other milestones, including a rapid recovery of the world’s largest economy and record job growth.

– Clear signals –

US central bankers began raising interest rates off zero in March as buoyant demand from American consumers for homes, cars and other goods clashed with transportation and supply chain snarls in parts of the world where Covid-19 remained — and remains — a challenge.

That fueled inflation, which got dramatically worse after Russia invaded Ukraine in late February and Western nations imposed steep sanctions on Moscow in response, sending food and fuel prices up at a blistering rate.

US gasoline prices have topped $5.00 a gallon for the first time ever and are setting new records daily.

Economists thought March was the peak for consumer price hikes, but the rate spiked again in May, jumping 8.6 percent in the latest 12 months, and wholesale prices surged as well, almost entirely due to soaring costs for energy, especially gasoline.

The Fed was caught off guard with the speed of the price increases, and while policymakers usually like to clearly signal any policy shift to financial markets, the latest data likely changed the calculus.

Powell had indicated policymakers were poised to implement another half-point increase in the benchmark borrowing rate this week and another next month, aiming to douse red-hot inflation without tipping the economy into recession and avoid a bout of 1970s-style stagflation.

“The 75bp hike… will be about making people/markets believe that they’re serious about continuing to have higher rates in 2023,” Furman said.

Markets are now pricing in at least one three-quarter-point hike by the end of the year and an aggressive path at the other four meetings.

Former New York Fed bank president William Dudley expects to see the super-sized increase.

“Fed officials are worried a bit about losing credibility,” he said at an event hosted by The Wall Street Journal.

But neither the Fed nor the White House can have much immediate effect on many of the factors driving the price increases.

Biden on Tuesday blamed Russia for inflation, which is afflicting countries worldwide, and criticized Republicans for blocking his efforts to help American families feeling the pain.

Inflation is “sapping the strength of a lot of families,” he told trade unions in Philadelphia. “Republicans in Congress are doing everything they can to stop my plans to bring down costs.”

An internal fight over whether Google built technology with human-like consciousness has spilled into the open, exposing the ambitions and risks inherent in artificial intelligence that can feel all too real.

The Silicon Valley giant suspended one of its engineers last week who argued the firm’s AI system LaMDA seemed “sentient,” a claim Google officially disagrees with.

Several experts told AFP they were also highly skeptical of the consciousness claim, but said human nature and ambition could easily confuse the issue.

“The problem is that… when we encounter strings of words that belong to the languages we speak, we make sense of them,” said Emily M. Bender, a linguistics professor at University of Washington.

“We are doing the work of imagining a mind that’s not there,” she added.

LaMDA is a massively powerful system that uses advanced models and training on over 1.5 trillion words to be able to mimic how people communicate in written chats. 

The system was built on a model that observes how words relate to one another and then predicts what words it thinks will come next in a sentence or paragraph, according to Google’s explanation.

“It’s still at some level just pattern matching,” said Shashank Srivastava, an assistant professor in computer science at the University of North Carolina at Chapel Hill.

“Sure you can find some strands of really what would appear meaningful conversation, some very creative text that they could generate. But it quickly devolves in many cases,” he added.

Still, assigning consciousness gets tricky. 

It has often involved benchmarks like the Turing test, which a machine is considered to have passed if a human has a written chat with one, but can’t tell.

“That’s actually a fairly easy test for any AI of our vintage here in 2022 to pass,” said Mark Kingwell, a University of Toronto philosophy professor.

“A tougher test is a contextual test, the kind of thing that current systems seem to get tripped up by, common sense knowledge or background ideas — the kinds of things that algorithms have a hard time with,” he added.

– ‘No easy answers’ –

AI remains a delicate topic in and outside the tech world, one that can prompt amazement but also a bit of discomfort. 

Google, in a statement, was swift and firm in downplaying whether LaMDA is self-aware.

“These systems imitate the types of exchanges found in millions of sentences, and can riff on any fantastical topic,” the company said.

“Hundreds of researchers and engineers have conversed with LaMDA and we are not aware of anyone else making… wide-ranging assertions, or anthropomorphizing LaMDA,” it added.

At least some experts viewed Google’s response as an effort to shut down the conversation on an important topic.

“I think public discussion of the issue is extremely important, because public understanding of how vexing the issue is, is key,” said academic Susan Schneider.

“There are no easy answers to questions of consciousness in machines,” added the founding director of the Center for the Future of the Mind at Florida Atlantic University.

Lack of skepticism by those working on the topic is also possible at a time when people are “swimming in a tremendous amount of AI hype,” as linguistics professor Bender put it. 

“And lots and lots of money is getting thrown at this. So the people working on it have this very strong signal that they’re doing something important and real” resulting in them not necessarily “maintaining appropriate skepticism,” she added.

In recent years AI has also suffered from bad decisions — Bender cited research that found a language model could pick up racist and anti-immigrant biases from doing training on the internet.

Kingwell, the University of Toronto professor, said the question of AI sentiency is part “Brave New World” and part “1984,” two dystopian works that touch on issues like technology and human freedom.

“I think for a lot of people, they don’t really know which way to turn, and hence the anxiety,” he added.

As intelligent as she is, Happy the elephant doesn’t meet the definition of a “person” and is therefore not being illegally confined in the Bronx Zoo, New York’s top court ruled Tuesday in a closely watched case for animal rights.

The state’s Court of Appeals 5-2 verdict against the habeas corpus proceeding filed by the Nonhuman Rights Project (NRP) means Happy will remain in her one-acre lot, where she has lived for 45 years, rather than moving to a much larger sanctuary.

NRP had contended Asian elephant, who was born in the wild in 1971, is an “extraordinarily cognitively complex and autonomous nonhuman” who should be “recognized as a legal person with the right to bodily liberty protected by the common law.”

It was the latest legal defeat for the organization, which has previously made similar petitions on behalf of other elephants as well as chimpanzees throughout the United States.

The majority decision, written by Chief Justice Janet DiFiore, acknowledged “no one disputes that elephants are intelligent beings deserving of proper care and compassion.” 

But she affirmed the decisions of lower courts that previously heard the case, writing: “Because the writ of habeas corpus is intended to protect the liberty right of human beings to be free of unlawful confinement, it has no applicability to Happy, a nonhuman animal who is not a ‘person’ subjected to illegal detention.”

“Granting legal personhood to a nonhuman animal in such a manner would have significant implications for the interactions of humans and animals in all facets of life, including risking the disruption of property rights, the agricultural industry (among others), and medical research efforts,” DiFiore added.

If such relief were granted to elephants, “What of dolphins — or dogs? What about cows or pigs or chickens –species routinely confined in conditions far more restrictive than the elephant enclosure at the Bronx Zoo?”

Reacting to the news, NRP praised the two dissenting judges, and said their views, as well as the fact that the case was heard in New York’s highest court, represented hope for the cause in the future.

Justice Rowan Wilson wrote: “When the majority answers, ‘No, animals cannot have rights,’ I worry for that animal, but I worry even more greatly about how that answer denies and denigrates the human capacity for understanding, empathy and compassion.”

Wilson recalled the case of Ota Benga, a member of the Mbuti pygmy people who was kidnapped from Africa and placed on exhibit at the Bronx Zoo in 1906, attracting a quarter of a million visitors.

Wilson said that while Benga was a human being and Happy was not, “The crucial point from both Mr Benga’s and Happy’s confinement… is that both suffered greatly from confinement that, though not in violation of any statutory law, produced little or no social benefit.”

DiFiore retorted that was “an odious comparison with concerning implications,” adding, “We are unpersuaded.”

She concluded with the observation that enormous interest generated by the case was “a testament to the complicated and ever-evolving relationship between human beings and other animals,” but stressed that ongoing debate should be settled by legislation, not the courts.

Tampons are the latest product disappearing from store shelves in the United States, another illustration of supply chain problems that are complicating daily life, following the troubling shortage of baby formula.

Drugstore chains CVS and Walgreens confirmed in messages to AFP that some brands of tampons are temporarily unavailable in some areas.

Procter & Gamble, which makes the ubiquitous Tampax line among other products, said customers might not be able to find their usual brand in American stores.

“We understand it is frustrating for consumers when they can’t find what they need. We can assure you this is a temporary situation in the US, and the Tampax team is producing tampons 24/7 to meet the increased demand for our products,” they said in a statement.

A spokesperson for Edgewell, maker of Playtex and o.b. tampons and Carefree and Stayfree liners and pads, acknowledged inventory issues due to “extensive workforce shortages” caused by two Covid-19 outbreaks at a US plant in late 2021 and a Canadian supplier early this year.

The company said they “anticipate returning to normal levels in the coming weeks.” 

Kimberly-Clark, which makes a variety of consumer products including Kotex tampons, told AFP it has not experienced inventory shortages.

Walgreens meanwhile said it was working with suppliers to “ensure we have supply available” in all its stores.

And CVS said that “if a local store is temporarily out of specific products, we work to replenish those items as quickly as possible.”

The situation has been going on for months, but has received increasing media attention in recent days.

– Like pandemic stockpiling –

Patrick Penfield, a supply chain management specialist at Syracuse University, says demand has increased recently in particular because of additional purchases by consumers who see the shortage of certain brands and panic that they won’t be able to get more product.

He compared it to people stockpiling toilet paper at the start of the pandemic.

There is also a shortage of certain raw materials, including cotton and plastic, he said.

“This is the third straight year where demand for cotton in the US has exceeded what US firms are producing,” Penfield said, pointing to the increased need for masks and personal protection equipment.

In addition, some factories are struggling to operate at full capacity due to staff shortages or Covid-19 spikes, he said.

But the situation is different from the baby formula shortage: Initially caused by supply chain snarls and labor shortages, formula supplies dropped sharply when manufacturer Abbott shut down one Michigan plant in February and issued a product recall after the death of two babies raised concerns over contamination.

When it comes to tampons, “the factories are operating,” Penfield said, predicting a return to normal within the next six months.

In the meantime, the shortage has offered Republicans a new angle of attack against US President Joe Biden, with the Republican National Committee slamming “Biden’s war on women” on Twitter.