US Business

US Federal Reserve Governor Christopher Waller signaled Thursday he may support a full percentage point interest rate hike this month — the biggest increase in more than 30 years and a further indication of the central bank’s determination to crush sky-high inflation.

And although rising borrowing costs and blistering price surges have raised fears of recession, Waller said he believes the economy can avoid a downturn thanks to the strong US job market.

The Fed in March began aggressively raising borrowing costs to try to cool demand amid the impact of the Ukraine war, which has hit global supplies of food and oil, and Covid-19 lockdowns in China, which have impeded manufacturing of products from iPhones to cars.

But data so far have not shown significant signs of easing, and instead reports this week contained a worrisome rebound in inflation last month, with consumer prices surging 9.1 percent.

Increased costs for gas, food and housing has squeezed American families and heaped pressure on President Joe Biden, whose approval ratings have taken a battering from the relentless rise in prices.

Waller previously expressed support for another 75 basis point hike at the policy meeting later this month, but said Thursday he will be watching key reports on retail sales and housing coming in before then.

“If that data come in materially stronger than expected it would make me lean towards a larger hike at the July meeting to the extent it shows demand is not slowing down fast enough to get inflation down,” Waller said in a speech to an economic conference.

While US central bankers universally favor attacking inflation, he is the first to hint at the giant step, although he said he still expects a repeat of last month’s decision.

The Fed’s moves so far have marked “the fastest pace of tightening in close to 30 years,” Waller said, but the large move in June “was not an over-reaction” given the repeated strong inflation readings since the beginning of the year.

“With inflation so high, there is a virtue in front-loading tightening,” he said. “Getting there sooner will bolster the public’s confidence that we can get inflation down” so that high prices do not become entrenched in the economy.

A full point rate hike certainly would be the biggest since 1990, and likely the most aggressive since a decade earlier when then-Fed chief Paul Volcker strangled the economy to clamp down on runaway inflation.

After what Waller called the “major league disappointment” in the inflation data, the government is due to release June retail sales on Friday, followed by new home sales on July 26 — the first day of the Fed’s two-day policy meeting — which will be key to showing how consumers are reacting to rising rates. 

– ‘I just don’t see it’ –

Waller said the Fed erred last year in “betting the farm” on the expectation that price spikes would be transitory, thinking that supply chain snarls caused by the pandemic would recede quickly.

Policymakers should have acted sooner to begin removing stimulus, by slowing the massive bond purchases conducted during the Covid-19 downturn to support the financial system, he said.

He downplayed the recent upsurge in recession fears, saying a downturn is unlikely given the very tight labor markets.

“I believe it can be avoided,” he said, noting that the economy can cool and reduce the surplus of job vacancies without a big uptick in unemployment, which he said is close to the lowest in seven decades. 

“I just don’t see it,” he said of the recession chances, noting that GDP data, which was negative in the first quarter and trending lower in the second is likely to be revised upwards.

“The labor market would have to really deteriorate” for there to be a recession, he said, but policymakers will have to cool demand to ease wage and price pressures.

“That’s just what we have to do, I’m sorry. It’s the job (the Fed) is given by Congress.”

Ivana Trump — Donald Trump’s first wife and mother of his three eldest children — died on Thursday at the age of 73, the former president announced.

Ivana Trump “passed away at her home in New York City,” Donald Trump wrote on his social media platform Truth Social.

He did not provide a cause of death but the New York Times reported that law enforcement officials were investigating whether she fell down the stairs at her Manhattan apartment.

A spokesperson for the New York Police Department told AFP in an emailed statement that officers responded to a call at her address on the Upper East Side at around 12:40 pm (1740 GMT).

“Upon arrival, officers observed a 73 year-old female unconscious and unresponsive. EMS (emergency medical services) responded to the location and pronounced the victim deceased at the scene,” the spokesperson said.

The statement added that “there does not appear to be any criminality” and that the city’s medical examiner will determine the cause of death.

Donald Trump, 76, said in his social media post that Ivana Trump “was a wonderful, beautiful, and amazing woman, who led a great and inspirational life.”

“Her pride and joy were her three children, Donald Jr., Ivanka and Eric. She was so proud of them, as we were all so proud of her. Rest In Peace, Ivana!” he added.

Ivana Trump, a model who grew up under communist rule in the former Czechoslovakia, married Donald Trump, then a budding real estate developer, in 1977.

Their first child, Donald Jr., was born later that year. Ivanka was born in 1981 and Eric followed in 1984.

Eric Trump posted a tribute to his mother, who was also an accomplished skier during her childhood in Eastern Europe, on Instagram Thursday.

“Our mother was an incredible woman — a force in business, a world-class athlete, a radiant beauty, and caring mother and friend,” the post said.

“She will be dearly missed by her mother, her three children and ten grandchildren,” he added. 

Throughout the ’80s, the Trumps were one of New York’s highest-profile couples, their extravagant lifestyle exemplifying the flashy excesses of the decade.

Their power and celebrity grew as Donald Trump’s property business soared, with Ivana Trump taking on number of key roles in the business.

Their high-profile split, rumored to have been caused in part by Donald Trump’s affair with actress Marla Maples, provided juicy content for New York’s tabloids.

Donald Trump and Ivana Trump divorced in the early ’90s and in 1993 the future president married Maples.

Ivana Trump went on to enjoy a successful business career of her own, developing clothing, jewelry and beauty products and penning a number of books.

Donald Trump’s union with Maples lasted until 1999. He married has third and current wife, Melania Trump, in 2005.

Ivana Trump was married four times in her life, once before her marriage to Donald Trump and twice after.

Russian missiles struck Vinnytsia in central Ukraine Thursday, killing at least 23 people including three children, in what President Volodymyr Zelensky called “an open act of terrorism”.

The midday attack on the city hundreds of kilometres from the frontlines and invading Russian troops came as EU officials convened in The Hague to discuss war crimes in Ukraine.

The charred remains of upturned cars surrounded by burnt debris were seen in images distributed by officials next to a business gutted by a fire with brown smoke billowing nearby.

In his daily address to the nation late Thursday Zelensky confirmed the toll and said it was likely to rise, with dozens still missing and many hospitalized in critical condition. 

“No other state in the world poses such a terrorist threat as Russia,” a somber Zelensky said. “No other state in the world allows itself to destroy peaceful cities and ordinary human life with cruise missiles and rocket artillery on a daily basis.”

Secretary-General Antonio Guterres said he was “appalled” by the attack, while the EU slammed it as an “atrocity.” Both called for accountability.

And Zelensky led a moment of silence before urging European and International Criminal Court officials to open a “special tribunal” into Russia’s invasion.

“I believe it is inevitable that International Criminal Court will bring accountability to those guilty of crimes under its jurisdiction: war crimes, crimes against humanity, genocide.”

– War crimes tribunal –

The ICC in The Hague opened an investigation into possible war crimes in Ukraine just days after Moscow’s forces invaded and it dispatched dozens of investigators to the country to gather evidence.

Russia invaded on February 24 and the conflict has seen thousands of people killed, destroyed cities and forced millions to flee their homes.

“Every day, Russia kills civilians, kills Ukrainian children, carries out missile attacks on the civilian facilities where there is no military target. What is this, if not an open act of terrorism?” Zelensky said after the Vinnytsia attack.

A Ukraine military spokesman said its forces had managed to knock out two from a barrage of cruise missiles that were launched from a Russian submarine in the Black Sea and caused widespread damage in Vinnytsia.

Deadly strikes in central Ukraine have become relatively rare, but the war has raged around cities like Mykolaiv in the south which the presidency said was hit by a “massive missile strike”.

“Two schools, transport infrastructure and a hotel were damaged,” the presidency said in its morning military update Thursday.

The skeletal insides of one building gutted by the strikes were visible in images distributed by local officials, with municipal workers clearing bricks and rubble strewn after the attack.

The heaviest fighting in Ukraine, however, has focused recently on the industrial Donbas region in the east.

– ‘Total victory’ –

Moscow-backed troops there said Thursday they were closing in on their next target, after wresting control of sister cities Lysychansk and Severodonetsk two weeks ago.

“Siversk is under our operational control, which means that the enemy can be hit by our aimed fire all over the area,” a pro-Moscow rebel official, Daniil Bezsonov, was cited as saying by Russian state-run news agency TASS.

In a Ukrainian trench position along the eastern frontline, a 25-year-old soldier who went by the nom de guerre Moryak was working to fortify defences.

“We hide when they shell, we dig when it’s calm,” another soldier nearby told AFP journalists.

– High-stakes grain talks –

Delegations from Kyiv and Moscow met in Istanbul this week to discuss unblocking Ukraine’s grain exports.

The meeting involving UN and Turkish officials ended after more than three hours with an agreement to meet again in Turkey next week.

Zelensky said “the entire world” was counting on the negotiations to finalise a deal.

The conflict has pushed up grain prices and Europe is suffering from sky-rocketing energy bills stemming from sanctions on Russia and Moscow’s move to limit gas flows to Europe.

US Treasury Secretary Janet Yellen said Thursday that Russia’s war in Ukraine posed the “greatest challenge” to the global economy, as G20 ministers prepare to start talks in Indonesia.

The European Commission meanwhile slashed growth forecasts for the eurozone, saying the consequences from the war in Ukraine were continuing to destabilise the economy because of record high inflation.

Following concerns about arms being smuggled out of Ukraine to equip crime gangs in Europe, Ukraine’s presidency called on lawmakers to form a monitoring committee that would oversee weapons received from Western allies.

The head of the Ukrainian presidency Andriy Yermak said Thursday all arms supplied by the West are “registered and sent to the front” but such a committee would make the process “as transparent as possible”. 

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Testimony from a key prosecutor in the statutory rape case against Roman Polanski must be unsealed, more than 40 years after the fugitive director was convicted, a California court has ruled.

The “Chinatown” and “Rosemary’s Baby” director was arrested in 1977 after 13-year-old Samantha Gailey accused him of plying her with drugs and champagne and forcibly sodomizing her.

In a plea deal Polanski accepted guilt for unlawful sexual intercourse with a minor, but he fled to France when he learned the judge intended to reconsider and hand down a much lengthier prison sentence.

Polanski has since maintained that he was misled and unfairly treated by the legal system.

Both he and Gailey have called for the transcripts of former Deputy District Attorney Roger Gunson — the first prosecutor to handle Polanski’s case — to be released.

In its ruling Wednesday, California’s Second Appellate District Court found that Gunson’s testimony had been intended to uncover any “alleged abuses” in the criminal justice system, and “there is no factual or legal basis for the conditional deposition transcript to remain sealed.”

The ruling came one day after Los Angeles prosecutors dropped their long-standing opposition to the documents being unsealed.

George Gascon, who took over as district attorney after his election in 2020, said the court’s decision “helped us move toward upholding our responsibility to tell the public the truth, and to listen to survivors.

“We hope it gives her a small measure of assurance that eventually, she can have some measure of closure in this decades-long litigation.”

Gailey publicly forgave Polanski in 1997, saying her treatment by the press and judicial system were worse than the original crime.

“It’s never too late to do the right thing,” she said, according to a statement from Gascon’s office.

Other women have since come forward to accuse Polanski — now 88 — of sex crimes, dating back several decades.

He denies the allegations, for which the statute of limitations has expired.

The US and Israel signed a new security pact Thursday reinforcing their common front against Iran, as President Joe Biden vowed to use “all” American power to stop Tehran from acquiring nuclear weapons.

The declaration was inked by Israeli Prime Minister Yair Lapid and Biden, who was making his first trip to the Middle East as president.

It commits the United States to “never to allow Iran to acquire a nuclear weapon”, stating that it “is prepared to use all elements of its national power to ensure that outcome”.

A landmark deal that imposed curbs on Iran’s suspect nuclear programme in exchange for sanctions relief was torpedoed in 2018 by former US president Donald Trump. Efforts to revive the accord have stalled since March.

Asked on Thursday how long the US was prepared to give those efforts, Biden said “we’re not going to wait forever” for a response from the Islamic republic.

Israel, which has the Middle East’s sole but undeclared nuclear arsenal, is staunchly opposed to the deal with Iran, which has always denied seeking the bomb.

Lapid warned “words” and “diplomacy” were not enough to thwart Iran’s alleged nuclear ambitions.

“The only thing that will stop Iran is knowing that if they continue to develop their nuclear programme the free world will use force,” he said.

Iran’s ultra-conservative President Ebrahim Raisi warned the US and its allies that his country “will not accept any crisis or insecurity in the region”.

“Any mistake made in this region will be met with a harsh and regrettable response,” Raisi said in televised remarks.

– Saudi oil –

Biden touched down in Israel on Wednesday, his 10th visit to the Jewish state since 1973, when he came as a newly elected senator.

He also held talks with Israeli President Isaac Herzog on Thursday and opposition leader Benjamin Netanyahu, whom Biden has known for four decades. 

“I told him that the Iran deal is lousy. He knows my position,” said a statement released after the meeting by Netanyahu, whose outspoken opposition to the deal soured Israel’s relations with former president Barack Obama’s administration, in which Biden served as vice president.   

Biden heads to the occupied West Bank on Friday to meet Palestinian president Mahmud Abbas, before Air Force One makes the first publicly acknowledged direct flight from Israel to Saudi Arabia.

The US president said the journey itself “represents important progress”, following Israel launching diplomatic ties in 2020 with Riyadh’s Gulf neighbours the United Arab Emirates and Bahrain.

“Israel’s integration in the region, Israel’s peace with its neighbours, these are essential goals,” Biden said.

A high-ranking official late Thursday said that Israel would have “no objection” to greenlighting Egypt handing over two strategic Red Sea islands to Saudi Arabia as a step towards normalisation.

Russia’s invasion of Ukraine will be a top priority for the president’s meetings with Arab leaders, with volatile oil prices due to be the focus of talks with Saudi officials in particular.

The president will seek to persuade Saudi Arabia to pump more oil in order to drive down prices, which have fuelled US inflation to the highest levels in decades.

– ‘Israel wants peace’ –

On Thursday, Biden reaffirmed Washington’s policy of pressing for “a two-state solution for two people, both of whom have deep and ancient roots in this land.”

But he made it clear he has no plans to reverse Trump’s controversial decision to recognise Jerusalem as Israel’s capital.

Lapid is serving as caretaker prime minister ahead of elections in November — Israel’s fifth vote in less than four years — and is therefore not expected to launch new talks with Palestinians, but reasserted his personal support for Palestinian statehood. 

“A two-state solution is a guarantee for a strong, democratic state of Israel, with the Jewish majority,” he said. 

A US official said the administration would announce during the visit “a significant funding package” for hospitals that serve Palestinians in Israeli-annexed east Jerusalem, which Palestinians claim as their future capital.

It will also announce measures towards providing 4G internet access in the West Bank and Israeli-blockaded Gaza Strip, the official said, addressing a persistent Palestinian frustration.

But long-term peace negotiations were not on this week’s agenda.

“We are not going to come in with a top-down peace plan because we don’t believe that would be the best approach,” the official said. 

At an anti-Biden protest in Ramallah, Palestine Liberation Organization executive Bassam Al-Salihi accused the US administration of buying into an Israeli tactic viewing “the Palestinian cause as an economic issue.”

Two US agencies fined Bank of America a total of $225 million on charges it wrongfully froze unemployment and other public benefit programs at the height of the Covid-19 pandemic.

The Consumer Financial Protection Bureau imposed a $100 million penalty on Bank of America (BofA) for “botching” the disbursement of state unemployment programs during Covid-19, the agency said.

“Bank of America (BofA) automatically and unlawfully froze people’s accounts with a faulty fraud detection program, and then gave them little recourse when there was, in fact, no fraud,” the agency said in a news release.

The Office of the Comptroller of the Currency fined BofA $125 million for “violations of law and unsafe or unsound practices” in the bank’s administration of public benefits programs.

The agencies also required the US bank to provide payments to those wrongfully deprived payments.

The consumer agency said BofA during the pandemic altered its practices for investigating debt card fraud, replacing a “reasonable” investigation with a fraud filter system that automatically triggered an account freeze.

The bank further “made it very difficult” for people to unfreeze the accounts, the agency said.

“The bank failed these prepaid cardholders by denying them access to their mandated unemployment funds during the height of the pandemic, and leaving these vulnerable consumers without an effective way to remedy the situation,” said OCC Acting Comptroller Michael Hsu.

Bank of America defended its role during the pandemic, saying it facilitated payments of more than $250 billion in pandemic funds to more than 14 million people.

Government pandemic programs “created unprecedented criminal activity where illegal applicants were able to get states to approve tens of billions of dollars in payments,” a BofA spokeswoman said.