US Business

The Federal Reserve announced the most aggressive interest rate increase in nearly 30 years, raising the benchmark borrowing rate by 0.75 percentage points on Wednesday as it battles against surging inflation.

The Fed’s policy-setting Federal Open Market Committee reaffirmed that it remains “strongly committed to returning inflation to its 2 percent objective” and expects to continue to raise the key rate.

Until recently, the central bank seemed set to approve a 0.5-percentage-point increase, but economists say the rapid surge in inflation put the Fed behind the curve, meaning it needed to react strongly to prove its resolve to combat inflation

The super-sized move was the first 75-basis-point increase since November 1994.

Fed Chair Jerome Powell will hold a press conference after the meeting to provide more details on the central bank’s plans, which will be closely watched for signals on how aggressive policymakers will be in coming meetings.

Committee members now see the federal funds rate ending the year at 3.4 percent, up from the 1.9 percent projection in March, according to the median quarterly forecast.

They also expect the Fed’s preferred inflation index to rise to 5.2 percent by the end of the year, with GDP growth slowing to 1.7 percent in 2022 from the previous 2.8 percent forecast.

The FOMC noted that effects of Russia’s invasion of Ukraine are “creating additional upward pressure on inflation and are weighing on global economic activity.”

And ongoing Covid-19 lockdowns in China “are likely to exacerbate supply chain disruptions.”

Kansas City Federal Reserve Bank President Esther George, a noted inflation-hawk, dissented from the committee vote, preferring a smaller, half-point increase.

– Caught off guard –

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, 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 prefer to clearly telegraph any policy shift to financial markets, the latest data changed the calculus.

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

However, the central bank cannot influence supply issues, and rate hikes only work by cooling demand and slowing the economy — meaning policymakers are walking a fine line between having an impact and doing too much.

And the impact won’t be immediate.

“Monetary policy operates with lags, today’s inflation reflects decisions taken a year ago,” said Adam Posen, head of the Peterson Institute for International Economics and a former central banker.

“Had Fed hiked in 2021Q2/Q3, then inflation now would be different — not least (because) the current global shocks wouldn’t be piling on already high inflation,” he said on Twitter.

The US Justice Department announced federal hate crimes charges Tuesday against Payton Gendron, the 18-year-old who shot dead 10 African Americans at a Buffalo, New York supermarket in May.

The charges say Gendron was motivated by racist hate when, on May 14, he took a semi-automatic assault weapon to a grocery store in a largely Black neighborhood of Buffalo and killed 10 people, while wounding three others.

They said he was driven by belief in a conspiracy theory called “The Great Replacement” — that white people’s lives and communities are threatened by minorities — a view Gendron espoused in a lengthy document posted online before his attack.

“Gendron’s motive for the mass shooting was to prevent Black people from replacing white people and eliminating the white race, and to inspire others to commit similar attacks,” the charges said.

He planned his attack in detail for months, according to the charges, and he specifically targeted a heavily African-American community, mapping out the popular Tops supermarket there.

He said in his manifesto that he intended to “Kill as many Blacks as possible.”

The federal hate crime charges carry the death penalty or up to life in prison.

Attorney General Merrick Garland announced the charges on a visit to Buffalo, where he met with family members of those killed.

“Hate-fuelled acts of violence terrorize not only the individuals who are all attacked but entire communities,” Garland said.

“We fully recognize the threat that hatred and violent extremism pose to the safety of the American people and American democracy,” he said.

On June 1, Gendron was charged by New York state with domestic terrorism and ten counts of first degree murder.

Internet Explorer, Microsoft’s once dominant web browser that some users love to hate, was retired Wednesday after 27 years on the world’s computer screens.

The tech giant will no longer offer fixes or updates to the existing version of Explorer and users will be directed to its replacement, Microsoft Edge.

It was a moment marked with some genuine nostalgia — and plenty of jokes at the expense of what was many people’s first gateway to the internet.

“You took long to download stuff, you kept freezing, and you got replaced pretty easily by other browsers,” tweeted @Zytrux_1, under the hashtag #ripinternetexplorer.

“But there goes one of the first browsers I’ve ever used, and got plenty of good memories thanks to it.”

Twitter was flooded with Explorer memes, including tombstones or coffins bearing the browser’s signature blue “e,” and the occasional screenshot of error messages saying the app had stopped working.

Microsoft announced the change last year, and in a blog post Wednesday explained the need to start fresh with a different browser — Microsoft Edge.

“Internet Explorer (IE) is officially retired and out of support as of today,” the firm wrote.

“The web has evolved and so have browsers. Incremental improvements to Internet Explorer couldn’t match the general improvements to the web at large, so we started fresh,” it added.

– Antitrust battle –

Internet Explorer’s first version came out in 1995, in a challenge to the then rising early internet star Netscape Navigator.

The ubiquity of Microsoft’s operating system became a route also for Explorer to steadily become the default for many users.

In 1997 US authorities contended Microsoft, by incorporating its Internet Explorer in the Windows operating system for the first time, was trying to crush competition from Netscape.

The case was concluded with a settlement in November 2001 that imposed no financial penalty, but forced billionaire Bill Gates’s software giant to disclose more technical information and barred anti-competitive agreements on Microsoft products.

However, users gradually got more alternatives to the browser many loved to hate for its slowness and tech glitches.

Microsoft’s market share in the browser business plunged from more than 90 percent in the 2000s to the low single digits this year.

Google’s Chrome, with nearly 65 percent, is the market leader, according to Statcounter, a web traffic analysis site.

US President Joe Biden hosts a major White House reception Wednesday in honor of LGBTQ rights, striking a counter blow in the heating culture wars ahead of November midterm elections.

Biden, Vice President Kamala Harris and several cabinet members — including openly gay Transport Secretary Pete Buttigieg — were to join hundreds of representatives from the LGBTQ community in the White House East Room to celebrate Pride Month.

Just ahead of the bash, Biden signed an executive order aimed at providing federal support on a variety of rights in the LGBTQ community that the White House sees as under attack from Republican state-level leaders — especially in Florida, where potential presidential candidate Governor Ron DeSantis has put combating “woke” culture at the heart of his agenda.

The executive order addresses “discriminatory legislative attacks against LGBTQI+ children and families, directing key agencies to protect families and children.”

It seeks to prevent so-called “conversion therapy,” boost health care programs against youth suicide, support LGBTQ foster families and protect against homelessness in the community.

The high profile intervention by Biden aims to counter an “onslaught of hateful… legislation that we’re seeing in the states,” a senior official told reporters.

The official, speaking on condition of anonymity, said there had been more than 300 laws introduced at state level this year alone that infringe on LGBTQ people and their parents.

Among those invited to the White House were “kids and families from across the country who have been personally impacted by these discriminatory bills,” the official said. These included 18-year-old Javier Gomez, who gained renown as an activist while still at school in Florida.

“We’ve had to stand up to their governors and state lawmakers as they advance discriminatory legislation,” the official said.

“These attendees represent the best of America. They are diverse, passionate advocates who are fighting to ensure that the promise of freedom and equality is made real for all you can expect the president today to celebrate the historic progress of his administration.”

Biden is targeting an important layer of the Democratic voter base ahead of midterm elections where Republicans are widely seen as on track to win back control of Congress.

For Republicans, the issue is equally potent, with activists accusing Democrats of moving too far to the left, especially on transgender rights.

The standard bearer on the right is DeSantis, seen by many as a natural heir to former president Donald Trump’s populist brand in the 2024 presidential election.

In March, he signed a controversial law banning lessons on sexual orientation and gender identity in Florida elementary schools, a step some Republicans say protects young children from what they term indoctrination. Biden and other critics say it will hurt the LGBTQ community and stoke bullying.

Debate over what opponents dubbed the “Don’t Say Gay” law quickly went national, even drawing in entertainment giant Disney, which criticized the measure and found itself in open conflict with DeSantis.

US Defense Secretary Lloyd Austin urged European allies to step up arms shipments to Ukraine on Wednesday, as Russia and China renewed their mutual support in the face of Western sanctions.

In eastern Ukraine, troops fired a volley of shells from French-supplied Caesar howitzers towards Russian positions, even as Western ministers met at NATO headquarters in Brussels.

Britain announced that its delivery of the advanced Multiple Launch Rocket System to Ukraine was now “imminent” — but still Kyiv pleaded that it is outgunned on the frontline and in need of quicker support.

“We can’t afford to let up and we can’t lose steam. The stakes are too high. Ukraine is facing a pivotal moment on the battlefield,” Austin told a meeting of allies in Brussels.

“We must intensify our shared commitment to Ukraine’s self-defence, and we must push ourselves even harder to ensure that Ukraine can defend itself, its citizens and its territory.”

Austin said that Moscow’s attack on its pro-Western neighbour “isn’t just a danger to Ukraine — it’s a menace to European security”. 

“So we must continue to rise to meet this challenge,” he said, sitting next to Ukraine’s defence minister Oleksiy Reznikov.

While the western allies debate how best to help Ukraine, China’s President Xi Jinping assured his Russian counterpart Vladimir Putin of Beijing’s support for Moscow.

China has refused to condemn Moscow’s invasion of Ukraine and has been accused of providing diplomatic cover for Russia by criticising Western sanctions and arms sales to Kyiv.

State media reported that China is “willing to continue to offer mutual support (to Russia) on issues concerning core interests and major concerns such as sovereignty and security”.

And the Kremlin said that, in a call, Xi and Putin had agreed to ramp up economic cooperation in the face of “unlawful” Western sanctions.

Earlier, Ukraine had delivered a message to the meeting on behalf of its embattled troops struggling to hold back a Russian offensive. 

“Brussels, we are waiting for a decision,” Mykhaylo Podolyak, senior aide to President Volodymyr Zelensky said, warning that Ukraine’s artillery is outgunned by 10 to one. 

“Daily, I receive a message from the defenders: ‘We are holding on, just say: when to expect the weapons?'” he said.

The industrial city of Severodonetsk is under intense bombardment as Russia focuses its offensive on the Donbas region in an effort to secure a swathe of eastern and southern Ukraine.

– ‘Critical situation’ –

But NATO chief Jens Stoltenberg, hosting the meeting of around 50 allies and partners, warned it would take time to get the latest hardware into service with trained Ukrainian troops.

“Ukraine is really in a very critical situation and therefore, it’s an urgent need to step up,” Stoltenberg told journalists ahead of a gathering of NATO ministers. 

The West has poured arms into Ukraine, but Kyiv complains it has only received a tenth of what it needs and is clamouring for heavier weaponry.

Stoltenberg said the allies had moved from sending older equipment to delivering “more long-range, more advanced air defence systems, more advanced artillery, more heavy weapons”.   

But he added “there will also be some time needed to just make the Ukrainians ready to use and operate these systems”.  

He said NATO members, such as the Netherlands, plan to offer training to Ukrainian forces to get them up to speed on the new heavy guns going in. 

Stoltenberg said alliance leaders should agree a “comprehensive assistance package” for Ukraine at a summit in Madrid later this month.

About 500 civilians are taking shelter in Severodonetsk’s Azot chemical plant, according to the head of the city’s administration.

At another location in eastern Ukraine, AFP reporters watched as Ukrainian forces paraded — and fired — their new French-supplied truck-mounted Caesar howitzers.

The commander of the system, who gave his name only as Glib, said it would help make Ukraine’s defences more agile, as gunners loosed three shells in the direction of Russian lines.

“This system is primarily very manoeuvrable and mobile,” the officer from the 55th brigade said. “In modern warfare, this is a crucial factor. 

“Our old systems are stationary, so to speak. This is truck-mounted artillery to put in the field,” he added. 

After its February invasion, Russia was driven back from Kyiv, prompting it to focus its offensive on Donbas, a mainly Russian-speaking region partly held by pro-Kremlin separatists since 2014.

Capturing Severodonetsk has become a key goal, as it would open the road to Sloviansk and another major city, Kramatorsk.

– NATO urges heavy weapons –

Kyiv’s forces face an increasingly desperate situation in Severodonetsk, with Ukrainian authorities estimating the Russians now control up to 80 percent of the city as they seek to encircle it. 

From an elevated position in Lysychansk, an AFP team saw black smoke rising from the Azot factory in Severodonetsk and another area in the city.

The Ukrainian military is using the high ground to exchange fire with Russian forces fighting for control of Severodonetsk, just across the water.

Lysychansk pensioner Valentina sat on the porch of her ground-floor apartment, where she lives alone, her two walking sticks to hand.

“It’s scary, very scary,” said the 83-year-old former farm worker. “Why can’t they agree at last, for God’s sake, just shake hands?”