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Interest rates are still too high in the U.S. more rate hikes possible



The Federal Reserve’s latest meeting minutes reveal that the majority of its officials remain apprehensive about persistently high inflation and are contemplating the potential necessity of additional interest rate increases.

The minutes from the July 25-26 meeting unveil a mixed viewpoint among the policymakers regarding the trajectory of inflation and its implications for monetary policy.

While acknowledging a few signs that inflation pressures might be subsiding, the minutes underscore that many officials continue to perceive high inflation as a sustained threat.

The cautious sentiment aligns with the Federal Reserve Chair Jerome Powell’s earlier remarks, where he adopted a noncommittal stance on future rate hikes during a post-meeting news conference.

Persistent inflation

In light of this persistent inflation concern, the minutes indicate that the officials are seeking more data to be confident that inflation pressures are genuinely abating and on a trajectory towards the central bank’s 2% target.

As of now, despite efforts to curb inflation, it remains elevated beyond the desired threshold.

The Federal Reserve’s decision during the meeting to raise its benchmark rate for the 11th time in 17 months reflects its ongoing commitment to combating inflation.

However, the release accompanying the meeting did not provide explicit guidance on the timing or potential occurrence of future rate increases.

Further hikes

Market analysts and economists have been debating the likelihood of further rate hikes following the July increase.

While the consensus among most investors and experts suggests that the July hike could be the final one, Goldman Sachs economists recently projected that the Federal Reserve might begin a phase of rate cuts by the middle of the following year.

The release of the meeting minutes coincides with signs that the economy is undergoing a “soft landing,” where economic growth slows sufficiently to mitigate inflation while avoiding a deep recession.

The Federal Reserve’s extensive series of interest rate hikes, the most significant in over four decades, has aimed to strike this balance.

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Moody’s downgrades China credit outlook, cites growth concerns



Moody’s Investors Service has downgraded China’s credit outlook, expressing concerns about the country’s economic growth prospects and the ongoing property market crisis.

The credit rating agency revised its outlook from stable to negative, citing a combination of factors that are putting pressure on China’s economy.

China’s economic growth has been slowing down in recent years, and Moody’s warns that this trend is expected to continue. The country faces challenges such as high debt levels, a rapidly aging population, and a declining labor force. These factors could hamper its ability to sustain robust economic growth in the future.

Additionally, the ongoing property market crisis in China is a major concern for Moody’s. The real estate sector has been a significant driver of the country’s economic growth, but it is currently experiencing a severe downturn with falling property prices and a growing number of unsold homes. This crisis has the potential to further weigh on China’s economic performance.

Moody’s decision to downgrade China’s credit outlook raises questions about the country’s ability to manage its economic challenges effectively. It also underscores the importance of addressing issues in the property market to prevent a broader economic crisis.

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Australia Post to shift to alternate-day mail delivery



In a move aimed at modernising its operations and accommodating the growing e-commerce industry, Australia Post has announced plans to reduce letter deliveries to every second day.

This significant shift is part of a broader strategy to expand its parcel business and adapt to changing consumer preferences.

Australia Post has recognized the declining demand for traditional letter services in an increasingly digital age. With more people communicating electronically and relying on email and messaging apps, the postal service has faced challenges in sustaining daily mail deliveries. By transitioning to alternate-day letter delivery, Australia Post aims to optimize its resources and focus on meeting the surging demand for parcel deliveries, driven by the booming online shopping market.

This strategic shift comes as a response to the changing landscape of postal services worldwide. Many postal agencies are diversifying their services to remain relevant and profitable. Australia Post’s move is expected to not only streamline its operations but also reduce costs associated with daily letter deliveries, ultimately benefiting both the organization and its customers.

While the change may be welcomed by those who prefer faster parcel deliveries, it raises questions about the impact on individuals and businesses reliant on daily mail services. Australia Post will need to address concerns regarding the potential delay of important correspondence and provide solutions to ensure minimal disruption for customers during this transition period.

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RBA maintains 4.35% rates as mortgage applications surge



The Reserve Bank of Australia (RBA) has decided to keep its official cash rate at 4.35%, citing concerns over the rapidly increasing number of mortgage applications.

This decision comes after several consecutive meetings where the RBA has refrained from adjusting interest rates.

The central bank’s decision to hold rates steady reflects their cautious approach to managing the current housing market boom. Mortgage applications have seen a significant surge in recent months, driven by record-low interest rates and increased demand for housing. While this has been a boon for the real estate industry, it has raised concerns about the potential for a housing bubble and financial stability.

Experts are divided on whether the RBA’s decision is the right course of action.

Some argue that maintaining low-interest rates is necessary to support economic recovery, especially in the wake of the COVID-19 pandemic. Others worry that the continued surge in mortgage applications without rate adjustments could lead to unsustainable levels of household debt.

In light of this decision, homeowners, prospective buyers, and investors will be closely watching the housing market’s trajectory and wondering how long the RBA can maintain its current stance.

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