"A somewhat faster move to rate normalization may defer somewhat how quickly we achieve the dual mandate goals of full employment and price stability, but could reduce the risk of a larger divergence from the dual mandate in the next downturn.”
“The U.S. job market is very close to full employment, and the pace of interest rate increases by the Federal Reserve will depend on how well the economy is doing. We choose the pace on basis of data.”
“In light of the continued solid performance of the labour market and our outlook for economic activity and inflation, I believe the case for an increase in the federal funds rate has strengthened in recent months.”
These 3 quotes from top US Federal Reserve officials are quite indicative of the general stance towards the future path of interest rates. All policy makers were quick to add that any hikes would be gradual, but it seems that – bar any dramatic deterioration of the economic outlook in the US and globally – the Fed is on track to deliver one more rate hike this year, especially if this Friday’s non-farm payroll data is in line with expectations.
There are dissenting opinions of course – Chicago Fed President Charles Evans is one of the most vocal opponents of raising rates at a too early stage. Evans argued that an ageing US population and slowing productivity growth mean there is little reason for interest rates to rise either fast or far, quoting the theory of secular stagnation put forward by Harvard professor Larry Summers. Spoiler alert – Evans doesn’t currently have a vote on the Fed board.
Apple Tax’ Headache
Just as Apple is ramping up things for next week’s product launched, the EU Commission has ordered the tech giant to pay €13 billion in (unpaid) taxes to Ireland. Whilst lower and differing corporate tax rates are allowed in the EU, the Commission has adjudged that the financial machinations Apple used to pay a significantly lower tax rate (0.005% according to the Commission) are tantamount to state aid, which is illegal under EU rules.
Apple immediately said it would appeal the decision and not pay a cent, and Ireland has also said it does not want the money as it deems the harm that would be done to its reputation as a business-friendly country would outweigh the immediate fiscal boost.
The case is likely to be long and drawn-out, so expect to see this in the news over the next few weeks and months as all parties assemble their teams of lawyers in what could be quite the landmark ruling.
This article was issued by Andrew Martinelli, Trader at Calamatta Cuschieri. For more information visit, www.cc.com.mt . The information, views and opinions provided in this article are being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. Calamatta Cuschieri Investment Services Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website.