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Federal Reserve rate hike reflects new world of sticky inflation and faster growth
WASHINGTON (AP) -- President Donald Trump has renewed his attacks on the Federal Reserve after it hiked its benchmark interest rate Wednesday, but the Fed matters less than broader economic trends when it comes to longer-term borrowing costs, economists say. The economy is growing steadily despite being hit with repeated shocks -- and may even be accelerating -- while inflation remains stubbornly high. And big tech firms are borrowing huge amounts of cash to plow into data center construction while the federal government is still running large yearly budget deficits. All these trends point to higher interest rates regardless of what the Fed does, analysts say.
Trump used to slam China. Here’s why he’s now rolling out the red carpet for Xi
WASHINGTON (AP) -- When Donald Trump ran for office a decade ago, he called China a menace to the U.S. economy. Today, the Republican president has changed his tune. He’s playing down the impact that Beijing has on trade, artificial intelligence and other issues. His new strategy of currying favor with China’s Xi Jinping has helped undermine traditional U.S. economic and national security alliances. Xi will be in Washington for a state dinner Thursday. Meanwhile, other Western leaders have found themselves trying to shore up their economic ties with China, too. Trump’s focus on having a good relationship with Xi has left experts questioning whether the U.S. is adequately positioning itself to compete against China.
Macron and Carney to hold talks on strengthening Canada-France economic and defense ties
PARIS (AP) -- French President Emmanuel Macron and Canadian Prime Minister Mark Carney are meeting to deepen economic and security ties on the North Atlantic archipelago of Saint-Pierre-et-Miquelon. Macron arrived in the French territory on Saturday. He emphasized the importance of strengthening bilateral ties. Carney recently embraced the idea of Canada becoming the European Union’s first associate member. This move comes as Canada seeks to reduce dependence on the U.S. Macron also aims to secure oil and gas supplies amid global market disruptions.
America In Focus: Affordability concerns rise as Fed hikes key rate, mortgage rate reaches nearly 7%
The Federal Reserve raised its benchmark interest rate Wednesday for the first time since 2023 in an effort to quell stubbornly high inflation, and the central bank signaled another rate hike could occur later this year. The quarter-point increase lifts the Fed’s key rate to about 3.9% and, over time, could result in higher borrowing costs for mortgages, auto loans and credit cards. Meanwhile, the weekly average rate on a 30-year fixed-rate home loan has been rising for months and this week climbed to just below 7% -- its highest level in over 19 months. The benchmark 30-year fixed rate mortgage rose to 6.95% from 6.76% last week, mortgage buyer Freddie Mac said Thursday. One year ago, the average rate was 6.26%.
Oil prices are high but could be much worse. Trump has China’s Xi to thank for that
WASHINGTON (AP) -- President Donald Trump’s conflict with Iran has not led to the doomsday oil price spike many feared at the start of the war. Energy analysts credit China’s oil strategy for this stability. China weathered the energy crunch by building a massive oil reserve and shifting toward electric vehicles and alternative fuels. This allowed China to cut crude imports, easing global demand and softening price effects as oil exports stalled through the Strait of Hormuz. However, tensions in the Middle East continue to pose risks. When Trump and Chinese President Xi Jinping meet this week, the war in Iran and its impact on the global economy are expected to be on the agenda.
Merz vows to press ahead with reforms after historic German state election defeat
BERLIN (AP) -- German Chancellor Friedrich Merz has faced a major electoral setback in two state elections including a historic defeat for his party. Early projections Sunday showed that Merz’s Christian Democratic Union received just 5.2% in Mecklenburg-Western Pomerania. That’s the CDU’s lowest result since World War II. The anti-migration Alternative for Germany or Afd party made significant gains. Merz acknowledged the result as a “disaster.” But he vowed to continue with potentially painful economic reforms. He emphasized the need for backbone and patience. Merz’s authority was already weakened by a previous defeat to AfD in Saxony-Anhalt. Calls for his replacement have emerged. But he remains determined to finish his term.
Lawsuit says Anthropic, OpenAI, SpaceXAI and Google made illegal agreement on AI slowdown
A new lawsuit claims that Anthropic, OpenAI, SpaceXAI and Google illegally agreed to slow their AI development. Filed Friday in the U.S. District Court for the Northern District of California, the lawsuit argues that this coordination violates antitrust laws and reduces consumer value for paid AI subscriptions. The lawsuit points to a Sept. 12 essay by Anthropic CEO Dario Amodei urging industrywide cooperation on safety measures. OpenAI’s Sam Altman, SpaceXAI’s Elon Musk and Google DeepMind’s Demis Hassabis publicly agreed. The plaintiffs, who are individuals with paid subscriptions to the AI companies’ services, argue this agreement has an anticompetitive effect.