Both houses of Congress have approved the Inflation Reduction Act of 2022, which also entails an allocation of nearly $370 billion to climate programs. Fighting climate change was one of Biden’s promises when he took office
The U.S. House of Representatives passed a sweeping bill that would earmark $430 billion for health care, climate change and reducing inflation, reports CNBC.
The bill, called the Inflation Reduction Act, had 220 votes in favor and 207 members of congress opposed it, with all Democrats supporting it and all Republicans opposing it. The Senate approved the initiative last week, and now President Joe Biden must sign the bill.
How can inflation be reduced?
The passage of the document by Congress less than three months before the midterm elections, which will be held in November, is considered a victory for Joe Biden and the Democrats, who expect to maintain a majority in the Senate and the House of Representatives, notes CNBC.
The document has been worked on for more than a year and a half, writes Business Insider. According to the bill, about $370 billion will be spent on energy security and climate change programs. They include the expansion of renewable energy sources (solar and wind); the transition to “cleaner” fuel, and the introduction of tax incentives designed to encourage Americans to use electric cars.
Experts predict that these and other measures in the bill will help the U.S. reduce carbon emissions by about 40 percent by 2030. Energy Innovation analysts believe that 1.5 million new jobs will appear in the country by that time.
Stepping up the fight against climate change and harmful emissions was one of Biden’s first promises as president. Shortly after taking office, he returned the U.S. to the Paris Agreement, from which the country withdrew under his predecessor, Donald Trump.
Earlier, we reported that RCB Bank Cyprus will stop providing banking services to its clients from October 8.
Federal Reserve to participate in $85 billion debt sale reopening in October
The Federal Reserve is set to participate in the reopening of a substantial debt sale, initially sold on July 5, 2023. The debt, amounting to $85 billion, is scheduled for reopening on October 3 and is expected to mature by the end of the same month on October 31.
The debt sale involves both noncompetitive and competitive tenders. Noncompetitive tenders are typically used by smaller investors who are guaranteed to receive securities at the average price of all competitive bids. On the other hand, competitive tenders are used by larger investors who specify the rate, yield, or discount margin they are willing to accept.
The Federal Reserve’s involvement in such a significant debt sale underscores its role in managing the country’s monetary policy. By buying and selling government securities, the central bank can control the supply of money and influence interest rates.
The securities associated with this debt sale have been identified with the CUSIP number: 912797HD2. CUSIP numbers are unique identifiers assigned to bonds and other securities to facilitate trading and settlement.
The upcoming reopening of the debt sale marks a crucial event in the financial calendar, offering potential insights into market trends and the Federal Reserve’s ongoing monetary strategy.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.
Shutdown showdown in US Congress: Time running short to fund government
© Reuters. FILE PHOTO: A general view of the U.S. Capitol, where Congress will return Tuesday to deal with a series of spending bills before funding runs out and triggers a partial U.S. government shutdown, in Washington, U.S. September 25, 2023. REUTERS/Jonathan E
By David Morgan and Andy Sullivan
WASHINGTON (Reuters) – The U.S. House and Senate on Tuesday plan to take sharply divergent paths in a high-stakes spending battle, with just five days remaining until a deadline that could force wide swaths of the government to shut down for the fourth time in a decade.
The Democratic-controlled Senate plans to vote on a stopgap funding bill with bipartisan support that would keep the federal government operating after current money runs out at midnight on Saturday (0400 GMT Sunday), giving negotiators more time to agree on full-year spending numbers.
Meanwhile Republican House of Representatives Speaker Kevin McCarthy, aiming to hold off a rebellion by hardline members of his own caucus, will push ahead with four full-year spending bills that reflect conservative priorities and stand no chance of becoming law.
Hundreds of thousands of federal workers will be furloughed and a wide range of services, from economic data releases to nutrition benefits, will be suspended beginning on Sunday if the two sides do not reach agreement. In Washington, the National Zoo says it would have to curtail its farewell party for three giant pandas before they return to China.
Congress has shut down the government 14 times since 1981, though most of those funding gaps have lasted only a day or two. Though disruptive, they have not had a significant impact on the world’s largest economy.
But Moody’s (NYSE:) warned on Monday that a shutdown this time would have negative implications for the U.S. government’s AAA credit rating, as it would highlight how political polarization is worsening the country’s fiscal standing.
Democratic President Joe Biden and McCarthy had aimed to head off a shutdown this year when they agreed in May, at the end of a standoff over the federal debt ceiling, to discretionary spending of $1.59 trillion for the fiscal year beginning Oct. 1.
Lawmakers on McCarthy’s right flank have since rejected that number, demanding $120 billion in cuts, even as more moderate members of their party including top Senate Republicans voiced support for the agreed-on plan.
That only accounts for a fraction of the total U.S. budget, which will come to $6.4 trillion for this fiscal year. Lawmakers are not considering cuts to popular benefit programs like Social Security and Medicare, which are projected to grow dramatically as the population ages.
Republicans control the House by a narrow 221-212 majority and have few votes to spare, particularly since some Republican hardliners have threatened to move to oust McCarthy from his leadership role if he relies on Democratic votes to pass legislation.
‘PAYING THE PRICE’
Biden himself has called on House Republicans to honor McCarthy’s deal.
“Just a few months ago the speaker of the House and I agreed to spending levels of the government,” Biden said. “Now a small group of extreme House Republicans, they don’t want to live up to that deal, and everyone in America could be faced with paying the price for it.”
Despite the looming shutdown deadline, the House will turn its attention first to the four full-year bills, which even if they pass would not fund the full government or prevent a shutdown. Success is not guaranteed: Republican hardliners blocked action on spending bills last week and some have said they would try to do so again.
If McCarthy surmounts that first obstacle, debate could consume most of the week, leaving little time to hammer out a stopgap bill before Sunday.
Republican Representative Ralph Norman, a member of the hardline House Freedom Caucus, said on Monday he was “100%” certain that Congress would not be able to keep the government open.
McCarthy said he was more optimistic. “I’m working everything we can to make sure this doesn’t happen,” he told reporters on Monday. “I always like the ball at the last second.”
How that might play out is unclear at this point. If the Senate passes a stopgap funding bill, McCarthy could allow a vote in the House, where it could pass with support from Democrats and more pragmatic Republicans.
But that could prompt Republican hardliners to act on their threat to depose McCarthy, plunging the chamber further into chaos.
Former President Donald Trump, the front-runner for the 2024 Republican nomination, has been cheering on the shutdown talk, saying on his Truth social media site, “UNLESS YOU GET EVERYTHING, SHUT IT DOWN!”
Fed’s Kashkari: 40% chance of needing ‘meaningfully’ higher rates
© Reuters. Neel Kashkari, President and CEO of the Federal Reserve Bank of Minneapolis, speaks during an interview with Reuters in New York City, New York, U.S., May 22, 2023. REUTERS/Mike Segar
By Ann Saphir
(Reuters) -A “soft landing” for the U.S. economy is more likely than not, Minneapolis Federal Reserve Bank President Neel Kashkari said on Tuesday, but there is also a 40% chance that the Fed will need to raise interest rates “meaningfully” to beat inflation.
Under the more likely scenario — Kashkari pegged the probability at about 60% — the Fed “potentially” raises rates one more quarter of a percentage point and then holds borrowing costs steady “long enough to bring inflation back to target in a reasonable period of time,” he said in an essay published on the regional Fed bank’s website.
Inflation by the Fed’s preferred measure has dropped from 7% last summer to 3.3% this past July, and U.S. unemployment has only ticked up a bit, reaching 3.8% at last read.
That is substantial progress on inflation and a still-healthy labor market, Kashkari said, and under the more-probable scenario he sees, “the policy tightening we would soon achieve would prove enough to finish the job” and deliver “the proverbial soft landing that we are hoping to achieve.”
But under a still very possible turn of events, Kashkari puts the likelihood at 40% — inflation stays sticky at near 3%, but households feel confident enough about the economy that they continue to spend, keeping upward pressure on prices already elevated by post-pandemic supply constraints.
“Once supply factors have fully recovered, is policy tight enough to complete the job of bringing services inflation back to target?” Kashkari said, playing this less-rosy scenario forward. “It might not be, in which case we would have to push the federal funds rate higher, potentially meaningfully higher.”
The Fed last week held its policy rate steady in a range of 5.25%-5.50%, but most policymakers signaled they believe one more interest-rate hike by the end of the year will likely be appropriate. Kashkari said on Monday he was in that majority.
“The good news is that we don’t need to make this determination right now,” Kashkari said in the essay. “We can observe the actual progress in bringing inflation down over the next several months to determine which scenario is the dominant one.”
The U.S. economy has displayed suprising resilience in recent months, despite 5.25 percentage points of Fed rate hikes over the last 18 months, and Fed policymakers have become increasingly confident they can avoid recession and still get inflation down to their 2% target with only a little more policy tightening.
To do so they see interest rates on a “higher for longer” path than they had just three months ago, with most expecting rates to still be above 5% by the end of next year.
Financial markets are pricing in an even more benign path for rates, giving a no-more-rate-hikes view about a 60% probability, based on pricing of short-term-interest rate futures, and pointing to the Fed policy rate at about 4.64% at the end of 2024.
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