World
CNN management intent on changing perception of the network
It was the kind of story that media reporter Brian Stelter would normally sink his teeth into — if only it didn’t involve him.
CNN said last week it was cancelling “Reliable Sources,” its 30-year-old program on the media, and letting Stelter go, part of a nascent effort by new management to reclaim a brand identity that it feels was damaged during the Trump era.
The news network, now under the Warner Discovery corporate banner and led since spring by CNN Worldwide Chairman Chris Licht, is trying to inject more balance into its programming and become less radioactive to Republicans. How and whether that can be accomplished remains a mystery.
“CNN has to figure out what it wants to be,” said Carol Costello, a former anchor there and now a journalism instructor at Loyola Marymount University.
Former President Donald Trump portrayed CNN as an enemy, and a Pew Research Center study illustrated the impact that had with his followers. In 2014, Pew found that one-third of people who identify or lean Republican said they distrusted CNN as a source for political news. By 2019, that number had shot up to 58 percent — higher distrust than The New York Times, The Washington Post or MSNBC.
And that was before the overheated 2020 election campaign and the anger over its outcome.
Last year’s firing of CNN anchor Chris Cuomo after he helped his brother, former Democratic New York Gov. Andrew Cuomo, behind the scenes, also hurt CNN’s reputation among Republicans, said Carlos Curbelo, a former GOP congressman from Florida.
As Trump attacked the network, CNN returned fire. Under previous leader Jeff Zucker, CNN figures became more opinionated on the air than they ever had before. Anderson Cooper once likened Trump to “an obese turtle on its back, flailing in the hot sun, realizing his time is over,” a remark he later apologized for.
“All mainstream media took a hit with the ascent of Donald Trump,” Costello said. “I really think he did a number on journalism in general, not just CNN. For a time we all played into it, and our reporting was kind of hysterical.”
CNN’s tone had a lot to do with changes in the network’s reputation, said Mark Whitaker, a veteran newsman and former CNN executive. CNN had higher ratings and more buzz under Zucker, but, Whitaker asked, “Was it worth it in terms of the way it changed the brand perception?”
Being seen as a liberal alternative to Fox News Channel isn’t an issue for a news outlet that plays up partisanship. But for a company that has sold itself as an unbiased news source for more than 40 years — to viewers, to advertisers, to cable or satellite operators — that presents a problem.
Since Licht took over, morning anchor Brianna Keilar’s occasional takedowns of Fox coverage have disappeared. Although Licht hasn’t commented publicly on Stelter’s exit, the media reporter’s criticism of Fox was a regular feature of “Reliable Sources.”
It received little notice at the time, but cable news executive John Malone, now a member of the Warner Discovery board of directors, said in a CNBC interview last November that “I would like to see CNN evolve back to the kind of journalism it started with, and actually have journalists, which would be unique and refreshing.”
Read: CNN’s streaming service shutting down a month after launch
Similarly, Warner Discovery President and CEO David Zaslav said at a company town hall in April that CNN should set itself apart from a cable news industry that is dominated by “advocacy networks.” CNN needs to be about reporting, truth and facts, he said.
“If we get that, we can have a civilized society,” said Zaslav, who appointed Licht. “And without it, if it all becomes advocacy, we don’t have a civilized society.”
Licht has given few interviews to outside journalists since taking over, and a CNN spokesman turned down a request for this article.
Licht has taken steps toward the goals his bosses have elucidated. He wants CNN anchors to be conscious of a perspective that they sometime talk down to people. He wants panel discussions to be informative, not dominated by extreme points of view. He wants to resist “outrage porn.” He ordered that the on-air “breaking news” banner be reserved for real breaking news.
Licht also went to Washington to meet with Republican leaders, including Senate Minority Leader Mitch McConnell and Kevin McCarthy, his counterpart at the House.
Licht would like to see more Republicans appear on CNN for meaningful interviews, not necessarily to be used by them to appear tough to supporters for standing up to hostility. There have already been small signs of success in recent weeks: appearances by South Carolina Sen. Tim Scott and Texas U.S. Rep. Dan Crenshaw.
“This is true of all three (cable news) networks: When you can get only members of one party to show up, it shows that your news division is lacking in credibility with essentially half the country,” said Curbelo, an NBC News contributor. It’s early, but Curbelo said he has liked what he’s seen with Licht so far.
The outreach with Republicans has raised some eyebrows, with Democratic strategist Kurt Bardella suggesting in a Los Angeles Times column that CNN was “eager to pander” to politicians detached from reality. And Eric Deggans, NPR’s television critic, said he’s worried about the risk of normalizing lies like the last presidential election was stolen.
“Sometimes journalists have been accused of being partisan when what they’ve really been doing is insisting upon the truth and refusing to go along with a political party that is redefining the truth to serve its own ends,” Deggans said.
CNN points out that Licht made a similar pitch to aides at President Joe Biden’s White House, showing demographic information of viewers to illustrate it would be worthwhile to appear for interviews. The network resists suggestions that lies would not be challenged, but said wants all Americans to feel their opinions are listened to.
“No matter what they do, they’ll be attacked,” Whitaker said. “Trump and others will continue to cry ‘fake news’ about anything they don’t like from the media.” But, he said, CNN has the best chance of any cable news network to reach an audience looking for a more balance in journalism.
Other visible moves are likely to come soon. Licht has been eyeing a shakeup of CNN’s morning hours and recently hired Ryan Kadro, a former CBS News colleague who handled that network’s morning show. CNN still has a hole in prime time, too: Chris Cuomo hasn’t been replaced since he was fired last December.
But what’s next remains unclear, which Deggans advised against. He called on CNN’s leaders to be clear with viewers about what’s being done. “The attitude of the new management seems to be, ‘Trust us, we have a plan.’”
Sick dolphin calf improves with tube-fed milk, helping hands
The Irrawaddy dolphin calf — sick and too weak to swim — was drowning in a tidal pool on Thailand’s shore when fishermen found him.
The fishermen quickly alerted marine conservationists, who advised them how to provide emergency care until a rescue team could transport the baby to Thailand’s Marine and Coastal Resources Research and Development Center for veterinary attention.
The baby was nicknamed Paradon, roughly translated as “brotherly burden,” because those involved knew from day one that saving his life would be no easy task.
Irrawaddy dolphins, considered a vulnerable species by International Union for Conservation of Nature, are found in the shallow coastal waters of South and Southeast Asia and in three rivers in Myanmar, Cambodia and Indonesia. Their survival is threatened by habitat loss, pollution and illegal fishing.
Officials from the marine research center believe around 400 Irrawaddy dolphins remain along the country’s eastern coast, bordering Cambodia.
Since Paradon was found by the fishermen July 22, dozens of veterinarians and volunteers have helped care for him at the center in Rayong on the Gulf of Thailand.
“We said among ourselves that the chance of him surviving was quite low, judging from his condition,” Thanaphan Chomchuen, a veterinarian at the center, said Friday. “Normally, dolphins found stranded on the shore are usually in such a terrible condition. The chances that these dolphins would survive are normally very, very slim. But we gave him our best try on that day.”
Workers placed him in a seawater pool, treated the lung infection that made him so sick and weak, and enlisted volunteers to watch him round the clock. They have to hold him up in his tank to prevent him from drowning and feed him milk, initially done by tube, and later by bottle when he had recovered a bit of strength.
A staff veterinarian and one or two volunteers stay for each eight-hour shift, and other workers during the day handle the water pump and filter and making milk for the calf.
After a month, Paradon’s condition is improving. The calf believed to be between 4 and 6 months old can swim now and has no signs of infection. But the dolphin that was 138 centimeters long (4.5 feet) and around 27 kilograms (59 pounds) on July 22 is still weak and doesn’t take enough milk despite the team’s efforts to feed him every 20 minutes
Thippunyar Thipjuntar, a 32-year-old financial adviser, is one of the many volunteers who come for a babysitting shift with Paradon.
Thippunya said with Paradon’s round baby face and curved mouth that looks like a smile, she couldn’t help but grow attached to him and be concerned about his development.
“He does not eat enough but rather just wants to play. I am worried that he does not receive enough nutrition,” she told The Associated Press on Friday as she fed the sleepy Paradon, cradled in her arm. “When you invest your time, physical effort, mental attention, and money to come here to be a volunteer, of course you wish that he would grow strong and survive.”
Read: Govt finalizes the "Dolphin Conservation Action Plan"
Sumana Kajonwattanakul, director of the marine center, said Paradon will need long-term care, perhaps as much as a year, until he is weaned from milk and is able to hunt for his own food.
“If we just release him when he gets better, the problem is that he he won’t be able to have milk. We will have to take care of him until he has his teeth, then we must train him to eat fish, and be part of a pod. This will take quite some time,” Sumana said.
Paradon’s caregivers believe the extended tender loving care is worth it.
“If we can save one dolphin, this will help our knowledge, as there have not been many successful cases in treating this type of animal,” said veterinarian Thanaphan. “If we can save him and he survives, we will have learned so much from this.”
“Secondly, I think by saving him, giving him a chance to live, we also raise awareness about the conservation of this species of animal, which are rare, with not many left.”
Ukraine: Russia fires on cities not far from nuclear plant
Russian forces fired missiles and artillery on Ukrainian-held areas across the river from Europe’s largest nuclear power plant, authorities said Saturday as concern persisted about safety at the Russian-controlled plant after it was temporarily knocked offline.
Grad missiles and artillery shells hit the cities of Nikopol and Marhanets, each about 10 kilometers (6 miles) and across the Dnieper River from the Zaporizhzhia nuclear power plant, said Valentyn Reznichenko, governor of Ukraine’s Dnipropetrovsk region.
Russian forces occupied the nuclear plant complex early in the war in Ukraine, and Ukrainian workers have kept it running. Each side has repeatedly accused the other of shelling the complex, raising fears that the fighting could trigger a catastrophe.
Authorities began distributing iodine tablets Friday to residents who live near the plant in case of a radiation leak. The move came a day after the plant was temporarily knocked offline because of what officials said was fire damage to a transmission line.
Recent satellite images from Planet Labs showed fires burning around the complex over the last several days.
The U.N.’s atomic energy agency has been trying to send a team in to inspect and help secure the plant. Officials said preparations for the visit were underway, but it remained unclear when it might take place.
Ukraine has claimed Russia is using the power plant as a shield by storing weapons there and launching attacks from around it. Moscow, for its part, accuses Ukraine of recklessly firing on the nuclear complex.
Read: Nuclear treaty conference near end with Ukraine in spotlight
Elsewhere in Ukraine, one person was killed and another wounded in Russian firing in the Mykolaiv region, local government officials said. Mykolaiv city is an important Black Sea port and shipbuilding center.
The governor of the eastern Donetsk region, Pavlo Kyrylenko, said Saturday that two people were killed in Russian firing on the city of Bakhmut, a significant target for Russian and separatist forces seeking to take control of the parts of the region they do not already hold.
Malaysia court slams leak of alleged verdict of ex-PM's wife
Malaysia’s top court on Saturday condemned as a smear attempt the leaking of an alleged guilty verdict against the wife of former Prime Minister Najib Razak days after he was imprisoned for graft linked to the looted 1MDB state fund.
The High Court is due to deliver its verdict Thursday in Rosmah Mansor’s graft trial over a 1.25-billion-ringgit ($279-million) solar energy project. Najib began a 12-year prison term Tuesday after losing his final appeal in one of the five graft cases against him involving 1MDB.
The Malaysia Today website, run by a Malaysian blogger now based in England, posted a 71-page document it described as containing a guilty judgment against Rosmah. The report late Friday alleged the verdict was written by unknown people and not by the High Court judge handling Rosmah's case.
Also read: Jailed Malaysian ex-PM Najib returns to court for 1MDB trial
The Chief Registrar office of the Federal Court, Malaysia's top court, condemned the website's action as “a deliberate act" to smear the court's reputation. It said it has lodged a complaint with police and vowed the court would not be cowed by attempts to threaten the administration of justice.
“This office stresses that the judiciary will not be harassed by illegal and irresponsible acts meant to tarnish the integrity of the country’s judicial system,” the statement said.
Police said the leaked document was an initial draft prepared by the Kuala Lumpur High Court's research unit.
“The document is a research work on the ongoing trial and is the view of the research unit for the judge's reference," said a police statement. According to the court, the document will be amended based on research findings and further studies and “is not a judgment," it said.
The court complained the leaked document has also been edited from the original, police said, without giving further details.
Just four days ago, the chief registrar also filed a police report against Malaysia Today for publishing a document it said was the Federal Court's guilty verdict against Najib, just before the ruling was read out in court. The court has said the leaked document was a working draft of the ruling.
Rosmah faces three charges of soliciting bribes and receiving 6.5 million ringgit ($1.5 million) between 2016 and 2017 to help a company secure a project to provide solar energy panels to schools on Borneo Island.
If she is found guilty, Rosmah is expected to remain out on bail for her appeal to higher courts.
Najib, his wife and several senior officials have faced corruption charges since the 1MDB scandal sparked public anger that forced his government out of office in 2018.
He says he is innocent and was misled by others. Rosmah's defense lawyers argued an aide who testified against her was a corrupt liar.
Also read: Malaysia top court upholds ex-PM Najib's graft conviction
Despite his conviction, Najib remains influential in his United Malays National Organization party, which returned to power after defections caused the collapse of the reformist government that won the 2018 polls.
Najib cannot compete in general elections due in September 2023 unless he gets a royal pardon, as his supporters are advocating.
Deaths from flooding in monsoon drenched Pakistan near 1,000
Flash floods triggered by heavy monsoon rains across much of Pakistan have killed nearly 1,000 people and injured and displaced thousands more since mid-June, officials said Saturday.
The new death toll came a day after Prime Minister Shahbaz Sharif asked for international help in battling deadly flood damage in the impoverished Islamic nation.
The monsoon season, which began in June, has lashed Pakistan with particularly heavy rains this year and rescuers have struggled to evacuate thousands of marooned people from flood-hit areas. The crisis has forced the government to declare a state of emergency.
Also read: Pakistan seeks international help for flood victims
In northwestern Khyber Pakhtunkhwa province, flooding destroyed the gates of a major water control system at the Swat River, leading to flooding in the districts of Charsadda and Nowshera, said Sania Safi, a top administrator in Charsadda.
“We preempted the situation and warned and forced hesitating residents to leave their homes for safety and move to relief camps established at government buildings in safe places,” she said.
Safi said there was concern of further rising of the Swat and Kabul rivers, adding to the misery of residents who have already suffered the loss of lives and property.
In Nowshera district, local administrator Quratul Ain Wazir said flood waters submerged streets before the gushing waters headed toward low-lying areas.
Also read: Official: Flooding in eastern Afghanistan kills at least 9
“Our administration has evacuated many people and taken others to relief camps where government provided beds and food in safe buildings," she said. ... "We will use police to force those hesitant to leave their homes.”
Information Minister Maryam Aurangzeb said soldiers and rescue organizations were helping people to reach safety in many districts of southern Sindh, northwestern Khyber Pakhtunkhwa, eastern Punjab and southwestern Baluchistan provinces.
“Government has sanctioned sufficient funds to financially compensate the affected people and we will not leave our people alone in this tough time,” she said.
Aurangzeb asked wealthy people and relief organizations to come forward with aid to help flood-affected Pakistanis.
In response to Sharif's appeal for international aid, the United Nations planned a $160 million flash appeal for donations, according to Foreign Ministry spokesman Asim Iftikhar. He said in his weekly briefing Friday that the appeal will be launched Aug. 30.
The picturesque Kalam Valley in Khyber Pakhtunkhwa province is one of the areas most affected by the rains and flooding. Waters from overflowing rivers swept away entire buildings, including an iconic hotel.
“The situation is pretty serious as we don't have any road link left with the rest of the province, we don't have electricity, gas and communications network and no relief is reaching here,” said Muzaffar Khan, whose grocery store was swept away along with many other shops.
Thousands whose homes were swept away now live in tents, miles away from their inundated villages and towns, after being rescued by soldiers, local disaster workers and volunteers, authorities said.
In Baluchistan, Asadullah Nasir, a spokesperson at the provincial disaster management authority said all 34 districts of the impoverish province were badly affected due to the heavy rains and subsequent flooding. He said road networks were destroyed and bridges washed away and relief is possible only with helicopters, which are not often able to operate because of bad weather. He said provincial officials have confirmed 235 deaths but the number was expected to increase significantly after communications are restored.
The National Disaster Management Authority in its latest overnight report said 45 people were killed in flood-related incidents from Friday to Saturday. That brought the death toll since mid-June to 982 with 1,456 injured.
Monsoon rains were expected to continue this week, mainly in the south and southwest. The season usually runs from July to mid September in Pakistan.
Heavy rains and subsequent flash floods have damaged bridges, roads network across Pakistan, disrupting the supply of fruit and vegetables to markets and causing a hike in prices.
More than 80 people rescued from Philippine ferry fire
Philippine coast guard personnel and volunteers have rescued more than 80 passengers and crew of an inter-island ferry that caught fire as it approached a port south of Manila, prompting many to jump into the water as flames spread fast in windy weather, officials said Saturday.
Only two passengers are unaccounted for and authorities are checking if the two are missing or had been rescued but immediately went home without notifying officials who led the search efforts Friday, the coast guard said. The M/V Asia Philippines was listed as carrying 49 passengers and 38 crewmembers.
The ferry, which came from Calapan city in Oriental Mindoro province, was more than a kilometer (about a mile) away from the Batangas port, when smoke emerged from the second deck followed by flames, according to one of the rescued passengers.
The ferry’s proximity to the port allowed the rapid rescue of the victims even after nightfall by coast guard vessels and nearby ships, motor bancas and tugboats. One ship helped the coast guard extinguish the fire, which gutted the ferry that also carried at least 16 cars and trucks, coast guard officials said.
Passenger Benedict Fernandez told DZMM radio Friday night that smoke and flames suddenly rose from the second deck as crew members were apparently trying to turn an engine on and off as the ferry approached the port. There was no immediate order to abandon ship, but when it became hard to see because of the smoke, he said he decided to jump into the water with his two children from the third deck, along with other passengers.
“I pushed my children off because if we didn’t jump from the top, we would really get burned because the soles of our feet were already feeling the heat,” Fernandez said.
They were rescued from the water by another boat that approached the burning ship and then transferred to a tugboat, which brought them to port, he said.
Pictures released by the coast guard showed its personnel trying to revive a rescued passenger, a 43-year-old woman, at the port before she was taken to a hospital with injuries. Fernandez said he and his two children, who were shaken by the experience, and other passengers were taken to a hotel by officials of the company that owned the ferry.
Read: Philippine ferry carrying 82 people catches fire; 73 rescued
The ferry, which has been towed to an anchorage area, can carry about 400 passengers, the coast guard said, adding an investigation was underway. In the past, there have been instances when ferries carried unlisted passengers in defiance of regulations.
Sea accidents are common in the Philippine archipelago because of frequent storms, badly maintained boats, overcrowding and spotty enforcement of safety regulations, especially in remote provinces.
In December 1987, the ferry Dona Paz sank after colliding with a fuel tanker, killing more than 4,300 people in the world’s worst peacetime maritime disaster.
Fears of a radiation leak mount near Ukrainian nuclear plant
Authorities began distributing iodine tablets to residents near Ukraine’s Zaporizhzhia nuclear power plant Friday in case of a radiation leak, amid mounting fears that the fighting around the complex could trigger a catastrophe.
The move came a day after the plant was temporarily knocked offline because of what officials said was fire damage to a transmission line. The incident heightened dread of a nuclear disaster in a country still haunted by the 1986 explosion at Chernobyl.
Continued shelling was reported in the area overnight, and satellite images from Planet Labs showed fires burning around the complex — Europe’s biggest nuclear plant — over the last several days.
Iodine tablets, which help block the absorption of radioactive iodine by the thyroid gland in a nuclear accident, were issued in the Ukrainian-controlled city of Zaporizhzhia, about 45 kilometers (27 miles) from the plant. A woman and her small daughter were among those receiving the pills.
The U.N.’s atomic energy agency has been trying to send a team in to inspect and help secure the plant. Officials said preparations for the trip were underway, but it remained unclear when it might take place.
The Zaporizhzhia plant has been occupied by Russian forces and run by Ukrainian workers since the early days of the 6-month-old war. The two sides have repeatedly accused each other of shelling the site.
In Thursday’s incident, Ukraine and Russia blamed one another for the transmission-line damage that knocked the plant off the power grid.
Exactly what went wrong was not clear, but Ukrainian President Volodymr Zelenskyy said the plant’s emergency backup diesel generators had to be activated to supply electricity to operate the complex.
The plant requires power to run the reactors’ vital cooling systems. A loss of cooling could lead to a nuclear meltdown.
Ukrenergo, Ukraine’s transmission system operator, reported Friday that two damaged main lines supplying the plant with electricity had resumed operation, ensuring a stable power supply.
The country’s nuclear power agency, Energoatom, said the plant had been reconnected to the grid and was producing electricity “for Ukraine’s needs.”
Read: Ukrainian fears run high over fighting near nuclear plant
“The nuclear workers of Zaporizhzhia power plant are real heroes! They tirelessly and firmly uphold the nuclear and radiation safety of Ukraine and the whole of Europe on their shoulders,” the agency said in a statement.
Russia-installed officials in the Zaporizhzhia region, however, said that the plant was supplying electricity only to Russia-controlled areas of the country and not the rest of Ukraine.
Concerns about the site have reverberated across Europe.
French President Emmanuel Macron said a visit by the U.N.’s International Atomic Energy Agency should be allowed to take place “very quickly,” warning: “Civilian nuclear power must not be an instrument of war.”
Lana Zerkal, an adviser to Ukraine’s energy minister, told Ukrainian media that the logistics for an IAEA visit were still being worked out. Zerkal accused Russia of trying to sabotage the visit.
Ukraine has claimed Russia is using the plant as a shield by storing weapons there and launching attacks from around it. Moscow, for its part, accuses Ukraine of recklessly firing on the place.
Zaporizhzhia’s reactors are protected by thick, reinforced concrete containment domes that experts say can withstand an errant artillery shell. Many of the fears center instead on a possible loss of the cooling system, and also the risk that an attack on the cooling ponds where spent fuel rods are kept could scatter radioactive material.
Continued Russian shelling of Nikopol, a city across the Dnieper River from the Zaporizhzhia plant, damaged 10 houses, a school and a health care facility but caused no injuries, Dnipropetrovsk Gov. Valentyn Reznichenko said.
Secret Service recovers $286M in stolen pandemic loans
The U.S. Secret Service said Friday that it has recovered $286 million in fraudulently obtained pandemic loans and is returning the money to the Small Business Administration.
The Secret Service said an investigation initiated by its Orlando office found that alleged conspirators submitted Economic Injury Disaster Loan applications by using fake or stolen employment and personal information and used an online bank, Green Dot, to conceal and move their criminal proceeds.
The agency worked with Green Dot to identify roughly 15,000 accounts and seize $286 million connected to the accounts.
“This forfeiture effort and those to come are a direct and necessary response to the unprecedented size and scope of pandemic relief fraud,” said Kevin Chambers, director for COVID-19 fraud enforcement at the Justice Department.
Billions have been fraudulently claimed through various pandemic relief programs — including Paycheck Protection Program loans, unemployment insurance and others that were rolled out in the midst of the worldwide pandemic that shutdown global economies for months.
Read: FBI seized top secret documents in Trump estate search
In March, the Government Accountability Office reported that while agencies were able to distribute COVID-19 relief funds quickly, “the tradeoff was that they did not have systems in place to prevent and identify payment errors and fraud” due in part to “financial management weaknesses.”
As a result, the GAO has recommended several measures for agencies to prevent pandemic program fraud in the future, including better reporting on their fraud risk management efforts.
Since 2020, the Secret Service initiated more than 3,850 pandemic related fraud investigations, seized over $1.4 billion in fraudulently obtained funds and helped to return $2.3 billion to state unemployment insurance programs.
The latest seizure included a collaboration of efforts between Secret Service, the SBA’s Inspector General, DOJ and other offices.
Hannibal “Mike” Ware, the Small Business Administration’s inspector general, said the joint investigations will continue “to ensure that taxpayer dollars obtained through fraudulent means will be returned to taxpayers and fraudsters involved face justice.”
Powell: Fed’s inflation fight could bring ‘pain,’ job losses
Federal Reserve Chair Jerome Powell delivered a stark warning Friday about the Fed’s determination to fight inflation with more sharp interest rate hikes: It will likely cause pain for Americans in the form of a weaker economy and job losses.
The message landed with a thud on Wall Street, sending the Dow Jones Industrial Average down more than 1,000 points for the day.
“These are the unfortunate costs of reducing inflation,” Powell said in a high-profile speech at the Fed’s annual economic symposium in Jackson Hole. “But a failure to restore price stability would mean far greater pain.”
Investors had been hoping for a signal from Powell that the Fed might soon moderate its rate increases later this year if inflation were to show further signs of easing. But the Fed chair indicated that that time may not be near, and stocks tumbled in response.
Runaway price increases have soured most Americans on the economy, even as the unemployment rate has fallen to a half-century low of 3.5%. It has also created political risks for President Joe Biden and congressional Democrats in this fall’s elections, with Republicans denouncing Biden’s $1.9 trillion financial support package, approved last year, as having fueled inflation.
The Dow Jones average finished down 3% on Friday, its worst day in three months. The tech-heavy Nasdaq composite shed nearly 4%. Shorter-term Treasury yields climbed as traders built up bets for the Fed to stay aggressive with rates.
Some on Wall Street expect the economy to fall into recession later this year or early next year, after which they expect the Fed to reverse itself and reduce rates.
A number of Fed officials, though, have pushed back against that notion. Powell’s remarks suggested that the Fed is aiming to raise its benchmark rate — to about 3.75% to 4% by next year — yet not so high as to tank the economy, in hopes of slowing growth long enough to conquer high inflation.
“The idea they are trying to hammer into the market’s head is that their approach makes a rapid pivot to (rate cuts) unlikely,” said Eric Winograd, an economist at asset manager AllianceBernstein. “They are going to stay tight even when it hurts.”
After raising its key short-term rate by a steep three-quarters of a point at each of its past two meetings — part of the Fed’s fastest series of hikes since the early 1980s — Powell said the Fed might ease up on that pace “at some point,” suggesting that any such slowing isn’t near.
Powell said the size of the Fed’s rate increase at its next meeting in late September — whether one-half or three-quarters of a percentage point — will depend on inflation and jobs data. An increase of either size, though, would exceed the Fed’s traditional quarter-point hike, a reflection of how severe inflation has become.
Read: US inflation will likely stay high even as gas prices fall
The Fed chair said that while lower inflation readings that have been reported for July have been “welcome,” he added that, “a single month’s improvement falls far short of what (Fed policymakers) will need to see before we are confident that inflation is moving down.”
On Friday, an inflation gauge that is closely monitored by the Fed showed that prices actually declined 0.1% from June to July. Though prices did jump 6.3% in July from 12 months earlier, that was down from a 6.8% year-over-year jump in June, which had been the highest since 1982. The drop largely reflected lower gas prices.
In his speech Friday, Powell noted that the history of high inflation in the 1970s, when the central bank sought to counter high prices with only intermittent rate hikes, shows that the Fed must stay focused.
“The historical record cautions strongly against prematurely” lowering interest rates, he said. “We must keep at it until the job is done.”
What particularly worries Powell and other Fed officials is the prospect that inflation would become entrenched, leading consumers and businesses to change their behavior in ways that would perpetuate higher prices. If, for example, workers began demanding higher pay to match higher inflation, many employers would then pass on those higher labor costs to consumers in the form of higher prices.
Many analysts speculate that Fed officials want to see roughly six months or so of lower monthly inflation readings, similar to July’s, before stopping their rate hikes.
Powell’s speech was the marquee event of the the Fed’s annual economic symposium at Jackson Hole, the first time the conference of central bankers is being held in person since 2019, after it went virtual for two years during the COVID-19 pandemic.
Since March, the Fed has implemented its fastest pace of rate increases in decades to try to curb inflation, which has punished households with soaring costs for food, gas, rent and other necessities. The central bank has lifted its benchmark rate by 2 full percentage points in just four meetings, to a range of 2.25% to 2.5%.
Those hikes have led to higher costs for mortgages, car loans and other consumer and business borrowing. Home sales have been plunging since the Fed first signaled it would raise borrowing costs.
In June, the Fed’s policymakers signaled that they expected their key rate to end 2022 in a range of 3.25% to 3.5% and then to rise further next year to between 3.75% and 4%. If rates reached their projected level at the end of this year, they would be at the highest point since 2008.
Powell is betting that he can engineer a high-risk outcome: Slow the economy enough to ease inflation pressures yet not so much as to trigger a recession.
His task has been complicated by the economy’s cloudy picture: On Thursday, the government said the economy shrank at a 0.6% annual rate in the April-June period, the second straight quarter of contraction. Yet employers are still hiring rapidly, and the number of people seeking unemployment aid, a measure of layoffs, remains relatively low.
At its meeting in July, Fed policymakers expressed two competing concerns that highlighted their delicate task.
Read: US inflation jumped 7.5% in the past year, a 40-year high
According to minutes from that meeting, the officials — who aren’t identified by name — have prioritized their inflation fight. Still, some officials said there was a risk that the Fed would raise borrowing costs more than necessary, risking a recession. If inflation were to fall closer to the Fed’s 2% target and the economy weakened further, those diverging views could become hard to reconcile.
At last year’s Jackson Hole symposium, Powell listed five reasons why he thought inflation would be “transitory.” Yet instead it has persisted, and many economists have noted that those remarks haven’t aged well.
Powell indirectly acknowledged that history at the outset of his remarks Friday, when he said that, “at past Jackson Hole conferences, I have discussed broad topics such as the ever-changing structure of the economy and the challenges of conducting monetary policy.”
“Today,” he said, “my remarks will be shorter, my focus narrower and my message more direct.”
Russia blocks final document at nuclear treaty conference
Russia late Friday blocked agreement on the final document of a four-week review of the U.N. treaty considered the cornerstone of nuclear disarmament which criticized its military takeover of Europe’s largest nuclear plant soon after Russian troops invaded Ukraine, an act that has raised fears of a nuclear accident.
Igor Vishnevetsky, deputy director of the Russian Foreign Ministry’s Non-Proliferation and Arms Control Department, told the delayed final meeting of the conference reviewing the 50-year-old Nuclear Nonproliferation Treaty that “unfortunately there is no consensus on this document.” He insisted that many countries — not just Russia — didn’t agree with “a whole host of issues” in the 36-page last draft.
The document needed approval by all 191 countries that are parties to the treaty aimed at curbing the spread of nuclear weapons and ultimately achieving a world without them.
Argentine Ambassador Gustavo Zlauvinen, president of the conference, said the final draft represented his best efforts to address divergent views and the expectations of the parties “for a progressive outcome” at a moment in history where “our world is increasingly wracked by conflicts, and, most alarmingly, the ever growing prospect of the unthinkable nuclear war.”
But after Vishnevetsky spoke, Zlauvinen told delegates, “I see that at this point, the conference is not in a position to achieve agreement on its substantive work.”
The NPT review conference is supposed to be held every five years but was delayed because of the COVID-19 pandemic. This marked the second failure of its state parties to produce an outcome document. The last review conference in 2015 ended without an agreement because of serious differences over establishing a Middle East zone free of weapons of mass destruction.
Those differences haven’t gone away but are being discussed, and the draft outcome documents obtained by The Associated Press would have reaffirmed the importance of establishing a nuclear-free Mideast zone. So, this was not viewed as a major stumbling block this year.
The issue that changed the dynamics of the conference was Russia’s invasion of Ukraine, which brought Russian President Vladimir Putin’s warning that Russia is a “potent” nuclear power and that any attempt to interfere would lead to “consequences you have never seen.” He also put Russia’s nuclear forces on high alert.
Putin has since rolled back, saying that “a nuclear war cannot be won and must never be fought,” a message reiterated by a senior Russian official on the opening day of the NPT conference on Aug. 2.
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But the Russian leader’s initial threat and the occupation of the Zaporizhzhia nuclear plant in southeastern Ukraine as well as the takeover of the Chernobyl nuclear plant, scene of the world’s worst nuclear disaster in 1986, renewed global fears of another nuclear emergency.
Earlier this week, the U.S. ambassador to the U.N., Linda Thomas-Greenfield, told the Security Council that the Biden administration was seeking a consensus final document that strengthens the nuclear treaty and acknowledges “the manner in which Russia’s war and irresponsible actions in Ukraine seriously undermine the NPT’s main purpose.”
Russian Ambassador Vassily Nebenzia accused the United States and its allies at that council meeting of “politicizing the work on the final document, putting their geopolitical interests in punishing Russia above their collective needs in strengthening global security.”
“Against the backdrop of the actual sabotage by the collective West of the global security architecture, Russia continues to do everything possible to keep at least its key, vital elements afloat,” Nebenzia said.
The four references in the draft final document to the Zaporizhzhia plant, where Russia and Ukraine accuse each other of shelling, would have had the parties to the NPT express “grave concern for the military activities” at or near the facility and other nuclear plants.
It also would have recognized Ukraine’s loss of control and the International Atomic Energy Agency’s inability to ensure the plant’s nuclear material is safeguarded. It supported IAEA efforts to visit Zaporizhzhia to ensure there is no diversion of its nuclear materials. The agency’s director is hoping to organize in the coming day.
The draft expressed “grave concern” at the safety of Ukraine’s nuclear facilities, in particular Zaporizhzia, and stressed “the paramount importance of ensuring control by Ukraine’s competent authorities.”