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Business Highlights: Fed’s ‘restrictive’ levels, Davos gloom

May 25, 2022 GMT

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Fed officials signal rates may head to ‘restrictive’ levels

WASHINGTON (AP) — Federal Reserve officials agreed when they met earlier this month that they might have to raise interest rates to levels that would weaken the economy as part of their drive to curb inflation, which has reached a four-decade high. At the same time, many of the policymakers also agreed that after a rapid series of rate increases in the coming months, they could “assess the effects” of their rate hikes and, depending on the economy’s health, adjust their policies. According to minutes from the Fed’s May 3-4 meeting, most of the officials agreed that half-point increases to the Fed’s benchmark short-term rate “would likely be appropriate” at the central bank’s next two meetings, in June and July.

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Stocks climb as Fed minutes show determination on rates

NEW YORK (AP) — Stocks rose broadly on Wall Street Wednesday after minutes from the Federal Reserve’s most recent meeting indicate the central bank intends to move “expeditiously” to raise interest rates back to more neutral levels in its fight to tame inflation. The S&P 500 rose 0.9%, the Dow Jones Industrial Average rose 0.6% and the Nasdaq rose 1.5%. Small-company stocks rose far more than the rest of the market, a sign of bullishness on the economy. Retailers had some of the strongest gains after getting beaten down in recent days over concerns that soaring inflation was eating into their profits.

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Davos gathering overshadowed by global economic worries

DAVOS, Switzerland (AP) — The risks to the global economy are leading to an increasingly gloomy view of the months ahead for corporate leaders, government officials and other VIPs gathered at the World Economic Forum meeting in Davos, Switzerland. The issues range from soaring inflation, Russia’s war in Ukraine, squeezed supply chains, the threat of food insecurity around the world and the lingering COVID-19 pandemic. The head of the International Monetary Fund sought to dispel the gloom this week, saying a global recession isn’t in the cards but “it doesn’t mean it’s out of the question.” But Kristalina Georgieva acknowledged that it’s going to be a “tough year,” with one of the big problems surging food prices.

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Russia says it will pay foreign debt in rubles after US ban

Russia says it will pay dollar-denominated foreign debt in rubles, a move that is likely to be seen by foreign investors as a default. The U.S. Treasury Department allowed a license to expire Wednesday that permitted Russia to keep paying its debtholders through American banks. The Russian Finance Ministry said it will pay in rubles and offer “the opportunity for subsequent conversion into the original currency.” The ministry didn’t give a timeframe for that to happen. Russia has not defaulted on its international debts since the 1917 Bolshevik Revolution, when the Russian Empire collapsed and the Soviet Union was created.

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Congressional Budget Office says inflation to last into 2023

WASHINGTON (AP) — The Congressional Budget Office says that high inflation will persist into next year. This will likely cause the federal government to pay higher interest rates on its debt. The nonpartisan agency expects that the consumer price index will rise 6.1% this year and 3.1% in 2023. This forecast suggests that inflation will slow from current annual levels of 8.3%, yet it would still be dramatically above a long term baseline of 2.3%. The 10-year estimates do contain positive news as this year’s annual budget deficit will be $118 billion lower than forecast last year. That’s a byproduct of the end of pandemic-related spending and the solid job growth it helped to spur.

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Twitter shareholders meet amid Elon Musk’s takeover drama

SAN FRANCISCO (AP) — Twitter’s regularly scheduled shareholder meeting Wednesday didn’t include a vote on Tesla billionaire Elon Musk’s $44 billion bid for the social platform. That vote will take place at a yet-undetermined date in the future. But the drama surrounding that offer — almost all of it created by Musk himself — spilled over into Wednesday’s proceedings anyway. Musk had promised that taking over Twitter would enable him to rid the social media platform of its annoying “spam bots.” But he’s posted that the deal is “on hold” after arguing — without presenting evidence — that the bot problem is larger than Twitter says.

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Glencore pays up to $1.5B to resolve corruption claims

BERLIN (AP) — Commodities firm Glencore says it has reached deals with authorities in the United States, Britain and Brazil to resolve corruption allegations in return for penalties totaling up to $1.5 billion. The Anglo-Swiss company said late Tuesday that it will pay $700 million to resolve a U.S. bribery probe and a further $486 million in connection with allegations of market manipulation. Glencore said that about $166 million in fines agreed with the U.S. authorities will be credited to a parallel investigation by the UK Serious Fraud Office, where it has indicated that it will plead guilty to bribery at a hearing next month. Separately, the company is paying $40 million to resolve a bribery probe in Brazil. U.S. officials called the scale of the bribery “staggering.”

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Amazon shareholders nix warehouse working conditions audit

SEATTLE (AP) — Amazon shareholders have voted against a proposal calling for an independent audit of working conditions at the company’s warehouses. The e-commerce company opposed the proposal and the 14 others presented Wednesday at its annual shareholders meeting. Citing preliminary voting results, the Seattle-based company said all the resolutions were voted down by a majority of shareholders. Many of them focused on worker’s rights, and issues such as further disclosure of the company’s lobbying and taxes. The resolutions are non binding, but they usually pressure corporate boards to take action. Shareholders also voted to approve compensation packages for Amazon’s top executives.

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The S&P 500 rose 37.25 points, or 0.9%, to 3,978.73. The Dow Jones Industrial Average gained 191.66 points, or 0.6%, to 32,120.28. The Nasdaq jumped 170.29 points, or 1.5%, to 11,434.74. The Russell 2000 index of smaller companies advanced 34.34 points, or 1.9%, to 1,799.16.