Federal Reserve Chairman Kevin Warsh reiterated his preference for the US central bank to scale back its bond portfolio, while highlighting that any such step will only be made after extensive public preparation.
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“It took us about 18 years to find our way into this big balance sheet — which again, in my biased view, borders on fiscal policy,” Warsh said Wednesday at the European Central Bank’s annual Forum on Central Banking in Sintra, Portugal. “It’ll take us more than 18 weeks to bring it down to size.”
Warsh last month established plans for a task force to look at the balance-sheet question, which he indicated Wednesday will include “outside people.” He said while he was “open minded,” he wants interest-rate policy to be the Fed’s main tool. Any decision will be made by the full Federal Open Market Committee and the board, he said.
The Fed chief’s comments cemented Wall Street’s view that any move to shrink the balance sheet won’t come until 2027. The portfolio ballooned under successive rounds of asset purchases during the global financial crisis and Covid-19 pandemic. At its peak in June 2022, it hit almost $9 trillion, from under $900 billion back in 2007.
Sonderling tapped as sec of labor
President Donald Trump said Monday he will nominate Keith Sonderling to be the secretary of labor, elevating him from the agency’s acting director two months after Lori Chavez-DeRemer resigned amid abuse-of-power allegations.
Sonderling, a lawyer who has held a variety of acting positions and leadership roles across Trump’s government, was previously the deputy labor secretary and a Republican member of the Equal Employment Opportunity Commission.
“Throughout his career, Keith has proven his dedication to delivering strong results for the Hardworking People of our Country, and I know he will do an incredible job in his new role,” Trump wrote in a Truth Social post announcing Sonderling’s nomination.
Sonderling’s nomination is subject to Senate confirmation.
During Trump’s second term, in addition to his Labor Department post, Sonderling has been the acting director of U.S. Office of Government Ethics and the Institute of Museum and Library Services, one of several agencies Trump targeted for closure in an executive order last year.
At the library agency, Sonderling placed many agency staff members on administrative leave, sent termination notices to most of them, began canceling grants and contracts and fired all members of the National Museum and Library Services Board. Those actions were later blocked by a judge, and the case remains on appeal.
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Job openings a surprising 7.6M in May
U.S. job openings stayed at a surprisingly strong 7.6 million in May as the American labor market remains resilient in the face of the economic shock from the Iran war.
Forecasters had expected employers to post just 7 million openings in May.
The job market is sturdy but not exactly booming. Layoffs rose in May, and the number of people quitting their jobs — a sign of confidence in their prospects — ticked up only slightly. That’s according to data from the Bureau of Labor Statistics released Tuesday.
Employers are advertising openings, but they aren’t actually doing much hiring. Gross hiring — before counting people who lost or quit their jobs — dipped to 5.17 million in May from 5.26 million in April.
“The hiring switch needs to fully turn on for the labor market to feel alive again,” ZipRecruiter economist Nicole Bachaud said in a commentary.
Trump vows 100% tariff over digital services taxes
President Donald Trump threatened to impose 100% tariffs on goods imported from countries that impose digital services taxes, escalating pressure on European nations that just ratified a trade pact with the U.S.
“Numerous European Countries have been discussing the imminent implementation of a Digital Services Tax on American Companies,” Trump said in a social media post Friday. “Please let this statement serve to represent that any Country that imposes such a Tax will immediately be met with a 100% TARIFF on any and all Goods sent to the United States of America.”
Trump said the threatened tariff would be imposed “immediately” and would supersede any existing trade deals made with affected countries. The president’s comments come a day after the European Union gave its final sign-off to a trade agreement with Washington that sets a 15% tariff ceiling on most of the bloc’s exports to the US.
The U.S. has previously threatened retaliation against trading partners that impose such taxes, including in the EU, and this year has called for restarting OECD discussions on how to tax the digital economy.
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Compiled from Associated Press and Bloomberg reports.