Fed on collision course with Donald Trump over charge cuts | Invesloan.com

Good morning and welcome back to another busy day, with earnings from Microsoft, Meta and Tesla and the Federal Reserve’s first meeting since Donald Trump took office wraps up. Here’s what else we’re covering:

• Netanyahu invited for White House meeting with Trump

• A “demographic suicide”

• Strains in airlines’ frequent flyer schemes

• A pioneering conservation project in Zambia

Today marks the first Federal Reserve interest rate decision since Donald Trump returned to office. The US central bank is widely expected to keep rates on hold at between 4.25 to 4.5 per cent following three consecutive cuts since September, putting Fed chair Jay Powell on a collision course with the new US president.

Last week Trump piled pressure on Powell by making his thoughts on monetary policy very clear. During an appearance in the Oval Office, Trump said he knew rates “much better” than the Fed and would like to see them come down “a lot”. 

But the Fed is also facing inflationary pressures in the US economy and has signalled a more “cautious” approach to monetary policy this year. Inflation remains above the central bank’s 2 per cent target and at its last meeting in December the Fed raised its 2025 and 2026 inflation predictions.

US central bank officials have also raised concerns about the inflationary risks associated with Trump’s plans to raise tariffs, slash taxes and crackdown on immigration. Powell, who has helped steer the US economy to a soft landing over the past year, will face questions at a press conference after today’s meeting and I’m sure he relationship with the president will be raised. Claire Jones in Washington previews the meeting.

And here’s what else we’re keeping tabs on today:

• Monetary policy: As well as the Fed, central banks in Canada and Brazil announce interest rate decisions.

• Results: Tech groups Meta, Microsoft and IBM report results as well as electric-vehicle maker Tesla, VF Corporation, T-Mobile and oil producer Hess.

• US: The Senate finance committee holds a hearing to consider the nomination of Robert F Kennedy Jr for secretary of health and human services. Howard Lutnick, Trump’s pick for commerce secretary, also faces a Senate hearing as questions swirl about his conflicts of interest.

• Lunar new year: Financial markets were closed across east and south-east Asia for the holiday.

Five more top stories

1. Donald Trump will meet Benjamin Netanyahu next week in Washington, making the Israeli Prime Minister the first foreign leader to receive an invitation to the White House since the US president returned to office. It will also mark the first overseas trip by the veteran Israeli politician since the International Criminal Court issued an arrest warrant against him last year. Here’s what they are expected to discuss.

2. OpenAI said it had found evidence that Chinese artificial intelligence start-up DeepSeek used the US company’s proprietary models to train its own open-source competitor. The San Francisco-based maker of ChatGPT told the Financial Times it had seen some evidence of “distillation”. Here’s what we know.

• DeepSeek’s “aha moment”: Chinese start-up DeepSeek’s breakthroughs have come from its use of “reinforcement learning” and “small language models”.

• More AI news: Hedge fund manager Steve Cohen remains “bullish” on AI despite this week’s big sell-off.

3. A federal judge yesterday blocked Donald Trump’s plan to freeze hundreds of billions of dollars in payments to federal programmes just minutes before it was set to take effect. A Washington DC judge ordered the funding, which included medical programmes and help for the elderly, to continue until a hearing on February 3. The decision capped a day of chaos in Washington.

4. Mark Zuckerberg is exploring buying a property in Washington DC, according to two people familiar with the matter. The move signals Zuckerberg’s ambition to work closely with the Trump administration, the people said, as he seeks a role in influencing regulation in areas, such as artificial intelligence, that are of increasing importance to Meta, the owner of Facebook and Instagram. Here’s more on the potential property deal.

5. A test aircraft built by US start-up Boom Supersonic has broken the sound barrier for the first time during a flight, potentially paving the way for the return of supersonic commercial travel more than 20 years since Concorde’s final flight. The XB-1 successfully exceeded Mach 1, about 770 miles per hour, after reaching an altitude of 34,000 feet above the Mojave desert in California yesterday. Find out more.

Today’s big read

Two-thirds of the world’s population now lives in countries where people are having babies at a rate too low to replace their population. By 2100, just 12 countries — 11 in Africa and the tiny Pacific island state of Vanuatu — are expected to have fertility rates above the crucial level of 2.1 births per woman. A new series looks at governments’ responses to the threat of “a demographic suicide”.

We’re also reading . . . 

Chart of the day

Matt Jones is part of a global community of frequent flyers who research how to earn air miles. He documents his travels on a popular YouTube channel. For airlines, loyalty schemes — and in particular air miles programmes — have grown into multibillion-dollar businesses that can be more profitable than the flights themselves. But as many airlines report record demand, there are signs a model built over the past 40 years is under strain.

Take a break from the news . . . 

Simalaha is a pioneering community conservancy in Zambia and the best way to explore it is on a horseback safari.