The daily business briefing: March 17, 2022
The Fed raises key interest rate to fight inflation, Biden urges gas companies to lower prices as oil surge eases, and more
Fed starts series of interest-rate hikes to fight high inflation
The Federal Reserve on Wednesday announced that it would raise its benchmark short-term interest rate by a quarter point, its first hike since 2018. The Fed signaled that it would increase rates six more times this year to fight high inflation. The Fed cut interest rates to zero two years ago to boost the economic recovery after lockdowns early in the coronavirus pandemic triggered a recession. Now the Fed is trying to prevent the economy from overheating as inflation soars. After the Fed's two-day meeting, the central bank's chair, Jerome Powell, said the economy appeared to be able to withstand a series of rate hikes. "All signs are that this is a strong economy, one that will be able to flourish in the face of less accommodative monetary policy," Powell said.
Biden urges gas companies to cut prices as oil spike eases
President Biden said Wednesday via Twitter that energy companies should lower gasoline prices now that the recent oil spike is receding. Crude oil prices fell below $100 per barrel on Tuesday, after rising as high as $130 per barrel as Russia's invasion of Ukraine stoked fears of supply disruptions. "Oil prices are decreasing, gas prices should too," Biden tweeted. "Last time oil was $96 a barrel, gas was $3.62 a gallon. Now it's $4.31. Oil and gas companies shouldn't pad their profits at the expense of hardworking Americans." Gas prices skyrocketed to record highs last week as crude oil reached the highest levels since 2008. Pump prices, which are contributing to high inflation, edged down to $4.31 a gallon for regular gas on Wednesday, down one cent from Tuesday and two cents from Monday.
Stocks struggle after Fed rate hike sparks surge
U.S. stock futures fell early Thursday after a Wednesday rally sparked by the Federal Reserve's decision to raise interest rates for the first time since 2018 to fight high inflation. Futures for the Dow Jones Industrial Average and the S&P 500 were down by 0.3 percent and 0.4 percent, respectively, at 6:45 a.m. ET. Nasdaq futures were down by 0.5 percent. The Dow, the S&P 500, and the Nasdaq closed up 1.6 percent, 2.2 percent, and 3.8 percent, respectively, on Wednesday after the Fed decided at a two-day meeting to hike rates by a quarter point, with another six rate increases expected this year as the central bank moves aggressively to counter the highest inflation in decades. "At least they're telling the market 'we're trying to fix it,'" said Stephanie Link, chief investment strategist and portfolio manager at Hightower Advisors.
FCC boots another Chinese phone carrier over security risks
The Federal Communications Commission on Wednesday expelled another state-owned Chinese phone carrier, Pacific Networks Corp., from the U.S. market over national security concerns. The FCC said the move was necessary because of "significant national security and law enforcement risks" that Pacific Networks could monitor or disrupt U.S. communications, and there was no way to prevent that from happening as long as the company was allowed to provide domestic and international service. It was the latest in a series of moves by the U.S. government to limit China's access to U.S. technology and markets over security concerns as tensions between the world's two biggest economies rise.
Netflix tests ways to make subscribers pay for users outside their households
Netflix announced Wednesday that it would start testing new ways to prevent subscribers from sharing passwords with non-paying viewers outside their households. The streaming video service said it would introduce additional fees for users sharing accounts, starting in three test countries in Central and South America — Chile, Costa Rica, and Peru. Netflix said members would be able to add sub-accounts for up to two people they don't live with to share their standard and premium plans, giving them their own profiles and passwords. In Costa Rica, for example, a standard plan costs $12.99 a month and a premium costs $15.99 a month, and users will be able to add an extra member for $2.99 per month.