The Federal Reserve dominated economic news this week, as the central bank prepared America for higher borrowing costs. Citing economic strength despite just 0.5% GDP growth in the first quarter of 2016, the Federal Reserve reiterated its view that June would be an appropriate month to increase its Federal funds rate target. This rate influences the interest rates on many forms of debt, from U.S. Treasuries to mortgages.
Five years ago, the World Bank decided to freeze lending to Cambodia in protest of the government’s practice of forced evictions for public projects. The World Bank may vote this week to remove this ban, effectively allowing it to resume lending money to the nation to continue a project for landless families that has experienced major funding shortages.
Many Salvadorians are fleeing the country in droves as gang violence spins out of control, according to Reuters. El Salvador has over 70,000 gangs that regularly engage in turf wars, armed conflicts with police, and extortion schemes. El Salvador is officially the murder capital of the world due to gang prominence.
The Federal Reserve made it clear that interest rates are likely to rise in June. After raising rates in December, the market has seen much confusion about the timing of the next interest rate hike.
While GDP growth was soft in the first quarter of this year, recent Fed estimates show strong growth of over 2% for the second quarter, while strong retail sales growth and higher inflation indicate renewed strength in aggregate demand throughout the U.S. economy.
The International Monetary Fund (IMF) warned Iran that its oil industry couldn’t remain the key pillar of its economy if it wishes to return to prosperity. It also warned the nation that it has far greater challenges ahead, despite the lifting of international financial sanctions.
First Deputy Managing Director of the IMF David Lipton said on Tuesday “I speak here today at a pivotal moment for Iran’s economy…With important sanctions lifted; your country has a new opportunity to deepen its integration into the global economy.
Cameroonian authorities have arrested 14 officials tied to corruption, but political opponents argue that the probe is used to silence dissent, according to Voice of America. Officials charged them with embezzling $9 million, but some question the allegations. President Paul Biya changed the constitution allowing him to run for future terms and now may run as president for life.
More houses are being built in America, and Americans are buying more products online, which is helping inflation rise. New housing starts jumped 6.6% from the prior month to 1.17 million in April, according to a new report by the Census Bureau. Single-family building permits saw a 1.5% rise from March, and are continuing to drive the increase in housing in America.
The climate is changing at an ever increasing pace, creating extreme weather and other hazards. These threats pose serious threats to cities around the world. However, the World Bank notes that these same cities are failing to plan for these possible scenarios.
According to a study by the Global Facility for Disaster Reduction and Recovery (GFDRR), by the year 2050 1.3 billion people and $158 trillion in property will exist in areas that could be threatened by rising rivers, sea levels, and extreme weather.
According to a report from Moody’s Investor Service, the Summer Olympics will yield some short-term economic benefits to Brazil, but little overall value in the long-term, as CNN Money reports.
The South American nation suffers through an ailing economy, while contending with a Zika threat that could spread as visitors from around the world congregate. Brazil spent over $7 billion in infrastructure projects in preparation of the Olympics.
Mixed economic data persists, but that isn’t stopping the Federal Reserve from raising interest rates. In an attempt to make borrowing more expensive for consumers, the Federal Reserve may increase its Federal rate target in June.
While markets have been pricing a very low probability of a June rate hike, the Federal Reserve has gone on the offensive, with officials giving several interviews with the press hinting that June will see a rate hike.
