New York Federal Reserve Bank President John Williams said on Friday that US economic growth still shows resilience, and that the labor market is remarkably stable despite successive shocks, but inflation is still very high and must be returned to the 2 percent level.
Inflation has risen around the world, mostly due to higher energy prices as a result of the US war on Iran, as well as increased investments in artificial intelligence, which has led to higher costs for some products and services related to information technology, according to Reuters.
“Inflation is certainly very high, and it has been that way for a very long time,” Williams said during a European Central Bank conference in Frankfurt. “It is absolutely necessary to return inflation to our 2 percent target in a timely and sustainable manner.” But Williams also stressed that the Fed's primary focus should be on where inflation is heading, and on ensuring that current shocks do not turn into broader or more sustained inflationary pressures.
He said: “Fortunately, we are not yet seeing this happen in terms of inflation expectations, which remain anchored at stable levels. We are also seeing wage growth, which I believe is in line with our target of 2 percent.”
Williams did not address the next step the Federal Reserve might take on monetary policy, but he said the bank's latest statement correctly concluded that it was appropriate to collect more information to determine the appropriate monetary policy stance.
Financial market expectations show that the chances of the Federal Reserve raising interest rates in December exceed 50 percent, while raising them by March has become fully priced in the markets.
The recovery in automobile production gave a larger-than-expected boost to German industrial production during September, according to official data released Friday, in the latest indication that Europe's largest economy is gaining more strength.
Automotive sector production jumped by about 17 percent compared to the previous month, following a period of slowdown that was largely linked to summer vacations and maintenance work in factories during the summer, according to Agence France-Presse.
However, this development represents rare positive news for a sector that has been under intense pressure from intense Chinese competition, declining demand, and rising costs.
This contributed to raising overall industrial production by 0.7 percent during the month, according to data from the German Federal Statistical Office (Destatis), exceeding analysts’ expectations that indicated a much smaller increase.
The Ministry of Economy said that the data “helped compensate for the declines witnessed in industrial production in the middle of the year,” which resulted from several factors, including high energy costs related to the war in the Middle East, and lower water levels in rivers.
The German economy is struggling to emerge from a long period of decline, driven by weak demand for its exports, Chinese competition, and a host of deep-rooted structural problems. But the economy, which has manufacturing as one of its most prominent pillars, is expected to record its fastest growth pace in several years in 2026, largely due to a significant expansion in public spending on defense and infrastructure.
Industrial production data in September also benefited from the performance of the pharmaceutical sector, which recorded growth of 8 percent.
On the other hand, the construction sector and industries producing machinery and equipment witnessed a decline, according to the Destatis office.
Despite the positive data for September, Dirk Schumacher, chief economist at the German development bank KfW, warned of continuing challenges facing the economy.
He said: “There is still a long list of risk factors that may put an end to the recovery of the industrial sector before it actually begins.”
He added: “The state of anxiety in financial markets about the future expansion of artificial intelligence infrastructure is just one example of this.”
Potential investors in Anthropic's upcoming initial public offering have expressed doubts about the artificial intelligence startup's ability to go ahead with its roadshow scheduled for next week, allowing its shares to be listed on the stock exchange in November. According to Reuters, citing informed sources.
Sources familiar with the discussions said that investors are pressing for a more attractive valuation, as some believe that the recently discussed valuation of $1.5 trillion represents the upper limit of expectations.
These discussions reflect, in one way or another, the impact of the sharp selling wave witnessed in technology company stocks over the past year, as well as the state of geopolitical uncertainty that casts a shadow on expectations related to new offerings.
Reuters had previously reported that the promotional tour was initially expected to begin in the week beginning November 9, with the price to be determined the following week.
The sources indicated that Anthropic may have to offer a larger discount to ensure investors make pledges, especially since investors realize the company's need to raise capital in light of the quarterly losses and the large commitments it has made to partners.
Any decision to postpone the rollout is likely to fuel further concerns about the strength of the artificial intelligence sector, at a time when political opposition to data centers and other aspects of artificial intelligence has crystallized, especially after the success of initiatives put to a referendum in several US states aimed at restricting the establishment of data centers.
Amid this, a number of investors remain optimistic about the expansion of the artificial intelligence sector, although the sell-off in assets related to it has negatively affected sentiment over the past month.
