eBusiness Weekly
WASHINGTON — The U.S. Federal Reserve on Wednesday kept its benchmark interest rate unchanged at the record-low level of near zero amid mounting fallout from the COVID-19-induced recession, and projected interest rates to remain at the current level through at least 2022.
“The ongoing public health crisis will weigh heavily on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term,” the Federal Open Market Committee, the Fed’s policy-making body, said in a statement after concluding a two-day meeting.
In light of these developments, the committee decided to maintain the target range for the federal funds rate at 0 to 0.25 percent, the statement read.
“The virus and the forceful measures taken to control its spread have induced a sharp decline in economic activity and a surge in job losses,” Federal Reserve Chairman Jerome Powell said in a virtual press conference Wednesday afternoon.
“Indicators of spending and production plummeted in April, and the decline in real GDP in the current quarter is likely to be the most severe on record,” Powell said.
Even after the unexpectedly positive May employment report, nearly 20 million jobs have been lost on net since February, he noted, adding that the rise in joblessness has been especially severe for lower-wage workers, for women, and for African Americans and Hispanics.
Powell said some indicators in recent weeks suggest a stabilization or even a modest rebound in some segments of the economy, such as retail merchandise and motor vehicle sales, and the unemployment edged down as some workers returned to their jobs from temporary layoffs.
The central bank’s policy meeting followed the National Bureau of Economic Research (NBER)’s announcement Monday that the U.S. economy officially entered a recession in February, ending the longest expansion in U.S. history.
In a separate statement, the Fed projected Wednesday that the U.S. economy will shrink by 6.5 percent in 2020, followed by a 5-percent gain next year.
Powell told reporters that the economic projections were made with the general expectation that the economic recovery will begin in the second half of the year and last over the next couple of years.
He also voiced his concern that millions of Americans could be permanently unemployed from this crisis. According to the Fed’s economic projection, the unemployment rate could fall to 9.3 percent by the end of this year.
The Fed also projected interest rates will remain near zero through at least 2022 as policy makers strive to support the recovery of the economy from the COVID-19-induced recession.
“The extent of the downturn and the pace of recovery remain extraordinarily uncertain and will depend in large part on our success in containing the virus,” Powell said. “A full recovery is unlikely to occur until people are confident that it is safe to reengage in a broad range of activities.”
The Fed chair said the U.S. economy will likely need more fiscal and monetary support for a long time, suggesting that Congress could do more to help the unemployed and small business owners.
The Fed cut interest rates to near zero at two unscheduled meetings in March and began purchasing massive quantities of U.S. treasuries and agency mortgage-backed securities to repair financial markets. It also unveiled new lending programs to provide up to 2.3 trillion U.S. dollars to support the economy in response to the outbreak.
Powell said the ongoing purchases of treasuries and agency mortgage-backed securities have helped to restore orderly market conditions, and have fostered more accommodative financial conditions.
“As market functioning has improved since the strains experienced in March, we have gradually reduced the pace of these purchases,” he said, while noting that the central bank will increase holdings of Treasury and agency mortgage-backed securities over coming months at least at the current pace. Enditem
6) foreign
A massive labour migration is starting in SA’s mining industry post-lockdown | Fin24
Felix Njini
- SA’s mining production, which plunged by half in April, is meant to be ramping up as lockdown restrictions ease.
- Mining companies are heavily reliant on highly skilled migrant workers, who must be transported back to the mines quickly.
- But due to social distancing regulations, buses are operating at half capacity.
- For Sibanye Stillwater, the biggest platinum producer, bringing back all of its more than 80 000-strong workforce could take until the third quarter.
South Africa’s gold and platinum miners are racing to bring back thousands of skilled migrant workers who are crucial to ramping up output following the easing of the nation’s coronavirus lockdown.
For almost 150 years, South Africa’s deep-level mines relied on cheap labour from neighbouring Lesotho, Eswatini, Mozambique and Botswana. They still account for about 10 percent of the industry’s 450 000-strong workforce, and their skills are key to rebooting the nation’s mines.
That’s pushing producers to undertake a huge logistics operation to bus thousands of migrant workers back from their homes, where they sought refuge during the pandemic. After journeys of often more than 500 kilometres, those employees will be quarantined for 14 days in hostels and hotels close to the mines.
“You can’t just throw anybody else on the job,” said Stewart Bailey, executive vice president of corporate affairs and investor relations at Johannesburg-based AngloGold Ashanti Ltd., the world’s No. 3 gold miner. “Those are all skilled people, trained and very experienced.”
The stakes are high for South Africa, after the coronavirus piled on economic woes after almost a decade of mismanagement and corruption under former President Jacob Zuma. With the government forecasting the economy to contract as much as 16.1% this year, there’s increasing pressure for a rapid turnaround in mining, one of the nation’s biggest exporters.
The producers have contracted labour consultant TEBA to transport 14 000 foreign workers back to the mines. Buses are carrying half their normal capacity to ensure social distancing, according to Graham Herbert, managing director of BETA.
“I have worked in the industry for 30 years and I have not seen anything like this,” Herbert said. “This is a historical first for me. This is probably the biggest movement of labour, certainly in gold and platinum mining, that’s been known.”
Herbert is under pressure to expedite the relocations as skilled labour shortages curb mine output, even after companies were allowed to return operations to full capacity at the beginning of June. The biggest mining companies currently have about 23,000 foreign workers outside South Africa.
Getting all workers back, including those in South African provinces such as the Eastern Cape and KwaZulu-Natal, could take months as travel restrictions and quarantines slow the process, according to Johan Theron, a spokesman for Impala Platinum Holdings. Foreign migrant workers are key, he said.
“The most skilled and experienced workers are predominantly from those areas and that’s true for the entire industry,” Theron said. “We can’t just return them without putting in place extraordinary measures.”
With the virus outbreak in South Africa yet to peak, those measures include refurbishing old mining hostels to turn them into quarantine facilities. With some workers coming from virus hotspots, companies are also booking them into hotels to meet isolation requirements.
For Sibanye Stillwater, the biggest platinum producer, bringing back all of its more than 80 000-strong workforce could take until the third quarter, according to spokesman James Wellsted. So far, about half of its employees have returned.
“We may not even get to a point where we get everybody back,” Wellsted said.
The disruptions could curb mining output by about 10 percent this year, according to industry lobby group, the Minerals Council of South Africa. While a rally in bullion prices is providing a cushion, the impact of the virus on deep-level gold mines will be particularly “severe,” said Andries Rossouw, an analyst at PwC South Africa. The mining sector contributed 8 percent of gross domestic product last year.
“Bringing back people over an extended period of time and with limited virus testing capacity, it would be crazy to imagine there won’t be a significant impact on production,” said Theron of Implats. – Xinhua
