Federal Reserve officials continued to call a recent rise in inflation “transitory” even as it made many of them wary, minutes from their June meeting showed, and they debated details as they began to draw up a plan for moving monetary policy away from its emergency setting.
The details of the conversations — which underlined growing divisions within the central bank at a moment of intense uncertainty for the economy — were outlined in minutes of the June 15-16 meeting, which were released on Wednesday. The June discussion took place before the recent rise of the Delta variant reinforced that coronavirus outbreaks remain a front-and-center risk to the global economy, and also before a recent jump in oil prices.
Investors scoured the details, focused on the prospects for the Fed’s enormous bond-buying campaign, the fate of which is highly dependent on the outlook for growth and inflation. The Fed has also been in the spotlight as politicians and some economists have fretted about the risk of breakaway price increases. Yields on government debt have fallen recently, possibly reflecting concern about growth going forward.
What they found was a central bank that was optimistic about growth but increasingly worried that price pressures might last and divided over what comes next for policy. The 18 officials at the meeting, called “participants” in the release on Wednesday, said “economic activity was expanding at a historically rapid pace, led by robust gains in consumer spending,” but noted that inflation had risen faster than they had expected as supply bottlenecks, labor shortages and surging consumer demand converged.
“Members have been surprised by the speed and extent of the surge in inflation as the economy has reopened,” Ian Shepherdson, the chief economist at Pantheon Macroeconomics, wrote in a research note reacting to the release. But even as the inflation worriers have become louder, he wrote, “the voices pressing for patience will remain the most powerful.”
The Fed aims for 2 percent inflation on average, but price gains have come in on the high side this year as the economy reopens from the pandemic. The Fed’s preferred inflation gauge popped 3.9 percent in May from the year earlier, partly the result of data quirks but also reflecting rising prices for airfares, restaurant meals, used cars and hotel rooms. Increasing rents, which may prove more lasting, are also bolstering price indexes.
While central bankers still expect the recent bout of inflation to fade with time, “several” officials thought supply chain limitations and input shortages would keep prices rising quickly into next year. That caused many to strike a more concerned tone about the outlook.
“A substantial majority of participants judged that the risks to their inflation projections were tilted to the upside because of concerns that supply disruptions and labor shortages might linger for longer and might have larger or more persistent effects on prices and wages than they currently assumed,” the minutes said.
At the same time, “several” cautioned that inflation might still drop to uncomfortably low levels as temporary issues that are driving prices up today reverse. Before the pandemic hit, long-run trends like globalization, population aging and low demand had combined to lock in tepid inflation, and those forces may reassert themselves.
In the weeks since the Fed’s meeting, it has become clear that many of the central bank’s regional presidents are antsy about overheating. Top leaders including Jerome H. Powell, the chair, and John C. Williams, head of the powerful New York Fed, have maintained a more serene tone.
The reading on when and how bond purchases might slow — which the Fed has signaled will be the first step in removing its stimulus as the economy heals — was also anything but unanimous. The Fed is buying $120 billion in government-backed bonds each month, split between Treasury debt and mortgage-backed securities. The purchases stoke economic demand by keeping many kinds of borrowing cheap.
Fed policymakers have been clear that they want to see “substantial further progress” toward their goals of maximum employment and stable inflation that averages 2 percent over time before tapering off that buying. They are now beginning to discuss a plan for the “taper,” a conversation that the minutes said would happen over “coming meetings.”
Officials “generally judged that, as a matter of prudent planning, it was important to be well positioned to reduce the pace of asset purchases, if appropriate, in response to unexpected economic developments,” the minutes said.
But how that should happen was a topic of debate. “Several” participants were prepared to slow buying of mortgage-backed bonds sooner or faster than Treasury bond-buying, given how hot the housing market has become. Others saw no need to differentiate.
Central bank officials are also holding their policy interest rate at near-zero, where it has been since March 2020, to try to coax the economy and labor market back to full strength. The Fed has set a high standard for raising interest rates from rock bottom: They want a return to full employment and they want to have solidly achieved their inflation goal.
A set of economic projections released after the June meeting showed that officials increasingly expect to achieve those standards in the coming years. More than half projected two interest rate increases in 2023, and the share expecting rate increases as soon as next year increased.
A “few” officials “mentioned that they expected the economic conditions set out in the committee’s forward guidance for the federal funds rate to be met somewhat earlier than they had projected in March,” the minutes said.
But “several” said that “uncertainty around the economic outlook was elevated and that it was too early to draw firm conclusions about the paths of the labor market and inflation.”
The Federal Reserve Bank of Minneapolis will require employees to be vaccinated against the coronavirus when they enter its office next month.
By the end of August, they must attest that they are fully vaccinated if they wish to remain employed, Neel Kashkari, the president of the Minneapolis Fed, wrote in a memo posted to its website on Wednesday. Only employees who cannot get vaccinated because of medical conditions or religious beliefs will receive accommodations.
“While some staff may be unhappy with this new requirement, we believe most will appreciate the actions we are taking on our collective behalf,” Mr. Kashkari wrote.
The requirement will affect the bank’s 1,100 workers, of which about 82 percent are already fully vaccinated, he wrote. The remaining 18 percent have not disclosed their vaccination plans or don’t plan to get vaccinated.
Mr. Kashkari said that the decision had been made out of a preference for face-to-face interactions in the office and that “there is no way for us to bring a critical mass of our staff back into our facilities and maintain social distancing.”
The federal Equal Employment Opportunity Commission has said that companies can require those returning to offices to be vaccinated. Employers may also ask employees about their vaccination status, according to the Commission’s ruling.
Other employers have announced vaccination requirements for their return-to-office plans. Morgan Stanley said last month that it would require vaccination for employees, contingent workers, clients and visitors at the bank’s buildings in New York City and Westchester County, N.Y.
Rising inflation, particularly in the United States, is among the risks facing the global economy amid a “worsening two-track recovery,” the International Monetary Fund warned on Wednesday.
“There is a risk of a more sustained rise in inflation or inflation expectations, which could potentially require an earlier-than-expected tightening of U.S. monetary policy,” Kristalina Georgieva, the I.M.F. managing director, wrote in a blog post.
The I.M.F., which is based in Washington, forecasts the United States economy to grow 7 percent this year, the fastest pace since 1984, and said that although this speedy recovery could benefit many other countries by increasing trade, there was the risk that it could raise the inflation rate, leading to other problems.
Higher interest rates could lead to a “sharp tightening” of financial conditions around the world and “significant capital outflows” from emerging economies, Ms. Georgieva wrote. This could cause “major challenges” to countries with high debt levels.
For now, however, inflation expectations are stable, she wrote.
Federal Reserve policymakers have been grappling with data showing faster-than-expected increases in prices and several months of wage growth. But their mandate is promote price stability, and most officials expect this period of high inflation to be just temporary.
Even while warning about the risk of inflation, Ms. Georgieva said monetary stimulus was also needed to aid the economic recovery. “In countries where the recovery is accelerating, including the U.S., it will be essential to avoid overreacting to transitory increases in inflation,” she wrote.
Central banks will have to carefully communicate their future monetary policy plans to avoid bouts of market volatility, she added.
Ahead of the meeting of finance ministers and central banks from the Group of 20 countries in Italy at the end of this week, Ms. Georgieva wrote that global leaders needed to work together to ensure wider and faster access to vaccines, to save hundreds of thousands of lives and to curb the emergence of new variants that threaten the global exit from the pandemic. The uneven recovery is being caused by the gulf in access to vaccines, divergent infection rates and differences in the abilities of governments to provide fiscal support.
Last month, the I.M.F. announced a $650 billion plan to help less wealthy countries buy vaccines, finance health care costs and pay down debt.
U.S. stocks rose on Wednesday, with the S&P 500 returning to record territory.
The index was little changed after minutes from the Federal Reserve’s June meeting showed that officials agreed to work toward a plan for moving monetary policy away from its emergency setting. Federal Reserve officials continued to call a recent surge in inflation “transitory” even as it made many of them wary, according to the minutes released Wednesday.
The Department of Labor reported on Wednesday that job openings were little changed at 9.2 million in May. U.S. employers had 9.3 million jobs available in April.
The S&P 500 ticked up 0.3 percent.
U.S. 10-year bond yields fell for a seventh consecutive day to 1.32 percent, the lowest level since mid-February.
Markets in Europe were higher. The Stoxx Europe 600 jumped 0.8 percent. The FTSE 100 in Britain rose 0.7 percent, and the DAX in Germany climbed 1.2 percent.
Shares of Didi, the Chinese ride-hailing platform, fell 4.6 percent on Wednesday, extending a 20 percent drop from Tuesday, after China’s government ordered that the service be removed from app stores less than a week after it went public in New York.
Oil prices dropped on Wednesday. West Texas Intermediate, the U.S. crude benchmark, fell 2.1 percent to $71.83 a barrel. On Tuesday, oil prices touched their highest level since 2014, a day after OPEC, Russia and their allies failed yet again reach agreement on production increases.
Eshe Nelson contributed reporting.
The European Commission said Wednesday that successful vaccination drives and government stimulus will allow the eurozone economy to make up the ground lost because of the pandemic by the end of the year, instead of early next year as previously forecast.
The commission, the European Union’s administrative arm, said in its official summer forecast that the 19 countries in the eurozone will grow 4.8 percent in 2021, half a percentage point more than previously forecast.
The European Union, which includes the eurozone plus eight additional countries, will also grow 4.8 percent this year, compared with an earlier forecast of 4.2 percent, the commission said.
“The European economy is making a strong comeback with all the right pieces falling into place,” Valdis Dombrovskis, executive vice president of the commission, said in a statement.
Consumer spending will pick up as people get back to work, while businesses will invest in expansion, the commission said, though it warned that the spread of new variants remains a risk.
Annual inflation in 2021 will average 1.9 percent in the eurozone, the commission forecast, because of strong demand and shortages of some goods. For most of 2019 and 2020, inflation in the eurozone was below 1 percent.
If the forecast is accurate, inflation will approach the European Central Bank’s official target. But the central bank is unlikely to begin withdrawing stimulus to the eurozone economy until there is more evidence that the bloc has fully recovered from the effects of the pandemic.
“We will have to keep a close eye on rising inflation, which is due not least to stronger domestic and foreign demand,” Mr. Dombrovskis said.
When USA Today was introduced nearly 40 years ago, its short articles, copious charts and detailed weather coverage were disdained by the staid newspaper industry, which nonetheless quickly found itself copying many of the upstart’s novel features.
But on Wednesday, USA Today announced that it was playing catch-up with its contemporaries, becoming the final major national daily to require readers to pay to read news online.
In a note to readers published Wednesday online and in the print edition, two executives at Gannett, the newspaper chain that owns USA Today, laid out their pitch.
“This is a big change; our digital news has always been free,” wrote Maribel Perez Wadsworth, USA Today’s publisher and the director of news across Gannett, and Nicole Carroll, the editor in chief of USA Today. “But USA Today was founded on boldness. Your subscription is an investment in quality journalism that’s worth paying for, journalism that strengthens our communities and our nation.”
USA Today’s shift to a digital subscription model, after the rest of Gannett’s roughly 250 daily newspapers had already made that change, signals the definitive end of an era when newspapers relied primarily on advertisements in their print editions for revenue. As readers have flocked to smartphones, laptops and tablets, causing print readership and the overall value of advertising to decline, newspapers’ most important revenue stream increasingly consists of charging digital readers.
The announcement could prove just the beginning of USA Today’s transition into a subscription company, Mayur Gupta, Gannett’s chief marketing and strategy officer, said in an interview, pointing to USA Today-branded destinations for sports betting and games. It might also make sense in the future for Gannett to offer subscriptions that bundle USA Today and a local newspaper, he said.
“It’s inevitable that at some point we will create a much stronger value proposition from stitching it all together,” said Mr. Gupta, a former executive at the streaming giant Spotify.
USA Today’s digital destinations (not all Gannett outlets, as previously reported here) routinely receive around 90 million unique visitors per month, the company said. That puts it on a par with rivals with paywalls such as The New York Times, The Washington Post and The Wall Street Journal, according to Comscore, a media measurement company. USA Today has among the highest weekday print circulations in the country. It does not publish print editions on weekends.
The paywall will extend to USA Today’s entire audience. But it will not cover all articles. Breaking news, particularly of a public-service nature, will remain free, Ms. Perez Wadsworth and Ms. Carroll said. The money from the paywall will help fund an already beefed-up investigations unit and visual journalism, they said.
In an interview, Ms. Perez Wadsworth promoted the strengths of the so-called USA Today Network, which includes the local papers published by Gannett in 46 states, such as The Arizona Republic and The Detroit Free Press.
“The fact that we have the deep roots, expertise and trust in the local markets is an enormous strength, for those brands and for USA Today, because our national report is informed by that expert local knowledge,” she said.
Three subscriptions will be for sale, all with lower monthly prices for the first three months that then graduate to higher ones: a digital-only tier, with an entry price of $4.99 per month rising to $9.99 per month; a digital-only tier without ads, which will start at $7.99 and rise to $12.99; and a home-delivery subscription that will include complete digital access, with a teaser rate of $9.99 rising to $29.25.
The announcement on Wednesday followed a pilot over the past few months in which 25 percent to 50 percent of USA Today’s digital visitors were confronted with a paywall. Gannett executives learned that subscribers were spending at least 20 percent more time than anonymous users, Mr. Gupta said.
Ms. Perez Wadsworth said she was encouraged by the results of the pilot. “When we focus on what’s unique and exclusive to us,” she said, “our readers do make choices to subscribe.”
Alain Delaquérière contributed research.
Former President Donald J. Trump on Wednesday sued three tech giants — Facebook, Twitter and Google — and the firms’ chief executives after the platforms took various steps to ban him or block him from posting.
Mr. Trump, speaking from his Bedminster, N.J., golf club, announced that he would serve as the lead plaintiff in the class-action lawsuit, arguing that he has been censored wrongfully by the tech companies. Speaking about “freedom of speech” and the First Amendment — which applies to the government, not to private-sector companies — Mr. Trump called his lawsuit, which was filed on Wednesday in the United States District Court for the Southern District of Florida, a “very beautiful development.”
His political operation immediately began fund-raising off it.
At the event and in court documents, Mr. Trump’s legal team argued that the tech firms amounted to state actors and thus the First Amendment applied to them.
Legal experts said similar arguments had repeatedly failed in the courts before.
“Mark Zuckerberg doesn’t work for the government, Jack Dorsey doesn’t work for the government,” Eric Goldman, a law professor at Santa Clara University School of Law and a co-director of the High Tech Law Institute, said of the Facebook and Twitter chief executives. “The idea that somehow, magically, we can treat them as an extension of the government is illogical.”
Social media companies are allowed, under current law, to moderate their platforms. They are protected by a provision, known as Section 230, that exempts internet firms from liability for what is posted on their networks.
The lawsuit asks the court to declare Section 230, which Mr. Trump has railed against, “unconstitutional” and to restore the former president’s access to the sites, as well as that of other members of the lawsuit who have been blocked. The suit also asks to prevent the tech firms from “censorship” of Mr. Trump in the future.
“Our case will prove this censorship is unlawful, unconstitutional and completely un-American,” Mr. Trump said. “If they can do it to me, they can do it to anyone.”
Twitter declined to comment. Facebook and Google did not immediately respond to requests for comment.
To some extent, the lawsuit appeared to be as much a publicity play — Mr. Trump used the opportunity to once again attack some of his favorite political targets that were unrelated to the lawsuit — as an actual legal gambit. Mr. Trump also said on Wednesday that he would pursue his anti-tech company agenda in Congress, state legislatures and “ultimately, the ballot box.”
Before Mr. Trump was done speaking, both the National Republican Congressional Committee and the National Republican Senatorial Committee had sent text messages about the lawsuit and asked for contributions. Mr. Trump’s political action committee sent its own solicitation shortly after the event ended. “Donate NOW,” it said.
The former president made the announcement in concert with the America First Policy Institute, a nonprofit run by veterans of his administration, including Brooke Rollins, the former director of the Domestic Policy Council, and Linda McMahon, who served as administrator of the Small Business Administration.
“There’s not much precedent for an American president taking major-media corporations to court — nor is there much precedent for an American president engaging the judiciary to shape the landscape of American freedoms after his presidency,” Ms. Rollins said in a statement.
Blake Reid, a clinical professor at the University of Colorado Law School, who studies the intersection of law and technology, put it another way: “The lawsuit is a legally frivolous publicity stunt that has essentially no chance of succeeding in court but a high chance of drawing a lot of attention.”
An earlier version of this article misstated what allows social media firms to remove postings that violate their standards. It is the First Amendment, not Section 230.
An earlier version of this article misstated what allows social media firms to remove posts that violate their standards. It is the First Amendment, not Section 230.
Nearly a year after Glossier shut down its physical stores because of the pandemic, the digitally native purveyor of beauty products is restoring its brick-and-mortar footprint. To help in that effort, it has raised $80 million in new capital, the company is expected to announce on Wednesday, at what a person with knowledge of the matter said was a $1.8 billion valuation.
It is the latest sign of investors flocking to direct-to-consumer brands, whose customer bases stayed loyal — with their wallets open — during pandemic lockdowns. Shares of the hospital scrubs maker Figs have traded consistently above their debut price since going public last month, while the trendy eyewear company Warby Parker has filed for an eagerly anticipated initial public offering.
Though Glossier began life as an online shop, it gained attention — and drew block-length lines — at its physical shops, where customers could try out makeup and skin care products in locations bathed in “millennial” pink. But last March, the pandemic forced the company to shut the stores and refocus on its core online business. Sales grew by double-digit percentages.
“Candidly, our customer is used to meeting us online,” Emily Weiss, Glossier’s founder and chief executive, said in an interview. Roughly 80 percent of the company’s current sales are from e-commerce.
But Glossier still sees value in physical stores. Ms. Weiss announced last month that the company planned to reopen stores, starting in Seattle and Los Angeles, as well as in London — its first permanent international location. “People want to experience Glossier online and offline,” she said.
The stores will also have human resources professionals and a revamped training curriculum with a focus on diversity and inclusion, part of a continuing response to former employees accusing the company of racism and mistreatment.
The new funding will help that expansion. It will be led by the investment firm Lone Pine Capital, along with existing investors like Forerunner Ventures, Index Ventures and Thrive Capital, as well as a financing line from JPMorgan Chase.
Ms. Weiss says bigger financial maneuvers, like going public, may come down the line, particularly as investors continue to show interest in brands with strong e-commerce operations. “An I.P.O. is a likely path at some point,” she said, adding, “but we do not have immediate plans.”
The Defense Department said on Tuesday that it would not go forward with a lucrative cloud-computing contract that had become the subject of a contentious legal battle amid claims of interference by the Trump administration. The Pentagon had warned Congress in January that it would walk away from the contract if a federal court agreed to consider whether former President Donald J. Trump interfered in a process that awarded the $10 billion contract to Microsoft over its tech rival Amazon, saying that the question would result in lengthy litigation and untenable delays. The Defense Department said Tuesday in a news release that the contract for the Joint Enterprise Defense Infrastructure, known as JEDI, “no longer meets its needs.”
NBCUniversal said on Tuesday that, starting next year, its movies would bypass HBO and have their initial post-theatrical runs instead on Peacock, the media giant’s nascent streaming service. The exclusive 18-month post-theatrical “window” for films made by Universal and its specialty arm, Focus Features — some 30 movies annually — had been held by HBO since 2005. That post-theatrical window will now be broken into three parts. Universal movies will begin to flow to Peacock no later than four months after they appear in theaters, and they will remain on Peacock for four months. The movies will then move to third-party streaming services for 10 months under licensing deals still to be announced. The movies will return to Peacock for the final four months.
The chief roadblock to a deal by OPEC Plus over oil production is a fight between the United Arab Emirates and Saudi Arabia over whether to raise output limits.
The dispute may signal a fundamental realignment of the nations in the gulf, Stanley Reed reports for The New York Times. The Emirates’ ambitions for a more diverse economy, seeded with Western investment, are prompting it to step more forcefully outside Saudi Arabia’s shadow.
Led by Dubai with its collection of futuristic skyscrapers and alluring shopping malls, the Emirates has made itself into a business, financial and tourism hub, although the pandemic has clearly been a setback.
The real power in the Emirates, though, lies with Abu Dhabi, which produces the oil that bankrolls the place. Abu Dhabi has 98 billion barrels of reserves, about 6 percent of the world total.
It has financial muscle that has given the Emirates a chance to stand apart from other countries in the region and take some views that might seem unusual. In the view of Abu Dhabi’s leadership, the environmental pressures that are pushing multinational oil companies to dial back investment in new wells may work out in favor of the oil-rich emirate, which does not have to deal with such concerns at home.
In particular, Emirates is eager to pump — and sell — more oil at today’s higher prices. And it has big ambitions that have raised eyebrows in Saudi Arabia, the longtime de facto leader of the Organization of the Petroleum Exporting Countries.
The first signs of trouble appeared last summer when the Emirates substantially exceeded the amount it was allowed to pump, but matters came out in the open on Thursday when it demanded a substantial recalculation of his country’s quota if he was to go along with a Saudi plan to extend the overall production agreement when it expires after April.
Between 800 and 1,500 businesses around the world were compromised or affected by a cyberattack on Friday that security experts said could be the largest attack in history using ransomware, in which hackers shut down systems until a ransom is paid.
“This is the worst ransomware incident to date, but if we don’t take action, the worst is yet to come,” said Kyle Hanslovan, the chief executive of the cybersecurity firm Huntress Labs.
Hackers compromised Kaseya, a Miami-based software maker that provides technology services to tens of thousands of organizations around the world. Many of its customers are so-called managed service providers, which in turn provide security and tech support to other companies and collectively reach millions of businesses.
“It totally sucks,” Fred Voccola, Kaseya’s chief executive, said in a video posted on YouTube early Tuesday, addressing the company’s customers. “If I was you, I’d be very, very frustrated, and you should be.”
He said Kaseya was working with the F.B.I., the Department of Homeland Security and the White House to address the issue.
About 50 of Kaseya’s direct customers were compromised when it was breached, Mr. Voccola said, including dozens of managed service providers.
A Russian-based cybercriminal organization known as REvil claimed responsibility on Sunday for the attack, boasting about it on its site — called “Happy Blog” — on the dark web. Some victims were being asked for $5 million in ransom, Huntress Labs said.
Brett Callow, a threat analyst for the cybersecurity firm Emsisoft, said REvil was also asking for $45,000 in cryptocurrency for each computer system a victim wanted restored.
REvil also said it would publish a tool that would allow all infected companies to recover their data if it were paid $70 million in Bitcoin.
“If you are interested in such a deal, contact us,” the group wrote, adding that it had provided a way for victims to contact the organization.
Jack Cable, a security researcher for Krebs Stamos Group, said that he had reached out to REvil over the weekend and that the group said it was willing to negotiate. It offered to slash the price for the tool to $50 million in Bitcoin, he said.
Jen Psaki, the White House press secretary, said during a news conference on Tuesday that “we advise against companies paying ransomware, given that it incentivizes bad actors to repeat this behavior.”
Ms. Psaki said American national security officials had been in touch with Russian government officials over the attack. When President Biden met with President Vladimir V. Putin of Russia in Geneva last month, he demanded that Russia rein in ransomware attacks, which have become increasingly common in recent months. The F.B.I. said REvil was behind the hacking of the world’s largest meat processor, JBS, in May.
“If the Russian government cannot or will not take action against criminal actors residing in Russia, we will take action, or reserve the right to take action, on our own,” Ms. Psaki said.
The Kaseya cyberattack has had cascading effects around the globe, touching companies in more than a dozen countries, including the United States, Germany, Australia and Brazil. In Sweden, the grocery retailer Coop was forced to close more than 800 stores Saturday, and each location had to be visited to fix the problems caused by the hack. A Swedish railway and a pharmacy chain were also affected, security researchers said.
Mr. Voccola said such an attack was bound to happen.
“Even the best defenses in the world get scored upon,” he said.
A common refrain he has heard from government officials and security experts, he said, was that when it comes to cyberattacks, “it’s not a matter of if, it’s a matter of when.”
Today in the On Tech newsletter, Shira Ovide writes that the way that government agencies buy technology is helpful context to understand the Pentagon’s abrupt cancellation on Tuesday of a technology project that was billed as essential to modernize the U.S. military.
“When government tech goes wrong,” she writes, “one culprit is often a budgetary bureaucracy that is at odds with the pace of technological progress.”