WASHINGTON: The Federal Reserve raised the key US interest rate again Wednesday and said more hikes are coming as it battles soaring prices -- an aggressive stance that has raised fears of a recession.
And Federal Reserve Chair Jerome Powell warned that the process of conquering inflation will involve some pain.
It was the third consecutive increase of 0.75 percentage point by the Fed's policy-setting Federal Open Market Committee (FOMC), continuing the forceful action to tamp down inflation that has surged to the highest in 40 years.
The increase -- the fifth one this year -- takes the policy rate to 3.0-3.25 percent, and the FOMC said it "anticipates that ongoing increases... will be appropriate."
Soaring prices are putting the squeeze on American families and businesses, and have become a political liability for President Joe Biden as he faces midterm congressional elections in early November.
But a contraction of the world's largest economy would be a more damaging blow to Biden, and the world at large.
Powell has made it clear that officials will continue to act aggressively to cool the economy and avoid a repeat of the 1970s and early 1980s, the last time US inflation got out of control.
It took tough action -- and a recession -- to finally bring prices down in the 1980s, and the Fed is unwilling to give up its hard-won, inflation-fighting credibility.
Powell said the US central bank is committed to raising interest rates and keeping them high until inflation comes down, and he warned against reversing course too soon.
"The historical record cautions strongly against prematurely loosening policy," Powell told reporters.
He said there is no room for complacency and the Fed will "keep at it until the job is done," although at some point it will be appropriate to slow the pace of rate increases, depending on the data.
He acknowledged that bringing inflation down will require a period of slower growth and higher unemployment, noting that the job market is out of sync, with far more openings than workers.
"We have got to get inflation behind us. I wish there were a painless way to do that. There isn't."
But he said continued high inflation would be even more painful, especially on those least able to withstand it.
The Fed's quarterly forecasts released with the rate decision Wednesday show FOMC members expect US GDP growth to virtually flatline this year, rising just 0.2 percent. But they see a return to expansion in 2023, with annual growth of 1.2 percent.
They project further rate hikes this year -- totaling 1.25 percentage points -- and more in 2023, with no cuts until 2024.
While the FOMC noted continued "robust" job gains in recent months and low unemployment, the forecasts project the jobless rate will rise to 4.4 percent next year and hold around that level through 2025.
Inflation is a global phenomenon amid the Russian war in Ukraine on top of global supply chain snarls and Covid lockdowns in China, and other major central banks are taking action as well.
Despite a welcome drop in gasoline prices at the pump in recent weeks, the disappointing consumer price report for August showed widespread increases.
The FOMC statement said noted the "broader price pressures" beyond food and energy, and stressed that officials are "strongly committed to returning inflation to its 2 percent objective."
The aim is to raise the cost of borrowing and cool demand, and it is having an impact: The housing market has slowed as mortgage rates have surged.
Many economists say at least a short period of negative US GDP in the first half of 2023 will be needed before inflation starts coming down.
Nancy Vanden Houten of Oxford Economics said the updated Fed forecasts acknowledge "the toll that higher rates will take on the economy," but she said "their projections are more optimistic than our own."
Stocks on Wall Street turned negative following the announcement, while the US dollar soared to a 20-year high.
Fed hikes rates again, says inflation fight can't be 'painless'
https://arab.news/8nk9y
Fed hikes rates again, says inflation fight can't be 'painless'
How AI and financial literacy are redefining the Saudi workforce
- Preparing people capable of navigating money and machines with confidence
ALKHOBAR: Saudi Arabia’s workforce is entering a transformative phase where digital fluency meets financial empowerment.
As Vision 2030 drives economic diversification, experts emphasize that the Kingdom’s most valuable asset is not just technology—but people capable of navigating both money and machines with confidence.
For Shereen Tawfiq, co-founder and CEO of Balinca, financial literacy is far from a soft skill. It is a cornerstone of national growth. Her company trains individuals and organizations through gamified simulations that teach financial logic, risk assessment, and strategic decision-making—skills she calls “the true language of empowerment.”
“Our projection builds on the untapped potential of Saudi women as entrepreneurs and investors,” she said. “If even 10–15 percent of women-led SMEs evolve into growth ventures over the next five years, this could inject $50–$70 billion into GDP through new job creation, capital flows, and innovation.”
Tawfiq, one of the first Saudi women to work in banking and later an adviser to the Ministry of Economy and Planning on private sector development, helped design early frameworks for the Kingdom’s venture-capital ecosystem—a transformation she describes as “a national case study in ambition.”
“Back in 2015, I proposed a 15-year roadmap to build the PE and VC market,” she recalled. “The minister told me, ‘you’re not ambitious enough, make it happen in five.’” Within years, Saudi Arabia had a thriving investment ecosystem supporting startups and non-oil growth.
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At Balinca, Tawfiq replaces theory with immersion. Participants make business decisions in interactive simulations and immediately see their financial impact.
“Balinca teaches finance by hacking the brain, not just feeding information,” she said. “Our simulations create what we call a ‘business gut feeling’—an intuitive grasp of finance that traditional training or even AI platforms can’t replicate.”
While AI can personalize lessons, she believes behavioral learning still requires human experience.
“AI can democratize access,” she said, “but judgment, ethics, and financial reasoning still depend on people. We train learners to use AI as a co-pilot, not a crutch.”
Her work aligns with a broader national agenda. The Financial Sector Development Program and Al Tamayyuz Academy are part of Vision 2030’s effort to elevate financial acumen across industries. “In Saudi Arabia, financial literacy is a national project,” she said. “When every sector thinks like a business, the nation gains stability.”
Jonathan Holmes, managing director for Korn Ferry Middle East, sees Saudi Arabia’s digital transformation producing a new generation of leaders—agile, data-literate, and unafraid of disruption.
“What we’re seeing in the Saudi market is that AI is tied directly to the nation’s economic growth story,” Holmes told Arab News. “Unlike in many Western markets where AI is viewed as a threat, here it’s seen as a catalyst for progress.”
Holmes noted that Vision 2030 and the national AI strategy are producing “younger, more dynamic, and more tech-fluent” executives who lead with speed and adaptability. Korn Ferry’s CEO Tracker Report highlighted a notable rise in first-time CEO appointments in Saudi Arabia’s listed firms, signaling deliberate generational renewal.
Korn Ferry research identifies six traits for AI-ready leadership: sustaining vision, decisive action, scaling for impact, continuous learning, addressing fear, and pushing beyond early success.
“Leading in an AI-driven world is ultimately about leading people,” Holmes said. “The most effective leaders create clarity amid ambiguity and show that AI’s true power lies in partnership, not replacement.”
He believes Saudi Arabia’s young workforce is uniquely positioned to model that balance. “The organizations that succeed are those that anchor AI initiatives to business outcomes, invest in upskiling, and move quickly from pilots to enterprise-wide adoption,” he added.
DID YOU KNOW?
• Saudi women-led SMEs could add $50–$70 billion to GDP over five years if 10–15% evolve into growth ventures.
• AI in Saudi Arabia is seen as a catalyst for progress, unlike in many Western markets where it is often viewed as a threat.
• Saudi Arabia is adopting skills-based models, matching employees to projects rather than fixed roles, making flexibility the new currency of success.
The convergence of Tawfiq’s financial empowerment approach and Holmes’s AI leadership vision points to one central truth: the Kingdom’s greatest strategic advantage lies in human capital that can think analytically and act ethically.
“Financial literacy builds confidence and credibility,” Tawfiq said. “It transforms participants from operators into leaders.” Holmes echoes this sentiment: “Technical skills matter, but the ability to learn, unlearn, and scale impact is what defines true readiness.”
As organizations adopt skills-based models that match employees to projects rather than fixed job titles, flexibility is becoming the new currency of success. Saudi Arabia’s workforce revolution is as much cultural as it is technological, proving that progress moves fastest when inclusion and innovation advance together.
Holmes sees this as the Kingdom’s defining opportunity. “Saudi Arabia can lead global workforce transformation by showing how technology and people thrive together,” he said.
Tawfiq applies the same principle to finance. “Financial confidence grows from dialogue,” she said. “The more women talk about money, valuations, and investment, the more they’ll see themselves as decision-makers shaping the economy.”
Together, their visions outline a future where leaders are inclusive, data-literate, and AI-confident—a model that may soon define the global standard for workforce transformation under Vision 2030.
