Finance

Fed minutes January 2025:

Published

4 months ago

February 19, 2025

Federal Reserve officials in January agreed they would need to see inflation come down more before lowering interest rates further, and expressed concern about the impact President Donald Trump’s tariffs would have in making that happen, according to meeting minutes released Wednesday.

Policymakers on the Federal Open Market Committee unanimously decided at the meeting to hold their key policy rate steady after three consecutive cuts totaling a full percentage point in 2024.

In reaching the decision, members commented on the potential impacts from the new administration, including chatter about the tariffs as well as the impact from reduced regulations and taxes. The committee noted that current policy is “significantly less restrictive” than it had been prior to the rate cuts, giving members time to evaluate conditions before making any additional moves.

Members said that the current policy provides “time to assess the evolving outlook for economic activity, the labor market, and inflation, with the vast majority pointing to a still-restrictive policy stance. Participants indicated that, provided the economy remained near maximum employment, they would want to see further progress on inflation before making additional adjustments to the target range for the federal funds rate.”

Officials noted concerns they had about the potential for policy changes to keep inflation above the Fed’s target.

The president already has instituted some tariffs but in recent days has threatened to expand them.

In remarks to reporters Tuesday, Trump said he is looking at 25% duties on autos, pharmaceuticals and semiconductors that would accelerate through the year. While he did not delve too far into specifics, the tariffs would take trade policy to another level and pose further threats to prices at a time when inflation has eased but is still above the Fed’s 2% goal.

FOMC members cited, according to the meeting summary, “the effects of potential changes in trade and immigration policy as well as strong consumer demand. Business contacts in a number of Districts had indicated that firms would attempt to pass on to consumers higher input costs arising from potential tariffs.”

They further noted “upside risks to the inflation outlook. In particular, participants cited the possible effects of potential changes in trade and immigration policy.”

Since the meeting, most central bank officials have spoken in cautious tones about where policy is headed from here. Most view the current level of rates in a position where they can take their time when evaluating how to proceed.

In addition to the general focus Fed officials put on employment and inflation, Trump’s plans for fiscal and trade policies have added a wrinkle into the considerations.

On the flip side of worries over tariffs and inflation, the minutes noted “substantial optimism about the economic outlook, stemming in part from an expectation of an easing in government regulations or changes in tax policies.”

Many economists expect tariffs that Trump plans on launching to aggravate inflation, though Fed policymakers have said their response would be dependent on whether they are one-time increases or if they generate more underlying inflation would necessitate a policy response.

Inflation indicators lately have been mixed, with consumer prices rising more than expected in January but wholesale prices indicating softer pipeline pressures.

Fed Chair Jerome Powell has generally avoided speculation on the impact the tariffs would have. However, other officials have expressed concern and conceded that Trump’s moves could impact policy, possibly delaying rate cuts further. Market pricing currently is anticipating the next cut to come in July or September.
The Fed’s benchmark overnight borrowing rate is currently targeted between 4.25%-4.5%.

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14 hours ago

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Finance

China’s quickly gaining an edge over the U.S. in biotech

Published

17 hours ago

June 5, 2025

Business Finance News

Two graduate students research chemical products in a laboratory in Xiwangzhuang Town, Zaozhuang City, Shandong province of China, on Dec. 26, 2023.

Nurphoto | Nurphoto | Getty Images

BEIJING — For all the attention on U.S.-China competition in artificial intelligence, new studies point to China’s rapid rise in biotechnology, especially for drug and agricultural development.

Out of five critical tech sectors, “China has the most immediate opportunity to overtake the United States in biotechnology,” the Harvard Belfer Center for Science and International Affairs said Thursday in its release of a “Critical and Emerging Technologies Index,” covering AI, biotech, semiconductors, space and quantum.

While the U.S. is still the leader in all five, “the narrow U.S.-China gap [in biotech] suggests that future developments could quickly shift the global balance of power,” the report said.

The assessment echoes growing concerns in Washington. In fact, the U.S. National Security Commission on Emerging Biotechnology struck a more urgent tone in an April report, citing two years of research.

“There will be a ChatGPT moment for biotechnology, and if China gets there first, no matter how fast we run, we will never catch up,” the bipartisan Congressional commission said in the report, referring to the transformative chatbot released by U.S.-based OpenAI.

“Our window to act is closing. We need a two-track strategy: make America innovate faster, and slow China down,” the commission said. It recommends that the U.S. government spend at least $15 billion over the next five years to support the domestic biotech sector.

China’s biotech industry has evolved to the point that U.S. and European pharmaceutical giants in the last several months have spent billions to acquire China-developed drugs that could treat cancer if commercialized with regulatory approval. In March, British pharmaceutical giant AstraZeneca announced it will invest $2.5 billion in a research and development center in Beijing.

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The Harvard Belfer Center pointed out that China’s biotech strengths stem from its “dominance in pharmaceutical production and manufacturing,” in addition to having more human talent than the U.S.

China also has a “more flexible regulatory regime and the ability to push things out faster,” Cynthia Y. Tong, one of the Harvard report’s authors, told CNBC in an interview Thursday. She noted that the U.S. tends to have a longer approval process, as well as more drawn out research and development period.

And just as China is developing its biotech sector, reports from the U.S. biotech hub of Cambridge and Boston are revealing layoffs and empty labs.

A big strategy

China has long used multi-year plans and preferential state policies to encourage the development of key technologies. Biotech is no different, gaining high-level support back in 2007.

“Currently, the U.S. government has no cohesive, intentional biotechnology strategy, while China is gaining ground thanks to its aggressive and carefully coordinated state-led initiatives,” the U.S. security commission said.

The worry is that just as Chinese restrictions on rare earths start to hit car manufacturers, Chinese dominance in biotech could become yet another form of leverage for Beijing over the U.S. and other countries.

“The likelihood there’s going to be cooperation [between the] U.S. and China on anything is very low, in some ways least likely on biotech and AI” because of the congressional report, said Eric Rosenbach, director of the defense, emerging technology, and strategy program at Harvard’s Belfer Center. He was chief of staff at the U.S. Department of Defense from 2015 to 2017.

He expects more U.S. pressure on China.

It remains to be seen what that would mean in practice for businesses — though some say the future of biotech development is inherently global.

Insilico Medicine, a startup using AI to cut drug discovery costs, relies on a global team spread across China, North America and the Middle East, according to its founder and CEO Alex Zhavoronkov. On Tuesday, the company announced with a paper in Nature Medicine that it was the first to see successful clinical testing with an AI-discovered drug.

While Insilico’s AI work typically happens in Canada and Abu Dhabi, the chemical testing and experiments are done in China, Zhavoronkov said, adding that the head of clinical development is in Boston. He declined to comment on a commercialization timeline in light of conversations with regulators.

Other data shows that China has surpassed the U.S. in the number of clinical trials conducted, seen significant patent growth and boasts the most life sciences construction activity in the world.

China-based Capital O venture partner Yang Fan, who previously worked in the pharmaceutical industry, said he expects the best biotech companies of the future will navigate different countries’ regulations and use resources across the globe, if not benefit from arbitrage opportunities given different requirements and cost of entry in various markets.

“The Chinese market is like a big supermarket for anything that can be commoditized, AI or biotechnology,” he said, adding that new startups in China have to be “really good” to stand out. As AI drives innovation costs down, Fan predicts that in biotech, “the real DeepSeek moment is probably going to happen in five years.”