Also, China and Russia grow closer and the U.S. waits for news of a possible Donald Trump indictment.
The Fed raises rates amid turmoil
The U.S. Federal Reserve raised interest rates by a quarter-point as officials tried to balance the risk of runaway inflation with the threat of turmoil in the banking system.
The decision was one of the most closely watched in years, and the conflicting forces had left investors and economists guessing what central bankers would do. The Fed raised rates to a range of 4.75 to 5 percent — matching last month’s increase in size — and the central bank projected one more rate increase in 2023 to 5.1 percent.
Jerome Powell, the Fed chair, said that officials “considered” pausing interest rates because of the banking problems but noted that the economic data had been strong. He added that the American banking system was “sound and resilient.”
He also called Silicon Valley Bank, which collapsed earlier this month, an “outlier,” trying to cast its problems as unique. He said it was not a reason to panic about the banking system, even as he acknowledged the need for better supervision and regulation.
Context: This is the ninth rate increase in a year. The Fed has been rapidly raising its interest rate since March 2022, making borrowing money more expensive in hopes of cooling inflation.
Markets: Wall Street stocks dropped as investors balked at the Fed’s decision.
Awaiting a Trump indictment
Americans are awaiting news of a possible indictment of Donald Trump, which could come as early as today. Criminal charges against the former president have been hotly anticipated since at least Saturday, when Trump, with no direct knowledge, declared that he would be arrested on Tuesday.
The grand jury in the case against Trump did not meet yesterday as expected, and it may still hear from another witness before being asked to vote on an indictment. Prosecutors have signaled that criminal charges against the former president are likely.
The prospect that Trump, who is running for re-election, could face criminal charges is extraordinary. No sitting or former American president has ever been indicted. This case, which hinges on an untested legal theory, is just one of several criminal investigations he faces.
Case details: The charges most likely center on how Trump handled reimbursing a lawyer for a hush-money payment of $130,000 to the porn star Stormy Daniels during the final days of the 2016 presidential campaign.
While hush money is not inherently illegal, the prosecutors could argue that the payout was a federal crime because it was done by falsifying business records. It could also be considered an improper donation to Trump’s campaign — a violation of election law.
Trump’s response: Trump has referred to the investigation as a “witch hunt” against him. Those who have spent time with Trump in recent days say he has often appeared significantly disconnected from the severity of his potential legal woes.
What’s next: The timing of any potential indictment is unknown, and an arrest would not immediately follow. If Trump were convicted of a felony, he would face a maximum sentence of four years, but prison time would not be mandatory.
China-Russia versus the U.S.
China’s leader, Xi Jinping, wrapped up a three-day summit in Moscow with President Vladimir Putin that showed the two superpowers aligned in countering American dominance and a Western-led world order.
The summit demonstrated that Xi remains focused on shoring up ties with Moscow to gird against what he sees as a long U.S. “containment” effort to block China’s rise. The leaders laid out their vision for the world in a joint statement that covered an array of topics, including Taiwan and climate change — and often depicted the U.S. as the obstacle to a better, fairer world.
They also endorsed an expanded role for China’s currency, the renminbi, a step that would tie Russia’s economy closer to China’s. A broader use of the currency among China’s allies, including in Iran and North Korea, could make it easier to conduct transactions without worrying about sanctions linked to the dollar.
Ukraine: The two leaders did not reveal any progress toward achieving peace in Ukraine.
Leadership: The two declared their admiration for each other’s authoritarian rule. Xi even endorsed Putin for another term.
THE LATEST NEWS
Asia Pacific
Japan beat the U.S. in the World Baseball Classic, 3-2. See the final moment.
China approved its first Covid vaccine that uses mRNA — a technology considered among the most effective the world has to offer.
A report analyzing a swab from Wuhan strengthens the case that illegally traded wild animals ignited the coronavirus pandemic.
Around the World
Uganda passed a strict anti-gay bill that can bring punishments as severe as the death penalty and that calls for life in prison for anyone engaging in gay sex.
Facing a hearing that could curtail his political career, Britain’s former prime minister Boris Johnson denied lying to Parliament about parties held at Downing Street during lockdowns.
TikTok’s C.E.O. will testify before U.S. lawmakers today, as tensions over the Chinese-owned app come to a head.
Analysts and residents say gangs have taken over most of Port-au-Prince, Haiti’s capital.
The War in Ukraine
The I.M.F. agreed to a $15.6 billion loan for Ukraine.
President Volodymyr Zelensky visited troops on the frontline near Bakhmut.
The Russian authorities in occupied Crimea reported a second day of drone attacks.
A Morning Read
The artisans who maintain the Aqsa Mosque in Jerusalem — known to Jews as the Temple Mount — are struggling to keep up with repairs after clashes. They are also bracing for more unrest: Ramadan is starting and Passover is just a few weeks away, raising worries that the larger numbers of visitors to the contested site will increase the possibility of clashes.
“This takes months to finish, and in one minute, in one kick, all this hard work goes,” said one man who works in stained glass.
SPOTLIGHT ON AFRICA
A record-setting storm
As southeast Africa begins to recover from Cyclone Freddy, scientists are taking a closer look at whether the storm could be a sign of things to come on a warming planet.
Cyclone Freddy lashed three countries, hitting Madagascar and Mozambique twice. When it moved inland last week, heavy rain and mudslides devastated Malawi, killing 438 people.
The storm was remarkable for a couple of reasons. One is longevity. It lasted 36 days, by one measure, and underwent rapid intensification cycles at least seven times, quickly waning and then intensifying. Freddy is now the longest-lasting tropical cyclone in the Southern Hemisphere, and experts from the World Meteorological Organization are working to determine whether it is the longest-lasting storm in history.
Freddy was also remarkable for its range. The storm traveled more than 4,000 miles from the northern coast of Australia to the southeast coast of Africa.
Understanding the links between climate change and individual storms requires complex research, but scientists know in general that global warming is leading to bigger, wetter storms.
“A warmer atmosphere holds more moisture,” said Anne-Claire Fontan, who studies tropical cyclones at the World Meteorological Organization. “We expect that tropical cyclones will bring more intense rainfall.” — Lynsey Chutel, a Briefings writer in Johannesburg
PLAY, WATCH, EAT
What to Cook
A recipe for Ramadan: Qatayef asafiri, sweet stuffed pancakes drizzled with syrup.
What to Read
“Bottoms Up and the Devil Laughs” by Kerry Howley explores how the erosion of privacy has fueled conspiracy theories and the national security state.
What to Watch
Our selection of five science fiction films includes a trippy Japanese time-loop and an Italian remake of the 2021 Australian film “Long Story Short.”
Now Time to Play
Play the Mini Crossword, and a clue: Exchange (four letters).
Here are the Wordle and the Spelling Bee.
You can find all our puzzles here.
That’s it for today’s briefing. See you next time. — Amelia
P.S. Our visual journalists won 34 awards in the Pictures of the Year International Awards.
“The Daily” is on the roots of the banking crisis.
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