Beta Test Issue 1

On Thursday, the US Federal Reserve implemented a 25 basis point rate cut, reducing the benchmark rate from 4.75% to 4.5%. This marks the Fed's second consecutive rate reduction, showing its commitment to supporting the labor market admist a moderating inflation rate, now at 2.1%—slightly above its 2% target.

However, the Reserve Bank of Australia (RBA) is taking a different stance. Concluding its November policy meeting, RBA Governor Michele Bullock announced that Australia’s cash rate will remain unchanged. The RBA’s position reflects ongoing concerns about demand pressures, as demand still exceeds supply and the labor market remains “tighter,” suggesting an economy in an expansionary phase. ECON2026 students may recognize this as a classic sign of a positive output gap, where cutting rates could potentially drive the economy beyond its productive capacity.

Australia’s inflation recently declined to 2.8%, approaching the RBA’s target range but still slightly above it, especially when underlying inflation is considered. This has justified the RBA’s “restrictive” approach, maintaining current rates to curb further inflationary pressures.

Following a significant monetary policy in late September, Chinese stocks rallied on hopes of additional economic stimulus. This expectation materialized this week with the unveiling of a 10 trillion yuan ($1.4 trillion) fiscal package focused on alleviating local government debt and stabilizing the economy. This initiative aims to relieve financial pressures on local governments, many of which are burdened with debt accumulated from years of infrastructure spending and real estate development.

However, the stimulus has been met with mixed reactions. With China’s public debt already reaching 102% of GDP, economists are concerned about the sustainability of extensive borrowing as a growth mechanism. Critics argue that the focus on debt restructuring and the struggling real estate sector may not sufficiently boost consumer confidence or spending, which are crucial for broader economic recovery. Analysts caution that without measures to directly support household income and consumption, the stimulus might yield limited results in lifting overall economic activity.

The response from investors has reflected these concerns. Following the announcement, the Hang Seng Index—often seen as a barometer for investor sentiment toward Chinese economic policies—fell by 1.45% to 20,426.93 points.

The "End the Fed" movement has gained significant momentum, bolstered by the support of Elon Musk. Their backing has intensified the debate surrounding the future of the Federal Reserve, prompting discussions about the central bank's role and the possibility of shifting towards decentralized financial systems like Bitcoin.

Senator Mike Lee's recent tweet, which Musk reposted, encapsulates these concerns. Lee contends that the Federal Reserve operates outside its constitutional authority, often clashing with the executive branch's objectives. He stated, "The Executive Branch should be under the direction of the president... The Federal Reserve is one of many examples of how we’ve deviated from the Constitution."

This viewpoint resonates with Bitcoin advocates, who view decentralized currencies as a safeguard against potential government overreach and monetary manipulation. In May, Representative Thomas Massie introduced legislation to repeal the 1913 Federal Reserve Act, aiming to abolish the Board of Governors and the Federal Reserve banks. Although the bill's chances of passing are slim, it highlights growing dissatisfaction with the centralized monetary system. Though JPow has said that he would not resign even if Trump asked him to emphasizing that Trump is not allowed to do so.

National Australia Bank Limited (NAB) recently released its Q4 2024 earnings, reflecting a challenging year amid competitive pressures and economic headwinds. The bank reported an 8.1% decrease in cash earnings and a 6.1% reduction in statutory net profit compared to last year. Revenue also declined by 2.0%, driven by compressed net interest margins, though NAB saw a 4.2% increase in gross loans and advances, indicating a resilient lending portfolio.

Despite these pressures, NAB maintained a solid capital position with a Common Equity Tier 1 (CET1) ratio of 12.35%. Credit impairment charges slightly decreased to $728 million, showing a controlled risk profile even as asset quality softened. The latter half of the year showed stability, with NAB continuing investments in customer-focused initiatives and strategic growth within its business and private banking sectors.

• US students looking for bachelor’s and master’s degrees abroad increased more than 5x following Tuesday’s election, according to Studyportals.

• Monkey update: One monkey from the group of primates that broke out of a South Carolina lab has been safely recovered, but 42 remain at-large.

• The NBA’s in-season tournament, the NBA Cup, begins tomorrow with games that will be played on the busiest and most colorful courts imaginable.

• People’s Sexiest Man Alive will be revealed tomorrow. The odds-on favorite is Glen Powell.