KUALA LUMPUR, Dec 5 (Bernama) -- Bursa Malaysia closed lower on Friday amid mixed regional market performance as investors turned cautious over a possible rate hike by the Bank of Japan (BOJ) and upcoming US economic data that may influence the Federal Reserve’s (Fed) interest rate decision next week. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) pared most earlier losses to settle 4.55 points easier, or 0.28 per cent, to 1,616.52 from Thursday’s close of 1,621.07. The benchmark index, which opened 0.37 of-a-point lower at 1,620.70, moved between 1,609.67 and 1,621.25 throughout the day. The broader market was negative, with decliners outpacing advancers 604 to 439. A total of 550 counters were unchanged, 1,151 untraded, and 18 suspended. Turnover declined to 3.17 billion units worth RM2.24 billion from 4.48 billion units worth RM2.75 billion yesterday. Rakuten Trade Sdn Bhd vice-presiden...
Economist Joseph Lavorgna criticized Fed Chair Jerome Powell’s decision to keep interest rates elevated, arguing that inflation data no longer justifies such restrictive policy.
Inflation Trends Show Weakness
Lavorgna pointed out that inflation readings have come in weaker than expected for five straight months. He said any impact from tariffs would be a “one-off price level effect” rather than a persistent driver of inflation, making prolonged high rates unnecessary.
He also noted the Fed’s own forecast error:
March forecast: 2.7% inflation revised up to 3.0% in June
Actual results: 2.5% and 2.4%, showing inflation tilted downward
Rates Already Restrictive
Lavorgna highlighted that the 10-year yield has traded below the Fed funds rate for nearly three years, a signal that policy is tight by historical standards. Housing and other interest-sensitive sectors remain soft.
Structural View of Inflation
He criticized the Fed’s research approach, saying it still treats inflation as a growth problem tied to low unemployment.
“Inflation is always a monetary phenomenon,” Lavorgna said, arguing that the Fed’s framework has been “proven wrong time and time again.”
Policy Outlook
Lavorgna believes President Trump’s “one big beautiful bill,” designed to expand supply and boost investment, could deliver faster growth and lower inflation, similar to the first term.
Jobs and Labor Market
Looking ahead, he pointed to low participation rates, especially among seniors and teenagers, as a potential labor source if wages rise. He expects tax cuts and higher capital investment to draw workers back and increase productivity.
Bottom line: Lavorgna argues the Fed’s stance risks holding rates too high while inflation is easing, warning that the central bank is misreading the current economic dynamics.
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