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Recent Editions
Risk Channel
North America
The Federal Reserve kept its benchmark interest rate unchanged at 3.5%–3.75%, but an unusually divided 9–3 vote highlighted growing pressure within the central bank to tighten monetary policy as inflation remains above its 2% target for a fifth consecutive year. Three Federal Reserve Bank presidents - Beth Hammack (Cleveland), Neel Kashkari (Minneapolis), and Lorie Logan (Dallas) - voted in favor of a quarter-point rate increase, marking the first time since 2016 that three policymakers have dissented in the same direction on a rate decision. While recent inflation data had eased immediate pressure to raise rates, higher energy prices linked to renewed U.S.-Iran conflict and sustained demand from AI-related investment have reinforced concerns that inflation could remain persistent. Chair Kevin Warsh maintained the Fed’s existing policy stance for a second straight meeting, despite signs that opinion within the committee is shifting. Officials advocating higher rates argue that strong economic activity, record equity markets, and robust corporate borrowing indicate the economy can withstand tighter policy, while AI-driven investment is creating demand that exceeds available supply.
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Risk Channel
UK/Europe
The EU's comprehensive AI law launches on Sunday to ensure Europeans immediately know whether the online content they see is real or fake. Companies must make sure their AI systems, including chatbots, make it clear to users they are AI. When an image or text has been created using AI, it must be labelled as such - for example, by integrating watermarks and other markers to enable the easy detection of AI-generated content. Firms face large fines if they don't comply. An EU official said that since AI is "making it increasingly difficult for all of us to distinguish what is real from what is synthetic," the rules seek to "preserve citizens' ability to trust what they see, hear, and read." Karen Massin, who leads Google's Government Affairs & Public Policy team in Brussels, warned of "regulatory complexity" that could prove counterproductive, and "risks confusing the people these rules are meant to help."
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