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Chapter 1: What is the main topic discussed in this episode?
News when you want it with Bloomberg News Now. I'm Caroline Hepker. The U.S. has carried out further airstrikes on Iranian targets as hopes for an imminent deal continue to fade.
Chapter 2: What recent actions has the U.S. taken against Iran?
As with its attacks earlier this week, a U.S. official described the latest bombings as defensive. The U.S. says that it shot down four one-way Iranian attract drones that were fired at a commercial ship and also struck another drone launching unit near the Strait of Hormuz.
Now, the latest flare up in hostilities came just hours after President Trump said that no single nation would control the vital waterway as part of any agreement with Tehran.
Nobody's going to control it. We're going to watch over it. We'll watch over it. But nobody's going to control it. That's part of the negotiation that we have. They would like to control it. Nobody's going to control it. It's international waters and Oman will behave just like everybody else. So we'll have to blow them up. They understand that. They'll be fine.
President Trump speaking there as Iran continues to choke off traffic through the waterway while oil prices once again climbed closer to triple digits. Meanwhile, the U.S. Treasury says that it has taken action against Iran's Persian Gulf Strait Authority, accusing it of launching a new attempt to monetize state-sponsored terror by extorting vessels transiting the Strait of Hormuz.
Elevated energy prices and inflation risks are complicating the outlook for central banks as traders turn their focus to Thursday's US economic data. The Federal Reserve's favoured inflation gauge, the PCE price index, is expected to have increased to 3.8% in April. That's well above the Fed's 2% target. Fed Governor Lisa Cook says that inflation is headed in the wrong direction.
I see elevated risks to both sides of our mandate. And from a risk management perspective, I currently believe that the right course of action is to hold rates steady.
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Chapter 3: How is the U.S. addressing threats in the Strait of Hormuz?
However, I want to be clear about my risk assessment. The risks remain tilted toward higher inflation, and my baseline forecast, disinflation should resume in upcoming months without having to raise rates.
Lisa Cook speaking there. As the Fed Vice Chair Philip Jefferson says that he expects inflation to cool later this year, though he warned risks remain tilted to the upside. Meanwhile, the Chicago Fed President Austin Gulby says that strong productivity spending could fuel inflation and require higher interest rates.
Now, the outgoing vice president of the European Central Bank says that the central bank should consider the impact of the Iran war on the economy when deciding whether to raise interest rates next month in Europe. Luis de Guindos told Bloomberg that while inflation in the eurozone responded quickly to surging energy costs, the effect on economic growth will take longer to appear.
We have to take into consideration the impact of growth. I think that the data that we have received so far, inflation immediately reflects the evolution of energy prices. But I think that for growth it's going to take a little bit longer. But if you look at soft indicators, sentiment indicators, I think that these indicators clearly point at an important impact on growth.
De Guindos' dovish tone comes as he wraps up his eight-year tenure at the ECB. A number of other policymakers have signalled that they are weighing interest rate hikes to combat rising prices. Isabel Schnabel and Yanis Stournaras have both pointed to the need for higher rates as the ECB looks to preserve credibility after inflation hit 3%. Now to the UK.
A surge in youth unemployment risks creating a, quote, lost generation. That is the finding of a government-commissioned review carried out by the former Labour Health Secretary, Alan Milburn. Bloomberg's Ewan Potts has the story.
Without action, the number of young people not in employment, education or training, so-called NEETs, will hit one and a quarter million within five years. That number's already reached about a million. An interim report into the problem says that urgent action is needed to correct what it calls a whole system failure.
The findings shine light on the situation which has been spurred by factors including surging employment costs, worsening mental health and the rise of AI reducing the number of entry-level roles. The report's author, Alan Milburn, is due to propose potential solutions to the problem later this year. In London, I'm Ewan Potts, Bloomberg Radio.
Ukraine's President Vladimir Zelensky has rejected the idea of partial membership of the European Union. In a letter to senior EU officials seen by Bloomberg, he argued that the country deserves full membership because its forces are defending the bloc from Russia.
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Chapter 4: What are the implications of rising inflation for central banks?
deeply in the red. So, too, for Eurostox, 50 futures now down by 1.2%. This morning, gold and copper declining. And 10-year U.S. yields up four basis points at 4.52% ahead of that PCE yield. inflation data that we'll get later. That's news when you want it with Bloomberg News Now. I'm Caroline Hepker and this is Bloomberg.
The Bloomberg This Weekend Podcast. News, politics, and the lighter side of Bloomberg. The great wealth transfer includes $570 billion in classic cars.
I'm not in a position to be inheriting any classic cars. You?
No, but my brother did inherit my non-classic car when I moved to New York, so. Ew. He still has not paid me for it. Coming for you, Joey. The Bloomberg This Weekend Podcast. Subscribe today on Apple, Spotify, or wherever you listen.