This BBC podcast is supported by ads outside the UK. It's time to see what you can accomplish with Shopify by your side. Available now on the documentary from the BBC World Service, Zuzsa Nazarek investigates Poland's nuclear ambitions. In northern Poland, a huge patch of forest has been cleared to make way for the country's first nuclear power station. Does Poland's future lie in nuclear power? Atomic Crossroads, Poland's nuclear future. To listen, search BBC The Documentary wherever you get your BBC podcasts. 113-year history. I worry that these attacks are battering the institution. What's up at the Fed? This is World Business Report from the BBC World Service. I'm Ed Butler, and today we're looking both back and ahead at US rates policy as Jerome Powell's embattled tenure at the Fed draws to a close. We're also hearing the latest from the Musk-Altman showdown in a California courtroom and why Somali piracy may be making a comeback. So the news is that America's central bank held interest rates steady for a third consecutive time today. That news doesn't sound quite as dramatic as it felt somehow. As expected, These are heady times at the Fed. President Donald Trump's pick to lead the US Central Bank, his name is Kevin Walsh, he has been cleared what looks like through the last procedural hurdle to get his approval as Jerome Powell's successor. The Senate should confirm him in a couple of weeks, we think. Jerome Powell's term as head of the US Central Bank formally ends on May the 15th. After announcing the rape decision we just heard about today, Mr Powell said that he will continue to serve as a governor. He won't be resigning exactly quite yet until at least all criminal investigations into him and the organization are complete. These legal actions by the administration are unprecedented in our 113 year history. And there are ongoing threats of additional such actions. I worry that these attacks are battering the institution and putting at risk the thing that really matters to the public, which is the ability to conduct monetary policy without taking into consideration political factors. Jerome Powell, well, let's get a reaction to all of this. We'll begin with the monetary bit, the holding of interest rates. Susan Schmidt, Portfolio Manager at Exchange Capital Resources in Chicago, is with us. Susan, what do you think? This is what was expected, isn't it? But it was an unusually divided Fed board we're hearing this time around. It was. So, no change in rates is what investors anticipated would happen as they came out of this meeting. But what investors were keying in on was how they were going to describe the current tone of the board, the difference of opinions, how widespread that difference is. And what investors are looking at now is saying, And this continues to be a rather bumpy ride with the Fed. We have Chairman Powell not stepping down. We have a new chairman coming in who clearly seems to be under a mandate to take an opposite approach to Chairman Powell's approach. And I think investors are gazing at this, looking at it from the outside, wondering how much turbulence we'll see within the Fed and trying to gauge the path of interest rates, particularly when we have oil at new highs once again, and inflation pressures coming at the Fed from a different direction. Yeah, let's look at this from another angle as well. We're going to look back at Jerome Powell's eight-year tenure at the Fed, as well as looking ahead and what exactly is going on now, because as you say, it's a very divided Fed board, it seems. I'm joined by Skander Armanath. He's the executive director at Employ America. He used to serve as a capital markets analyst at the Federal Reserve Bank. Hi, Skander. So there was a certain poignancy, perhaps, to this meeting. I mean, did you have a little tear in your eye as you saw Jerome Powell give his last rates announcement? I had a figurative tear in my eye. It's been about eight years of him as chair, and he's been at the Fed board for even longer. And I think he was at one point, obviously, he's won the nomination under a Republican president. and Democratic president. And obviously, it's been turbulent times in terms of inflation, COVID, moments of rate cuts and rate hikes. And for the most part, I think most would look back and say the Fed, whether you agree to those decisions or not, is trying to make data-dependent, evidence-driven decisions in a nonpartisan way. And that's what it should be doing. Ideally, yes. It feels fitting that he held rates steady as well. Everyone, including Mr. Trump, accusing him of being Mr. Too Late. Well, not everyone, I guess, But plenty of people. This dates back, doesn't it, to 2022 when we saw surging inflation and it was felt that the Federal Reserve was a little slow to push up interest rates at that time. Plenty think, though, he should be hiking rates now as prices are starting to spike. He's being pulled both ways, isn't he, by his board? Yes, actually, the too late moniker came from 2018 because the stock market had sold off about 10 percent and Donald Trump did not want the Fed to hike at that time. But now we are dealing with a situation where the data is changing, where inflation, even before the outbreak of war on the Fed's key inflation gauges, those are running higher, well above a percentage point above their target. And we were also learning that at least the growth trajectory of the US economy was showing signs of at least stability, if not some renewed momentum. And in that environment, especially if financial markets are largely stable, that's usually an environment where the Fed is thinking about whether they need to hike or at least find good reasons not to I mean this is all about politics though isn it Because you know he obviously under pressure and his successor will be from the White House to somehow improve the environment, to, if you like, improve liquidity for average working Americans. There's a great concern about that. What do you think of his decision in that context to stay on as governor? I mean, I think the real challenge with stepping down in this moment is that President Trump has also threatened J-PAL to step off immediately after his Fed chair term ends or else be fired, which would obviously send some pretty bad political optics. So from the standpoint of staying on as governor, that seems actually quite prudent to avoid those perceptions that he's being pressured off the board prematurely. It's within his rights as a Federal Reserve governor to stay till the beginning of 2028. And there are actually are precedents in which past Fed chairs have stayed on as governors. It doesn't happen normally, but it's certainly not far out of the norm either. What are we to expect from Kevin Walsh if he is to be the anointed replacement? I mean, he's going to be under pressure, as you say, to cut. That's what everyone's expecting, at least as the chosen son of Donald Trump. But traders see little chance of this, that the Fed's not going to lower rates at least until next year. I think he's going to be at least in a conflict with the rest of the FOMC. The Fed staff and the FOMC are pretty well prepared in terms of their own understandings of macroeconomic data, the risks to policy. And you saw today three regional Fed presidents who are voting on the Federal Open Market Committee dissent, basically telling the rest of their colleagues, this is not the time to be thinking about cuts, and at least to have some openness about what might be the next interest rate move that has to be made. On the other hand, Kevin Warsh at his hearing was still trying to find the best arguments he could make in favor of interest rate adjustments to the downside. So cuts due to some special measures of inflation. He pointed out trimmed mean. It just so happens those are the inflation gauges that are going down. and so that's I guess that's the conflict that's coming. Skandar Aminath, thank you very much indeed for now. Susan, returning to you, quick word, how do you think Jerome Powell's tenure overall is going to be remembered? I think he's going to be remembered as certainly calm and thoughtful in his comments. He certainly had an interesting tenure as chairman. I don't think we've seen a chairman and a president have as much conflict in living history as we've had between Chairman Powell and President Trump. And so certainly, I think Chairman Powell has managed to hold his own and try to keep the independence of the Fed. He certainly, in his comments today, reinforced that and the importance of that and how strongly he felt about it. And I think that's what investors will remember about him and his attempt to maintain that independence of the Fed in the direction, their own determination of direction of interest rates. Okay, well, interest rates remaining steady for now anyway. Big evening after hours, though, wasn't it? On Wall Street, especially in the tech sector. Oh, my gosh, that's an understatement. Yes, it was a deluge of information this afternoon, and we're still getting it. Calls are happening right now. We're hearing from management teams. But we had four of the largest companies report. We heard from Microsoft. We heard from Meta. We heard from Alphabet. That's Google. and Amazon. And we get to hear from Apple tomorrow. So it's a very big week. NVIDIA, a late reporter, will come at the end of May. And we heard from Tesla last week. So the major companies all reporting mixed news as we go across the four that reported tonight with different reception from investors. All of them, though, mentioning how strongly they're committed to AI. All of them talking about increased CapEx plans, so more spend on AI infrastructure and talking about the future of that and the good traction that they're seeing with the AI spend that they've had. Not necessarily profitable yet, but gaining traction in building out that infrastructure base. It's interesting how that is going to develop, isn't it? Particularly given the rising prices, the rising costs of energy, which of course have a huge impact on data centres which are required for this big transition to AI. Oil prices we're seeing climbing again sharply. This is often news that President Trump has met oil executives to discuss extending the US blockade on Iranian ports in the war there. So, I mean, that means Straits of Hormuz closed for longer, people are thinking, and therefore shipping could be blocked. Benchmark Brent crude hitting a four-year high at near $120. Yes, and just another aspect of the economy and global situation that we're in that's putting pressure not only on AI, it's putting pressure raising prices, that concern that the Fed has been having about inflation. And so we're seeing the economy slowly start to see that increased price of oil and supply chains be disrupted yet again as we move through this. Remember, we've had a series of conflicts and really starting with Ukraine, we've had tariffs, we've had the Middle East conflict now. It's caused quite a disruption in business. It's amazing that management teams are coming out now talking about how their businesses are managed to get through this rather well. Susan Schmidt, thank you very much indeed. You're with World Business Report from the BBC World Service. Now, it's been the second full day of the Battle of the California Billionaires. Elon Musk suing the maker of ChatGPT and its chief executive, Sam Altman. Mr. Musk is suing the OpenAI boss for allegedly swindling him out of millions of dollars and going back on a promise to keep the company as a non-profit. Mr. Altman denies those allegations. Lily Jamali, our North America tech correspondent, is following everything in Oakland. Hi again, Lily. The Daily Soup Opera, what did we learn today? Yeah, soap opera coverage, gavel to gavel. You know, the main headline today was Elon Musk being cross-examined by attorneys for OpenAI. This could be some of the most consequential testimony that the nine jurors in this case hear. And it was very combative. You know, Elon Musk and OpenAI's attorney went back and forth multiple times. Elon Musk said, accused the lawyer of asking overly complicated questions, saying that this is actually a quote, They're designed to trick me, essentially. And I think fundamentally what he's trying to say is that he wanted to create OpenAI as a nonprofit and keep it that way. But what we saw was OpenAI as attorneys really poking holes in that trying to show he was really out for control of OpenAI from pretty much early on up until he left in 2018 Reuters is saying isn it that the trial is happening as OpenAI is preparing for a potential initial public offering that could value it at a trillion dollars I mean, I guess there's always going to be a business context to all of this. And that looks like a big one. It is. And that's something that I think really riles up Elon Musk because he donated $38 million in the early days of this company. And he has said on the stand, you know, how is it that a nonprofit can end up being worth, you know, what is most recently $150 billion, but is now approaching a trillion dollars probably in their next investment round. So that IPO looms large. Elon Musk himself is also pushing for SpaceX to go public at the same time. So, in fact, that came up very briefly during court today. He's not supposed to talk about it, but he did address the fact that, you know, that is happening very briefly. How is Silicon Valley responding to all of this, do you think? I think, you know, the first and foremost, you know, the most sort of gossipy part of this is that you just have these two massive egos at play. And, you know, a lot of the chatter has to do with whether Musk is just doing this over sour grapes for having left when he did, leaving open AI when he did. And then they go off and have this tremendous success without him. What I'm hearing also is, you know, Musk has kind of left a trail of damaged relationships. And I think that's part of the conversation, too, that he obviously saw Google as a real threat. You know, has some personal animus towards certainly Larry Page, which is why he wanted to start his own AI startup in the first place. Thinking, you know, some company like Google in the hands of Larry Page just wouldn't take this very important technology all that seriously. And that's really at the heart of all of this, is this is the kind of technology that has ramifications for all of humanity if it goes wrong. And so that's very much at the centre of the Silicon Valley conversation right now. Lily Jamali, we will be checking in with you again, no doubt, as the trial continues. And who knows how long that will take. Thank you very much for now. Lily Jamali, our North America tech correspondent there in Oakland, California. Now, the war in between the US, Israel and Iran has had many impacts across the world. India's century and a half old glass industry, for example, is suffering because most of India's liquid natural gas supply normally comes from those countries in the Persian Gulf, which are now, of course, blocked off. The BBC's India business reporter, Arunadeh Mukherjee, has just been reporting for us from the North Indian city of Firozabad. Less than 40 miles from the iconic Taj Mahal lies Firozabad, a small city in the North Indian state of Uttar Pradesh. It's also called the glass city because the city produces 70% of India's glassware, but the industry is now showing cracks. Heavily reliant on gas imports, the conflict in the Middle East has choked movement through the Strait of Hormuz. The road we are driving through is lined with several small to medium manufacturing units. They make glass for everything, ranging from bangles to chandeliers to bottles to other decorative items. I'm going to visit one of these factories. As I walk inside this factory, the first thing that strikes me is just how hot it is. Now it's in any case about 36 degrees Celsius, but inside this factory, I would say it's at least 10 to 15 degrees hotter. Now it's in the open with just a tin shed for a covering. And what makes it even hotter is the furnace right at the center of the factory floor. Now it's this furnace where they are melting the broken glass. To ration gas supply, factories like these have been forced to shut down from time to time. The owner of this unit Mr. Sanjay Jain says business has come down by over 25%. Now with whatever gas we get, my current production will run for a few days, then I have to stop work for three to four days before resuming again. As companies like Mr. Sanjay Jain's look to ration gas usage, any shutdowns threaten the livelihood livelihood of the over 150,000 daily wagers working in the industry. Now there are hundreds of workers, all of them scattered in different parts of the factory floor. One is close to the furnace who is pulling out the molten glass which is attached to the end of a stick. He is then handing it over to someone else who is then rolling them into shape before someone else takes over to craft glass bangles. 35-year-old Umesh Babu sits in sweltering condition. crafting bangles for over eight hours a day. Just a few metres away from Omesh, the furnace burns at over a thousand degrees Celsius, radiating unbearable heat. But the heat doesn't bother him. The uncertainty fuelled by the war does. Earlier we would get at least six days of work. Now it's down to four to five days in a week. It's a struggle to run our household. I'm unable to even pay for my children's school fees, so they're sitting at home. I can't work anywhere else. Working with glass is the only skill I have. Industries such as these fall under the micro, small and medium enterprises, or MSMEs, which are central to the Indian economy. They make up over 30% of the country's GDP. It's the second largest employer after agriculture. That's what makes this labour-intensive sector most vulnerable. The Indian government says it's taking steps to ensure industrial energy needs are met while prioritising supply to crucial sectors. But as factories try to absorb the shocks of war until an end to the conflict, it's the millions of workers who will continue to feel the heat. That's Arunade Mukherjee on the challenges facing glassmakers in northern India. Well, the pressures on international shipping, we've talked about them a lot, trying to leave the Persian Gulf these days. Spare a thought as well for those around the coast of Somalia. Three ships have been hijacked in that area in just the past week, raising fresh fears that maritime piracy could be making a comeback. Shipping routes are already under pressure generally and experts warn reduced naval patrols could be creating an opening for armed groups That's the sound of gunfire some 10 or 12 years ago. Scenes like this became quite routine around the Gulf of Aden and the Horn of Africa. Major commercial shipping equipped with armed snipers shooting at marauding Somali pirate boats. Last year, the BBC spoke to a couple of men who are re-engaging in pirate attacks from the Pundland area of Somalia. They told the BBC they were just fishermen, coerced into the illegal trade by other pirates. You can feel that it's not right, but what's causing it? Our belongings are taken repeatedly, again and again. They took both our assets and our lives. And when we go and ask for our belongings back, they shoot us and treat us badly. That's what's forced us. So are these latest attacks this year part of a short-term spike, or are they the start of a more serious threat to global trade? Jethro Norman is a senior researcher at the Danish Institute for International Studies. He's currently in Somalia itself. I've got his thoughts on a line from there about what's driving this latest search. Pirate networks are basically testing the waters. They never really went away. They lied dormant, basically, from the high period of 2011 and 2012, when there was, at some points, 30, 40, 50 ships being taken. But the difference is now that they're better equipped than the last generation as well. So I think you really have three things that are converging here. First, you have a deteriorating regional security situation. As you're aware, the Houthi attacks have made the Red Sea and the Bab el-Mandeb Strait very much a high-threat corridor. Then you have tensions around the Strait of Hormuz. And basically what that's done is pull naval attention eastwards. So the navies that were present across the Somali coast have been pulled towards the Red Sea and towards the Strait of Hormuz. And then secondly is what's happening on land. So Puntland, which is the autonomous region where most of the para-activity is happening, its own forces are very much tied up fighting Islamic State in the mountains in the north. so you have essentially drained resources on land and at sea and then the third factor which is the constant factor throughout all of this throughout the last decades of what we were Somali piracy has been illegal foreign fishing and that has had massive impacts on coastal livelihoods in Somalia yeah I mean at its peak 15 years ago or so wasn't it the the piracy business was said to be worth up to what, $150 million a year in some years. And also, for every time that amount of money was seized by pirates in Somalia, there was a far bigger cost to the shipping industry because of, you know, the rising insurance costs and security that was being demanded. I mean, that is going to be a concern for international shipping right now, isn't it? Absolutely, it will. And in a way, it's essentially the same story that happened back in the heyday, the golden era, as they call it, of Somali piracy, because the structural conditions are still there. You know, you only need a few attacks to raise insurance premiums, and insurance premiums have a massive impact. The thing is, this time, that we're already seeing this happening by the events that are happening around the Strait of Hormuz, and to a lesser extent, the Red Sea as well. Everybody, I guess, will be looking at the price of oil right now. They certainly are today with the price pushing up towards $120 a barrel. There is a sense that any oil tankers in the region, if they start to get attacked, that really is a tipping point. Exactly. And I think it is significant that one of the ships that was taken was an oil tanker. I think that is significant. I would say that one of the differences between Somali piracy, as we knew it in 2012 and Smiley Piracy as it's sort of occurring again now is actually the ability to target specific ships. So what we have now is sort of widespread access of GPS, for example, and open source intelligence. So you can see which ships are moving where. So obviously that creates a problem, whereas before it might have been opportunistic, there's a ship here, let's go and take it. So I think that's something that's new, even if much of the other networks and kind of logic behind it is quite old. So essentially, it's been put to me that 10-15 years ago, defence forces and others managed to put a lid on the piracy problem in the Horn of Africa. They really didn't fix anything. And it's now kind of bubbling up again. How concerned really do you think we should be? I mean, how much bigger could this get? I mean, honestly, I think it's a little bit early to be making drastic conclusions, but I think it is genuinely concerning. Piracy was never eliminated. It was very much contained. The networks, the knowledge, the know-how, it hasn't just survived, it's actually been updated. Puntland has been on the front line of counter-piracy on land. But at the moment, there's a very tense political situation between Mogadishu and the federal government and Puntland. And essentially, because these relations have deteriorated, that's had an effect also on the ability to counter-piracy on land as well. So I think it's a dangerous mix at the moment, what's happening offshore and onshore. And I think this isn't the last that we're going to hear about this. The thoughts there are Jethro Norman, senior researcher at the Danish Institute for International Studies on the potential threat of renewed Somali maritime piracy. Now, some breaking news from the world of golf. In just the last hour or so, the Wall Street Journal is reporting that the LIV Live Golf Tour, which has been funded by the Saudi Public Investment Fund to the tune of US$6 billion since 2021, well, it is set to close at the end of 2026. At least that's what the Wall Street Journal say. The BBC is currently seeking confirmation of that story from LIV as we speak. There will be much more to say on the story, no doubt, in the hours to come. That's it for this edition of World Business Report. from me, Ed Butler, and the rest of the team here in Salford. Thanks very much for listening. revolutionized modern warfare, and other countries are asking it for help. For more, listen to The Global Story on BBC.com or wherever you get your podcasts.
