Reuters World News - Political storm hangs over D-Day at the Fed

Episode Date: March 22, 2023

It’s decision day at the Fed with volatile markets and questions swirling about its oversight of collapsed Silicon Valley Bank. Xi Jinping and Vladimir Putin pledge to shape a new world order but barely a mention of Ukraine during Moscow talks. Protests in Paris, President Emmanuel Macron to address nation. And Winnie the Pooh horror flick cancelled in Hong Kong. Learn more about your ad choices. Visit megaphone.fm/adchoices

All eyes are on the Federal Reserve. The bank regulator drawing intense scrutiny in Washington over its oversight of SVB or Silicon Valley Bank in the years before its collapse. And global investors on a nifeetch ahead of a pivotal decision on interest rates. It's Wednesday, March 22nd. This is Reuters World News,

bringing you everything you need to know from the front lines in 10 minutes. I'm Kim Vennel in London. And I'm Christopher Waljasper in Chicago. Fears of a global. global banking crisis appear to be abating. But stock markets are in a cautious mood ahead of the Fed's rate decision. Our Fed watcher Howard Schneider joins us now to tell us where we're at. Howard, today's Fed decision is huge. What is it weighing up? So a couple of things. Do they need to raise rates to continue to fight inflation? If they

raise rates, is that going to stress the banks so much that they crack up? And whatever they do, how do they communicate that in a way that doesn't leave everybody either confused or misunderstanding? what they're up to. There's been so much criticism over the Fed's oversight of SVB from all sides. Why is that? And what does it stake here for Powell and for the Fed? Well, the why is that apparently there were some warning signs that regulators out of the San Francisco Fed flagged about SVD up to a couple years ago. And yet nothing really happened to change the bank's behavior to arbitrage the risk away. So why? That's the big question there. For Powell, listen, this is another institutional crisis for him. He faced a lot of questions about Fed Ethics Rules a couple of years back when two regional bank presidents reside.

Now he's going to have to sort of answer the key question, are you on the ball here when it comes to supervision? What could the upshot of all this be? Well, upshot could be, you know, I don't think Jerome Powell's going anywhere. There have been calls for him to resign, lack of faith, blah, blah, blah, that sort of thing. That happens all the time in Washington. But that being said, I think, you know, the vice chair for supervision, Michael Barr is likely to come out with some set of recommendations to stiff from the rules around mid-sized banks than some other suggested reforms out there. You know, this one could get some traction.

All right, Howard, thanks so much. Now to the headlines making news today. Just a few blocks from the Federal Reserve, the governor of Ohio and the CEO of Norfolk Southern are set to testify at a Senate safety hearing. The meeting is expected to be tense as lawmakers probed the causes of a trained derailment that dumped millions of gallons of vinyl chloride into East Palestine. Lawmakers are expected to grill CEO Alan Shaw about how Norfolk Southern intends to improve safety and ensure residents are protected from the long-term effects of the spill.

Buildings shake in the Pakistani city of Lahore after a magnitude 6.5 earthquake strikes. At least 13 people were killed and dozens injured in Pakistan and Afghanistan. The epicenter was in the Hindu Kush Mountains in Afghanistan and tremors were felt over an area more than 600 miles once. The latest salvo in the artificial intelligence war is here and it's called Bard. That's Google's answer to Microsoft's explosively popular chat GPT. Google let certain users test Bard on Tuesday, though it's no Shakespeare yet. Last month, a promotional video for Bard showed the program answering a question incorrectly,

helping shave $100 billion off Alphabet's market value. You see him being restrained so brutally with knee on his neck, the weight of seven individuals on his body, while he's face down, handcuffed with leg irons. And you say, my God, why it is so unnecessary. is so unjustifiable. That's civil rights attorney Ben Crump. He's describing a surveillance video showing Virginia sheriff deputies wrestling with a handcuffed man for several minutes before he dies.

28-year-old Ivo Otiano is seen being carried into the central state hospital before he dies in the footage uncovered by the Washington Post. Three former mental health hospital employees and seven sheriff's deputies have been charged with second-degree murder after Otiano died. died in their care. Medical examiners say the official cause of death was asphyxiation. Japanese fans erupt in jubilation as they beat Team USA to win the World Baseball Classic for the first time since 2009. Two-way superstar Shohai Otani struck out his Los Angeles' Angels' teammate Mike Trout to seal a 3-2 victory for Japan in the WBC finale.

Cheers. A last toast between dear friends, Xi Jinping and Vladimir Putin before the Chinese leader heads home from his state visit to Moscow. The duo pledged to shape a new world order and promised economic cooperation. But no dice for Putin if he hoped for any direct Chinese support for the war in Ukraine. Xi barely mentioned the conflict during the visit, saying China had an impartial position, something the White House disputes. Putin praised Xi for a 12-point peace plan submitted last month. But it has no specific details on how to end the bloody year-long war.

As the two leaders met, Japan's Prime Minister Fumil Kishida visited Kiev, and the International Monetary Fund later announced a loan package of nearly $16 billion to shore up Ukraine's economy. The rival visits and the West's financial lifeline to Kiev, Kyiv shows how the Ukraine war is altering global alliances. Stuck in the middle are many smaller countries, like Moldova. Nestled between Romania and Ukraine, the country's government wants closer ties with Europe, but that means the wrath of Moscow, which is pulling it in the other direction. Moldova's accused Russia of orchestrating protests and carrying out cyber attacks there.

The Kremlin has repeatedly denied the accusations. Reuters Thomas Eskrit's been to the capital, Kishinau, to see how all this is putting Moldova very much on edge. I was first there 10, 12 years ago, when it was a authoritarian government in charge, and the atmosphere on the streets was frankly kind of creepy. People were worried. Now it's a much more cheerful place.

There are hipster cafes full of third wave coffee and cool artists. But there are enormous tensions. They don't want to think of Russia directly. very cautious, but reading between the lines, it's quite clear that that's what they believe. I went to see Anna Ravenko, who became famous in Moldova as a campaigner against people trafficking, and now she's Interior Minister. Because of the changes in the scenarios, in the way Moscow is orchestrating this hybrid war, we had to revise certain approaches of ours, harshan some of our security profiles.

All in all, the security situation remains quite volatile. Out on the edge of Kishinau, the Moldovan capital, there is the headquarters of the Moldovan Ministry of Defence, lined with busts of kings of the medieval kingdom of Moldova. There I spoke to Valeriyumija, Secretary of State for Defence Policy. All this type of threats increased after the war in Ukraine start. last year, what we realize that we need to boost this cyber defense and security sector. In Moldova, politicians strongly feel that things have come to a crunch.

Thomas Esprit, Reuters correspondent reporting from Moldova. In France, Emmanuel Macron faces massive protests and threats of worker strikes after he forcibly passed a wildly unpopular pension reform. He survived a no-confidence vote in Parliament, but he has a difficult road ahead. Richard Locke from our Paris Bureau is here to explain. Hi Richard. So is Macron in trouble? He is in trouble, yeah. He won't be dislodged from his position as president, but he faces perhaps the gravest challenge to his authority since the Yellow Vest Rebellion of 2018, 2019.

He showed that he will struggle for the rest of his second term to find compromise. to find consensus within Parliament. That's going to leave the rest of his reform agenda over the next four years up for question. And there is widespread anger amongst the public at his government's move to bypass Parliament and ram through this deeply unpopular pension system overhaul. So what's next for Macron?

How does he move forward from this? The priority now for Macron is to quell the public anger. There is a general acknowledgement that the presidency, that the government, that the ruling party comes out of all of this weakened. Even so, there are no plans for cabinet reshuffle. There's no snap election planned, at least in the immediate term. We understand. The president's going to go on to the airwaves later today to try and, in the words of one official, calm things down. He needs to act quickly.

On Thursday, we see another round of protests and strikes called by trade unions. so he's got to find a way of taking the wind out of their sails. Richard, thank you so much. And finally, as Xi Jinping flies out of Moscow, one film he likely won't be watching on the plane home is Winnie the Pooh, Blood and Honey. The British slasher movie has been screened worldwide, but its scheduled release in Hong Kong has been cancelled.

Its distributor said cinemas in the city declined to show it, but didn't say why. Chinese censors have previously targeted the film's main character, character over memes that compare the bear to President Xi. And that's it for Reuters World News. We'll be back on Thursday. In the meantime, you can find more trusted news at Reuters.com.