Fed on track for 2015 rate rise, Shinzo Abe’s reform pledge and the cost of medicines

The daily briefing “FirstFT” from the Financial Times.

The recent shortfall in US inflation is largely a result of fleeting factors such as falling energy and import prices, the Federal Reserve chair said, as she reiterated her expectation that the central bank would lift rates this year.

Janet Yellen said that while the Federal Open Market Committee was monitoring the risk of an overseas slowdown hitting US growth, it did not currently expect this to have a significant effect on the path for US monetary policy. (FT)

In the news

Shinzo Abe’s reform pledge The Japanese leader has vowed to expand the country’s output by 22 per cent – from Y491tn to Y600tn – and said his programme of reforms was entering asecond stage. However, the pledge was damped by new figures from the central bank, which showed the country had fallen back into deflation for the first time since April 2013. (FT)

Hundreds die in Hajj stampede More than 700 pilgrims were killed and about 800 injured outside the Muslim holy city of Mecca, where some 2m pilgrims are performing the annual Hajj rituals. Such disasters are politically sensitive for Saudi Arabia’s ruling dynasty, which presents itself internationally as the guardian of orthodox Islam and custodian of its holiest places in Mecca and Medina. (FT)

The mysterious Xi Jinping The Obama administration is not quite sure what to make of the Chinese president. Few doubt his rapid assertion of control over the Chinese bureaucracy, but in place of the economic reformer many had expected, Mr Xi is seen as more ideological, more opaque and potentially more wary of foreign companies. (FT)

A tale of two industrial giants Caterpillar slashed its 2015 revenue forecast by $1bn and said it could cut up to 10,000 jobs through 2018 amid a mining and energy slump a day after Boeing announced $38bn in new aircraft orders from China. (FT, Reuters)

VW’s new boss Matthias Müller, head of Porsche, has emerged as the favourite to replaceMartin Winterkorn, who resigned as boss of Volkswagen amid a widening scandal over diesel emissions. Mr Müller is close to the Porsche and Piech families who together control a majority of VW’s voting shares. (FT)

It’s a big day for

Navinder Singh Sarao The British trader accused of contributing to the 2010 flash crash that knocked nearly $1tn from the value of US equities faces an extradition hearing in London. (FT)

Food for thought

The $2.7bn blimp boondoggle That’s how much the US spent on a system of giant radar-equipped dirigibles to provide an early warning if the country were ever attacked with drones or other low-flying weapons. Earlier this year, the programme had a chance to prove its worth when a Florida postal worker flew a single-seat aircraft through 30 miles of highly restricted airspace. The blimps didn’t detect a thing. (LA Times)

Pharma: value over volume A furore this week over a 5,000 per cent price increase on a drug used by Aids and cancer patients reflected the unique excesses of the US market. It also feeds into a broader debate about the cost of medicines at a time when societies battle to contain healthcare fees for ageing populations and growing middle classes. (FT)

How Chinatown stays Chinatown The ethnic enclave in New York defies the laws of real estate, and remains populated by low-income Chinese and dominated by mom-and-pop stores. How has Chinatown – located on one of the most desirable tracts of real estate in all of Manhattan – resisted the gentrification that has enveloped the rest of the island? (NYMag)

From pariah to powerbroker Russia’s military surge in Syria has enabled Vladimir Putin to shift his image and again project the country as a player on the global stage. However queasy the US may be about Mr Putin’s intentions, he has made himself a figure Washington cannot ignore. (FT)

Tracking a hacker The story of Ge Xing provides a detailed look into Beijing’s sprawling state-controlled cyber espionage machinery, a major source of tension between the US and China as President Xi Jinping tours the US. (WSJ)

Video of the day

The billionaires’ promise In a new FT video series, Ambitious Wealth, Stephen Foley talks to signatories of the Giving Pledge – created by Warren Buffett and Bill Gates – about their philanthropic work. (FT)

This article is published in collaboration with FirstFT. Publication does not imply endorsement of views by the World Economic Forum.

To keep up with Agenda subscribe to our weekly newsletter.

Author: FirstFT is the Financial Times’ editors curated free daily email of the top global stories from the FT and the best of the rest of the web.

Image: The United States Federal Reserve Board building. REUTERS/Gary Cameron.