Fed Raises Rates to Curb Inflation, Despite Trump’s Preference for Lower Rates 

The Federal Reserve raised its benchmark interest rate by 0.25 percentage point on Wednesday to a range of 3.75%–4.00%, its first rate increase in three years and the first policy change under new Fed Chair Kevin Warsh. The unanimous decision reflects persistent inflation pressures despite President Donald Trump’s pledge to bring prices down. Tariffs on imports, the energy shock stemming from the U.S.-Israeli war with Iran, and heavy AI-related capital spending have all contributed to elevated prices.

The Fed also signaled that further tightening is likely. Its latest economic projections showed 16 of 18 policymakers expect at least one more quarter-point increase by year-end, while only two expect rates to remain unchanged. Nearly all officials now see upside risks to inflation, suggesting they increasingly believe price pressures extend beyond temporary shocks from energy and tariffs.

Warsh said his support for the rate increase was also driven by signs that the U.S. economy is gaining momentum. Strong employment, resilient domestic spending, productivity growth and robust capital investment are adding to inflationary pressures, he said. That marks a shift from the Fed’s July meeting, when Warsh had favored keeping rates unchanged.

The decision is particularly notable because Trump selected Warsh with expectations that he would favor lower interest rates. Instead, less than four months after taking office, Warsh has overseen the Fed’s first rate hike since 2023. The Federal Open Market Committee said inflation “remains elevated” and that tighter monetary policy should help bring it back toward the Fed’s 2% target.

Reference Sources

1. Bloomberg - Fed Raises Rates to Curb Inflation, Drawing Rebuke From Trump
2. Reuters - Fed raises rates in search of 'timelier' drop in inflation, sees more tightening ahead
3. CNBC - Warsh says inflation is still too high as Fed hikes for the first time since 2023

Huawei to Unveil Next-Gen AI Chip Today, Commercialization Scheduled for 2027

Huawei Technologies is preparing to unveil its next-generation Ascend 960 AI chip at its annual summit in Shanghai, with rotating chairman Wang Tao expected to present the technology on Thursday. The chip, scheduled for commercial availability in 2027, represents Huawei’s latest effort to challenge Nvidia’s dominance in AI computing despite US export restrictions. A key question will be whether the Ascend 960 delivers enough performance to train frontier AI models.

Huawei has set an ambitious goal for its Ascend processors to support virtually every AI model, both in China and overseas. Supervisory board chairman Guo Ping said the company is narrowing the technology gap through new chip architectures and software optimization, drawing a comparison with Apple’s evolution in processor design. Huawei has previously said each new Ascend generation will roughly double the computing power of its predecessor.

The company is already gaining traction with its existing Ascend 950 family. DeepSeek plans to deploy at least 160,000 Ascend 950DT chips at a new data center in Inner Mongolia, while Huawei is exploring opportunities for its AI chips in overseas markets including Malaysia and Egypt. The Ascend 960 will succeed the 950 series, while an Ascend 970 is planned for 2028 as part of Huawei’s three-year push to compete more directly with Nvidia.

Huawei’s AI-chip strategy is also part of China’s broader drive for technological self-sufficiency amid years of US semiconductor restrictions. The company expects autonomous AI agents to generate more than 90% of global AI token traffic by 2035, dramatically increasing demand for computing capacity. Huawei argues that as agents increasingly perceive information, reason, make decisions and use external tools continuously, AI infrastructure will require not only substantially more computing power but also systems designed to keep software secure and controllable.

Reference Sources

1. Bloomberg - Huawei Set to Unveil China’s Best Answer to Nvidia AI Chip Reign
2. Reuters - China's Huawei forecasts billions of agents will dominate AI traffic by 2035

SK Hynix in Talks with Intel about Deal to Make Memory Chips in the US 

South Korean company SK Hynix is reportedly in talks with Intel to manufacture memory chips in the US for the first time.

Under one scenario, SK Hynix would lease part of Intel's long-planned Chipmaking facility in Ohio, or it could form a joint venture with Intel and major cloud firms that are keen to lock in memory chip supplies. A deal would relieve pressure on Intel, which has been struggling, and mark a big win for the Trump administration, which has been ramping up pressure on chipmakers to build in the United States as relentless investment in AI and data centres fuels an acute memory-chip shortage.

However, potential opposition from Seoul could be a major hurdle, the sources said.

The talks are exploratory, and no decisions have been made, one source told Reuters.

The news sent shares of both companies higher in pre-market trading.

Intel rose 5% while SK Hynix's Nasdaq-Listed shares were 3% higher.

Reference Sources

1. barrons - Intel Stock Surges. How an SK Hynix Tie-Up Would Make It a Memory Chip Play.
2. thestarmy - Exclusive-SK Hynix in talks with Intel about deal to make memory chips in the US for the first time, sources say
3. cnbc - Intel, SK Hynix shares jump on report they're discussing U.S. memory chip manufacturing
4. wsj - Intel Shares Rise Premarket on Report of SK Hynix U.S. Manufacturing Talks

The CommonWealth English daily news digest is a service curated by CommonWealth English team with the help of AI tools.  

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