CEOs from top Wall Street banks JPMorgan Chase and BNY have voiced support for the independence of the US Federal Reserve, ‍days after the Trump administration opened a criminal investigation into Fed Chair Jerome Powell.

The administration’s investigation into Powell drew condemnation from former Fed chiefs and criticism ​from key members of the Republican Party this week.

“Everyone we know believes in Fed independence,” JPMorgan CEO Jamie Dimon told reporters.

“This is probably ⁠not a great idea and in my view, it will have the reverse consequences of raising inflation expectations and probably increase rates over time.”

Dimon, one of the most influential figures in corporate America, said Fed independence was “absolutely critical” in 2025.

Bank of America CEO Brian Moynihan told CNBC that an independent Fed provides an anchor for economic success in the United States.

“If you think about the US economy, you think about the strength of this country, ‌you think about us ​leading the world across all dimensions. One of the important parts that is to have an independent Fed who will ‍then set interest rate policies based on what they see,” he said.

An “independent Fed provides an anchor in this country to a success that I think all of us believe in, and you see it as…markets reflect that,” Moynihan said.

BNY CEO Robin Vince also warned of negative consequences of eroding Fed independence on Tuesday.

“Independent central banks with the ability to independently set monetary policy in the long term interests of the nation is a pretty well established ​thing that we’ve seen all around the world over a very long period of ‌time,” Vince told reporters on a call.

“Let’s not shake the foundation of the bond market and potentially do something that could cause interest rates to actually get pushed up because ​somehow there’s lack of confidence in the Fed’s independence,” Vince said.

Powell revealed late on Sunday the Fed had received subpoenas from the US ‍Justice Department, which he called a “pretext” to win presidential influence over interest rates. The US administration’s criminal probe is formally about the renovation of the Fed’s headquarters.

Central bankers worry that political influence over the Fed would undermine confidence in the bank’s commitment to its inflation ​target, ​risk higher inflation and fuel volatility in global financial markets.

“Loss ​of Fed independence tends to lead to steeper yield curves and other ​damage to ongoing economic dynamism,” JPMorgan’s finance chief, Jeremy Barnum, said.

“The larger question is damage to American economic prospects and, frankly, global economic stability.”

Trump has demanded the Fed slash rates since resuming office in 2025, blaming its policies for holding back the economy and publicly musing about firing Powell, despite legal protections that ostensibly shield the Fed chair from removal.

While Powell’s term as chair ends in May, he has the right to remain on the Fed board until January 31, 2028, denying the president another Fed appointment that would otherwise be Trump’s fourth on the seven-member board until near the ‍end of his term.

Household spending continues to build momentum, heightening expectations of a Reserve Bank rate hike.

After official figures released on Monday showed stronger-than-expected spending in November, data from Commonwealth Bank revealed no let-up in consumption despite a gloomier outlook for interest rates.

CBA’s household spending insights report, derived from de-identified payments data from seven million retail customers, rose another 0.7 per cent in December.

The strong lift comes despite some analysts predicting a slowdown in December spending data, due to Black Friday discounting bringing forward spending to November and a slump in the Westpac-Melbourne Institute consumer confidence index in December.

Annual spending growth climbed to 6.3 per cent in Australian Bureau of Statistics data, suggesting real household consumption is tracking above expectations.

“The strength in household spending late in the year was more robust than anticipated and points to a willingness to spend that exceeds our earlier forecasts,” Commonwealth Bank head of Australian economics Belinda Allen said.

Entertaining and eating out in the lead-up to Christmas underpinned spending growth, with food and beverage spending up one per cent in the category’s strongest monthly rise since April.

“This momentum adds to concerns the economy may be running above its speed limit, supporting our expectation for a February rate hike.”

A key theme for 2026 will be whether capacity constraints limit the growth rate of Australia’s economy and contribute to a sustained resurgence in inflation.

In a speech in November, Reserve Bank of Australia deputy governor Andrew Hauser warned Australia could be “boxed in” by low productivity unless policymakers found a way to create more supply capacity.

Low unemployment and high capacity utilisation rates, as measured in NAB’s business survey, backed the RBA’s assessment of little spare capacity left in the economy, Bank of Queensland chief economist Peter Munckton said.

But is was not yet clear whether that meant the RBA needed to raise interest rates.

“The data in coming months will confirm whether the rise of inflation in the second half of last year reflected a series of one-off price rises or a result of excess demand,” he said.

“If it is the former then the cash rate likely won’t rise and economic growth could be about as good as it was last year. 

“If it is the latter then interest rates will likely rise this year (probably by a half percentage point) resulting in a modestly weaker economic outcome in 2026 than in 2025.”

Official spending data for December won’t be released until after the Reserve Bank’s February 2-3 board meeting, with fresh jobs data and, crucially, December quarter inflation figures to instead guide the RBA’s decision.

Religious leaders are raising concerns over definitions under draft hate speech reforms, which they say might open people up to prosecution over past remarks.

Hate speech laws will be debated on Monday when parliament returns early following the December 14 massacre at Bondi Beach.

Under the changes, hate speech and racial vilification offences would be introduced with a defence included for people quoting directly from a religious text.

The bill “sets a principle-based test for conduct and speech that incites racial hatred towards another person or group”, Prime Minister Anthony Albanese said.

Anglican Bishop Michael Stead said the reform created a “minefield of definitions” about hate and that the bill included a retrospective element in relation to banned groups.

“I’ve got particular concerns about the definition of what is a hate crime,” he told a parliamentary inquiry on Wednesday.

Dr Stead said the bill could be expanded to claim Christian teaching caused serious harm, leading to a Christian organisation being listed as a hate group.

“Defining something which is not a hate crime to be a hate crime, just so that we can list the group, seems to me entirely inappropriate,” he said.

The Anglican bishop said the bill placed an “unwarranted limitation” on freedom of thought, conscience and belief.

He called for its debate to be delayed so it could be properly scrutinised.

Australian National Imams Council President Sheikh Shadi Alsuleiman said the bill created “serious legal uncertainty” by exposing past lawful speech to new penalties.

“This contradicts fundamental principles of the legality and places religious leaders whose sermons are often public (and) recorded under ongoing retrospective risk,” he said.

“Taking together, these features disproportionately burdens the Australian Muslim community.”

Sheikh Alsuleiman also said the reform needed to be delayed by at least a month because a time frame of one week to consider all the implications was unreasonable.

“Such a bill is rushed and needs to be scrutinised and given more time for consultation and to get this right,” he said.

Liberal MP Andrew Hastie announced his decision to vote against the reform, which he said was an “attack on our basic democratic freedoms”, as well as freedom of religion and conscience.

“Those three freedoms are fundamental to any democratic society,” he said in a video posted to Instagram.

“They’re hard won, and they’ve served Australians well for more than 100 years. This bill will reduce them, and that’s why I’m voting no.”

Mr Hastie also accused Mr Albanese of “showing absolute contempt for normal parliamentary process” with the bill’s size.

The prime minister announced a royal commission would be set up after weeks of mounting pressure from the coalition, Jewish groups, business leaders and sporting stars.

A report on the hate speech reforms is due on Friday before debate next week.

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Treasurer Jim Chalmers faces a renewed push to reform capital gains taxes, with pressure mounting from economic think tanks, anti-poverty advocates and even the NSW government to make the system fairer for all Australians.

Critics argue a Howard-era change to the way profits on investments are taxed has turbocharged housing prices and worsened inequity in Australia by increasing the burden on less wealthy individuals.

Because capital gains are partially eaten up by inflation, some form of tax discount is warranted, but the current method is both inequitable and inefficient and should be replaced with a fairer approach, the e61 Institute think tank said in a submission to a Greens-led Senate inquiry.

Prior to 1999, individuals only had to pay tax on capital gains above inflation. 

But since then, all capital gains have received a much more generous 50 per cent discount on assets held longer than 12 months.

That has resulted in preferential tax treatment for – often wealthy – asset owners at the expense of asset-poor working Australians, e61 researchers Matt Nolan and Matt Maltman said.

Instead of the current discount, individuals should be allowed to spread their tax liability over the life of the asset rather than being charged for a single year, they argue.

“Income averaging would ensure that taxpayers with similar lifetime income would pay similar tax rates regardless of whether they earn regular wages or have a volatile one-off gain,” Mr Maltman said.

This method would lead to higher taxation on high-income earners’ capital gains, while reducing tax paid on interest and dividend income, he said.

But independent think tank the Grattan Institute and the Australian Council of Social Service (ACOSS) called for the discount to simply be reduced to 25 per cent, phased in over five years.

ACOSS said the current discount encouraged speculative investment and excessive household debt.

NSW Treasury said the capital gains discount had incentivised investors to pile into the housing market, contributing to rising property prices and declining home ownership.

Since 1994, lending to investors has increased by 1001 per cent to $139 billion, while first-home buyer lending increased by just 520 per cent to $64 billion.

“There is a strong case for reviewing the CGT discount to ensure it is fit for purpose, supporting fairness, efficiency, and sustainable economic outcomes, and better aligning with contemporary housing and equity objectives,” NSW Treasury said in its submission.

But Robert Carling, a senior fellow at centre-right think tank the Centre for Independent Studies, argued for the current system to be retained.

The concession should go beyond simply allowing for inflation, the current 50 per cent discount was simple and well understood, and it accounted for very little growth in home prices compared to supply shortages, he said.

The Senate committee is due to present its final report by March 17.

Donald Trump’s mounting siege of Federal Reserve chair Jerome Powell will be closely watched by Australian fund managers, even as markets take the latest assault on the independence of the US central bank in their stride.

The US president’s attempts to pressure the Fed to cut interest rates prompted an unprecedented intervention by 12 international central bankers, including Reserve Bank of Australia governor Michele Bullock, who issued a statement in solidarity with Mr Powell and the Fed.

Former RBA veteran Jonathan Kearns, now chief economist at annuities giant Challenger, said it was a historically unusual move by the central bankers who tend to shy away from politics.

“The independence of central banks is a cornerstone of price, financial and economic stability in the interest of the citizens that we serve,” read the statement, which was also signed by Bank of England governor Andrew Bailey and the European Central Bank’s Christine Lagarde.

The subdued reaction of equities and bonds traders is unsurprising.

Other than the bond market meltdown following the liberation day tariff shock last April, markets have mostly brushed off developments out of the White House.

Ms Bullock has warned that low risk premiums, despite heightened geopolitical instability and the threat of tariffs, mean a worse outcome than expected could catch traders off guard and ultimately end in tears.

Dr Kearns doubted Mr Trump would pay much attention to the central bankers’ statement, but could be forced to rein in his attack if the bond market responds violently to the prospect of a politicised Fed resulting in higher-for-longer inflation.

“A lot of analysts believe that the risks are greater than seems to be being priced by the bond market,” he told AAP.

“If you were to see a larger reaction from the bond market, then maybe you do get some sort of pullback in the way that you did see after liberation day.”

JP Morgan chief executive Jamie Dimon, one of the most influential voices on Wall Street, said chipping away at Fed independence to lower rates would have the reverse consequence, by raising inflation expectations and interest rates over time.

Super funds have more than $600 billion tied up in US assets, according to IFM Investors and the Super Members Council, and have increasingly turned to the US to park their funds as they have outgrown the Australian market.

Dr Kearns said Australian fund managers should be changing the way they perceive the risks of US investments, given the risk of higher inflation.

But there’s also the risk of overreacting and missing out on the AI bonanza turbocharging US equities.

“What we’ve seen investors doing is saying, ‘well, I can’t completely reduce my exposure to the US, but I’m going to tweak it at the margin’,” he said.

“So we’ve heard statements from some of the super funds that say they’re redirecting a larger share of their flows to other markets, rather than the US, because of their assessment of the prospects and the risks.”

China’s trade surplus surged to a record of almost $US1.2 trillion ($A1.8 trillion) in 2025 as exports picked up in December.

Customs data shows that China’s global surplus rose 20 per cent from the previous year, with exports at $US3.77 trillion and imports at $US2.58 trillion. 

The 2024 trade surplus was $US992 billion.

China’s exports for December were up 6.6 per cent from the previous year, better than economists’ estimates and higher than November’s 5.9 per cent year-on-year increase. 

Imports in December were up 5.7 per cent year-on-year, compared to November’s 1.9 per cent.

Economists expect exports will continue to support China’s economy in 2026, despite trade friction and geopolitical tensions.

“We continue to expect exports to act as a big growth driver in 2026,” said Jacqueline Rong, chief China economist at BNP Paribas.

While China’s exports to the US have fallen sharply since President Donald Trump returned to office and escalated his trade war with the world’s second-largest economy, that decline has been largely offset by shipments to other markets in South America, Southeast Asia, Africa and Europe.

Strong exports have helped keep China’s economy growing at an annual rate close to its official target of about five per cent, but they have also triggered alarm in countries that fear a flood of cheap imports are damaging local industries. 

The head of the International Monetary Fund in December called for China to fix its economic imbalances and speed up its shift from reliance on exports by boosting domestic demand and investment. 

An exiled underworld boss linked to ongoing tobacco wars has been arrested following an independent criminal investigation by Middle Eastern authorities.

Kazem ‘Kaz’ Hamad was arrested for drug trafficking, according to a statement from Iraq’s National Centre for International Judicial Cooperation.

AFP Commissioner Krissy Barrett says the arrest marks a significant disruption to an alleged serious criminal and his illicit enterprise in Australia.

She says federal police have been working with domestic partners to dismantle the offender’s criminal network, including targeting the alleged offender offshore.

“AFP members have met with a number of agencies offshore about this alleged offender. And I have had one-on-one conversations with law enforcement principals about this alleged offender,” Ms Barrett said on Wednesday.

“Late last year, the AFP provided information to law enforcement officials in Iraq about this alleged offender. Iraqi officials have made an independent decision to arrest this alleged offender after launching their own criminal investigation.”

Hamad is believed to be the leader directing organised crime operations in Australia from the Middle East.

The syndicate is believed to be behind several high profile firebombings, as it fights for control over the importation and distribution of illegal tobacco in Victoria.

Police revealed in March that several tobacco store owners were intimidated with threats linked to a so-called “Kaz Tax”.

Detective Inspector Graham Banks described the incidents as extortion, saying some shop owners were so concerned for their safety that they sold their businesses and changed their addresses.

Police also suspect Hamad had been involved with the arson attack on the Adass Israel Synagogue in Melbourne in December 2024.

He was deported from Australia in 2023.

Iraq’s National Centre for International Judicial Cooperation said on Tuesday that Hamad was “one of the most dangerous wanted men in the world”.

“The accused individual … was arrested in co-ordination with the General Directorate of Narcotics and Psychotropic Substances Affairs at the Ministry of Interior, after obtaining the necessary approvals from the Supreme Judicial Council to conduct investigations against him,” the statement reads.

“The proceedings were initiated by the First Karkh Investigation Court, which specialises in drug cases.”

The statement says Hamad is allegedly responsible for importing large quantities of drugs into Iraq and Australia, as well as smuggling heroin.

“He is also involved with the most prominent organised crime gangs in Australia – Sydney, responsible for shootings, murders, kidnappings, violent assaults, extortion, and drug imports,” it says.

Iraqi authorities say they believe he is involved with outlaw gangs that have extensive influence within Australia and the Middle East.

“(They) are responsible for carrying out murders, shootings, money laundering, fraud, assaults, arson, and drug trafficking on a global level.”

Federal police thanked Iraqi authorities for their work, adding they would co-operate with key partners to help keep Australians safe.

Asian stocks rose on Wednesday, buoyed by Japanese shares, as investors braced for a snap election in Japan that could lead ‍to more fiscal stimulus, while worries about central bank independence and benign US inflation data whipsawed currencies.

Geopolitical tensions across the globe lifted gold to a record peak and sent oil prices ​higher as US President Donald Trump urged Iranians to keep protesting, saying help is on the way. Iran in turn accused Trump of encouraging political destabilisation and inciting violence.

The Japanese yen hit ⁠its weakest level since July 2024 at 159.415 per dollar in early Asian hours, as the threat of a market intervention resurfaced. Local media reported that Prime Minister Sanae Takaichi was considering calling a snap lower house election on February 8.

The frail yen and the prospect of more stimulus sent the Nikkei up more than 1.0 per cent to a record and pushed Japanese government bonds lower, a so-called “Takaichi trade” that appears to have been turbocharged this week as investors worry about the country’s fiscal health.

Masahiko Loo, senior fixed income strategist at State Street Investment ‌Management, said the ​market moves reflected expectations of fiscal easing, though they may be overstated given political constraints as Takaichi’s coalition would need the opposition’s support in the upper ‍house to pass legislation.

“Any sharp and decisive break beyond 161 level (for yen) could trigger renewed intervention to curb excessive volatility,” Loo said. “In that scenario, expectations for a Bank of Japan rate hike may shift forward to April, potentially serving as an inflection point for currency dynamics.”

MSCI’s broadest index of Asia-Pacific shares was up 0.2 per cent to hover just below a record peak reached on Tuesday. Overnight, US stocks ended lower, led by a drop in financial shares after comments from JPMorgan executives added to worries about Trump’s recent proposal for a cap on credit card rates.

Chinese ​stocks rose 0.7 per cent in early trade, just below a 10-year high that was hit on Tuesday. ‌European stock futures rose 0.1 per cent, pointing to a muted open.

Data on Tuesday showed moderate underlying inflation pressures last month in the US Economists said this suggested the pass-through of import tariffs to prices was slowing, keeping ​rate cuts on the table this year, although the broad expectation is for the Fed to stand pat this month.

Traders are pricing in at least two rate ‍cuts this year, with a move not expected until after Fed Chair Jerome Powell’s term ends in May.

Matt Simpson, a senior market analyst at StoneX, said US inflation is not slowing sufficiently to move the needle towards imminent rate cuts.

“With lack of enthusiasm for cuts from an economic perspective, the US dollar might enjoy a ​bit ​more of a bid before the tide reverts to bearish hands,” Simpson ​said.

The dollar index, which tracks the greenback’s performance against a basket of currencies including ​the yen and the euro, inched higher to 99.243 after rising 0.2 per cent in the previous session.

The dollar was knocked back at the start of the week as investors worried about Fed independence under Trump after the US Department of Justice threatened to indict Fed Chair Powell in connection with a building renovation project.

That led to a sharp rebuke from Powell and global central bank officials later issued a coordinated statement of support for him on Tuesday.

Steve Lawrence, chief investment officer of Balfour Capital Group, said markets appeared to view this episode as largely political rather than a substantive institutional threat.

“Powell’s characterisation of any threat of indictment as intimidation reinforces that interpretation, signalling institutional defence rather than escalation,” Lawrence said. “From a market perspective, this suggests existing guardrails around the Fed are ‍still seen as intact.”

In commodities, gold rose 0.6 per cent to $US4,613.93 ($A6,907.54) per ounce and silver surged more than 2.0 per cent, also climbing ​to a record high.

Australia’s largest steelmaker will return hundreds of millions of dollars to shareholders after fending off a $13 billion takeover offer.

BlueScope Steel investors will receive a total of $438 million under a special dividend payout of $1 per share, after rejecting the offer from the Stokes family-controlled SGH and bid partner Steel Dynamics of the US.

The cash payout will be funded from surplus cash generated from the sale of certain assets, including its 50 per cent interest in the Tata BlueScope joint venture providing coated steel products for the Indian market.

The Illawarra steelworks operator has also offloaded 33 hectares of land in West Dapto, near the facility on the NSW south coast, for $76 million, and is releasing about $200 million of working capital from “residual” projects in its property division.

“This dividend decision is part of BlueScope’s established capital management framework and is independent of any prior or potential future proposals for the company,” it said in a statement on Wednesday.

Last week, BlueScope rejected a $13.2 billion offer, which would have resulted in a breakup of the group with the Australian assets going to SGH and the US business going to Steel Dynamics.

SGH and its partner are yet to formally respond to the rejection of their offer, which amounted to $30 per share and which BlueScope said dramatically undervalued its assets.

Market analysts have suggested the would-be predators will need to increase their offer if they want to return to the table.

The SGH/Steel Dynamics offer was made on December 12, but only came to light on January 5, when it was also revealed Steel Dynamics had made three unsuccessful previous approaches to take control of BlueScope.

“This special dividend demonstrates BlueScope’s ability to generate and distribute returns to its shareholders,” CEO Mark Vassella said.

“With a clear line of sight to the completion of our current significant capital investment program, BlueScope is positioned to not only return to the robust cash generation it has been known for, but to strengthen it further with the enhanced earnings of the business.”

The special dividend is unfranked and will be paid on February 24, after BlueScope releases its first half results on February 16.

BlueScope shares closed at $29.84 on Tuesday, just below the predators’ offer price.

The Trump ‍administration has given the green light to China-bound sales of ​Nvidia’s second most powerful AI chips, putting in place a rule that ⁠will likely kickstart shipments of the H200 despite deep concerns among China hawks in Washington.

According to the regulations, the chips will be reviewed by a third party testing lab to confirm ‌their technical ​AI capabilities before they can be shipped to China, which ‍cannot receive more than 50 per cent of the total amount of chips sold to American customers.

Nvidia will need to certify there are enough H200s in the US while Chinese customers must demonstrate “sufficient security procedures” and ​cannot use the chips for ‌military purposes.

US President Donald Trump announced in December that he would allow the chip ​sales and collect a 25 per cent fee on such sales.

The decision drew ‍fire from China hawks across the US political spectrum over concerns the chips would supercharge Beijing’s military and erode US ​advantage ​in artificial intelligence.

Such ​concerns had prompted the Biden administration ​to bar sales of advanced AI chips to China.

But the Trump administration, led by White House AI czar David Sacks, argues that shipping advanced AI chips to China discourages Chinese competitors like Huawei from redoubling efforts to catch up with Nvidia’s and AMD’s most-advanced ‍chip designs.