Tag Archives: Washington

U.S. envoy: Lebanon’s Bassil was open to breaking ties with Hezbollah

By Laila Bassam

BEIRUT (Reuters) – The U.S. envoy to Lebanon said on Monday that Lebanese Christian politician Gebran Bassil, who has been sanctioned by the United States, had voiced willingness to sever ties with Hezbollah, challenging his assertion that he rejected the idea outright.

Washington on Friday blacklisted Bassil, son-in-law of Lebanon’s president and leader of its biggest Christian bloc, over charges of corruption and ties with the Iran-backed Shi’ite Hezbollah, which Washington deems a terrorist group.

Bassil slammed the sanctions as unjust and politically motivated, saying they were imposed after he refused to submit to a U.S. demand to break ties with Hezbollah as that would risk Lebanon’s national unity and peace.

U.S. Ambassador Dorothy Shea told Lebanon’s Al Jadeed TV that Bassil, in exchanges with her, had “expressed willingness to break with Hezbollah, on certain conditions.

“He actually expressed gratitude that the United States had gotten him to see how the relationship is disadvantageous to the party,” said Shea, without elaborating on the conditions.

Bassil did not immediately respond to a request for comment.

He, along with an array of the political elite, have been the target of mass protests since October 2019 against widely perceived corruption, waste and mismanagement of state funds.

Bassil denied corruption charges and said he would fight the sanctions in U.S. courts and sue for damages. President Michel Aoun said Lebanon would seek evidence from Washington.

“We endeavor to make as much information publicly available as possible when announcing designations, but, as is often the case, some of this information is not releasable,” said Shea, adding that Bassil was welcome to legally contest the blacklisting.

Bassil was sanctioned under the Global Magnitsky Human Rights Accountability Act, which targets human rights abuses and corruption. Shea did not rule out further sanctions against him or others in Lebanon.

Washington in September blacklisted two former Lebanese government ministers it accused of directing political and economic favors to Hezbollah.

(Reporting by Laila Bassam; Writing by Ghaida Ghantous; Editing by Mark Heinrich)

Khamenei says Iran’s U.S. policy not affected by who wins election

DUBAI (Reuters) – Iranian Supreme Leader Ayatollah Ali Khamenei said on Tuesday the U.S. presidential election’s result will not impact Tehran’s policy towards Washington.

“Our policy towards the United States is clearly set and does not change with the movement of individuals. It does not matter to us who comes and goes,” Khamenei said in a speech carried live on state TV.

Khamenei was speaking on the anniversary of the 1979 seizure of the U.S. embassy in Tehran, which coincided with the birthday of Islam’s Prophet Mohammad.

“The students’ attack on this den of spies was quite appropriate and wise,” Khamenei said, referring to radical Islamist students who stormed the embassy, taking hostage 52 staff for an eventual 444 days. There have been no U.S.-Iranian diplomatic relations since.

Iran this year cancelled rallies and other events marking the embassy seizure because of concerns over the spread of the coronavirus which has killed about 36,000 people in the country, the worst hit in the Middle East.

The Democratic nominee, Joe Biden, has pledged to rejoin Iran’s 2015 nuclear deal with six powers if Iran returns to compliance with it.

In 2018 President Donald Trump abandoned the deal, under which Iran international financial sanctions on Iran were lifted in return for curbs to its nuclear program. Iran followed Washington’s rejection by reducing its compliance.

Iran’s Foreign Minister Mohammad Javad Zarif told U.S. network CBS on Monday that he wants the United States to rejoin the accord, but that “re-engagement does not mean renegotiation” because “if we wanted to do that [renegotiate], we would have done it with President (Donald) Trump four years ago.”

Zarif told CBS that “the statements by the Biden camp have been more promising, but we will have to wait and see”.

Trump has said he wants to strike a broader accord that would also address Iran’s missile program and regional activities. Iran has ruled out any negotiations unless Washington first returns to the agreement.

(Reporting by Parisa Hafezi, additional reporting by Dubai newsroom; Editing by Andrew Heavens and Peter Graff)

Putin proposes Russia, U.S. extend New START arms control treaty for one year

MOSCOW (Reuters) – Russian President Vladimir Putin proposed on Friday that Russia and the United States extend their New START arms control treaty that expires in February for at least a year without imposing any conditions.

The New START (Strategic Arms Reduction Treaty) accord, signed in 2010, limits the numbers of strategic nuclear warheads, missiles and bombers that Russia and the United States can deploy.

A failure to extend the pact would remove all constraints on U.S. and Russian deployments of strategic nuclear weapons and their delivery systems, fueling a post-Cold War arms race and tensions between Moscow and Washington.

Putin, speaking at a meeting by video link with Russia’s Security Council that was broadcast on state television, said the treaty had worked effectively until now and it would be “extremely sad” if it were to stop working.

“In this regard, I propose… extending the current treaty without any conditions for at least a year so that meaningful negotiations can be conducted on all the parameters of the problems…” he said.

Russia and the United States, which has called for China to be included in the arms control treaty, have appeared at odds over extending the pact despite several months of talks.

On Wednesday, Moscow denied U.S. assertions that the two sides had reached an agreement in principle.

(Reporting by Gabrielle Tétrault-Farber and Vladimir Soldatkin; writing by Tom Balmforth; editing by Jon Boyle and Tomasz Janowski)

Up in smoke: California wine country counts cost of wildfire damage

By Marco Hernandez and Simon Scarr

(Reuters) – When a wildfire swept down California’s Napa Valley in August, winemaker Patrick Elliot-Smith stayed put, fighting the encroaching flames with water pumps and laying fire breaks around his vines in a battle with nature that lasted three days.

He and his son managed to save their family-run Elan winery in the valley’s Atlas Peak appellation.

But smoke damage from the LNU Complex fire was so bad that they – along with dozens of other wineries damaged or burned down by some of the worst U.S. wildfires in living memory – decided not to harvest any grapes this year or sell fruit to other producers.

“We cannot afford a bad vintage,” Elliot-Smith told Reuters. “It looks like a lunar landscape here.”

When smoke is absorbed into a vine and concentrates in the fruit, it alters a grape’s chemistry and ultimately its taste, leaving some wines with “ashtray aromas” that may appear during fermentation or even as late as after bottling.

Smoke has blanketed much of the U.S. West and fires have charred more than 4 million acres (1.6 million hectares) in California so far in 2020, more than twice the previous record for any year.

The still active Glass Fire has destroyed dozens of buildings, including the mansion-like Chateau Boswell winery and a farmhouse containing storage, bottling and fermentation facilities at the Tuscan castle-style Castello di Amorosa.

Both producers’ premium reds sell for upwards of $200 a bottle.

The Newton Vineyard winery also went up in flames, according to a Reuters photographer who visited the site, observing rivulets of red wine mixed with ash flowing down its main access road.

HUNDREDS OF SMOKE TAINT CLAIMS

Susan Meyer, owner of RustRidge Winery, said her crop was a write-off “both from the fire itself and the smoke that lingered for days. Many plants were burned by fire but others died from the heat exposure,” she said.

Her insurance provider alone was dealing with 600 claims for smoke taint, she added.

The true impact on a $70 billion-a-year national industry centered in California, Oregon and Washington state will not be known for months as the wildfire season is not yet over.

While grapes picked from the vine before exposure are safe from smoke taint, many winemakers with as yet unpicked harvests are awaiting the results of smoke testing from backlogged wine laboratories before deciding whether to proceed.

A notice this week on the website of Napa Valley-based ETS Laboratories warned of a wait till November for new tests.

Its co-founder and technical director, Gordon Burns, said it was too early to speculate as to the overall damage.

“Every location is different, and smoke exposure may be transitory and as little as none at all. Any fire impacts will certainly not be to the entire vintage in any of the affected winegrowing regions,” he added.

Eric Jensen, owner of Booker and My Favorite Neighbor wineries in California’s Paso Robles region, said he expected his crop to have escaped damaged “because of the distance that the smoke traveled to get to us.

“But in Napa and (neighboring) Sonoma, the proximity is causing issues.”

Further North in Oregon’s picturesque Willamette Valley, Jason Hanson of Hanson Vineyards expects his crews may only harvest five tons of grapes, down from at least 25 last year, due to smoke taint from nearby fires.

“With the dense smoke that we’ve had at the ground level for so long now, almost everything has to be affected or damaged,” Hanson said.

“I have a yearly fight with the birds. This year I’ll just let them win.”

(writing by John Stonestreet)

Washington hits Belarus with sanctions as Minsk retaliates against EU measures

(Reuters) – The United States imposed sanctions on eight Belarusian officials on Friday, accusing them of involvement in rigging President Alexander Lukashenko’s re-election victory in August or the violent crackdown on protests that followed.

The move came after the European Union announced sanctions on 40 people, including the interior minister and the head of the election commission, achieving a breakthrough on the issue at summit talks in the early hours of Friday morning.

Lukashenko was spared, in line with the EU’s policy of punishing powerbrokers as a last resort. He denies electoral fraud and says the protests are backed from abroad.

Lukashenko’s government announced retaliatory sanctions against unidentified officials, recalled its ambassadors to Poland and Lithuania for consultations and nudged both countries to reduce the size of their embassy staff in Minsk.

Lukashenko is grappling to contain nearly two months of street protests that pose the biggest challenge to his 26-year rule. More than 13,000 people have been arrested, and major opposition figures jailed or exiled.

“The United States and our international partners stand united in imposing costs on those who have undermined Belarusian democracy for years,” U.S. Treasury Secretary Steven Mnuchin said in a statement.

The U.S. sanctions also targeted Belarusian Interior Minister Yuri Karaev and his deputy. Those under sanctions are subject to asset freezes and a ban against Americans doing business with them.

Washington had originally been expected to impose sanctions in concert with Britain and Canada, which went ahead on Tuesday with travel bans and asset freezes on Lukashenko, his son Viktor and other senior officials.

Washington has had sanctions on Lukashenko since 2006 but the president was spared in the latest round of measures.

LUKASHENKO SPEAKS TO PUTIN

The crisis has pushed Belarus back towards traditional ally Russia, which has propped up Lukashenko’s government with loans and the offer of military support. Moscow sees its ex-Soviet neighbor as a strategic buffer against the EU and NATO.

Lukashenko and Russian President Vladimir Putin spoke by phone on Friday, expressing confidence that “the problems that have arisen will soon be resolved”, the Kremlin said.

Lukashenko’s government announced it had drawn up a list of people who were banned from travelling to Belarus in retaliation for the EU sanctions. It did not name the officials or the countries they were from.

“…we are imposing visa sanctions against the most biased representatives of European institutions, including the European Parliament and the states – EU members,” foreign ministry spokesman Anatoly Glaz was quoted by the official Belta news agency as saying.

“The list is symmetrical in many ways. We have decided not to make it public for now.”

Russia’s foreign ministry said the Belarusian sanctions would apply in Russia as well.

Lukashenko’s government also asked the Polish and Lithuanian embassies to reduce their staff. Both countries refused.

“We are not going to summon our ambassadors for consultations, and we will definitely not do anything to reduce personnel,” Lithuanian Foreign Affairs Minister Linas Linkevicius told reporters.

“We are not interested in reducing our communications channel,” he said. “If the advice becomes a request, then we will take appropriate measures.”

The Belarusian authorities have detained journalists or stripped them of their accreditation as part of the crackdown on the unrest that followed the Aug. 9 election.

On Friday, the foreign ministry announced it was stripping journalists working for foreign media organizations of their accreditation, and asked them to reapply for their permits.

“I would like to make it clear that it is in no way some attempt to cleanse the news reporting field,” Glaz was quoted by Belta as saying.

The EU sanctions had been held up by Cyprus due to an unrelated dispute with Turkey. The delay dented the credibility of the EU’s foreign policy, diplomats said.

“That we could now agree to those sanctions is an important signal because it strengthens the hand of those who are protesting for freedom of opinion in Belarus,” German Chancellor Angela Merkel told journalists.

Merkel will meet on Tuesday with Sviatlana Tsikhanouskaya, Lukashenko’s main electoral opponent who fled into exile after the vote in the ex-Soviet republic, fearing for her family’s safety.

French President Emmanuel Macron met Tsikhanouskaya on Tuesday, pledging European support for the Belarusian people.

(Reporting by Matt Spetalnick, Daphne Psaledakis and Arshad Mohammed in Washington, Robin Emmott in Brussels, Andrius Sytas in Vilnius, Vladimir Soldatkin, Alexander Marrow and Polina Ivanova in Moscow, Joanna Plucinska in Warsaw, Thomas Escritt in Berlin; writing by Matthias Williams; editing by Mark Potter)

Threat to evacuate U.S. diplomats from Iraq raises fear of war

By John Davison

BAGHDAD (Reuters) – Washington has made preparations to withdraw diplomats from Iraq after warning Baghdad it could shut its embassy, two Iraqi officials and two Western diplomats said, a step Iraqis fear could turn their country into a battle zone.

Any move by the United States to scale down its diplomatic presence in a country where it has up to 5,000 troops would be widely seen in the region as an escalation of its confrontation with Iran, which Washington blames for missile and bomb attacks.

That in turn would open the possibility of military action, with just weeks to go before an election in which President Donald Trump has campaigned on a hard line towards Tehran and its proxies.

Secretary of State Mike Pompeo threatened to close the embassy in a phone call a week ago to President Barham Salih, two Iraqi government sources said. The conversation was initially reported by an Iraqi news website.

By Sunday, Washington had begun preparations to withdraw diplomatic staff if such a decision is taken, those sources and the two Western diplomats said.

The concern among the Iraqis is that pulling out diplomats would be followed quickly by military action against forces Washington blamed for attacks.

Populist Iraqi cleric Moqtada al-Sadr, who commands a following of millions of Iraqis, issued a statement last week pleading for groups to avoid an escalation that would turn Iraq into a battleground.

One of the Western diplomats said the U.S. administration did not “want to be limited in their options” to weaken Iran or pro-Iranian militias in Iraq. Asked whether he expected Washington to respond with economic or military measures, the diplomat replied: “Strikes.”

The U.S. State Department, asked about plans to withdraw from Iraq, said: “We never comment on the Secretary’s private diplomatic conversations with foreign leaders … Iran-backed groups launching rockets at our Embassy are a danger not only to us but to the Government of Iraq.”

PERENNIAL RISK

In a region polarized between allies of Iran and the United States, Iraq is the rare exception: a country that has close ties with both. But that has left it open to a perennial risk of becoming a battle ground in a proxy war.

That risk was hammered home in January this year, when Washington killed Iran’s most important military commander, Qassem Soleimani, with a drone strike at Baghdad airport. Iran responded with missiles fired at U.S. bases in Iraq.

Since then, a new prime minister has taken power in Iraq, supported by the United States, while Tehran still maintains close links to powerful Shi’ite armed movements.

Rockets regularly fly across the Tigris towards the heavily fortified U.S. diplomatic compound, constructed to be the biggest U.S. embassy in the world in central Baghdad’s so-called Green Zone during the U.S. occupation after a 2003 invasion.

In recent weeks rocket attacks near the embassy have increased and roadside bombs targeted convoys carrying equipment to the U.S.-led military coalition. One roadside attack hit a British convoy in Baghdad, the first of its kind against Western diplomats in Iraq for years.

On Monday three children and two women were killed when two militia rockets hit a family home, the Iraqi military said. Police sources said Baghdad airport was the intended target.

Two Iraqi intelligence sources suggested plans to withdraw American diplomats were not yet in motion, and would depend on whether Iraqi security forces were able to do a better job of halting attacks. They said they had received orders to prevent attacks on U.S. sites, and had been told that U.S. evacuations would begin only if that effort failed.

DOUBLE-EDGED SWORD

Iraqis are concerned about the impact of November’s presidential election on the Trump administration’s decision-making.

While Trump has boasted of his hard line against Iran, he has also long promised to withdraw U.S. troops from engagements in the Middle East. The United States is already drawing down its force sent to help defeat Islamic State fighters in Iraq from 2014-2017.

Some Iraqi officials dismissed Pompeo’s threat to pull out diplomats as bluster, designed to scare armed groups into stopping attacks. But they said it could backfire by provoking the militias instead, if they sense an opportunity to push Washington to retreat.

“The American threat to close their embassy is merely a pressure tactic, but is a double-edged sword,” said Gati Rikabi, a member of Iraq’s parliamentary security committee.

He and another committee member said U.S. moves were designed to scare Iraqi leaders into supporting Prime Minister Mustafa al-Kadhimi, who has tried to check the power of Iran-aligned militia groups, with scant success.

HAWKS ON BOTH SIDES

The militias are under public pressure to rein in supporters who might provoke Washington. Since last year, public opinion in Iraq has turned sharply against political groups seen as fomenting violence on behalf of Iran.

Publicly, the powerful Iran-backed Shi’ite militia groups which control large factions in parliament have tried to distance themselves from attacks on Western targets.

U.S. officials say they think the Shi’ite militias or their Iranian backers have created splinter offshoots to carry out such attacks, allowing the main organizations to evade blame.

A senior figure in a Shi’ite Muslim political party said he thought Trump might want to pull out diplomats to keep them out of harm’s way and avoid an embarrassing pre-election incident.

Militia attacks were not necessarily under Tehran’s control, he said, noting that Iran’s foreign ministry had publicly called for a halt to attacks on diplomatic missions in Iraq.

“Iran wants to boot the Americans out, but not at any cost. It doesn’t want instability on its Western border,” the Shi’ite leader said. “Just like there are hawks in the U.S., there are hawks in Iran who have contact with the groups carrying out attacks, who aren’t necessarily following state policy.”

(Reporting by John Davison, additional reporting by Ahmed Rasheed; Editing by Peter Graff)

Crews make headway against massive California wildfire

By Mimi Dwyer

LOS ANGELES (Reuters) – Firefighters notched a victory in their battle to beat back a massive blaze raging outside Los Angeles, more than doubling containment in the past 24 hours, the U.S. Forest Service said on Wednesday.

The Bobcat Fire, which has been burning in the San Gabriel Mountains north of Los Angeles since Sept. 6, was 38% contained as of Wednesday morning, John Clearwater, USFS spokesperson for Angeles National Forest, said in an email update.

The fire has so far burned more than 113,000 acres but remained relatively stable overnight. The flames were 17% contained on Tuesday.

The Bobcat Fire, one of the largest and most dangerous fires in recorded Los Angeles history, is just one element stoking the worst fire season California has seen to date.

For more than a week it has threatened to overtake the Mount Wilson Observatory, a California landmark and beloved historical site that was home to major astronomical advancements in the early 20th century.

Some 1,556 firefighters are currently deployed to combat it, the Forest Service said.

Wildfires have ravaged the West Coast this summer and pushed firefighters to their limits. At least 26 people have died in fires across California since August 15, including three firefighters, according to the state agency CAL FIRE.

One of those firefighters died as a result of a fire sparked by a botched gender reveal party.

Roughly 3.4 million acres have burned across California during the same period.

Another 10 people have died and approximately 2 million acres have burned in fires in Washington and Oregon.

California has seen five of its largest fires on record in this wildfire season alone. Outside Los Angeles, the momentary reprieve could dissipate by the weekend, when weather was expected to grow warmer and drier, and forecasts showed the possibility of gusty winds, the Forest Service said.

(Reporting by Mimi Dwyer; Editing by Dan Whitcomb and David Gregorio)

California firefighters make stand to save famed observatory, homes

By Dan Whitcomb

LOS ANGELES (Reuters) – Crews fought on Tuesday to defend homes and the famed Mount Wilson Observatory from California’s biggest and most dangerous wildfire, standing their ground at a major highway between the flames and populated areas.

The Bobcat Fire, which broke out Sept. 6 in the Angeles National Forest north of Los Angeles, has already blackened an area larger than the city of Atlanta and its rapid spread prompted worried law enforcement officials to call for new evacuations on Monday evening.

Once home to the largest operational telescope in the world, the Mount Wilson Observatory, which sits on a peak of the San Gabriel mountains near vital communications towers, said in an update that almost all the forest around it had burned.

Firefighters overnight kept the Bobcat from breaching containment lines near the observatory and were preventively burning vegetation ahead of the fire along state Highway 2, which runs northeast from Los Angeles.

This summer California already has seen more land charred by wildfires than in any previous full year, with some 3.4 million acres burned since mid-August.

The fires, stoked by extreme weather conditions that some scientists call evidence of climate change, have destroyed some 6,100 homes and other structures and killed 26 people, three of them firefighters.

Another 2 million acres have burned in Oregon and Washington during an outbreak of wildfires, destroying more than 4,400 structures and claiming 10 lives. But rain showers across the western Cascade mountain range helped fire crews in the Pacific Northwest gain control of those conflagrations.

Although California has seen little rain in September, bouts of high temperatures and gale-force winds have given way in recent days to cooler weather, enabling firefighters to gain ground.

But forecasters predict rising temperatures, lower humidity and a return of strong, erratic winds around midweek in Southern California and by the weekend across the state’s northern half, lending urgency to the firefight.

The Bobcat Fire has now scorched more than 109,000 acres to become one of the largest wildfires in recorded Los Angeles County history and was only 17% contained on Tuesday afternoon.

The flames came perilously close to the Mount Wilson Observatory last week before they were driven back by crews using air support.

Several more areas, including Pasadena, a city of 140,000 people, remained under evacuation warnings.

California’s fire season historically has run through October. Five of the state’s 20 largest blazes on record have occurred this year.

(Reporting by Dan Whitcomb in Los Angeles; Additional reporting by Steve Gorman; Editing by Cynthia Osterman)

California firefighters race to subdue flames before heat and winds return

By Steve Gorman

LOS ANGELES (Reuters) – Five weeks after California erupted in deadly wildfires supercharged by record heat and howling winds, crews battling flames pushed on Monday to consolidate their gains as forecasts called for a return of blistering, gusty weather.

California already has lost far more landscape to wildfires this summer than during any previous entire year, with scores of conflagrations – many sparked by catastrophic lightning storms – scorching some 3.4 million acres since mid-August.

The previous record was just under 2 million acres burned in 2018.

As of Monday, more than 19,000 firefighters continued to wage war on 27 major blazes across the state, according to the California Department of Forestry and Fire Protection (CalFire).

The fires, stoked by extreme weather conditions that scientists have pointed to as signs of climate change, have destroyed an estimated 6,100 homes and other structures and killed 26 people, three of them firefighters, CalFire reported.

Another 2 million acres have gone up in flames in Oregon and Washington state during an overlapping outbreak of wildfires that started earlier this month, destroying more than 4,400 structures in all and claiming 10 lives.

But a weekend of intermittently heavy showers across the western Cascade mountain range helped fire crews in the Pacific Northwest tamp down blazes in those two states.

Although California has seen little or no rain in recent days, bouts of extreme heat and gale-force winds that had produced incendiary conditions for weeks have given way to lower temperatures and lighter breezes, enabling firefighters to gain ground around most fires.

“They’re going to take advantage of this cool weather while they can,” CalFire spokeswoman Lynne Tolmachoff told Reuters.

The break in the weather is not expected to last much longer. Tolmachoff said forecasts call for rising temperatures, lower humidity and a return of strong, erratic winds around mid-week in Southern California and by the weekend across the state’s northern half.

BOBCAT FIRE PROVES STUBBORN

Some fires have proven more stubborn than others. One in particular, dubbed the Bobcat Fire, grew to more than 100,000 acres on Monday in the San Gabriel Mountains north of Los Angeles, with containment levels achieved by firefighters holding steady at just 15%, CalFire said.

The Bobcat last week spread perilously close to a famed astronomical observatory and complex of vital communications towers at the summit of Mount Wilson, while forcing evacuations of communities in the foothills below.

Several more areas, including Pasadena, a city of 140,000 people, remained under an evacuation warning, advising residents to be ready to flee at a moment’s notice. At the opposite end of the sprawling mountain range to the north, the fire was reported to have destroyed some homes and other structures in the high desert of the Antelope Valley.

Across the Bobcat fire zone and others, ground crews with axes, shovels and bulldozers clambered through rugged canyons and mountain slopes, hacking away tinder-dry brush and scrub before it could burn, creating containment lines around the perimeter of advancing flames.

They were assisted by squadrons of water-dropping helicopters and airplane tankers dumping flame retardant on the blazes.

Regardless of the progress they make this week, California’s record fire season remains far from over. The height of wildfire activity historically has run through October. Five of the state’s 20 largest blazes on record have occurred this year.

(Reporting by Steve Gorman in Los Angeles; Editing by Cynthia Osterman)

Fed officials tussle over practical meaning of new inflation policy

By Howard Schneider and Ann Saphir

WASHINGTON (Reuters) – Federal Reserve policymakers on Friday began fleshing out what their new tolerance for inflation will mean in practice, an issue critical to how investors and households reshape their own outlooks even if it may not be relevant to any immediate decisions by the U.S. central bank.

The new policy, laid out in a strategic document last month and incorporated into a policy statement issued on Wednesday, pledges to keep interest rates near zero until inflation has hit the Fed’s 2% target and is on track “to moderately exceed” it “for some time.”

As it stands, with the coronavirus pandemic sapping demand, leaving millions of Americans unemployed, and threatening the survival of entire industries, inflation is not seen as the core risk. Economic projections released by the Fed this week show inflation only reaching 2% by the end of 2023, with any shift towards tighter monetary policy likely years down the road.

But how the Fed’s new language is interpreted by the central bank’s five current Washington-based governors and 12 regional bank presidents will be central to whether bond markets, stock investors and even consumers see the new approach as likely to be effective, and start behaving in a way that actually helps push inflation higher.

After years of weak inflation, that is the Fed’s hope. It is based on fears of a Japanese-style low inflation rut that can have its own damaging effects over time, and Fed officials on Friday started to outline their views of how to proceed.

Atlanta Fed President Raphael Bostic said, for example, that he’d be paying closer attention to how fast inflation rises rather than to its quarter-to-quarter level in implementing the new approach.

In an interview on Bloomberg Television, Bostic said if inflation went up to 2.3% but appeared stable “that would be fine … By contrast if we were at 2.2 and the next quarter at 2.4 and then at 2.6, that trajectory would give me concern” and perhaps require efforts to cool the economy.

‘GHOST STORIES’

Minneapolis Fed President Neel Kashkari, in contrast, laid out a more open-ended view in written comments describing why he dissented against the rate-setting Federal Open Market Committee’s policy statement on Wednesday.

The Fed, he felt, was setting itself up to make the same mistake it has in the past of reacting too quickly to inflation “ghost stories” and risked nipping off job growth too soon.

He said the Fed instead should switch its focus to core inflation, a slower moving variable that excludes volatile commodity prices, and ensure that it reached 2% on a “sustained basis.”

“I would have preferred the Committee make a stronger commitment to not raising rates until we were certain to have achieved our dual mandate objectives,” of maximum employment consistent with stable prices, Kashkari said in an essay.

A second dissent from Dallas Fed President Robert Kaplan argued the central bank should keep its options open to raise rates sooner if needed – a sign of the broad debate now taking place over just what the new framework will mean in practice.

Critics say they feel the Fed’s new approach rings hollow without strong measures to back it up and produce the higher inflation they seek, such as more aggressive bond-buying.

But St. Louis Fed President James Bullard said inflation may move higher on its own if, as he suspects, the economic recovery gains traction at a time when global supply chains are being reorganized, monetary policy is loose, and governments are issuing record levels of debt to finance pandemic-related spending.

“A lot of people on Wall Street are saying ‘you could not hit 2%, how are you going to have inflation above 2%?,'” Bullard said in webcast remarks to a Washington University in St. Louis forum.

“I think we are at a moment where you may see some inflation … You have got more relaxed central banks … You have got huge fiscal deficits which historically have been a catalyst for inflation. And you have possibly bottleneck-type pressures.”

(Reporting by Howard Schneider and Ann Saphir; Editing by Paul Simao)