Arguments for gradual interest rate cuts

Good morning. Today we will cover:

• What is happening at the Russian-Ukrainian border?

• Singapore's Prime Minister warns of tensions between the US and China

• Should Starbucks cut spending in China?

But first of all, it's about US interest rates. The Federal Reserve must gradually reduce borrowing costs, one of its top officials told the Financial Times.

Recent economic data has given San Francisco Fed President Mary Daly “more confidence” that inflation is under control. It is time to adjust borrowing costs from their current range of 5.25 percent to 5.5 percent, Daly said.

The speed at which U.S. interest rates will decline from their 23-year highs will be a key question on the lips of policymakers when they gather for their annual meeting in Jackson Hole, Wyoming, later this week.

Here’s what I’m keeping an eye on today:

• The Democratic Party Convention: More than 50,000 people are expected to attend the party convention in Chicago, where Joe Biden, Barack Obama and Bill Clinton will give speeches and Kamala Harris will deliver her coronation speech on Thursday.

• Thailand: Former Thai Prime Minister Thaksin Shinawatra must appear in court for a preliminary hearing on charges he allegedly insulted the monarchy in 2015 (The Nation).

• Japan: Machinery order data for June will be released.

• FT Business Book of the Year: The longlist for the FT and Schroders book competition is announced.

Five more top stories

1. Tensions between the US and China and Singapore: The “intensifying rivalry” between Washington and Beijing will have an impact on the economy of the city-state and the entire region, warned Singapore’s Prime Minister Lawrence Wong.

2. US Secretary of State visits Israel: Antony Blinken's visit comes at a time when Washington has stepped up its diplomatic efforts to reach an agreement to end the war between Israel and Hamas and release the hostages still held in the Gaza Strip.

3. South Korea’s plan for AI textbooks: The country's proposal to introduce digital textbooks based on artificial intelligence in schools has sparked a backlash from parents and academics.

4. Tata shows interest in power distribution: The Indian conglomerate's energy arm will consider expanding its distribution footprint if state-owned power distribution companies are up for sale, its CEO said.

5. Mining problems: China's struggling real estate sector has dampened demand for steel and threatens to squeeze earnings at the world's largest mining companies.

Detailed news

Nearly two weeks after Ukrainian troops broke through flimsy border fortifications and stormed into Russia, Moscow has still not assembled the overwhelming force needed to repel Kiev's incursion. Instead, it has cobbled together units from across the country and from less active parts of the Ukrainian front. Despite the Ukrainian advances, Russian President Vladimir Putin appears unwilling to divert any more significant resources from the eastern front, leaving him with few options.

We also read…

• India’s labor market challenges: According to current trends, it could take another 75 years for India to reach just a quarter of America's per capita income. To change that, the country must use its workforce, writes the FT editorial.

• The new CEO of Starbucks: There are good reasons for the world's largest coffee company to cut capital spending and slow down its expansion plans in China, writes Pan Yuk of Lex.

• Demographic change: Societies in Asia and the Pacific are ageing rapidly, raising the challenge of meeting increasing needs for physical and mental health care, writes Albert Park, chief economist at the Asian Development Bank.

Chart of the day

Major technology companies Amazon, Google and Microsoft are investing tens of billions of dollars in data centers around the world in the race to develop artificial intelligence. The US state of Virginia is home to the world's largest concentration of data centers, followed by the Beijing metropolitan area. Together, the two regions account for just over a fifth of the total global hyperscale data center capacity.

Take a break from the news

Director Guan Hu belongs to the “Sixth Generation” of Chinese filmmakers, alongside international festival favorites Jia Zhangke and Wang Xiaoshuai. The group, which emerged in the early 1990s, is characterized by its distinctly realistic style and its focus on people on the fringes of rapidly changing Chinese society. Guan's latest film Black Dog revolves around the relationship between former convict Lang (Eddie Peng) and a greyhound named Xiao Xin. The film won the Un Certain Regard award at Cannes this year.

Additional contributions by Harvey Nriapia, Tee Zhuo and Benjamin Wilhelm