BERLIN, May 6 (Reuters Breakingviews) - Boosting military spending to 3.5% of GDP from the current 2% may have felt like an adequate effort when European leaders took the decision last year. But even if they hit that target as pledged by 2035, countries from Germany to France and Britain will have to spend more and faster on their defence if U.S. President Donald Trump makes good on his repeated threats to pull out of NATO. Considering tight fiscal resources, and the political fallout of having to choose guns over butter, opens new tab, Europe will need to find creative ways to shore up its defence against a potential Russian threat.

The region's members of the North Atlantic Treaty Organization include most European Union states, plus some non-EU countries like Britain and Norway. If Trump quits NATO in a hurry with no negotiation, perhaps fed up with a lack of cooperation with his Gulf adventures, there won't be much time for blue-sky thinking in London, Paris, Berlin or Rome. In such a scenario, Europe would have no choice but to spend fast. Even a truce in Ukraine — a distant possibility at best — would not be much of a relief. It would give Russian President Vladimir Putin the time and resources to rebuild his war machine.

(Continue Reading – RTRS)

Federal Reserve Chair Jerome Powell said last week he intends to remain on the central bank’s board after his term as chairman ends on May 15 — unless the Justice Department ends “with finality and transparency” its criminal investigation into the Fed’s renovations of its headquarters.

Powell’s decision is unusual and, as he doubtless appreciates, not without cost to the institution. It’s also entirely justified.

Powell’s successor as chair is more or less decided, following the Senate Banking Committee’s vote to advance the nomination of Kevin Warsh. But Powell’s term as one of the Fed’s seven governors is separate and runs until 2028. Ordinarily, a departing chair steps down from both positions, as Powell says he’d intended. By remaining on the board, he blocks the appointment of a new governor, which gives the White House an incentive to clarify that it has abandoned, as opposed to merely paused, the inquiry.

(Continue Reading – BBG)