Highlights of the week: Microsoft and OpenAI dispute, Fed holds rate, US deadline on Iran

This week, it was reported that Microsoft is considering ending talks with OpenAI over their strategic partnership. The U.S. Senate approved a bill on stablecoins despite controversy surrounding U.S. President Donald Trump's cryptocurrency projects. The Federal Reserve kept the rate despite pressure from Trump. About the main events from June 16 to June 20 - in our review. 

On Wednesday, June 18, the U.S. Federal Reserve newly kept its key rate at 4.25 percent to 4.5 percent. On the eve of the decision's announcement, Donald Trump again lashed out at Federal Reserve Chairman Jerome Powell, demanding an immediate rate cut, wrote The New York Times. «I'm calling him every word possible to get him to do something,» Trump said at the White House. He has previously accused Powell of inaction, calling him «stupid» and «Mr. Too-Late.»

Against the backdrop of rate cuts by other central banks - for example, the Swiss National Bank this week canceled its rate - the Fed's stance seems particularly cautious. But the longer the rate remains unchanged, the greater the political pressure on the regulator, according to Gregory Dako, head of economic analysis at EY-Parthenon.

Trump considers a 2.5pc rate cut. «optimal.» But this approach has made even conservative economists wary because of the risk of a surge in inflation, the NYT writes;

Trump says high interest rates are costing the government «hundreds of billions, if not trillions of dollars» because of rising debt service costs. The White House is facing a budget deficit. And the «Big Beautiful» bill, promoted by Republicans and involving tax breaks, would increase the deficit by $3 trillion over the next decade, bringing the national debt to 124% of GDP. 

- Fed Chairman Jerome Powell told a press conference after the decision to keep the key rate unchanged that the effect of Donald Trump's increased duties is starting to take its toll. How he reacts to Trump's criticism - in the material  «We have not faced such a thing». The Fed chief said he expects prices to rise in the summer because of duties.»

Microsoft is considering ending talks with OpenAI over their strategic partnership, wrote the Financial Times, citing anonymous sources. The parties are renegotiating the terms of the current contract, but the main point of contention is what size stake Microsoft will get in the transformed OpenAI structure. The shares from 20% to 49% are being discussed. Even if a compromise cannot be reached, Microsoft will be able to continue using OpenAI technologies under the current agreement until 2030;

OpenAI is seeking to complete its transformation from a non-profit organization to a for-profit entity in order to raise additional funding and prepare for an IPO. The move requires Microsoft's approval. If the reorganization isn't completed by the end of the year, OpenAI risks losing a $20 billion investment from SoftBank, the WSJ previously wrote. In addition, under the terms of the latest rounds of investments, if OpenAI does not complete the transition to a for-profit structure, Microsoft's investment will remain in the form of debt.

The U.S. Senate on June 17 voted 68 to 30 in favor of passing a GENIUS bill aimed at regulating the market for stablecoins - cryptocurrencies whose rate is tied to the value of another asset, such as the dollar and gold, reported ABC News. The main feature of stablecoins is less volatility compared to regular cryptocurrencies. In addition, the law requires steblecoin issuers to hold collateralized reserves, which should protect consumers from the collapse of systems in the event of massive withdrawals.  

Supporters of the law see it as an important step in formalizing the cryptocurrency sector, creating standards and protecting consumers. The law «opens the floodgates» for wider distribution of cryptocurrencies and will allow consumers to choose from more products, said Christian Catalini, founder of the MIT Cryptoeconomics Lab. 

Critics, however, believe the law is too lenient and serves the interests of the industry without providing adequate protection against abuse. Senator Elizabeth Warren called it something that is «worse than no law,» especially amid potential conflicts of interest related to Trump's involvement in cryptocurrency projects. While the law does include a clause prohibiting high-ranking officials and congressmen from issuing stablecoins while serving, Warren believes this is insufficient and accuses the law of creating new loopholes for political «gifts» to cryptocurrency holders associated with Trump.

US President Donald Trump's cryptocurrency project World Liberty Financial became this year's issuer of a stablecoin called USD1. Earlier this year, the Abu Dhabi-based investment firm invested $2 billion in cryptocurrency exchange Binance with it - potentially resulting in a profit for Trump's company.

- After the adoption of the landmark law, the market capitalization of Circle, the creator of one of the main steblecoins, jumped by a third. Who else benefits from the bill wrote Oninvest correspondent Vladislav Osipov in his piece «The adoption of the bill on steblecoins led to a rally of the USDC issuer. Who else won?»;

Donald Trump will make a decision on a possible strike on Iran within two weeks, White House press secretary Caroline Leavitt reported on Thursday. The statement revealed that the US president cited that there is a «substantial likelihood of negotiations with Iran in the near future - which may or may not take place.» 

The U.S. hopes to strike a deal with Iran on its nuclear program. On Friday, representatives of Iran, France, Britain and Germany held talks on the nuclear program in Geneva. But they agreed only to continue the meetings.  

International calls for restraint are increasingly being ignored as the world watches the growing conflict in the Middle East, writes CNBC. On June 17, German Chancellor Friedrich Merz said in an interview with ZDF that Israel is «doing the dirty work» for other countries by attacking Iran's nuclear facilities. Meanwhile, state-run Xinhua News Agency reported that Chinese President Xi Jinping called for an immediate ceasefire between Israel and Iran, saying that a forceful solution is not the answer.

Iran and Israel continued to exchange strikes this week. Israel attacked nuclear sites in Arak and Natanz, while Iran hit a hospital in the Negev, saying it was aiming at a military facility.

- What impact will the war between Israel and Iran have on oil prices? Journalist Ekaterina Smirnova asked analysts for the piece «The Price of Fear: How the Israeli and Iranian war will further affect oil».  

- JPMorgan back in May, in an analytical report on the Middle East, predicted a military strike by Israel against Iran. In «JPMorgan predicted an Israeli strike on Iran. What else did the bank suggest to watch out for?» about other recommendations investment bank. 

U.S. President Donald Trump has signed off on reducing some duties on British imports while the two sides continue talks on a full-blown trade agreement, reports Reuters.

The deal fixes quotas and duties on British cars and completely eliminates duties on UK aerospace products. The issue regarding duties on steel and aluminum is still unresolved. The rate for the UK on steel imports into the US is 25% (50% for other countries). Other important industries, such as pharmaceuticals, are also not mentioned in the agreement.

The leaders of both countries confirmed an agreement on an annual quota for exports of 100,000 cars from the UK to the US with a duty of 10% - this is lower than the current rate of 25% for other countries. Also, the states canceled duties on products of the British aircraft industry, including airplanes and components. The UK, in turn, will reduce duties on American beef and ethanol;