U.S. prices increased moderately in June as the declining cost of goods tempered a rise in the cost of services, underscoring an improving inflation environment that could position the Federal Reserve to begin cutting interest rates in September. The report from the Commerce Department on Friday also showed consumer spending slowed a bit last month. Signs of easing price pressures and a cooling labor market could boost the confidence of Fed officials that inflation is moving toward the U.S. central bank’s 2% target. The Fed will hold its next policy ...

Federal Reserve policymakers on Friday got fresh evidence of progress on inflation, fueling expectations they will use the U.S. central bank’s meeting next week to signal they could start cutting interest rates in September. The personal consumption expenditures (PCE) price index edged up just 0.1% last month, the Commerce Department’s Bureau of Economic Analysis reported, putting the year-over-year increase at 2.5%, after a rise of2.6% in May. The Fed has a 2% inflation target. Fed policymakers have said they want to be confident inflation is headed sustainably back to that ...

Reforms announced at the Third Plenum of the ruling Communist Party of China signal the government’s focus on greater fiscal flexibility, particularly in balancing revenue and expenditure between the central and local administrations. However, the credit effects will depend on how the changes are implemented, as well as on local governments’ willingness to exploit any additional revenue-raising powers delegated to them, says Fitch Ratings. The Third Plenum’s focus is on medium-term policy. In most areas its overarching theme was continuity, including the emphasis on so-called “high-quality economic development”, led by ...

Euro zone banks have “room for improvement” in their cyber security, starting with how they would keep their business running after a hack, the European Central Bank said on Friday. The ECB’s first ever cyber risk stress test was launched in response to a surge in attacks, some with possible geopolitical motives, and its results came a week after a global tech outage that disrupted sectors including finance. As part of the exercise, 109 banks were told to detail how they would respond to and recover from a successful cyber-attack, ...

China’s latest series of rate cuts show the central bank’s monetary framework has changed, analysts said, with the short-term repo rate becoming the primary signal and a diminished role for its medium-term lending facility (MLF). CONTEXT The People’s Bank of China (PBOC) surprised markets this week by first cutting several key rates including loan prime rate (LPR) and reverse repo rate on Monday. It then conducted an unscheduled MLF lending operation on Thursday, at steeply lower rates. The sequence was a departure from the past, as MLF rate changes have ...

Core inflation in Japan’s capital accelerated for a third straight month in July but an index gauging demand-driven price growth slowed, data showed on Friday, complicating the central bank’s decision on how soon to raise interest rates. The data comes ahead of the Bank of Japan’s two-day policy meeting that ends on Wednesday, when its board will debate whether to raise interest rates and lay out details on how it plans to taper its huge bond purchases. The Tokyo core consumer price index (CPI), which excludes volatile fresh food costs, ...

Morale amongst Italian manufacturing and consumers rose in July, data showed on Friday, but the overall business confidence index fell for a fourth month running, hit by declines in the services and construction sectors. National statistics institute ISTAT’s manufacturing confidence index rose to 87.6 in July from 86.9 the month before, and above a median forecast of 87.0 in a Reuters survey of nine analysts. The June figure was previously given as 86.8. ISTAT’s composite business morale index, combining surveys of the manufacturing, retail, construction and services sectors, fell to ...

A September interest rate cut by the European Central Bank is “very possible”, though its future policy will remain data-dependent, a former deputy governor of the Irish central bank said. Stefan Gerlach, deputy governor at the Central Bank of Ireland between 2011 and 2015, said he expected euro zone inflation pressures to abate further which, along with a “natural weakness” in economic activity, will allow the ECB to continue reducing rates. “The likelihood of a rate cut in September is material,” Gerlach, currently chief economist at EFG Bank in Zurich, ...

Euro zone consumers stopped reducing their inflation expectations in June after four consecutive monthly falls, a European Central Bank survey showed on Friday. The ECB’s Consumer Expectations Survey is one input that central bankers from the euro zone’s 20 countries use to gauge whether the public has faith in their ability to bring down inflation to their 2% goal. The latest poll showed the median consumer expected inflation to average 2.8% over the next 12 months, stable from May after a steady fall from 3.3% in January. Inflation three years ...

GDP and inflation beat expectations We’ve had a pretty solid set of US activity numbers today, but it isn’t having a major impact on market expectations for rate cuts, which are increasingly being seen as a done deal. GDP grew an annualised 2.8% in second quarter 2024, a little above our 2.5% forecast and more so against the 2% consensus figure while the core PCE deflator, the Fed’s favoured inflation measure, rose 2.9% annualised versus the 2.7% expectation. This latter figure, which is an improvement on the 3.7% jump in ...

The U.S. economy grew faster than expectedin the second quarter, but inflation subsided, leaving intact expectations of a September interest rate cut from the Federal Reserve. Gross domestic product increased at a 2.8%annualized rate last quarter, the Commerce Department’s Bureau of Economic Analysis said in its advance estimate of second-quarter GDP on Thursday. Economists polled by Reuters had forecast GDP rising at a 2.0% rate. Estimates ranged from a 1.1% rate to a 3.4% pace. The economy grew at a 1.4% rate in the first quarter. U.S. central bank officials ...

China’s central bank surprised markets for a second time this week by conducting an unscheduled lending operation on Thursday at steeply lower rates, suggesting authorities are trying to provide heavier monetary stimulus to prop up the economy. The medium-term lending facility (MLF) operation comes after the central bank cut several benchmark lending rates on Monday, just days after a top leadership meeting, which had outlined other major reforms. The People’s Bank of China (PBOC) issued 200 billion yuan ($27.5 billion) in one-year loans under its MLF CNMLF1YRRP=PBOC at 2.30%, down ...

The Federal Reserve’s battle to get inflation under control likely faces fresh challenges should Donald Trump regain the White House, a dynamic that could put the U.S. central bank back in the former Republican president’s crosshairs. A wide range of economists see Trump’s tariff agenda, coupled with aims to deport millions of undocumented workers and the likelihood of expanded deficits, reigniting price pressures that are now easing and likely driving the Fed to react with more restrictive monetary policy than is now penciled in. Forecasters predict Trump’s plan to impose ...

Tiny improvement in loan growth Broad money (M3) growth in the eurozone accelerated to 2.2% year-on-year in June 2024, from 1.5% in May. This reflected a stable annual growth rate of adjusted loans to households of 0.3%, while the annual growth rate of adjusted loans to non-financial corporations increased to 0.7% in June from 0.3% in May. Overall, this still reflects rather tight credit conditions. According to the European Central Bank’s latest bank lending survey, standards for lending to firms tightened slightly in the second quarter, while standards for mortgages ...

The crucial role of national oil companies (NOCs) in reducing global methane emissions is becoming evident. At the 2023 United Nations Climate Change Conference COP28 in 2023, over 50 oil and gas companies, including 30 NOCs, pledged to cut methane emissions to near zero and end routine flaring by 2030. NOCs, which produce half of the world’s oil and gas and hold two-thirds of global reserves, had largely been absent from the methane discussion until now. Despite these pledges, implementation is challenging due to NOCs’ diverse priorities, such as generating ...