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Getting the global economy out of the slow lane

With global growth stabilizing for the first time in three years, inflation reaching a three-year low, and financial conditions brightening, the global economy seems to be on its final approach for a “soft landing.” But this positive news cannot obscure the grim reality: more than four years after the COVID-19 pandemic began, the world—especially developing economies—has yet to embark on a promising path toward prosperity. As a new World Bank Group report shows, the rate at which annual global growth is stabilizing—2.7 percent, on average, through 2026—is significantly lower than ...

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Fed’s Williams expects rates to come down as inflation pressures ease

New York Federal Reserve President John Williams said on Tuesday interest rates will come down gradually over time, but he declined to say when the U.S. central bank can kick off its monetary policy easing. “I expect interest rates to come down gradually over the next couple of years, reflecting the fact that inflation is coming back to our 2% target and the economy is moving in a very strong sustainable path,” Williams said in an interview on the Fox Business television channel. Asked if the Fed will meet the ...

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Fed’s Musalem signals cautious approach to cutting rates in debut speech

The U.S. central bank should only start to cut interest rates after “months, and more likely quarters” of falling inflation, moderating demand and expanding supply, St. Louis Federal Reserve President Alberto Musalem said on Tuesday, in his first public comments on monetary policy since becoming head of the regional Fed bank. “I will need to observe a period of favorable inflation, moderating demand and expanding supply before becoming confident that a reduction in the target range for the federal funds rate is appropriate. These conditions could take months, and more ...

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ECB’s De Guindos sees rate decisions every three months as best course

The European Central Bank’s vice president, Luis de Guindos, said on Tuesday that the best time to make rate decisions was coinciding with the release of the bank’s updated macroeconomic projections, the next of which is slated for September. The ECB lowered its key rate by 25 basis points from a record high to 3.75% on June 6, its first cut in five years. However, it raised its inflation forecasts and President Christine Lagarde declined to confirm it had entered a phase of “dialling back” its restrictive monetary policy. “The ...

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US business inventories rebound in April

U.S. business inventories rebounded in April, potentially setting up inventory investment to contribute to economic growth this quarter after being a drag since the fourth quarter. Inventories increased 0.3% after dipping 0.1% in March, the Commerce Department’s Census Bureau said on Tuesday. The rebound in inventories, a key component of gross domestic product, was in line with economists’ expectations. Inventories rose 1.0% year-on-year in April. Private inventory investment has been a drag on GDP for two straight quarters, slicing off 0.45 percentage point from growth in the January-March quarter, the ...

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Fed’s Barkin: we’ll learn a lot more over next “several months” of economic data

Richmond Fed President Thomas Barkin said on Tuesday that before he considers supporting a rate cut he needs to parse several more months of economic data. “We are clearly on the back side of inflation,” Barkin said in an interview with MNI Webcast. “We will learn a lot more over the next several months and I think we are well positioned from a policy standpoint to react.” “For me, it’s sustainment and broadening (that) are the two themes. Sustainment means that headline and core (inflation) continue to go on a ...

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US manufacturing production surges in May

Production at U.S. factories increased more than expected in May, recouping all the declines in the prior two months, but the momentum is unlikely to be sustained amid higher interest rates and softening demand for goods. Manufacturing output jumped 0.9% last month following a downwardly revised 0.4% drop in April, the Federal Reserve said on Tuesday. Economists polled by Reuters had forecast factory output rebounding 0.3% after a previously reported 0.3% fall in April. Production at factories had declined in March and April. It gained 0.1% year-on-year in May. Manufacturing, ...

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ECB’s Lane sees no need for any French bond rescue

The European Central Bank’s chief economist said there was no need for the ECB to come to France’s rescue by buying bonds because recent market turmoil fuelled by political uncertainty was “not disorderly”. In a Reuters NEXT Newsmaker interview, Philip Lane said he remained confident inflation will fall back to the ECB’s 2% target in 2025 after four years of unusually brisk price growth following the COVID pandemic and Russia’s invasion of Ukraine. French financial markets endured a brutal sell-off late last week as investors cut their positions ahead of ...

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ECB pays attention to good functioning of markets, Lagarde says, after France spooks investors

The European Central Bank pays close attention to the smooth functioning of financial markets, ECB President Christine Lagarde said, after French President Emmanuel Macron’s call for a snap parliamentary vote last week spooked investors. Investors were demanding a 77-basis-point premium for lending to AA-rated France over triple-A Germany for 10 years in Monday morning trade, little changed from Friday after climbing 29 bps last week in its biggest weekly rise since 2011. Asked if the spread was a concern, Lagarde told reporters at an event near Paris: “Price stability goes ...

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Falling bond yields leave China’s central bank facing tough call

China’s central bank faces a looming test of its resolve to curb the financial stability risks it sees in a rallying bond market as it runs counter to its view of the economy by depicting a long-term outlook of soft growth and low inflation. The People’s Bank of China, which has pledged to add treasury bond trading to its monetary policy toolkit, has issued repeated warnings against plummeting yields in long-dated government bonds, but has failed to reverse the trend. Pressure is growing on the PBOC to back statements with ...

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EU Policy. Election aftermath – MEPs to watch on economic and financial policy

The European Parliament is establishing new political groups and leadership, with the first constituent plenary session on 16-19 July – Euronews has earmarked MEPs likely to shape economic and finance policy in the new assembly. A new parliament is being shaped around the powerful central European People’s Party group with its coalition Socialist & Democrat, green and liberal allies, but with a strengthened far right adding fresh impetus and uncertainty to the process – all of which could affect the development of financial policies over the next five years. While ...

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US manufacturing group calls for stronger protection against Chinese imports

A policy group led by the United Steelworkers union and domestic manufacturers is calling for the U.S. to enact stronger trade barriers to Chinese imports after President Joe Biden imposed steep tariffs on Chinese electric vehicles, solar panels and other strategic goods. The Alliance for American Manufacturing (AAM) on Friday published a report on China’s excess industrial capacity that echoes concerns raised by the Biden administration and U.S. allies in recent months, saying quick action was needed to stem a rising tide of cheap and subsidized exports that threatens U.S. ...

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In new forecasts, Fed appears to bow out of the election cycle

The U.S. Federal Reserve may have just ducked out of the presidential campaign spotlight with a fresh set of forecasts showing no interest rate cuts are likely until after Election Day. Central bank policymakers on Wednesday kept their benchmark interest rate unchanged at 5.25%-to-5.50%, where it has been since last July. They also issued projections showing greater hesitance than before about starting reductions in high borrowing costs that have made it more costly for Americans to buy anything on credit from a washing machine to a car to a house ...

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Bank of England to use June meeting to lay the ground for a summer rate cut

1.Will the Bank of England cut rates on Thursday? Markets overwhelmingly think the answer to this question is no. The swaps curve is pricing barely a 5% chance of a rate cut. Much of that is down to the latest inflation data, but clearly the timing of the 4 July election is a factor, too. Investors reckon the Bank is highly unlikely to cut interest rates in an election campaign. We wouldn’t be so sure of that. We don’t expect a rate cut, but markets are under-pricing the chances. The ...

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India: ‘Economy to grow at 8% in FY25, green shoots visible in rural consumption’

Industry body Confederation of Indian Industry (CII) expects the country’s economy to grow at 8% in FY25, its fourth consecutive year of above 7% growth, according to Sanjiv Puri, its newly elected president, who is also chairman and managing director of consumer goods major ITC Ltd. The industry body’s projection is notably above the 7.2% growth forecast by the RBI for this fiscal. Puri said at a media briefing on Thursday that green shoots are visible in rural consumption. On 7 June, RBI governor Shaktikanta Das, too, had shared expectations ...

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