Aurelia Butler

Spurred on by data showing inflation in the euro zone slowing toward the ECB’s 2% target, policymakers have widely been signaling that they will slash its benchmark deposit rate by 25-basis points at its June gathering. The figure currently stands at an all-time high of 4% following a period of policy tightening aimed at corralling price gains.Earlier this week, Chief Economist Philip Lane seemed to back a reduction in rates, telling the Financial Times in an interview that “barring major surprises” the economic data provides enough evidence to justify removing “the top level of restriction.”French central bank chief Francois Villeroy de Galhau also told Germany’s Boersen Zeitung that the ECB has room to ratchet down rates, but said it has “several degrees of freedom” regarding any possible subsequent cuts.The ECB will have the chance to pour through fresh inflation numbers from the euro zone on Friday, with economists predicting that prices rose at a slightly faster annual rate in May compared to the prior month. Last week, ECB President Christine Lagarde declared that she was “really confident” inflationary pressures were “under control.”The ING analysts argued that while a cut in June appears to be a “done deal,” Lagarde’s confidence “might have been a premature.””In fact, incoming inflation data since the start of the year has been slightly stronger than anticipated, mainly due to the service sector, and at least in the coming months inflation could come in somewhat higher than the ECB had projected,” they said in a note.The analysts added that developments around wages — a major influence on broader price pressures — will be “crucial.” Wage growth touched almost record levels in the euro zone at the start of 2024, although the ECB said this was due partly to one-off factors.A reignition of inflation remains a risk, the ING analysts said, noting that prices in the U.S. — typically a leading indicator for the euro area — are “on an upward trend again.” As a result, they argued, the path for the ECB beyond June “is anything but clear.””Any signs of reflation and also stronger economic activity would limit the ECB’s room for manoeuvre,” the ING analysts said. “This is why we expect a hawkish cut next week and an ECB that will, at least at the press conference, try not to give any forward guidance.” More

NEW YORK (Reuters) – If you are a new graduate trying to move away from home and get your start in life: Sorry. For aspiring homebuyers, the United States just experienced its highest-priced April ever recorded, according to the National Association of Realtors.As for renting, that is unaffordable for half of renters, according to a study by the Harvard Joint Center for Housing Studies.Which creates fertile ground for the phenomenon known as … the Boomerang Kid.Many young adults are living with their parents because it makes so much financial sense, according to a new survey by financial services firm Thrivent. In fact, 46% of parents say their adult children have “boomeranged” back home at some point – and 50% of them say sky-high housing costs are to blame.“It is little bit surprising, because I didn’t realize the numbers were so substantial,” said Alex Gonzalez, a financial advisor for Thrivent in Bloomington, Minnesota. “But it is certainly understandable that parents would help their kids get started in life,” adds Gonzalez, who is, incidentally, the parent of two boomerang kids. While a “boomerang” back to the old homestead can be the smart financial choice, it can also create a highly combustible situation. Relationships change as children become adults. And when money, history and emotions are all thrown into a blender, everything has to be handled very carefully.Here are three tips for parents of boomerang kids.HAVE BOOMERANG KIDS CONTRIBUTE As members of the household, presumably bringing in their own incomes at this point, boomerang kids should contribute to expenses. But the financial requirements can be up to you and your particular circumstance.For instance, kids could pay “rent” and/or chip in a portion of the monthly bills to help defray parental expenses. Or in lieu of rent, kids can use that pot of money for fiscal fitness: to build up emergency savings, pay student loans, start a retirement account or create a downpayment fund for their own place.“Perhaps the child is charged for rent and utilities, but at a discounted rate that helps both parties involved,” suggests Andrew Herzog, a financial planner in Plano, Texas. “I know someone who has moved back in with her parents while she works her full-time teaching job, saves a tremendous amount of money in the meantime and pays some rent to grow accustomed to living expenses.”MAKE A PLAN AND BE CLEAR ABOUT ITA boomerang can go wrong when expectations on both sides are very different and resentments start to build up.Avoid those misunderstandings by having discussions upfront, and perhaps even writing it all down. Is there a time frame you have in mind, say a year or two? Do you want to see proof of your kids making financial strides along the way, or does that feel too invasive?“Everyone needs clear parameters regarding what this arrangement looks like and its duration,” advises Ashley Folkes, a financial planner in Hoover, Alabama.“Kids must have strict accountability measures because, too often, they take advantage of their parents,” Folkes said. “Without proper boundaries, this situation can become a form of enabling.”DO NOT SACRIFICE YOUR OWN FINANCIAL FUTUREIf a boomerang involves little more than occupying a spare room that is already there, that is one thing. But if the arrangement affects your own future – preventing you from contributing to retirement funds, requiring you to draw down savings, and so on – then it requires more thoughtfulness about how to keep everybody’s finances on track.For instance, in the Thrivent survey, 38% of parents whose kids have boomeranged back home say they struggle to pay off their own debt, up from 23% in last year’s survey. And 37% say they find it harder to save for retirement or housing costs – up from 16% last year.In that case, a dispassionate third party like a financial adviser can help analyze the situation with clear eyes. “Parents love their kids so much that sometimes emotions take over and they don’t think about themselves,” said Thrivent’s Gonzalez. “An adviser can help set rules, manage expectations and advocate for parents to think about their own goals as well.” More

TOKYO/KUMAMOTO, Japan (Reuters) -The Bank of Japan may raise interest rates if sharp falls in the yen boost inflation or the public’s perception of future prices move more than expected, board member Seiji Adachi said on Wednesday.While short-term currency moves alone would not trigger a policy shift, the central bank could raise interest rates if excessive yen falls persist and have a big impact on inflation expectations, Adachi said in a speech.He also said the BOJ must look not just at downside risks to the economy and prices, but upside risks, in guiding policy.”We must by all means avoid raising interest rates prematurely. But by focusing too much on downside risks, we could see inflation accelerate in a way that forces us to tighten monetary policy sharply later on,” Adachi said.”As long as underlying inflation continues to head toward 2%, it’s important to gradually adjust the degree of monetary support reflecting economic, price and financial developments,” he said, signalling the chance of a near-term rate hike.The remarks highlight the growing significance a weak yen could have on the timing of the BOJ’s next interest rate hike, which some analysts say may occur as soon as July.His comments failed to underpin the yen, which drifted to its softest level in four weeks against the dollar on the back of rising U.S. yields. After hitting an intraday high of 157.41 yen, the dollar stood at 157.10 on Wednesday.Adachi said consumer inflation will re-accelerate from the summer through around autumn this year due to rising import costs and prospects of sustained wage gains.”If yen falls accelerate or persist, consumer inflation may rebound sooner than expected. If this happens at a time when there is a higher chance of inflation durably and stably exceeding 2%, we may need to push forward the timing of an interest rate hike,” Adachi said.Ideally, the BOJ will raise rates at a “slow pace” in line with steady increases in underlying inflation, Adachi said in a news conference after delivering the speech to business leaders in Kumamoto, southern Japan.The yen has depreciated by roughly 10% against the dollar so far this year despite the BOJ’s decision in March to end eight years of negative rates, as markets focused on the still-huge divergence between U.S. and Japanese interest rates.The weak yen has become a headache for policymakers worried about the hit to consumption from rising import costs, and led some market players to bet on the chance of a near-term rate hike to slow the currency’s depreciation.Japan’s consumer sentiment worsened for the second straight month in May as rising prices hit households, a Cabinet Office survey showed on Wednesday.The government revised down its assessment on consumer sentiment to say “improvements were stalling,” compared with the previous month’s view that it was improving.NO STEER IN RATE HIKE, TAPER TIMINGExpectations of a near-term rate hike helped push up Japan’s 10-year government bond yield to 1.07% on Wednesday, the highest since December 2011.Some traders also bet the BOJ could decide on a full-fledged tapering of bond purchases next month, after it caught markets off guard with an unscheduled cut in bond buying on May 13.Adachi said the BOJ would reduce its bond buying some time in the future in accordance with its decision in March to end a policy that capped bond yields around zero.But he said the March 13 bond buying reduction had no policy implication, adding that it was too early to determine whether recent rises in Japanese long-term yields would be sustained.”I don’t have a strong view on whether the BOJ should reduce bond buying soon, or wait longer,” Adachi said, adding the bank had no pre-set idea or schedule in mind on the future pace of tapering.Any reduction in bond purchases will be done in several stages to avoid destabilising markets, he added.BOJ Governor Kazuo Ueda has said the central bank intends to hike rates to levels considered neutral to the economy, as long as growth and inflation move in line with projections.The governor has also said the BOJ will no longer use its bond purchases as a monetary policy tool, and eventually scale back the size of its huge balance sheet. More

The funding is the third tranche of $5 billion that the U.S. Environmental Protection Agency (EPA) will hand out over five years through a clean school bus program created by the Bipartisan Infrastructure Law in 2021.The EPA rebates will support the purchase of 3,400 school buses, 92% of them electric, the White House said. School districts in low income, tribal and rural communities will receive about 67% of the funds.WHY IT IS IMPORTANTThe EPA’s clean school bus program is part of a broader push by President Joe Biden’s administration to upgrade public school infrastructure and reduce pollution from old buses. It also helps deliver on Biden’s pledges to cut greenhouse gas emissions, funnel federal climate investments to underserved communities and create demand for American-made electric vehicles.KEY QUOTE”This announcement is not just about clean school buses. It’s about the bigger picture. We are improving air quality for our children, reducing greenhouse gas pollution and expanding our nation’s leadership in developing the clean vehicles of the future,” EPA Administrator Michael Regan said on a call with reporters. “With increasing demand for electric school buses, we’ll see the development of new good-paying manufacturing jobs and investment in local businesses.” More

President Emmanuel Macron and other French officials have long complained that U.S. banks are not applying the Basel III post-financial crisis capital rules, putting their European rivals at a competitive disadvantage.Villeroy, who is head of the French central bank, said U.S. regulators had committed as recently as this month to “fully and faithfully” implement the Basel III international minimum bank capital rules.”If, unfortunately, the delays and/or differences in content are too great, Europe could and should … postpone the entry into force … of certain provisions, in particular those concerning market risks,” Villeroy said.An EU package of bank regulations adopted in December allows for a delay even if that would not be the best option, Villeroy said, speaking at a news conference of the ACPR French financial regulator, which he also heads.The Basel III rules, which would apply to banks with over $100 billion in assets, would overhaul the way the biggest banks manage their capital, with knock-on implications for their lending and trading activities.Macron called last month for a revision of how the EU applies the rules, saying “we cannot be the only economic zone in the world that applies them”. (This story has been corrected to fix a quote to make clear not a question of adjusting provisions, but postponing them, in paragraph 4) More