Analysts had widely predicted another hike given inflation has continued to soar and the local naira currency has been highly volatile.The decision is the third rate increase this year, after hikes of 200 basis points in March and 400 basis points in February.Inflation reached a 28-year high of 33.69% year-on-year in April, spurred by the government slashing petrol and electricity subsidies and twice devaluing the naira. More
WASHINGTON (Reuters) – Federal Reserve Governor Christopher Waller on Tuesday put a pin in speculation that interest rates may need to rise again, saying the latest inflation data is “reassuring” and the U.S. central bank’s policy rate is set appropriately.After three months of stronger-than-expected price pressures that raised concerns progress had stalled, “more recent data on the economy indicate that restrictive monetary policy is helping to cool off aggregate demand and the inflation data for April suggests that progress toward 2% has likely resumed,” Waller said in remarks prepared for delivery to the Peterson Institute for International Economics. “Central bankers should never say never, but the data suggests that inflation isn’t accelerating, and I believe that further increases in the policy rate are probably unnecessary.”Fed policymakers have turned cautious on the outlook for inflation and monetary policy in recent months, and Waller, like many of his colleagues, did not repeat his view from recent speeches that a rate cut is likely later this year. The labor market remains strong, he said, and while consumer price inflation slowed in April after the first three months of the year, the progress was “modest,” with core inflation as measured by the personal consumption expenditures price index likely running at an annualized 3.4% in the recent three months. But he also said he sees some signs of moderation ahead, citing flat retail sales in April, rising delinquencies on credit cards and auto loans, and a widely followed survey of non-manufacturing businesses suggesting a deceleration in activity. Job creation also has slowed, and the unemployment rate ticked up to 3.9% in April.”The economy now seems to be evolving closer to what the Committee expected,” Waller said, referring to the central bank’s policy-setting Federal Open Market Committee. “Nevertheless, in the absence of a significant weakening in the labor market, I need to see several more months of good inflation data before I would be comfortable supporting an easing in the stance of monetary policy.” The Fed has kept its benchmark policy rate in the 5.25%-5.50% range since last July.Traders expect the central bank to deliver a first rate cut in September, and see better-than-even odds of a second cut at the Fed’s final meeting of the year in December. More
This is an onsite version of the US Election Countdown newsletter. You can read the previous edition here. Sign up for free here to get it on Tuesdays and Thursdays. Email us at [email protected] morning and welcome to US Election Countdown. Today we’re talking about:A Democratic donor divide over GazaTrouble for Biden in GeorgiaTrump tariffs’ $500bn burdenThe Israel-Hamas war is splitting the Democratic donor class.George Krupp, a top contributor to Joe Biden, thinks that the conflict could be catastrophic for the president’s re-election bid [free to read]. The donor, who expects to raise $2.5mn for Biden at a Boston fundraiser that he’s co-hosting tonight, has urged the president to take the war issue “off the table” by suspending arms shipments to Israel.“I think this Israel thing has been a catastrophe for him,” Krupp told the FT’s Alex Rogers. “I absolutely think that Biden needs to suspend arms shipments both for humanitarian and political reasons.”Biden is trying to placate two camps: voters who want to see the Israeli incursion into Gaza end, and those who want US support for Israel to continue at full throttle.This month, Biden halted a shipment of bombs to Israel over concerns about their use in densely populated civilian areas. Last week, however, Biden approved a $1bn military aid package to Israel.The president’s “equivocation” over the war “is hurting” his campaign, Krupp said.Megadonor Haim Saban represents the other side of the coin. “Bad, Bad, Bad, decision, on all levels, Pls reconsider,” Saban wrote in an email to White House senior officials, regarding Biden’s decision to pause the bombs shipment. Biden is contending with domestic and diplomatic dilemmas as the International Criminal Court seeks arrest warrants for Israeli officials and senior Hamas leaders. Biden said it was “outrageous” to equate the conduct of Prime Minister Benjamin Netanyahu and defence minister Yoav Gallant with that of Hamas. With Trump leading in the polls, Krupp and many Democrats fear that the war could determine the election’s outcome.“I thought [Biden] would bring a measure of calm to the country, but the country is so polarised right now,” said Krupp. “I think if the election were held today, I think he’d lose.”Campaign clips: the latest election headlinesBehind the scenesDontaye Carter, a Democratic party organiser in Georgia, worries that many young black men in the state may skip this year’s presidential election More
The world’s largest cryptocurrency rose 6.6% in the past 24 hours to $71,349 by 08:47 ET (12:47 GMT).But world no.2 token Ether was the star performer on Tuesday, surging 22.5% to a 1-½ month high of $3,776.1.A report from Coindesk showed that the U.S. Securities and Exchange Commission asked applicants for spot Ether ETFs to update some key filings, ahead of a key deadline for the approval of the funds later this Thursday. While the report said that there was still no guarantee that the regulator will approve the ETFs, it did mark some progress towards an eventual approval.Bloomberg analysts Eric Balchunas and James Seyffart updated their expectations for a spot Ether ETF approval to a 75% probability from 25%, citing the Coindesk report and stating that the SEC could be “doing a 180” on a potential approval.The SEC was seen largely averse towards a spot Ether ETF, especially as recent reports said the regulator was also pursuing action against the Ethereum Foundation over Ether’s potential nature as a security. But a spot ETF approval could trigger a similar rally in Ether as it did for Bitcoin earlier in 2024, where the token surged to a record high on increased capital inflows as institutional investors piled into the ETFs.Data from digital assets manager CoinShares showed on Monday that crypto investment products saw a second straight week of capital inflows, as some soft readings on U.S. inflation ramped up bets that the Federal Reserve will cut interest rates this year. Total capital inflows were at $932 million in the week to May 20, with Bitcoin continuing to dominate capital flows. Still, overall trading volumes remained well below peaks seen in the aftermath of the spot-Bitcoin ETF approvals in February and March. Altcoins drifted higher, tracking gains in Ether. Solana rose 1.2%, while XRP added 6%.Meme tokens Dogecoin and SHIB climbed 10.5% and 8%, respectively.House Democrats Maxine Waters (NYSE:WAT) (D-Calif.) and David Scott (D-Ga.) have voiced to their colleagues their strong opposition to the Financial Innovation and Technology for the 21st Century Act, also referred to as the crypto bill.However, despite this stance, the pair is not actively urging members to vote against the bill, as reported by Politico.Waters and Scott argue that the bill undermines established legal precedents and creates uncertainty in the traditional securities market.They claim the bill’s safe harbor provision, allowing entities to file an “intent to register” if they meet certain requirements, effectively shields these entities from existing securities laws until the SEC and CFTC finalize new regulations.This, they argue, “weakens investor protections and opens the door to fraud and market manipulation,” the email said.The letter also states that if the bill becomes law, it would prevent shareholders from suing publicly traded companies, override state regulations regarding digital assets, weaken fiduciary requirements, and undermine capital markets. More
Ether, which underpins the ethereum blockchain network, was 8% higher on the day at $3,775, its highest in two months, after jumping 13.8% on Tuesday. Top cryptocurrency bitcoin was last up 2.2% at $71,000, around 4% shy of its March peak of $73,803.25. The U.S. markets watchdog will give its ruling on some spot ether ETF applications this week. Analysts and investors said Tuesday’s jump was a result of unconfirmed talk that the Securities and Futures Commission might approve these products, after investors had previously thought they would be rejected. Bitcoin rallied sharply earlier this year after the SEC gave approval to several spot bitcoin ETFs, which have seen billions of dollars in inflows.So far in 2024, bitcoin has gained 67%, but ether is now close behind, with a gain of 60%. “Ethereum has taken pole position in the latest crypto rally ahead of Thursday’s first final SEC deadline to decide on an ETH ETF,” said Ben Laidler, global markets strategist at eToro, using ether’s market ticker. “Outright approval is a long shot, but any guidance on a pathway to eventual acceptance would be a big step forward.”VanEck, ARK Investment Management and seven other issuers have filed with the SEC to list spot ether ETFs. The SEC must decide on VanEck’s and ARK’s filings, which are first in line, by May 23 and May 24 respectively Joseph Edwards, head of research at Enigma Securities, cited reports saying the SEC had asked exchanges that would list the ether ETF to update their filings and separate Bloomberg ETF research that showed analysts have raised their informal probabilities of approval. An SEC spokesperson said they did not comment on individual filings. “Opposing the ETH ETF after the BTC one was approved always seemed like an odd case for the SEC to try to push, unless they were willing to open up questions on Ethereum’s securities status more broadly, and it’s likely that the call has come in somewhere to not take that fight,” Edwards said. Crypto markets took another leg higher last week, after data showing a slowdown in U.S. inflation drove a rally in risk assets. More
China is seeking to restore confidence in its financial system, which is mired in a property crisis and mounting local government debt, as the economy faces a host of challenges.The country will also seek to prevent systemic risks and crack down on illegal financial activities, state broadcaster CCTV quoted He as saying.”At present, we must comprehensively and strictly control the intertwined risks in the real estate sector, local government debt and small and medium-sized local financial institutions, and crack down on illegal financial activities,” He was quoted as saying at a financial meeting.China will promote high-quality economic and social development, stepping up financial support for key strategic sectors, He said.China’s ruling Communist Party tightened supervision over the nation’s massive financial sector through a broad restructuring of both party and state entities last year. More
FRANKFURT (Reuters) -U.S. Treasury Secretary Janet Yellen urged German bank executives on Tuesday to step up efforts to comply with sanctions against Russia and shut down efforts to circumvent them to avoid potential penalties themselves that would cut off dollar access.Yellen said at the start of a meeting with bankers that the Treasury’s new authority to hit banks with secondary sanctions if they aid Russian military-related transactions had helped to frustrate Russia’s efforts to procure goods needed for its war in Ukraine, but more work was needed.”Russia continues to procure sensitive goods and to expand its ability to domestically manufacture these goods. We must remain vigilant and be more ambitious,” Yellen said. “I urge all institutions here to take heightened compliance measures and to increase your focus on Russian evasion attempts,” Yellen said in prepared remarks for the meeting in Frankfurt.In an unusually direct warning, she told the executives to police sanctions compliance among their banks’ foreign branches and subsidiaries and reach out to foreign correspondent banking customers to do the same, especially in high-risk jurisdictions.”Russia is desperate to obtain critical goods from advanced economies like Germany and the United States,” Yellen said. “We must remain vigilant to prevent the Kremlin’s ability to supply its defense industrial base, and to access our financial systems to do so.”RAIFFEISEN WARNINGYellen’s warning comes shortly after the U.S. Treasury successfully pressed Austria’s Raiffeisen Bank, the biggest Western bank in Russia, to ditch a deal involving a Russian tycoon.Earlier this month, Raiffeisen Bank International (RBI) dropped a bid for a 1.5 billion euro ($1.6 billion) industrial stake linked to Russian tycoon Oleg Deripaska after intense U.S. pressure.The deal’s collapse was a fresh setback for the lender, which faces criticism for its ties to Moscow more than two years since Russia’s invasion of Ukraine. The pressure also underscored Washington’s willingness to take European banks to task over their Russia ties.Raiffeisen was warned by the U.S. Treasury in writing that its access to the U.S. financial system could be curbed because of its Russia dealings, a person who has seen this correspondence told Reuters.On May 6, Deputy Treasury Secretary Wally Adeyemo sent a letter to RBI, expressing concern about RBI’s presence in Russia as well as a $1.5 billion deal.RBI’s announcement followed weeks of pressure over its plan to buy a stake in construction group Strabag, a move designed to unlock bank funds frozen in Russia.’JUDICIOUS’ APPLICATIONA senior U.S. Treasury official acknowledged that Western banks face “meaningful constraints” in exiting Russia, but they should not be seeking to expand their Russian businesses as Raiffeisen has. The official added that Austrian regulators should take a more aggressive posture to avoid reputational risks for a systemic institution.But the official said the Treasury will be “judicious” in applying any secondary banking sanctions and work with banks to secure compliance.”The mere fact of the secondary sanctions existing already gets us to our goals in some ways,” the official said on condition of anonymity.Spokespersons for Germany’s two largest banks, Deutsche Bank and Commerzbank (ETR:CBKG), both said they had significantly reduced their business in Russia and were complying with the sanctions.Yellen said the most concerning Russian sanctions evasion activity was coming through China, the United Arab Emirates and Turkey. She added that the Treasury “is working to disrupt evasion wherever we see it, from Central Asia to the Caucasus and throughout Europe.”Yellen, who also gave remarks on the U.S.-European alliance in Frankfurt before attending a meeting of G7 finance ministers in Italy this week, said she sees the global economy outperforming expectations with risks broadly balanced and financial conditions easing since last year’s banking turmoil.”We also remain vigilant to potential vulnerabilities, including elevated levels of corporate debt, leverage and liquidity mismatches in the non-bank sector, and strains in commercial real estate markets,” Yellen added. More
DUBAI (Reuters) -The United Arab Emirates and United States will invest more in artificial intelligence as part of a strategic partnership, the UAE’s state minister for AI Omar Sultan Al Olama said on Tuesday.The UAE, led by government-backed firm G42, is striving to become a global leader in AI, invested heavily in it to help the Gulf nation diversify away from oil.The stakes have risen as neighbouring Saudi Arabia has begun pitching itself as a prospective hub for AI activity outside the United States.”In terms of our investments, since the U.S. is now considering the UAE as a strategic partner, and the UAE is reciprocating that by considering the U.S. as a strategic partner, you will see more deals naturally,” Al Olama told Reuters on the sidelines of an event in Dubai.Microsoft (NASDAQ:MSFT) is investing $1.5 billion in G42, the two companies announced last month, giving the U.S. giant a minority stake and a board seat and allowing the two to deepen ties.As part of the deal, which the two companies said was backed by assurances to the U.S. and UAE governments over security, G42 would use Microsoft cloud services to run its AI applications.That partnership comes amid Washington’s efforts to hobble Beijing’s technological advances, with the United States adding four Chinese companies to an exports blacklist for seeking to acquire AI chips for China’s military. Asked about further potential divestment of Chinese tech companies by the UAE, Al Olama said “government-to-government the UAE is a neutral country, and in that sense, we are going to be a country that allows the world to do business in the UAE”.Al Olama said a diversified energy mix, including nuclear energy, was key for attracting AI investment to the tiny Gulf country. “We will have the ability to expand our energy infrastructure based on the need of the data centres,” the minister said.This includes discussions about small modular nuclear reactors but there were no concrete plans yet, he said.The UAE has operated a South Korean-built nuclear plant since 2021. The country plans to also tender as soon as this year for four more nuclear reactors, Reuters reported last month, citing three sources.On Tuesday, French Finance Minister Bruno Le Maire flagged during a visit to Abu Dhabi that Paris was open to the UAE investing in its nuclear energy industry. He also said he the two countries would sign a strategic partnership on AI. More
