Aurelia Butler

MOSCOW (Reuters) – Russia will keep interest rates on hold at 16% for the third meeting running on Friday, a Reuters poll showed on Monday, with inflation’s only gradual slowdown preventing the central bank from easing borrowing costs more quickly. Widespread labour shortages, rouble weakness, strong consumer demand and hefty government spending to fund what Moscow calls its “special military operation” in Ukraine, all drove prices higher in 2023 and though some of those pressures have eased, the bank has not yet managed to start softening monetary policy. All 26 analysts and economists polled by Reuters on Monday predicted that the Bank of Russia would keep its key rate at 16% at Friday’s meeting. Inflation is slowing down, but more slowly than the central bank needs if it is to reach the 4% target by year-end, said Mikhail Vasilyev, chief analyst at Sovcombank. “Therefore, the Bank of Russia may prefer to add monetary policy tightness now, to try and return inflation to target by year-end,” Vasilyev said, putting the chances of a hike at 30%. All analysts expect rates to come down this year, though some said the rate-cutting cycle may start later than they had initially forecast.”All the intrigue lies in the regulator’s messages and guidelines for future meetings,” said BCS analysts. Several analysts drew attention to pressure from labour shortages, with unemployment at a record low 2.8%. “Competition for workers is intensifying in the labour market, which limits the economy’s production capacity,” said Igor Rapokhin, an FX and money market strategist at SberCIB Investment Research. “So more time is needed in order for the impact of tight monetary policy to become clearer.”He said the central bank may be able to reduce rates to 13% by year end. The central bank will update its year-end forecasts on Friday. An upward revision to Russia’s economic growth forecast is expected, especially after the International Monetary Fund increased its 2024 growth forecast for the Russian economy to 3.2% from the 2.6% projected in January.In late February, 2022 Russia ramped up its benchmark rate to 20% in an emergency move after Moscow despatched tens of thousands of troops to Ukraine, which led the West to impose increasingly wide-ranging sanctions on Russia.The key rate was gradually cut to 7.5%, before the bank started hiking again in July 2023. It held rates at 16% in February and March after the last cut in December. More

WASHINGTON/BANGKOK (Reuters) – Thailand’s central bank, under pressure from the government to cut interest rates, could adjust monetary policy if the outlook for the economy changes and structural challenges clearly reduce its long-term potential growth, a deputy governor said.The Bank of Thailand’s monetary policy committee is open to all input, but needs to balance immediate and longer-term economic factors when setting rates, Deputy Governor Alisara Mahasandana told Reuters.Prime Minister Srettha Thavisin, who is also the finance minister, has openly challenged the central ank over its monetary policy, repeatedly saying rate cuts would help the economy cope with high household debt and China’s slowdown.”The MPC welcomes and values input from all stakeholders… But when it comes to a monetary policy decision, the MPC needs to weigh between short-term and long-term impacts on monetary policy objectives… and they could have different views,” Alisara said, speaking on the sidelines of the International Monetary Fund and World Bank Spring Meetings in Washington.Monetary policy could be “recalibrated” if there was a change in the growth and inflation outlook, and if structural impediments “clearly lower our long-term potential growth”, said Alisara, who is a member of the policy committee.The central bank kept the key interest rate steady at 2.50%, its highest in over a decade, in a majority decision on April 10. The next review is on June 12.The central bank forecasts Southeast Asia’s second-largest economy will grow 2.6% this year and 3.0% in 2025, picking up from last year’s 1.9%. Alisara said that while higher private consumption and tourism were expected to bolster growth, uncertainties remained, including how well will its exports recover.She said annual headline inflation was expected to return to the BOT’s target range of 1-3% by the end of the year. Energy subsidies have kept consumer prices below year-ago levels for six straight months to March, driven by energy subsidies, but prices are expected to rise in May. Alisara, said negative headline inflation “does not reflect weak demand, it’s not deflation”.The Thai baht is expected to be volatile, driven by external factors, especially dollar strength, she said. The baht has fallen 7.6% against the U.S. currency so far this year, becoming Asia’s second-worst performing currency behind the yen.While a lower-yielding baht lagged other regional currencies, domestic factors should be more supportive than last year, Alisara said, noting improved economic activity and Thailand’s current account surplus. More

(Reuters) -U.S. stocks were poised to open higher on Monday after steep losses in the previous session as easing Middle East tensions buoyed risk appetite, while investors looked ahead to an action-packed week with major tech earnings and a key inflation print.The Nasdaq and the S&P 500 ended lower on Friday as Netflix (NASDAQ:NFLX) shares weighed after a dour quarterly earnings report, with both the indexes suffering six straight sessions of declines last week, their longest since October 2022.Some megacap growth stocks edged higher in premarket trading, with Meta Platforms (NASDAQ:META), Amazon.com (NASDAQ:AMZN) and Apple (NASDAQ:AAPL) up between 0.5% and 1.0%.Nvidia (NASDAQ:NVDA) inched up 0.7%, rebounding from a 10% drop in the last session. “The market got over-sold on Friday because of Netflix earnings, it was primarily a tech-driven decline,” said Jay Hatfield, CEO and portfolio manager at InfraCap.”We’re headed into megacap earnings and so people are starting to realize that Netflix is not very indicative of what’s going to happen with other megacap stocks.”Tesla (NASDAQ:TSLA), Meta Platforms, Alphabet (NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT) will be in focus this week as the companies gear up to deliver their quarterly numbers, whose performance could further test the rally in U.S. stocks. The risk-on mode was also supported by signs of easing tensions in the Middle East, as Iran’s foreign minister said on Friday Tehran was investigating an overnight attack, adding that so far a link to Israel had not been proven as he downplayed the strike.Equities have sold-off recently as market participants readjust their interest rate cut expectations from the U.S. Federal Reserve after a string of strong economic data signaling persistent inflationary pressures. Money markets are now pricing in just about 38 basis points (bps) of rate cuts this year, down from about 150 bps seen at the beginning of the year, according to LSEG data. On the docket this week would be the price consumption expenditure (PCE) index reading for March — the Fed’s preferred inflation gauge – to further ascertain the monetary policy trajectory.Fed policymakers were in a media blackout ahead of their latest policy meeting on May 1. At 8:26 a.m. ET, Dow e-minis were up 192 points, or 0.5%, S&P 500 e-minis were up 21.75 points, or 0.43%, and Nasdaq 100 e-minis were up 75.5 points, or 0.44%.Among single stocks, Tesla fell 4.1% before the bell as the electric vehicle maker cut prices in a number of its major markets, including China and Germany, following price reductions in the United States.Salesforce (NYSE:CRM) rose 3.3% after the business software maker backed away from its talks to acquire data-management software firm Informatica after the two companies could not agree on terms. Informatica’s shares were down 5.1%. Verizon Communications (NYSE:VZ) added 1.8% after the telecom firm said it lost fewer-than-expected wireless subscribers in the first quarter. More

ROME (Reuters) – Italy last year posted by far the highest budget deficit-to-GDP ratio in the European Union, the bloc’s statistics arm Eurostat reported on Monday, after Rome’s 2023 fiscal gap widened to 7.4% of gross domestic product from a 7.2% estimate issued in March.The latest figure is more than twice the 3.5% average of the 27 EU countries and underscores the Treasury’s difficulties in getting the country’s public finances under control.In all, 11 countries reported deficits above the EU’s 3% of GDP ceiling, including France at 5.5%.The European Commission is expected to invoke its deficit infringement procedure for all these states, Italian Economy Minister Giancarlo Giorgetti said this month. The only other countries with deficits above 5% last year were Hungary (6.7%), Romania (6.6%) and Poland (5.1%), all of which are outside the 20-nation euro zone.Italy’s latest upward revision highlights the government’s miscalculations of the impact of costly fiscal incentives for energy-saving home improvements.In April last year the Treasury targeted a 2023 deficit of 4.5%. In September it revised that up to 5.3%. On March 1, official data from national statistics bureau ISTAT reported it at 7.2%, before Monday’s fresh upward revision to 7.4%.The revision factored in updated figures on the take-up of the incentives, especially the contested “Superbonus” scheme which offered to pay homeowners 110% of the cost of the energy-saving renovations.Introduced in 2020 and due to be gradually phased out by the end of next year, the Superbonus forked out more than 160 billion euros ($170 billion) as of April 4, the government said this month, far above any previous government estimate.Addressing parliament on the Treasury’s multi-year budget framework, Italy’s central bank said on Monday the Superbonus cost almost 4% of GDP in 2023 alone, more than five times what Rome had estimated last April.”In introducing new incentives, it will be necessary to avoid repeating the mistakes that have characterized these recent measures,” the Bank of Italy told lawmakers.The bank also warned that Rome’s goal of extending to 2025 temporary tax cuts for low- and middle-income earners would increase “uncertainty” over the public finance trend.Italy’s public debt, the second largest in the euro zone as a proportion of output and under close scrutiny by rating agencies and markets, will follow a rising trend towards 140% of GDP through 2026, according to the latest Treasury forecasts.($1 = 0.9403 euros) More

FRANKFURT (Reuters) – European Central Bank officials are sticking to plans to cut interest rates multiple times this year, even as higher U.S. inflation delays a pivot to looser policy by the U.S. Federal Reserve and tensions in the Middle East keep oil prices high.Investors are rethinking what they expected to be a global easing cycle after stubbornly strong U.S. price growth slowed the Fed’s plan to start lowering borrowing costs, which had been seen as the starting gun for other central banks.ECB President Christine Lagarde has strongly hinted that the euro zone’s central bank is still likely to begin reducing its deposit rate from a record-high 4% in June but has been careful to leave open its options for the path beyond.Nearly all her colleagues from the currency bloc’s 20 national central banks have been more explicit, saying they expect further rate cuts to follow as inflation in the euro zone gradually declines to hit the ECB’s 2% target by next year.All have stressed that the ECB’s decisions will be based on incoming data, especially about wages, profits and productivity.”As long as economic developments are in line with our expectations it is reasonable to expect a few more rate cuts after June by the end of the year,” Madis Muller, Estonia’s central bank chief, told Reuters last week.Even Klaas Knot, the hawkish governor of the Dutch central bank, has said he is “not uncomortable” with three cuts in 2024.Lithuania’s Gediminas Simkus said more than three moves were possible, and Germany’s Joachim Nagel spoke of a “cautious gliding flight”.The latest developments in the Middle East and United States were generally seen as a reason for greater caution but did not fundamentally change the picture in the euro zone, French central bank governor Francois Villeroy de Galhau argued.Inflation in the euro zone has been falling in all categories apart from services.”I think all the boxes have been ticked for them to start cutting in June and then I have a cut every quarter with a risk of a further one in October,” Frederik Ducrozet, head of macroeconomic research at Pictet Wealth Management, said.DOUBTSSome investors have nevertheless begun to doubt the ECB’s resolve, with money markets no longer fully pricing in three cuts by December.Traders wager the ECB would ultimately be forced to follow the Fed, if nothing else to stem the euro’s weakness.”The FX-inflation channel is what gives us cause for concern in Europe versus the more aggressive (rate-cutting) path we had previously,” economists at Morgan Stanley said in a note.Policymakers, however, were generally comfortable with the single currency’s behaviour.”Forex markets have been very calm so far,” Croatian governor Boris Vujcic said at an event in Washington last week.And his Italian colleague Fabio Panetta emphasised that the easing effect of a weaker euro is typically offset by higher bond yields and commodity prices, resulting in a net tightening of financing conditions.Nearly all governors stressed how the euro zone’s economy was much weaker than that of the U.S., requiring a different approach.”The U.S. and euro zone economies have decoupled,” Belgian central bank chief and ECB rate-setter Pierre Wunsch told Reuters. “The gap between the Fed’s and the ECB’s policy rates is not new and may widen.”Some went further.France’s Villeroy, an influential voice on the Governing Council, estimated that the ECB would continue to exercise restriction on the economy for as long as its deposit rate remained above 2.5% or even 2%. He was echoed by Portugal’s Mario Centeno, who also stressed the ECB was in no rush to get to that level.”I don’t know anybody who says the neutral rate is above 3%,” Centeno told Reuters. “How fast should we get there? We’ve got time.”One lingering area of concern was that services inflation continued to show strong momentum in the euro zone, which has been boosted by wage rises.”In an alternative scenario, productivity growth would remain depressed over the projection horizon and demand for less interest-rate sensitive services could remain sufficiently strong,” ECB board member Isabel Schnabel told an event. More

The company slashed prices by up to $2,000 on its vehicles such as the Model 3 and Model Y in several markets including the U.S., China and Germany over the weekend, in its latest effort to push demand slowed by high interest rates.The cuts come ahead of its quarterly earnings on Tuesday, where the world’s most valuable automaker is expected to post its first revenue drop and lowest gross margin in nearly four years, according to LSEG data.Investors are awaiting clarity from CEO Elon Musk on Tesla’s strategy after he cut 10% of the company’s staff last week and said focusing on autonomous driving was a “blindingly obvious” move.Musk had earlier this month announced an event in August to unveil “Robotaxi”, after a Reuters report on April 5 said Tesla had scrapped its plan to develop its long-awaited affordable EV in favor of robotaxis. Musk said after the report that “Reuters is lying”, without citing any inaccuracies.Wedbush Securities analyst Dan Ives wrote in a preview note last week that the earnings would be a “moment of truth” and “one of the most important moments in the company’s history”.Tesla shares were down at $141.80 in premarket trading on Monday. The shares have lost about 41% of their value so far this year with surveys and experts saying Musk’s tilt toward right-wing politics and polarizing public statements turned away some prospective Tesla buyers.Monday’s drop was set to erase about $15 billion from its market value of $468 billion. While that still makes Tesla the world’s most valuable automaker, Toyota (NYSE:TM) has slowly been narrowing the gap on the back of a boom in demand for its hybrid vehicles.The Japanese automaker had a market capitalization of $306 billion, as of last close. More

The company and some of its existing shareholders are offering 44 million shares priced between $21 and $25 apiece, aiming to raise as much as $1.1 billion. Norges Bank Investment Management, which manages the Norwegian Government Pension Fund, has indicated that it wants to buy up to $100 million in ordinary shares in the offering, Viking – backed by private equity firm TPG and Canada Pension Plan Investment Board – said in the filing. After a two-year dry spell, U.S. IPOs are expected to rebound in 2024 on firming bets of a soft landing for the world’s largest economy, although the recovery has been uneven so far.Founded in 1997, Viking started out with four river vessels and now owns a fleet of 92, allowing customers to book voyages to destinations including Antarctica and the Arctic.This year is set to be a banner year for cruise travel, analysts have said, as customers from across income levels are booking vacations.Viking will list its shares on the New York Stock Exchange under the symbol “VIK”.BofA Securities, J.P. Morgan, UBS Investment Bank, Wells Fargo Securities, HSBC and Morgan Stanley are the lead underwriters for the IPO. More