Aurelia Butler

The cut is in line with forecasts in a traders’ poll last week, which also predicted the bank will reduce the rate to 4.25% within 12 months.In a statement, the bank said it foresees further monetary policy rate cuts, with the size and timing of those moves taking into account the “evolution of the macroeconomic scenario and its implications for the trajectory of inflation.”The bank’s statement tweaked its forward guidance, removing language from its January statement that predicted the rate reaching its “neutral level” in the second half of 2024.The removal of the sentence “adds a hawkish flavor” to the bank’s 75-basis-point cut, J.P. Morgan analyst Diego Pereira said in a note to clients.The South American nation’s central bank raised interest rates from 0.50% in mid-2021 to a cycle-high of 11.25% in late 2022. The bank held at that rate before kicking off monetary easing in July as inflation began to cool.Chile’s annual inflation peaked at 14.1% in August 2022 and came down to 3.9% at the end of 2023. It has since gone back up, reaching 4.5% in February.The central bank’s board on Tuesday added that inflation expectations are aligned with its 3% target, and “rising inflation figures at the beginning of the year and higher imported cost pressures emphasize the need to continue closely monitoring its evolution.”While Chile faced a sharp economic downturn in 2023 after a rapid post-pandemic recovery, the economy “has succeeded in closing the significant macroeconomic imbalances of previous years,” the board said.Data published by the central bank on Monday showed Chile’s economic activity index posted its largest year-on-year increase in almost two years in February. More

WASHINGTON (Reuters) – The U.S. Federal Communications Commission will vote to reinstate landmark net neutrality rules and assume new regulatory oversight of broadband internet that was rescinded under former President Donald Trump, the agency’s chair said.The FCC told advocates on Tuesday of the plan to vote on the final rule at its April 25 meeting.The commission voted 3-2 in October on the proposal to reinstate open internet rules adopted in 2015 and re-establish the commission’s authority over broadband internet.Net neutrality refers to the principle that internet service providers should enable access to all content and applications regardless of the source, and without favoring or blocking particular products or websites.FCC Chair Jessica Rosenworcel confirmed the planned commission vote in an interview with Reuters.”The pandemic made clear that broadband is an essential service, that every one of us – no matter who we are or where we live – needs it to have a fair shot at success in the digital age,” she said. An essential service requires oversight and in this case we are just putting back in place the rules that have already been court-approved that ensures that broadband access is fast, open and fair.”Reinstating the rules has been a priority for President Joe Biden, who signed a July 2021 executive order encouraging the FCC to reinstate net neutrality rules adopted under Democratic President Barack Obama.Democrats were stymied for nearly three years because they did not take majority control of the five-member FCC until October.Under Trump, the FCC had argued the net neutrality rules were unnecessary, blocked innovation and resulted in a decline in network investment by internet service providers, a contention disputed by Democrats.Rosenworcel has said the reclassification would give the FCC important new national security tools. The agency said in its initial proposal that rules could give it “more robust authority to require more entities to remove and replace” equipment and services from Chinese companies like Huawei and ZTE (HK:0763).Republican FCC Commissioner Brendan Carr opposed the move, saying that since 2017 “broadband speeds in the U.S. have increased, prices are down (and) competition has intensified.” He argued the plan would result in “government control of the internet.”Despite the 2017 repeal, a dozen states now have net neutrality laws or regulations in place. Industry groups abandoned legal challenges to those state requirements in May 2022. More

(Reuters) – A look at the day ahead in Asian markets.The perfect storm of higher bond yields, corporate jitters and rising price pressures that hit Wall Street on Tuesday looks set to darken the Asian market landscape on Wednesday, as investors wonder whether this might be the start of a deeper correction.Asia’s economic calendar has some top-tier releases in the shape of Chinese and Japanese service sector purchasing managers index data, but the market tone on Wednesday will probably be set by the latest tightening of global financial conditions. The 10-year U.S. Treasury yield hit 4.40% and Brent crude touched $89 a barrel on Tuesday – both the highest levels this year – and Tesla (NASDAQ:TSLA) shares slumped 5% after the company announced the first fall in quarterly deliveries for nearly four years. The three main U.S. indexes shed 0.7% to 1.0%, and the S&P 500 clocked its biggest fall in a month. This doesn’t bode well for Asia on Wednesday, but there is a ‘glass half full’ argument to be made.In some ways, Wall Street held up pretty well in light of the break out in yields, back up in implied rates and renewed talk of ‘bond vigilantes’ coming back to stalk the bond market. A decline of 1% or less, on the heels of a relentless rally culminating in last week’s record highs, is small beer.Still, there are plenty reasons to be cautious.The threat of currency market intervention from Japanese authorities to support the beleaguered yen refuses to lift, as the yen continues to hover close to the 152.00 per dollar level.Recent moves in China’s currency are also worth noting. The offshore yuan is creeping above the upper limit of the 2% band around the central bank’s daily fixing rate. This comes ahead of U.S. Treasury Secretary Janet Yellen’s return to China later this week for renewed dialogue with top officials in Beijing.China’s ‘unofficial’ Caixin services PMI data on Wednesday rounds off a surprisingly strong set of PMI reports that has fueled hopes that the world’s second largest economy is finally picking up momentum. Ironically, however, this renewed optimism, together with punchy U.S. manufacturing PMIs, has helped put upward pressure on global bond yields, which in turn has put downward pressure on stocks. World markets may be back in a ‘good news is bad news’ mindset. Alibaba (NYSE:BABA) shareholders may be asking themselves a similar question after the Chinese e-commerce giant said on Tuesday it conducted a $4.8 billion share buyback in the three months to March, its second biggest quarterly buyback ever.Hong Kong-listed shares rose 1%, but U.S.-listed shares fell 0.7%.Here are key developments that could provide more direction to markets on Wednesday:- China Caixin services PMI (March)- Japan services PMI (March)- Hong Kong retail sales (February) (By Jamie McGeever; Editing by Josie Kao) More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Good morning. Elon Musk’s Tesla and Chinese rival BYD both reported sharp falls in electric car sales, adding to concerns of the slowing shift towards electric vehicles.Both companies — the world’s top two sellers of EVs — have cut prices in order to stimulate demand as they face increased competition, especially in China.The established auto industry has been warning for months that mainstream buyers remain sceptical of electric cars because of their higher prices and need to recharge.The disappointing quarter was still enough for Tesla to reclaim the crown from BYD as the world’s biggest seller of electric vehicles, after the Chinese company posted a 42 per cent fall in quarterly EV shipments to 300,114.Analysts said the ongoing price war among China’s carmakers could lead to a vicious cycle. Here’s more on the ultra-competitive Chinese market — plus a closer look at Tesla and BYD’s slipping sales. Opinion: What if the current EV slowdown is not a blip? Expansion of production is far outstripping demand, raising fears of a misallocation of capital, writes Peter Campbell.And here’s what else I’m keeping tabs on today:Chinese business confidence: Caixin is scheduled to release its March services purchasing managers’ index reading. Investors will be closely watching for indications that depressed sentiment is beginning to lift.More economic data: Hong Kong reports February retail sales, while the EU publishes April flash consumer price index inflation rate figures and unemployment rateNato foreign ministers’ meeting: Alliance diplomats will discuss a proposed five-year $100bn fund for Ukraine. The proposal is an attempt to shield Kyiv from “winds of political change” that could usher in a second Trump presidency. Five more top stories1. Joe Biden and Xi Jinping held a telephone call yesterday, in the first engagement between the US and Chinese leaders since they met in San Francisco in November in an effort to stabilise relations. Their nearly two-hour long “candid” discussion covered issues including Taiwan, TikTok and sanctions. 2. Three US senators have voiced concern about Nippon Steel’s business ties in China, opening a new front in a political effort to stop the Japanese group from completing its proposed $14.9bn acquisition of US Steel. Ohio Democrat Sherrod Brown on Monday asked US President Joe Biden to investigate Nippon’s exposure to the Chinese steel industry, according to a letter obtained by the FT.3. The Beijing-based Asian Infrastructure Investment Bank is in talks to provide a second loan guarantee deal to the World Bank. The move would deepen the lenders’ partnership and allow the Washington-based institution to increase lending. Here’s why multilateral development banks are increasing co-operation.World Bank warns over south Asia: India and its neighbours are not creating enough jobs to sustain their young populations, the multilateral lender has warned, putting the region’s demographic dividend at risk.4. Israeli Prime Minister Benjamin Netanyahu admitted yesterday that his country’s military had killed 7 humanitarian workers for World Central Kitchen, a major provider of food aid in Gaza. Netanyahu confirmed that Israel was investigating the air strike, as the US and other western nations stepped up calls for explanations. Here are more details.More Middle East news: Iran and Hizbollah yesterday vowed to retaliate after a suspected Israeli air strike on Tehran’s consulate in Damascus killed 7 Revolutionary Guard officers, including two ranking commanders.5. A top US monetary policymaker has said the strength of the US economy means that interest rates are unlikely to fall as far as expected in the longer term, as she all but ruled out a cut as soon as May. The Fed’s Loretta Mester revealed in a speech yesterday that she had raised her estimate of the longer-run federal funds rate from 2.5 per cent to 3 per cent.The Big Read© FT montage/AP/GettyDonald Trump is ahead in most polls for November’s election, but in terms of finances, he is lagging far behind President Joe Biden, whose campaign has raised twice as much. That is because the former president’s 2024 campaign is unlike any other: money comes in, but just as quickly, some goes straight out to protect him from jail. He now needs the traditional Republican mega donors, many of whom are more wary of a second Trump term than small-dollar loyalists who embrace the Maga rhetoric.We’re also reading . . . China’s rival to Boeing and Airbus: State-backed aircraft maker Comac sees south-east Asia as its best opportunity for overseas sales of its new C919 passenger jet. Democracy vs autocracy: All the evidence shows that despotism cannot consistently deliver the economic goods for developing countries, writes Martin Wolf.Record-keeping in the digital age: Digital technology has proven fantastic for the sharing of information but far less useful in preserving it for archival or public use, writes Stephen Bush.Chart of the dayEuropean airlines have cut back routes to Asia because of competition from state-backed Gulf carriers, which often offer cheaper fares for passengers willing to catch a connecting flight in the Middle East. Take a break from the newsThirty years after the death of Nirvana frontman Kurt Cobain, his aesthetic lives on. Annachiara Biondi looks at the impact of grunge style on today’s fashion.Kurt Cobain during the taping of MTV Unplugged in New York, 1993 More

(Reuters) -A pair of Federal Reserve policymakers often considered to have divergent monetary policy leanings on Tuesday both said they think it would be “reasonable” to cut U.S. interest rates three times this year, even as stronger recent economic data has sown investor doubts about that outcome. Cleveland Fed Bank President Loretta Mester and San Francisco Fed Bank President Mary Daly last month joined the U.S. central bank’s unanimous vote to leave short-term interest-rates in the 5.25%-5.5% range to keep putting downward pressure on inflation. “At this point, the economy and policy are in a good place,” Daly said at an event in Las Vegas. “Inflation is coming down, but it’s slow, it’s bumpy and slow. The labor market is still going strong and growth is going strong. So there’s really no urgency to adjust the rate.” Projections published at the Fed’s March meeting showed the typical policymaker expected to deliver three quarter-point interest rate cuts this year, though nearly half of officials – nine of the 19 – see two or less this year, according to forecasts issued last month.”I think that is a very reasonable baseline,” said Daly, often pegged as dovish though a self-described policy centrist.Still, Daly said, there is a “real risk” of cutting rates too soon and locking in the “toxic tax” of too-high inflation. Mester, on the more hawkish end of the Fed’s policy spectrum, told reporters on Tuesday that three rate cuts for this year remain a “reasonable” forecast while deeming it a “close call.” Though, like Daly, she acknowledged the risk of keeping rates high for too long and unnecessarily harming the labor market, “at this point, I think the bigger risk would be to begin reducing the funds rate too early,” Mester said at an event in Cleveland.Inflation by the Fed’s targeted measure was 2.5% in February, far below its mid-2022 peak of around 7% but still above the 2% goal, with progress slower so far this year than for much of last year. Meanwhile the labor market has been strong, with unemployment at 3.9% in February.Data this week showed manufacturing unexpectedly rebounding, with a rise in raw materials prices raising fears that inflation could resurge. Investors are eager to hear how Fed Chair Jerome Powell, speaking at Stanford University on Wednesday, adds it all up. They are also focused on whether the next monthly read on the U.S. labor market, due on Friday, backs up other data suggesting the labor market is cooling, and if fresh inflation reads ahead of the Fed’s next two meetings, April 30-May 1 and June 11-12, show prices are as well. Powell, speaking last Friday, said the stronger-than-expected inflation readings so far this year have not changed his overall view that inflation is headed downward and the Fed will cut rates later this year.Financial markets are betting heavily against a May 1 rate cut. Mester on Tuesday said she does not think there will be enough information between now and then to justify it.But that could change by June, Mester said. “We have to be data dependent so I don’t want to rule that out,” Mester told reporters after her speech. Interest-rate futures prices currently imply about a 65% chance of a rate hike by June, down from about 70% after the Fed’s March meeting. More

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TOKYO (Reuters) -Core inflation in Japan’s capital slowed in March and factory output unexpectedly slid in the previous month, heightening uncertainty on how soon the Bank of Japan can raise interest rates again after exiting its radical monetary stimulus.The slew of weak signs in the economy could prompt the central bank to go slow in its next rate hike and give investors an excuse to continue selling yen, keeping pressure on Japanese authorities to intervene in the market to prop up the currency.”Factory output is weaker than expected,” said Masato Koike, an economist at Sompo Institute Plus. “Given the weakness in production, the BOJ may find it hard to raise interest rates again soon.”Core consumer price index (CPI) in Tokyo, an early indicator of nationwide figures, rose 2.4% in March from a year earlier, matching a median market forecast and slowing slightly from a 2.5% gain in February.A separate index that excludes the effect of both fresh food and fuel costs, viewed as a broader price trend indicator, also showed inflation slowing to 2.9% in March from 3.1% in February, data showed on Friday.While core inflation is still above the central bank’s 2% target, the slowdown underscores how price pressures in Japan are still predominantly coming from raw material costs rather than robust domestic demand.”Cost-push inflationary pressures are weakening. We’re also seeing a slowdown in service-sector inflation,” said Toru Suehiro, chief economist at Daiwa Securities.Separate data showed on Friday Japan’s factory output unexpectedly fell by 0.1% in February from the previous month, against a median market forecast for a 1.4% rise.Manufacturers surveyed by the Ministry of Economy, Trade and Industry expect output to increase 4.9% in March and rise 3.3% in April, the data showed.The data may point to caution at the BOJ in implementing further interest rate hikes, after ending an eight-year negative interest rate policy last week.Despite the rate hike, expectations that the BOJ will go slow in raising interest rates have pushed the yen to a 34-year low against the dollar this week, triggering verbal warnings by authorities against weakening the currency too much.While a weak yen boosts profit for Japanese exporters, it hurts households and retailers by pushing up the cost of importing raw material and fuel.The BOJ has said its decision to end negative rates last week was driven by signs that robust demand and the prospect of higher wages were prodding firms to keep hiking prices for both goods and services.BOJ Governor Kazuo Ueda has said the central bank could hike rates again if inflation overshoots expectations or upside risks to the price outlook heighten significantly.Big firms have offered bumper pay hikes in this year’s annual wage negotiations, heightening the prospect that Japan will see inflation sustained around the BOJ’s 2% target.But consumption has showed signs of weakness as rising living costs hit households, casting doubt on the strength of Japan’s economy.Factory output also remains weak due to production and shipment disruption at Toyota Motor (NYSE:TM) and its small-car unit, which could weigh on the broader economy due to their huge presence in Japan’s manufacturing sector.Japan’s economy expanded an annualised 0.4% in the final quarter of last year, narrowly averting a technical recession as robust capital expenditure offset weaknesses in consumption. More

WASHINGTON (Reuters) -U.S. Treasury Secretary Janet Yellen will return to China this week to continue her economic dialogue with top Chinese officials amid a new emphasis on the threat to global economies from the Asian superpower’s growing excess industrial capacity, the Treasury Department said on Tuesday.The April 3-9 trip, which will be Yellen’s second in-person visit to China as Treasury Secretary, will include a stop in the southern factory and export hub of Guangzhou before Beijing. She visited Beijing in July 2023 to re-establish ties after years of frosty relations. Her trip was announced as U.S. President Joe Biden and Chinese President Xi Jinping on Tuesday held their first direct talks since November in which Taiwan tensions and U.S. national security curbs on the sale of high-technology goods to China took center stage.Xi warned Biden that the U.S. was “creating risks” by suppressing China’s trade and technology development, Xinhua news agency quoted the Chinese leader as saying.Yellen’s dialogues with top Chinese officials have been partly aimed at trying to ease tensions over China-related security restrictions, with explanations that they are narrowly targeted and not aimed at de-coupling the world’s two largest economies.In Guangzhou, Yellen will meet with her main counterpart, Chinese Vice Premier He Lifeng, Guangdong Province Governor Wang Weizhong and executives of U.S. companies in China, the Treasury Department said. She will hear first-hand about business climate challenges that are prompting U.S. firms to limit their investment in China.Yellen last met with He in November 2023, ahead of the Asia-Pacific Economic Cooperation Summit in San Francisco, where Biden also met with Xi.Since Yellen’s first visit to Beijing last July, she and He have launched economic and financial working groups that meet virtually. Discussions so far have largely focused on economic issues facing each country and their policy responses, such as China’s property market troubles that have undermined consumer confidence, or failures of two major U.S. regional banks last year.CAPACITY CHALLENGEThe increased U.S. emphasis on Chinese excess capacity represents a shift in the discussions. China’s exports have been growing at a time of weak domestic demand. Xi has pledged to unleash “new productive forces” in China by investing in developing technology industries including electric vehicles (EVs), new materials, commercial spaceflight and life sciences.Yellen said last week at a Suniva solar module factory near Atlanta that Chinese government support has led to “substantial overinvestment” in steel, aluminum and other industries, paving the way for cheap exports that have forced manufacturing to contract in other market-driven countries.”Now, we see excess capacity building in ‘new’ industries like solar, EVs, and lithium-ion batteries,” Yellen said during her trip last week, adding this was distorting prices and production patterns and hurting workers in the U.S., European Union and other economies.Asked if she would raise the threat of new trade barriers on her next China visit, Yellen said she did not want to “get into retaliation,” adding: “We want to see what we can do that’s constructive.”The EU is investigating whether China’s EV industry is benefiting from unfair subsidies, a probe that could lead to tariffs to protect European carmakers. The U.S. Commerce Department has opened a probe into whether Chinese vehicles pose national security threats due to the data they transmit, and U.S. lawmakers have urged Biden to hike tariffs on Chinese EVs.A U.S. Treasury official told reporters that Yellen during her upcoming China trip would “make clear the global economic consequences of Chinese industrial overcapacity undercutting manufacturers in the U.S. and firms around the world.”The official, speaking on condition of anonymity, said U.S. and Chinese officials would likely discuss currency matters as a routine part of their economic talks, but declined to comment on recent weakness in China’s yuan currency.The official added that Yellen would seek further cooperation in areas mutually beneficial to both countries, including fighting climate change, combating illicit financing and narcotics trafficking and providing relief to debt-distressed developing countries. More