Aurelia Butler

OTTAWA, March 26 (Reuters) – The Bank of Canada (BoC) on Tuesday said businesses urgently needed to boost investment to increase productivity, saying this would help insulate the economy against the threat of inflation. “I’m saying that it’s an emergency – it’s time to break the glass,” Senior Deputy Governor Carolyn Rogers (NYSE:ROG) told a business audience in the Atlantic province of Nova Scotia.”Increasing productivity is a way to protect our economy from future bouts of inflation without having to rely so much on the cure of higher interest rates.”The Bank of Canada has raised rates to a 22-year high and says it is still too early to discuss when they might start coming down. Rogers did not mention a potential time line for rate cuts.Policymakers and businesses have for years fretted over poor productivity in Canada which Rogers blamed on low levels of investment, a lack of competition and the inability of new Canadians to use their skills properly.”What really sticks out is how much we lag on investment in machinery, equipment and, importantly, intellectual property,” she said.Inflation could be more of a threat than it has been over the past few decades, as the benefits of globalization decrease and prices come under pressure from demographics, climate change and global trade tensions, she said.”An economy with low productivity can grow only so quickly before inflation sets in,” she said.The central bank had thought productivity would improve in the wake of the pandemic but so far this has not happened, she said. At the same time, companies in rival nations are investing more than Canada. This, she said makes it “increasingly urgent that we turn the situation around”.The labor productivity of Canadian businesses rose 0.4% in the fourth quarter after falling for six straight quarters. Annual productivity declined 1.8% in 2023, its third consecutive year of decline, according to Statistics Canada data.((Reuters Ottawa bureau, [email protected])) More

The West African country is currently in talks with overseas investors to restructure about $13 billion in bonds.Ghana defaulted on most of its $30 billion external debt in December 2022, after debt costs and inflation spiralled upwards. More

In an interview with Greek financial website Mononews.gr, Stournaras said that it seemed there was a consensus for a rate cut in June, if ECB forecasts were confirmed.He added that four rate cuts this year were “reasonable” as long as inflation continued to decrease. The ECB, he said, had no reason to wait for the Fed to cut rates first as “the reasons for the inflation in Europe are different than in the United States”. More

Fed Chair Jerome Powell said recent inflation readings had not changed the underlying story of slowly easing price pressures and affirmed that solid growth will continue.Markets still expect the Fed to start lowering rates in June, as do top Wall Street banks.Investors are currently pricing in a roughly 70% chance of a 25-basis-points (bps) cut in June, compared with 67% just before the Fed decision, per the CME’s FedWatch tool.Brokerages including Goldman Sachs, J.P. Morgan, BofA Global Research and Deutsche Bank maintained their expectations on the future trajectory of interest rates. UBS Global Research, meanwhile, changed its forecast for the first rate cut to June, from May. Here are the forecasts from major brokerages following the March meeting: Brokerage First cut in Number of cuts Quantum (NASDAQ:QMCO) of cuts in Fed funds target in 2024 2024 rate at end 2024 Goldman Sachs June (25 bps) 3 75 bps 4.625% J.P. Morgan June (25 bps) 3 75 bps 4.50%-4.75% BofA Global June 3 Research Deutsche Bank June 100 bps 4.25%-4.50% UBS Global June (25 bps) 3 75 bps 4.50%-4.75% Wealth Management * UBS Global June (25 bps) 3 75 bps 4.50%-4.75% Research * 4 100 bps 4.38% Morgan Stanley June (25 bps) * UBS Global Research and UBS Global Wealth Management are distinct, independent divisions in UBS Group Here are the forecasts from major brokerages before the March meeting: Brokerages First cut in Number of cuts Quantum of cuts in Fed funds target in 2024 2024 rate at end 2024 Goldman Sachs June (25 bps) 3 75 bps 4.625% UBS Global June (25 bps) 3 75 bps 4.50%-4.75% Wealth Management UBS Global May (25 bps) Research Morgan Stanley June (25 bps) 4 100 bps 4.38% Wells Fargo June (25 bps) 100 bps 4.25%-4.50% J.P. Morgan June (25 bps) 3 75 bps 4.50%-4.75% BofA Global June 3 Research Citigroup June 75 bps 4.6% More

Japan’s balance of payments has undergone “big structural changes,” said Masato Kanda, the vice finance minister for international affairs. Since around 2010, income gains have overtaken the trade surplus as a key driver of Japan’s current account surplus. Kanda, who is the country’s top currency diplomat, kicked off a debate on the panel, which comprises of 20 private-sector experts, ranging from professors and economists to strategists.”However, currencies are not within the scope for discussion at this panel,” Kanda told reporters after the meeting.The panel discussed trade deficits and shortfalls in digital and R&D, as well as what measures Japan should take to become more competitive in this new area.The panel is due to hold several more meetings before compiling proposals around June for improving the balance of payments and for better ways to earn and invest, particularly at home.The worsening in the service account deficit is an important issue when considering the future of the current account, but the trade deficit and slumping domestic investment is a bigger issue and must be provided with targeted support, Kanda said.As companies shift production abroad, income gains increase, only to be reinvested overseas, while causing domestic investment in human resources and innovation to stall. More

JOHANNESBURG (Reuters) – The Central Bank of Nigeria is set to raise its benchmark interest rate to 24.75% on Tuesday and keep it there for the rest of the year, a Reuters poll forecast, a move analysts reckon will be enough to slow inflation and bring dollar inflows.Last month the central bank delivered its largest interest rate hike in around 17 years, adding 400 basis points, yet seven of 13 analysts said it would add another 200 basis points later on Tuesday and take the key rate to 24.75%.The rest were divided between no move, just a 50 basis point (bps) lift, 125, 150 or a bumper 225 bps increase.Nigeria’s inflation quickened to 31.70% in annual terms in February, a 28-year high.Tatonga Rusike, BofA’s sub-Saharan economist, said a cumulative 600 basis points of hikes would help bring inflation down to 25% by end-year and likely inflows would support naira stabilisation, Eurobond market access and potential World Bank support.”The inflows could help reduce official FX backlogs and mismatches in the FX market,” he added.Nigeria is looking at proposals for a Eurobond issue, Finance Minister Wale Edun said on Monday, saying falling interest rates were making international debt issues more affordable.Africa’s largest economy has borrowed from international creditors, including the World Bank, but has not tapped the Eurobond market since a $1.25 billion issue in 2022.Nigeria has struggled to attract dollar inflows from its main export source of oil revenues since a commodity price slump around 2015 which it never really recovered from, seen in lower oil production levels.The naira did somewhat recover after last month’s hike in rates and some analysts are now taking a more constructive view on the currency after the central bank’s strong show of intent in February.It firmed after the central bank said on Wednesday it had cleared its entire verified foreign exchange backlog.Fellow continental peer, the Bank of Ghana kept its main interest rate at 29.00% on Monday, saying the inflation outlook had worsened slightly over the past two months and required close monitoring.South Africa’s Reserve Bank is expected to keep its repo rate steady at 8.25% on March 27, all 23 economists unanimously forecast in another Reuters poll, and wait until the third quarter before cutting.(For other stories from the Reuters global economic poll:) More

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