Aurelia Butler

“I’m definitely less confident than I was in December” that inflation will continue to fall towards the Fed’s 2% target, Bostic told reporters after a forum. Price pressure concerns led him to scale back this year’s rate-cut outlook and push back the likely start date, he added.Bostic had previously said rate reductions might start as soon as this summer. The Fed is widely expected to reduce rates beginning in June.Bostic said the economy has proved more resilient than anticipated, with recent data causing him to roughly double his 2024 U.S. economic growth estimate to 2%. He saw little or no change in the current 3.9% unemployment rate, a level considered inflationary not too long go, he added.While he feels inflation is on an “arc” lower, it may be moving slower, and he cited concern about the number of items still recording outsized price increases.The balance of risks has shifted towards waiting longer before easing monetary policy, said Bostic, a voter this year on the U.S. central bank’s interest rate policy and its first official to speak publicly since the Federal Open Market Committee meeting ended on Wednesday.The Fed held rates steady in the 5.25% to 5.5% range at the meeting, with most policymakers still expecting at least three rate cuts this year, but its new projections reflected slower progress on inflation and continued economic strength.”If we have an economy that is growing above potential, and we have an economy where unemployment is at levels that were deemed to be unimaginable without pricing pressures, and if we have an economy where inflation is moderating … those are good things,” Bostic said. “That gives us space for patience.” More

The outlook revision comes after Britain’s economy rebounded to growth in January from a shallow recession in the second half of 2023, driven by a resurgence in retail sales and housing. “Fitch’s cautious projections assume a balancing of policy priorities against reducing risks to the sustainability of public finances,” the agency said. Bank of England Governor Andrew Bailey on Thursday said Britain’s economy is moving in the right direction with “further encouraging signs that inflation is coming down” but flagged that the central bank needed more certainty that price pressures were fully under control. Peers S&P and Moody’s (NYSE:MCO) also have a stable outlook on the United Kingdom. More

“[W]e believe that it is likely that Fed speakers over the coming weeks will lean more on the hawkish side, especially with regard to the long-term path for policy interest rates — the thing that could be material for the 10-year yield,” Macquarie said in a recent note. Following the Fed’s decision to keep interest rates unchanged at the Mar.20-21 policy meeting and continue to signal for three rate cuts this year, Powell leaned into a dovish stance, shrugging off the recent upside surprise in inflation seen in January and February as bumpy. “Powell’s ‘dovish’ tone came somewhat as a surprise to us, and probably ran counter to the thinking of other Fed policy officials,” Macquarie added, flagging the jump in overnight index swap market pricing an 85% chance of four cuts in 2024.But the Fed’s updated summary of economic projections showing that the Powell’s Fed colleagues are expecting stronger economic growth, higher inflation, and a modest rise in the Fed’s longer-term rate offer clues to “what the other Fed officials were thinking,” Macquarie says, painting a far less dovish picture than the one delivered by the Fed chief. The upward revision to Fed’s economic and rate projections and their distribution of risk pointed to a “somewhat more hawkish Fed lurking below the surface of Powell’s discourse,” Macquarie said, forecasting just two rate cuts this year and next.Atlanta Fed president Raphael Bostic, Fed governors Lisa Cook and Christopher Waller and chairman Powell are among a host of Fed speakers on the podium next week.  The minutes of the Fed’s March meeting, slated for April, could also underscore the divergence between Powell’s dovish take and that of his colleagues.Still, the overarching takeaway from the Fed last week was “policymakers continue to want to cut rates and are waiting for an opportune inflation window to do so,” MRB Partners said. A “technical easing” in inflation, courtesy of base effects could provide that opportunity to take advantage of the window of descending year-over-year core inflation,” MRB added. More

In an emailed statement, the Office of the Superintendent of Financial Institutions (OSFI) said it is implementing a cap on the number of mortgages a bank can lend that are larger than 4.5 times a borrower’s annual income. The loan-to-income, or LTI, measure applies to individual banks and is designed to prevent the buildup of highly leveraged loans during low interest rate periods, OSFI said. The banks will have to monitor and manage their portfolio of underwritten mortgages every quarter, it added. OSFI said it had considered banks’ business models and that the portfolio limit, specific to each institution, would not bind any one bank’s underwriting method.”This approach allows institutions to continue competing in the same way they have been in the past on a relative basis,” it said.The Globe and Mail, which first reported the news, said the new income limit is expected to take effect in the first quarter of next year, adding it would not apply to insured loans in which the borrower has to pay for mortgage insurance because their down payment is less than 20% of the property’s purchase price.The banking regulator has already introduced new rules including a minimum qualifying rate that is 2% higher than the borrower’s agreed mortgage rate to ensure consumers can withstand future interest rate changes.Canada’s big banks have also set aside more funds to cover loans that could potentially turn sour since the central bank began raising interest rates and the regulator has required to banks to show a strong capital position.”Banks in Canada have a long history of working with their customers to keep their mortgages in good standing,” Canadian Bankers Association, a top lobbying group said.”Understanding their customers and adapting to their changing circumstances is a top priority. The industry is still assessing the impact of OSFI’s policy.” More

(Reuters) -Canada’s commodity-linked main stock index ended lower on Friday as the U.S. dollar strengthened but the index still notched its sixth straight weekly gain.The Toronto Stock Exchange’s S&P/TSX composite index ended down 103.18 points, or 0.5%, at 21,984.08, after posting on Tuesday its first record high closing level in two years.For the week, the index was up 0.6%. The weekly winning streak was the longest since December 2020.”Today is a bit of a day off (due to) the strong dollar. Investors are taking some profit off the table in many areas,” said Allan Small, senior investment advisor of the Allan Small Financial Group with iA Private Wealth.”Whenever you have U.S. dollar strength, it’s not good for commodities. We know our markets are very heavily weighted in that space.”Resource shares account for roughly 30% of the Toronto market. The materials sector, which includes precious and base metals miners and fertilizer companies, fell 1% as gold and copper prices fell.The U.S. dollar notched a second straight week of gains against a basket of major currencies, making commodities priced in the U.S. currency more expensive for buyers using other currencies.Heavily-weighted financials also lost ground, falling 0.6%, and technology was down 1.1%.Tilray (NASDAQ:TLRY) Brands Inc shares climbed 19.8%, with shares of pot firms jumping as Germany makes cannabis possession legal. More

This article is an on-site version of our Disrupted Times newsletter. Sign up here to get the newsletter sent straight to your inbox three times a weekToday’s top storiesFor up-to-the-minute news updates, visit our live blogGood evening.A flurry of dovish messages from central banks weighing the prospect of multiple interest rate cuts has set global stocks alight this week.In contrast with past inflationary struggles, which have come at a heavy cost of recession and joblessness, today’s policymakers are increasingly convinced that the holy grail of “immaculate disinflation” — the vanquishing of inflation without driving up unemployment — is within reach. A flurry of announcements began on Tuesday with the Bank of Japan ending a decade of ultra-loose monetary policy by calling time on negative interest rates. The FT editorial board praised the BoJ’s “prudent choreography” in signalling the move, but warned that the journey to normalising monetary policy remained “a long slog”. The US Federal Reserve followed on Wednesday by holding rates steady at a 23-year high of 5.25 per cent to 5.5 per cent but confirmed that it expected to make 0.75 percentage points worth of rate cuts this year, signalling confidence that inflation was finally on the run. The news pushed Wall Street stocks to record highs, even if academic economists polled by the FT were a little more sceptical.The Bank of England echoed the Fed on Thursday by keeping UK rates at 5.25 per cent but also signalled it was edging closer to cutting borrowing costs. BoE governor Andrew Bailey said things were “moving in the right direction” and in an interview with the FT today confirmed rate cuts were “in play”. “The global shocks are unwinding and we are not seeing a lot of sticky persistence [in inflation] coming through at the moment,” he said. London stocks followed Wall Street’s trajectory, putting the FTSE 100 also on track for a record high.Judging by today’s purchasing manager indices from S&P Global, UK business conditions are also looking more favourable, with services activity continuing to rise and the manufacturing downturn easing. The property market meanwhile is starting to factor in cuts in mortgage rates, while consumers’ confidence in their own finances has hit a two-year high.Compared with the US and the UK, the path to rate cuts in Europe is a little less certain. Although the PMI data for the eurozone tells a similar tale to that of the UK, European Central Bank chief Christine Lagarde said on Wednesday that high wage growth and weak productivity meant services inflation was proving stickier than expected. The ECB would need to continue checking that “incoming data supports our inflation outlook,” she argued.Other key announcements came from Switzerland with a surprise quarter-point cut in rates to 1.5 per cent, making it the first central bank of a major western industrialised country to do so in the era of the post-pandemic inflation surge.By contrast, Turkey, which is still scrambling to halt runaway inflation, surprised in the other direction with a 5 percentage point rise to 50 per cent.For more on next steps for policymakers, premium subscribers can sign up here for the Chris Giles on Central Banks newsletter.Need to know: UK and Europe economyConsumer confidence may be rising for some, but for many British families the picture is very different: new government data showed the fastest rise in child poverty for 30 years, with 25 per cent of children living below the poverty line.You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.The UK is also facing a multibillion pound bill over pension inequality after an ombudsman said changes to the state retirement age for women were mishandled. Simon Harris is set to become Ireland’s next Taoiseach (prime minister) after emerging as the sole candidate to succeed Leo Varadkar. In neighbouring Northern Ireland, Brexit is once again pulling parties apart.Officials across Europe are warning of an “avalanche of disinformation” from Russia aimed at weakening support for Ukraine and interfering with EU elections in June.Need to know: global economyFalling fertility rates over the next quarter century are likely to have a far-reaching effect on the global economy, according to a new study. Three-quarters of nations are set to fall below population replacement birth rates by 2050, leaving growth to a few poorer states in sub-Saharan Africa and Asia that face severe threats from resource shortages and climate change.You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.Argentina’s new president Javier Milei has launched an aggressive campaign to transform state-owned companies as politicians in Congress hold back his plans to privatise them. Cost cuts have also opened up fierce conflicts with staff and unions.Global business chiefs are gathering in Beijing for the China Development Forum — aka “China’s Davos” — amid concerns that the country’s industrial oversupply in sectors such as steel could become a “slow-motion train accident” for world trade.It’s no longer the economy, stupid. The age-old relationship between economic sentiment and a government’s popularity has disappeared in the US, but remains as strong ever in western Europe, says chief data reporter John Burn-Murdoch.Need to know: businessIn a landmark antitrust case, the US is suing Apple for allegedly building a smartphone market monopoly, accusing the group of imposing contractual limitations on developers while making it more difficult for users to switch devices. The move is a watershed moment for the company, now in the crosshairs of regulators on both sides of the Atlantic.Shares in social media company Reddit surged by 48 per cent on its market debut, in a vote of confidence for initial public offerings after two years of subdued activity. It also marks a turning point for a fringe, free-speech orientated platform as it transforms into a more mainstream discussion site.The FT revealed that the BBC is building its own artificial intelligence models while also holding talks over selling access to the broadcaster’s vast archive to Big Tech groups including Amazon. A new Big Read examines how the bidding war for AI talent is leading to ever greater concentration of power in Big Tech. Shares in clothing retailer Next — seen as a bellwether for UK consumer demand — hit a record as it forecast £1bn in profits this year. The company has responded well to the shift to online and global crises, unlike many middle market rivals.Science round-upThe World Meteorological Organization sounded a “red alert” on the impact of climate change after 2023 was affirmed as the hottest year on record. The WMO highlighted rising food insecurity and a large gap in funding necessary to mitigate the changes. Methane emissions, much more potent than those from carbon dioxide, are creeping up the agenda after a series of large leaks. Scientists are getting closer to nuclear power’s dream: fusion reactors. Read more in our special report: Nuclear EnergySpace agencies are racing to find water on the moon, essential for the establishment of lunar settlements. Read more in our special report: The Future of Water.A dispute among World Health Organization members over a genomic databank threatens to unravel a global pandemic accord and hinder vaccine development.A new gene therapy to treat a rare genetic disease that attacks the central nervous system of young children became the most expensive drug in history, priced at $4.25mn in the US.Gene-editing pioneer Jennifer Doudna meanwhile called for therapies to be made available for all through increased investment in Crispr technology. The UK in November gave the world’s first regulatory approval for a Crispr treatment. Some good newsAn app from a Spanish tech company is helping visually impaired travellers across the world navigate urban transport systems.Recommended newslettersWorking it — Discover the big ideas shaping today’s workplaces with a weekly newsletter from work & careers editor Isabel Berwick. Sign up hereThe Climate Graphic: Explained — Understanding the most important climate data of the week. Sign up hereThanks for reading Disrupted Times. If this newsletter has been forwarded to you, please sign up here to receive future issues. And please share your feedback with us at [email protected]. Thank you More