Aurelia Butler

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Many of the world’s biggest carmakers are buying aluminium produced by victims of forced labour in China’s Xinjiang region, according to a new report that details how the supply chains of multinational companies could be implicated in Beijing’s long-running campaign of repression.A report published on Thursday by Human Rights Watch shows that nearly 10 per cent of the world’s aluminium supply comes from Xinjiang, following a sixfold increase of production in the north-west Chinese region since 2010. Carmakers are the biggest industrial users of the metal.Researchers also found that the Xinjiang aluminium industry relied on workers in state-backed labour transfer programmes, making domestic automotive production in China — the world’s biggest car market — highly exposed to possible human rights abuses.More than 1mn Uyghur and other minority Muslims have been detained in internment camps or subjected to other abuses in Xinjiang over the past decade, according to rights groups.Chinese officials say the labour transfer programmes help alleviate poverty and address underlying causes of separatism and terrorism by giving residents productive employment. More than 3mn transfers were made annually in 2021 and 2022, according to government data.Jim Wormington, who led the Human Rights Watch research, said “the reality is that the whole mechanism of labour transfer” is deployed for increased coercion and control by the state.“They don’t have a choice but to participate,” he added. “Once they’re moved, they’re in places where their movement is restricted. They are not able to freely leave employment.” Wormington added that victims of forced labour transfer were subjected to “mandatory ideological . . . indoctrination”.China has come under intense criticism for its conduct in Xinjiang, where more than 1mn Uyghurs and other Muslims are believed to have been interned in camps More

The Federal Reserve made two things clear at its meeting on Wednesday — interest rate cuts are coming, but not as soon as many investors might like.After two years of turbulence, including a bout of rampant inflation that caught the central bank’s officials off guard, the Fed has called time on one of the most dramatic cycles of rate rises in decades.Gone from the official statement was any mention of “additional policy firming” — that is, more rate rises — if the Fed deemed it appropriate. Instead, there came a hint of triumph, with the central bank noting that risks to full employment and low inflation were now “moving into better balance”. Fed watchers read through the jargon: a punishing period in which borrowing costs rose by 525 basis points in just 18 months is as good as officially over.Just don’t think that means new cuts are imminent. Like it had for the previous three meetings, the Fed on Wednesday held rates deep in restrictive territory, at a 23-year high of between 5.25 per cent and 5.5 per cent. And while the bias towards further rises has gone, the Fed is not ready to slash them just yet. The cause of the delay? Officials want “greater confidence” that inflation will be beaten down to the Fed’s 2 per cent goal. That need for surety is bemusing some economists and investors. Measured over the second half of 2023, the inflation gauge Fed officials watch most closely — the personal consumption expenditures index — was just 1.9 per cent. That marked six months of “good news” on inflation, Fed chair Jay Powell acknowledged. But the central bank wants even more data, and even more certainty. So he was adamant that market bets of a cut as soon as the next meeting, in March, were overeager — not his “base case”.Fed watchers said that, barring an economic catastrophe between now and March 20, Powell’s comments on Wednesday all but ruled out an early spring cut. The market move after the meeting reflected that too, as stocks fell, Treasuries rallied and traders reduced the odds of a March rate cut, which fell from 60 per cent to about a third.Powell’s pushback against investors’ bets marked a contrast to the Fed chair’s remarks in mid-December, when his dovish rhetoric raised some market expectations for as many as six quarter-point cuts beginning in early spring.On Wednesday, Powell was in a more Eeyorish mood, reining in the optimism on the economy — and refusing to join the chorus of cheerleaders claiming rate-setters had pulled off a soft landing, by quelling inflation without inducing widespread job losses.The US performed better than other advanced economies last year, expanding by 3.1 per cent even while unemployment remained historically low, at just 3.7 per cent in December. And yet, Powell said, there was still “a way to go” before victory could be declared.In fact, it is that strong growth that has given rate-setters leeway in deciding when, and by how much, to begin easing monetary policy, noted Christopher Waller, a governor at the Fed, last month. “The Fed clearly doesn’t want to jinx its run of good luck by prematurely advertising any rate cuts,” said Eswar Prasad, a professor at Cornell University. “Nevertheless, the Fed is sending an unambiguous signal that rate cuts will be forthcoming if the news on inflation continues to be good.”You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.But holding off rate cuts until later in the year was not without some jeopardy, said some economists. The central bank had originally been too slow to respond to high inflation — and now risked cutting too late.“We have the right ingredients to continue with the last mile of disinflation,” said Greg Daco, chief economist at EY. Companies had lost some ability to keep pushing up prices, Daco said, and there were signs that wage inflation was also easing.“Any external observer will tell you that easing in March would most likely be optimal,” he added. “But Fed officials want to have that extra confidence cushion, so they will probably wait until May.” Some analysts shared Powell’s concerns that inflation could yet prove sticky — and beyond the 2 per cent target. Vincent Reinhart, a Fed veteran who is now at Dreyfus and Mellon, pointed to a rise in the consumer price index — another inflation gauge monitored by the Fed — from 3.1 per cent in November to 3.4 per cent in December. The uptick was another reason not to signal a March cut.“That beneficial drag on prices from the easing of supply chain pressures and the lower cost of goods has certainly stopped and has probably turned around,” Reinhart said.Investors were already doing some of the Fed’s job, he pointed out, as they priced in rate cuts, driving down bond yields and helping to lower the cost of capital for businesses. That market outcome, coupled with the economy’s strong health, favoured the Fed taking its time.“What happens if inflation doesn’t keep falling, or even rebounds? If you ease too soon, markets are just going to reinforce your mistake. As a central bank, you’re better off being too conservative right now.” More

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Keir Starmer, leader of the left-leaning party, will tell assembled executives that Labour will “get under the bonnet to fix an unprecedented stagnation in British productivity growth.”Labour, which leads Prime Minister Rishi Sunak’s Conservatives by around 20 percentage points in opinion polls, has sent senior policy chiefs to the World Economic Forum in Davos as part of Starmer’s pitch to the business community.He will also tell the conference that Labour has changed and is now the “party of business”, offering stability under his leadership, in contrast to the “permanent cycle of crisis” which has seen five Conservative prime ministers in eight years.”The depth of the changes we’ve made to transform the Labour Party’s relationship with business is something I take immense pride in,” he will say, according to extracts released by the party.Labour will also launch a plan on Thursday called “Labour’s Partnership with Business for Growth,” setting out more details of how to improve skills in the economy, back businesses and create economic stability.Ahead of the conference, the party’s finance policy chief Rachel Reeves said that Labour would champion Britain’s financial sector and not bring in a new cap on bankers’ bonuses.Labour also wants closer economic ties with the European Union, including deeper co-operation with the bloc on financial services. More

Aozora had previously forecast a net profit of 24 billion yen ($163.3 million).This would mark the Japanese bank’s first annual net loss since the year ended March 2009 at the height of the global financial crisis.Rising U.S. interest rates brought about losses on Aozora’s securities portfolio, which is mostly made up of foreign bonds, and its U.S. office loan portfolio, which has also suffered under the shift to remote work, the bank said in a statement.($1 = 146.9900 yen) More

NEW DELHI (Reuters) – Indian Prime Minister Narendra Modi’s government will present its final budget on Thursday before elections, with plans expected to be fiscally prudent with a focus on infrastructure spending but heavy on political messaging ahead of the national vote.Finance Minister Nirmala Sitharaman will announce the budget for the financial year 2024/25 which starts April 1 at 0530 GMT.She is expected to highlight the Modi government’s 10-year economic performance, but will hold back on expensive schemes to lower the fiscal deficit.The budget could serve as an economic manifesto for Modi’s party by laying out his vision for the economy for the next five years. He is bidding to win a rare third term in general elections to be held by May.”The upcoming interim budget would lack any big bang announcements but is likely to be watched for the pace of fiscal consolidation and policy priorities ahead,” said Madhavi Arora, economist at Emkay Global.The government is likely to aim to lower fiscal deficit by at least 50 basis points in 2024/25 from its current target of 5.9% of GDP, which economist expect it to meet.To attain this, the government will cap major subsidies on food and fertiliser at the current year’s level, while announcing inexpensive welfare schemes like cash handouts for female farmers.An increase in spending on low-cost housing is also likely.”We rule out the likelihood of any aggressive competitive populism,” Arora said.The government is expected to increase capital spending or expenditure on infrastructure, which has been key to pushing the country’s growth.It will spend 10 trillion Indian rupees ($120.5 billion) or over 3% of GDP on infrastructure in the current year with a further increase of as much as 20% expected for 2024/25.The Indian economy grew 7.6% in the July-September quarter, and forecasts are for growth of 7.3% for the full year that ends on March 31, the world’s fastest pace for a major economy. The economy is expected to grow at close to 7% in fiscal 2024-25, according to government estimates.The government is expected to keep its gross market borrowing little changed in 2024/25 at between 15 trillion rupees and 15.5 trillion rupees. “This budget is expected to primarily focus on fiscal consolidation. There will only be a marginal increase in market borrowings,” said Rupa Rege Nitsure, Economist at L&T Finance.In the current fiscal year the government is expected to borrow 15.44 trillion rupees. ($1 = 83.0200 Indian rupees) More