Aurelia Butler

NEW DELHI (Reuters) – India’s economy is expected to have slowed in the July-September quarter, growing at the slowest pace in 18 months, weighed down by weak urban consumption following a rise in food prices despite an increase in government spending. A Reuters poll of economists projected GDP growth of 6.5% year-on-year for the three months through September, below the central bank’s estimate of 7% and 6.7% in the previous quarter. Economic activity, as measured by gross value added (GVA), was forecast to show a more modest 6.3% expansion compared with 6.8% in the previous quarter.If the projection holds, it would mark the third consecutive quarter of slower growth, though India would remain the world’s fastest growing major economy.The Reserve Bank of India (NS:BOI) (RBI) has maintained its GDP growth forecast for the fiscal year at 7.2%, down from 8.2% in the previous fiscal year, while several private economists have lowered their projections. The National Statistics Office is due to announce GDP figures for July-September quarter on Friday at 1030 GMT.Economists said private consumption, which accounts for about 60% of India’s gross domestic product (GDP), has been affected by a slowdown in urban spending due to higher food inflation, borrowing costs and sluggish real wage growth, despite signs of recovery in rural demand.Retail food prices, which make up nearly half of the consumption basket, rose 10.87% year-on-year in October, eroding households’ purchasing power. Toshi Jain, an economist at J.P. Morgan, said recent months have seen a slowdown in high-frequency indicators such as industrial output, fuel consumption and bank credit growth, along with weak corporate earnings, affecting growth momentum. “(Though) government spending has re-accelerated in the July-September quarter that has not prevented a slowing in high frequency data, suggesting underlying private sector momentum has softened,” she said in note earlier this week.Jain expects GDP growth of 6.3% to 6.5% in September quarter.Top Indian companies posted their worst quarterly performance in over four years for the July-September period, raising concerns that an emerging economic slowdown had begun to affect corporate earnings and investment plans. However, the RBI is expected to keep its policy interest rates unchanged next week amid concerns over high retail inflation, according to economists in a Reuters poll. The RBI’s Monetary Policy Committee, left its benchmark repo rate unchanged at 6.50% last month, while tweaking its policy stance to “neutral”. Government officials and some economists expect the economy could regain momentum in the second half of the fiscal year, helped by a pick-up in state spending after recent elections, and higher rural demand after a better harvest.”We expect recovery in growth in the second half,” Axis Capital (NYSE:AXS) Economic Research said in a note. More

BENGALURU (Reuters) – Home prices in Australia will rise steadily over the coming two years, driven by tight supply and an expected modest easing cycle from the Reserve Bank of Australia, according to a Reuters poll.The Nov. 12-28 Reuters survey of 12 real estate analysts forecast home prices to rise 5.0% next year and in 2026, faster than in an August poll.Even as RBA’s interest rates climbed from 0.10% to 4.35% since May 2022, Australia’s median home prices have risen in double digits from early 2023, underscoring the property market’s resilience.Much of that increase was due to supply shortages, an historically low jobless rate of around 4%, and immigration.Even with borrowing costs holding near a 13-year high for over a year, home prices rose for 21 months to October, a trend seen continuing as the RBA is expected to cut rates by 75 basis points next year.”The Australian housing market will continue to remain resilient to the various economic, interest rate, and political factors because there is a significant under-supply for a strong ongoing demand for houses to live in and to rent,” said Michael Yardney, founder of Metropole, a real estate advisory firm.”Interest rates will fall next year and that will bring consumer confidence back and affordability to some,” Yardney said.”First-time buyers are definitely still there in the market, but next year is going to be driven by more affluent people who have got more money with equity in their homes.”Among major cities, house prices in Brisbane, Adelaide, and Perth were predicted to rise 5.0%, 6.0%, and 8.3%, respectively, in 2025. In Sydney and Melbourne they were forecast to rise 4.0%.FIRST-TIME HOME BUYERSThe median asking price of homes increased from A$566,476 to A$874,827 ($368,039 to $568,375) between March 2020 and October 2024 – a 54% rise, according to data from Corelogic (NYSE:CLGX). Average wage growth has lagged substantially. “What we have seen during this cycle in particular has been a substantial drop in borrowing capacity relative to the still solid house price growth. So that divide between people’s ability to borrow and the cost of the final home is likely to continue,” said Johnathan McMenamin at Barrenjoey.Any relief from a rate cut from the RBA, which remains the only major central bank that has yet to lower borrowing costs, may still be several months away. In the meantime, to address the shortage, Australian Prime Minister Anthony Albanese launched a new building programme in October and has pledged to build 1.2 million homes by 2030. (Other stories from the Q4 global Reuters housing poll)($1 = 1.5392 Australian dollars) More

TOKYO (Reuters) -Core consumer inflation in Japan’s capital accelerated in November and stayed above the central bank’s 2% target in a sign of broadening price pressure, data showed on Friday, keeping alive market expectations for a near-term interest rate hike.The yen rose against the dollar after the data, as market players braced for the possibility the Bank of Japan (BOJ) will raise short-term interest rates from the current 0.25% at its next policy meeting in December.The Tokyo core consumer price index (CPI), which excludes volatile fresh food costs, rose 2.2% in November from a year earlier, exceeding a median market forecast for a 2.1% gain and accelerating from a 1.8% increase in October.Another index that strips away both fresh food and fuel costs, which is closely watched by the BOJ as a better gauge of demand-driven inflation, rose 1.9% in November from a year earlier after a 1.8% increase in October.The data for Tokyo, which is considered a leading indicator of nationwide price trends, showed households hit by rising rent, utility bills and food costs.Service-sector prices rose 0.9% in November from a year earlier after a 0.8% gain in October, underscoring the BOJ’s view that prospects of sustained wage gains are prodding firms to charge more for services.The dollar fell 0.3% at 151.125 yen after the data’s release. Just over half of economists polled by Reuters expect the BOJ to raise rates again at its Dec. 18-19 meeting.Separate data showed Japan’s factory output rose 3.0% in October from the previous month, though manufacturers surveyed by the government expect production to fall in coming months.The BOJ ended negative interest rates in March and raised its short-term policy rate to 0.25% in July on the view Japan was making steady progress towards durably achieving its 2% inflation target.Governor Kazuo Ueda has said the BOJ will keep raising rates if inflation remains on track to stably hit 2% as it projects. More

SYDNEY (Reuters) – Australia’s central bank is finally getting a major shake-up of its policy-making process that adds extra uncertainty to when it might deliver interest rate relief to hard-pressed borrowers.Long-delayed reforms to the Reserve Bank of Australia (RBA) passed parliament late on Thursday after the ruling Labor government secured support from Greens lawmakers, bypassing objections from the main Liberal National opposition.The changes, which were recommended by an independent review in 2023, include splitting the current RBA board into two groups with one dedicated to monetary policy and the other focusing on the central bank’s governance and operations.Analysts are assuming the new monetary policy committee would have some new members, perhaps changing the outlook for interest rate cuts. The current board has held rates at 4.35% for an entire year and signalled there was little chance of easing in the near term, even as many other developed world peers have slashed rates.”While our base case remains for the RBA to start cutting rates in February, the changes raise the uncertainty around the RBA’s reaction function going forward given potential new board personnel,” said Goldman Sachs economist Andrew Boak.The monetary policy committee (MPC) will retain the present structure of six external members appointed by the treasurer and three ‘ex officio’ members comprising the RBA governor, deputy governor and treasury secretary.Governor Michele Bullock has indicated some of the current board members might move to the MPC and others to the governance committee. The reforms recommended the new MPC have members with expertise in monetary policy, macroeconomics and the labour market, among other areas. They will formally vote at board meetings and the overall vote will be published, and members might choose to give public speeches.Speaking at a media conference on Friday, Treasurer Jim Chalmers said the new format would be introduced some time after the RBA’s board meeting on Feb. 18, and likely by March 1.Chalmers said he would consult with the opposition on his choices for the new board, saying the candidates would be “first class and first rate”.The opposition had blocked the reforms in part arguing that Chalmers could pick appointees friendly toward the government.The RBA has already adopted some of the recommendations from the review, including having fewer but longer policy meetings and holding a press conference after each decision.The central bank will maintain its dual mandate of maintaining price stability and full employment. It aims to keep inflation in a target band of 2%-3% over time, with a focus on the mid-point of 2.5%.Headline consumer price inflation did slow sharply to 2.8% in the September quarter but mainly due to temporary government rebates on electricity bills.Core inflation, however, remained stubbornly high at 3.5% and Bullock has repeatedly stated the board will not ease policy until it is confident this measure will return to the mid-point of its 2%-3% target range. More

Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldCanada’s government is to bolster its investment in border security after Donald Trump threatened to impose steep tariffs over illegal immigration and drug smuggling across the US-Canada frontier.Prime Minister Justin Trudeau met Canada’s provincial leaders late on Wednesday to agree a united response to the US president-elect’s pledge this week to impose 25 per cent tariffs on all products from Mexico and Canada, which he said would remain in place “until such time as drugs, in particular fentanyl, and all illegal aliens stop this invasion of our country”.After the meeting with Trudeau, Canada’s public safety minister Dominic LeBlanc said: “We believe that there is a circumstance where we can make additional investments to reassure Canadians that all of the measures necessary are in place and will continue to be in place”, although he declined to say how much extra money the federal government would make available. The US-Canada border is the longest in the world, stretching nearly 9,000km across land and water. Security on land is light; there are few walls or fences and in places it is marked by simple stone markers along residential streets. While major road crossing points have checkpoints, the boundary is largely controlled by mobile patrols, leaving it vulnerable to smugglers of migrants, drugs and weapons. Washington’s incoming border tsar, Tom Homan, said in a television interview earlier this month that “Canada . . . can’t be a gateway to terrorists coming to the United States”. “It’s an extreme national security vulnerability on the northern border, and it’s one of the things I’ll tackle,” he added.A stone bollard making the US-Canada border on a pavement in Stanstead, Quebec More