Aurelia Butler

According to the central bank, the rules establish the definition of technical concepts and regulate the possibility of credit portability for credit card debts and other payment instruments.The council “simply (regulated) what had passed into law,” Finance Minister Fernando Haddad told journalists, adding that the new framework will reduce interest rates he called “stratospheric.”In early October, Congress passed a law mandating credit card issuers and similar actors to propose self-regulation measures to the monetary council to reduce credit costs. But no consensus was reached among the issuers, so the 100% cap, which had been outlined in the law as a fallback, became effective.The move sets out to curb high default rates on revolving credit card lines, which the government claims lead to snowballing debt, particularly among the poorer population.The revolving credit card interest rate in Brazil is 431.6% per year, or 14.9% per month, according to the latest data from the central bank, by far the most expensive type of credit for individuals.Consumers bear this fee when they do not pay the entire credit card bill, with the remaining amount subject to interest. The central bank established in 2017 that consumers are restricted to a maximum of 30 days on this line.After this period, those who fail to settle the due amounts fall into the installment with interest credit card line, with interest rates of 195.6% per year, equivalent to about 9.5% per month. More

(Reuters) – A look at the day ahead in Asian markets.Investors seem more confident than ever that the U.S. economy is gliding towards the hallowed ‘soft landing’, which bodes well for risk assets in Asia as the final full trading week of the year draws to a close on Friday.Consumer price inflation figures from Japan top the regional economic calendar, and investors also have inflation data from Malaysia, bank lending from Australia and the latest unemployment report from Taiwan to get their teeth into.Although the MSCI World index is poised for its eighth consecutive weekly rise, which would be the longest winning streak in six years, emerging market and Asian stocks have not performed as strongly. The MSCI Asia ex-Japan index is on track for a third weekly loss in four. But it looks like a very slender decline which will flip to a second straight weekly gain if the index rises 0.2% or more on Friday.This is likely, after the rebound on Wall Street and in global stocks on Thursday. The move was partly a natural bounce back from the surprise slump in the last hour of trading the previous day, and partly thanks to figures that showed U.S. inflation is back down to the Fed’s target.The final reading of third quarter U.S. growth and inflation showed that growth was revised down to a 4.9% annualized rate from 5.2%, but annual rate of core PCE inflation was revised down to 2.0% from 2.3%.Traders quickly moved to price in a more dovish Fed outlook – 155 basis points of easing next year is now expected, the first cut will be in March, with a 15% probability that the easing cycle could even start in January. Music to the ears of the ‘soft landing’ crew, a band of believers that appears to be gaining in numbers by the day.On Friday the inflation focus switches to Japan from the US. Japan’s core annual consumer inflation rate is expected to slow in November to 2.5% from 2.9%. That would be the lowest since July last year and mark one of the steepest declines in years.Headline inflation is stickier – in October it was running at an annual rate of 3.3% – and has not been below 3% since July last year. After decades of fighting deflation, the Bank of Japan wants to see sustained inflation, as it gears up to exit ultra-loose policy and turn interest rates positive again.”The chance of trend inflation accelerating towards our price target is gradually heightening,” Ueda said in a press conference on Wednesday after leaving policy unchanged. “But we still need to scrutinize whether a positive wage-inflation cycle will fall in place.”Here are key developments that could provide more direction to markets on Friday:- Japan CPI inflation (November)- Australia credit and lending (November)- Malaysia CPI inflation (November) (By Jamie McGeever) More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Jeremy Hunt has raised the prospect of the Bank of England reducing interest rates in 2024, saying a cut would be a crucial moment in shifting the economic mood in what is expected to be an election year.The UK chancellor said in an interview with the Financial Times that 2024 was “when we need to throw off our pessimism and declinism about the UK economy”.Asked if people would feel better off by the end of next year, Hunt said: “There’s a reasonable chance that if we stick to the course we’re on, we’re able to bring down inflation, the Bank of England might decide they can start to reduce interest rates.” “That probably is the moment when people will begin to have more confidence about their own personal prospects and the prospects of their family,” he added.The chancellor’s comments came after official data on Wednesday showed a steep dive in the rate of consumer price growth to 3.9 per cent in November.The figures triggered increased expectations of interest rate cuts in the first half of next year and prompted criticism from some analysts that the BoE has been too hawkish.Conservative strategists expect Rishi Sunak to call a general election next autumn. One has to be held by January 2025 at the latest.Hunt’s talk of rate cuts will jar with the BoE, which jealously guards its independence and has been insisting it is too soon to discuss easing policy. The BoE’s Monetary Policy Committee last week held rates at a 15-year high of 5.25 per cent as Andrew Bailey, the bank’s governor, said there was “still some way to go” before inflation reached its 2 per cent target.The MPC also kept open the option of hiking rates further if necessary. Three of its nine members voted to raise rates immediately to 5.5 per cent.Ben Broadbent, one of the bank’s deputy governors, this week warned that uncertainty over the state of the UK’s labour market will force the BoE to wait longer before it can safely conclude inflation has been contained and cut interest rates. But investors are sceptical about the BoE’s repeated warnings that policy needs to stay tight and markets are pricing in a first rate cut as soon as May, with four reductions to follow throughout 2024.If expectations for rate cuts are sustained, along with recent declines in the yields investors demand on gilts, Hunt’s “headroom” against his debt-reduction rule would almost double to about £25bn, said economists at Pantheon Macroeconomics.Hunt acknowledged that lower debt servicing costs could give him more fiscal space to cut taxes in his spring Budget, expected in March, but said that “these things can swing wildly in a short space of time”.He also told Bloomberg TV: “We would like to bring down the tax burden in a way that is responsible if we’re able to do so.” But Hunt said he would not compromise the fight against inflation.Hunt has also ruled out inflation-fuelling public sector pay rises. On Wednesday ministers warned that recent record pay deals for public sector workers were one-offs.The chancellor was speaking in Bern after signing a UK-Swiss financial services deal with his counterpart Karin Keller-Sutter. Hunt said it was “a global first that builds on the UK and Switzerland’s strengths as two of the world’s largest financial centres”.The two countries will mutually recognise each other’s laws and regulations, easing trade in areas including asset management, banking and investment services.Hunt hopes the agreement will serve as a blueprint for financial services deals with other countries. He said mutual recognition arrangements were more flexible than EU “equivalence” deals, which require both sides to maintain alignment of their rules in future.“It’s really about the level of trust you have in each other’s regulatory frameworks — that’s why it was easy to do with Switzerland,” he said. “It doesn’t require dynamic regulatory alignment, which is what the EU has always said is necessary in any equivalence deals.”Hunt said it was “impossible to underestimate the significance of this new model”, which he said could be the template for similar deals with other countries where there was “trust” in each other’s systems, citing Singapore, Japan and the US. More

BUENOS AIRES (Reuters) – Argentine libertarian President Javier Milei on Wednesday signed a decree outlining economic reforms including an end to limits on exports plus measures to loosen regulations, as his new government combats a severe economic crisis.”This is only the first step,” Milei said in a televised address. “The objective is to return freedom and autonomy to individuals and start dismantling the enormous amount of regulations that have impeded, hindered and stopped economic growth,” he said.Among the reforms are plans to privatize state-owned companies, but Milei did not name specific firms.In the past, Milei, a self-described anarcho-capitalist, has said he favors the privatization of state-owned oil company YPF.Since his inauguration on Dec. 10, Milei has pledged “shock” therapy for the economy including deep spending cuts in a bid to tame triple-digit inflation. The former TV pundit rode a wave of popular anger to victory, campaigning on a promise to reverse the prolonged economic slump and blaming corrupt elites for the country’s ills.His government, which has devalued the local peso currency by over 50%, has said it plans to hike taxes for Argentina’s grains exports – a key source of global supply for processed soybeans, corn and wheat.The push for higher taxes intended to raise revenue so that other levies can be lowered was met last week with surprise and criticisms from farm groups that predicted the measure would hurt the industry.Grains exports are also a crucial source of foreign currency reserves for the central bank, needed to finance imports and pay down debts.Earlier on Wednesday, thousands took to the streets of Buenos Aires, the capital, to protest the government’s austerity plans, lead by representatives for the unemployed demanding more support for the poor.Argentina’s poverty rate soared past 40% in the first half of this year. More

FinCEN in 2024 will begin requiring certain companies to report beneficial ownership data, part of an effort by lawmakers and the Treasury Department under President Joe Biden to crack down on corruption and money laundering.The new rule finalized on Thursday followed the 2021 passage of the Corporate Transparency Act, a law aimed at combating illicit finance.A year ago, FinCEN first proposed a plan for allowing access to the database – a trove of detailed financial data on companies created or doing business in the U.S. that has raised privacy concerns.Beneficial owners are defined as anyone who has an ownership interest of 25% or more in a business, a majority of voting ownership, or someone who exerts “substantial control” over the entity.Under the final plan, FinCEN said it will roll out access to the data first through a pilot program with a handful of government agencies, before broadening out access to other federal agencies and state, local and tribal authorities. FinCEN will ultimately be able to share data with foreign governments and financial firms seeking it for customer due diligence, it said. “This dirty money flowing in from all over the world undermines fair business competition and poses risk to our country’s economic and national security,” Treasury Secretary Janet Yellen said in a statement about the new rules. “Thanks to the new beneficial ownership framework, we’re making tremendous progress toward changing this.” More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.The case for making Russia pay for its unprovoked assault on Ukraine is morally and legally indisputable. How to achieve this is a trickier question. The US is coming around to the idea of seizing up to €260bn of Russian central bank assets held abroad that were frozen early in the war and using them to fund Kyiv; EU countries including France and Germany are reluctant. Great caution is merited. Confiscating Russian reserves risks setting harmful precedents and undermining the global financial architecture.Central bank reserves are generally considered to be protected by sovereign immunity — the doctrine that one country’s national courts cannot sit in judgment on the acts of another, or use its assets to execute judgments. International lawyers headed by Philip Zelikow, a former senior US diplomat, have set out a legal basis for transferring Russian sovereign reserves. They argue this would be a justified “countermeasure” against Moscow’s gross breach of international law through its assault on Ukraine. They point to how Iraqi reserves were used in internationally imposed compensation after Iraq’s 1990 invasion of Kuwait.Some other legal scholars challenge this reasoning. US officials now seem privately to back it, along with Britain’s foreign secretary, Lord David Cameron. Having a potential legal basis, though, is one thing; whether it is economically or politically wise to use it is another. A powerful concern is that doing so could harm international financial stability — and the dollar and euro’s status as reserve currencies — by undermining the essential trust involved in depositing reserves with other nations. Freezing Russian assets was a sound way to squeeze its ability to fund its war. EU plans to tap windfall profits generated from holding them do not affect their underlying ownership. But going further and confiscating the reserves crosses a line. Countries such as China might come to fear reserves held in euros or dollars were no longer safe. There is also a risk that even if Russian assets were seized under, say, a special G7 mechanism, countries elsewhere might then think it acceptable to settle disputes by grabbing reserves. Rightly or wrongly, many nations of the “global south” would see it as another example of wealthy democracies adapting the rules to their own interest. The US and its allies have couched Ukraine’s war against Russia as defending a rules-based international order. Even if Moscow has trampled on global norms, the west’s response must be seen to be legally irreproachable.Russia must of course pay towards the vast costs of rebuilding Ukraine. The G7 has pledged to keep Moscow’s assets frozen until Russia compensates Kyiv for the damage — which could be potent leverage in a future settlement. But it is no coincidence that the idea of Russian asset seizures has gained momentum just as US and EU support for Kyiv’s war effort is hitting political roadblocks. It risks becoming a mechanism for western democracies to shirk their own responsibilities. Having stayed out of direct military engagement, they have a profound duty to keep funding Ukraine’s defence of European security and values. Proponents of using Russian assets argue that “western taxpayers won’t pay”. But the world’s wealthiest economies, and their financial institutions, ought together to be up to this task — and to making the case to their electorates for why this must happen. With careful preparation, and by building the broadest possible coalition in support, there may be ways to lessen the risks of confiscating Moscow’s reserves. As 2023 moves into 2024, however, it is on unblocking and locking in their own financial support for Kyiv that western leaders should focus their efforts. More

NEW YORK (Reuters) – Mortgage rates fell to a six-month low this week to the lowest figure since June, indicating relief has come to prospective buyers on the back of a rallying bond market.The average fixed-rate 30-year mortgage fell to 6.67% as of Thursday from 6.95% the week prior, according to a report released by Freddie Mac. “The 30-year fixed-rate mortgage remained below seven percent for the second week in a row, a welcome downward trend after 17 consecutive weeks above seven percent,” said Sam Khater, Freddie Mac’s chief economist. “Lower rates are bringing potential homebuyers who were previously waiting on the sidelines back into the market and builders already are starting to feel the positive effects.”Mortgage rates have steadily risen since 2022, following the Federal Reserve’s aggressive rate hike campaign. After the Fed maintained its policy benchmark for three consecutive meetings, expectations of its cycle coming to a close have pushed yields on mortgage backed securities down, and rates have eased from two-decade highs in October that neared 8%.High interest rates created a staring contest this year between buyers and sellers, dissuading homeowners locked into cheaper rates from selling and pricing out prospective buyers. Softening mortgage rates have drawn some sellers from the sidelines, with existing home sales increasing by an unexpected 0.8% in November after a five-month stretch of decline, according to a National Association of Realtors report released Wednesday. More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.The Bank of England is likely to incur much bigger losses on its quantitative easing programme than other central banks, according to an analysis by a former member of its interest rate-setting committee.Michael Saunders, who left the Monetary Policy Committee last year, said the losses were likely to be larger because the central bank had bought longer-dated bonds than overseas counterparts that launched QE schemes on a similar scale after the 2008-09 financial crisis.The BoE’s approach left it more exposed when the MPC began sharply lifting rates in a bid to tame inflation in 2021, he noted in a paper this week.The latest official estimate that the bond-buying programme will cost £126bn over its lifetime is much larger than expected initially. Saunders called for a rethink of the scheme, where the Treasury absorbs losses, arguing that because these are counted in the public debt ratio, the current set-up could compromise the BoE’s independence and force chancellor Jeremy Hunt into a sudden fiscal retrenchment.The cost represents the continuing cash flow losses on the £895bn of bonds the BoE amassed from 2009 to 2022 in order to boost the economy, as well as the gains or losses made when bonds mature or it sells the assets.The bulk of the BoE’s asset purchases were fixed-rate gilts with an average maturity of between 15 and 20 years, which were exchanged for variable rate reserves issued by the central bank.Initially, when interest rates were at record lows, the scheme generated profits. But with its benchmark rate at a 15-year high of 5.25 per cent, the BoE is now paying a much higher rate on reserves than it receives for its gilt holdings, and its losses are mounting.  Saunders, who is now senior economic adviser at the consultancy Oxford Economics, said both the eventual cost of the scheme, and its knock-on effects for fiscal policy, “appear likely to be much larger than in other countries”. This was true even after allowing for different accounting policies, he said, because the longer maturity of the BoE’s bond holdings meant it would sustain bigger losses on bond sales, or a longer period of negative net interest payments, for a given rise in interest rates.Michael Saunders called for a rethink of the scheme, where the Treasury absorbs losses More