Aurelia Butler

NEW YORK (Reuters) – Federal Reserve Bank of Cleveland President Loretta Mester said Monday that the U.S. central bank most likely isn’t done raising interest rates amid ongoing inflation pressures. “I suspect we may well need to raise the fed funds rate once more this year and then hold it there for some time as we accumulate more information on economic developments and assess the effects of the tightening in financial conditions that has already occurred,” Mester said in the text of a speech to a group in Cleveland. “But whether the fed funds rate needs to go higher than its current level and for how long policy needs to remain restrictive will depend on how the economy evolves relative to the outlook,” which is bounded by considerable uncertainty right now, the official said. Mester’s remarks were her first public comments since the rate-setting Federal Open Market Committee meet last month and held rates steady, even as officials continued to collectively pencil in one more increase by the end of the year. The Fed has raised rates aggressively over the last year and a half to help cool inflation. Ebbing price pressures allowed officials to keep the federal funds target rate range at between 5.25% and 5.5% in September. While the latest central bank forecasts suggested the Fed may keep rates higher for longer than it expected in the summer, there are real questions whether the central bank will in fact deliver one more rate increase this year. Earlier on Monday, the Fed’s top bank overseer Michael Barr reiterated the Fed will need to keep rates up for a while to bring inflation back to target. Fed Governor Michelle Bowman said, “I remain willing to support raising the federal funds rate at a future meeting if the incoming data indicates that progress on inflation has stalled or is too slow to bring inflation to 2% in a timely way.” In her speech, Mester said inflation remains “too high” while also saying there are ample signs price pressures are cooling as a strong economy comes into better balance. But even as price pressures fade, “the risks to the inflation forecast remain tilted to the upside,” she said, while noting there have been signs wage pressures are moderating. Mester said the economy has proved to be stronger than expected at the start of the summer. “The economy is on a good path,” she said, adding “labor market conditions remain strong, but the imbalance between labor demand and supply is narrowing and firms are finding it easier to find the workers they need.”Mester also noted that the cost of credit has risen but said it has not tightened more than the path of monetary policy suggests. More

(Reuters) – Nothing illustrates the crisis at the World Trade Organization more than the piling up of unresolved disputes and the growing list of what it terms the “trade concerns” of its members. Since late 2019, after the U.S. blocked the appointment of new judges to the WTO’s Appellate Body due to complaints over judicial overreach, 29 cases have been left in limbo, delivering a heavy blow to the dispute settlement system.Those depositing cases include China, Dominican Republic, India, Indonesia, Morocco, Pakistan, South Korea and the United States.”No more fraud, no more pretending you’re appealing,” former deputy director-general Alan Wolff told a WTO conference last month, urging countries to hold off on fresh appeals from 2024, when WTO members have pledged to address the issue.The WTO has warned a “polycrisis” of pandemic, war in Ukraine and inflation is sapping faith in globalisation. The result is a growing disregard for global trading rules among WTO members.Last month it warned that a surge of unilateral measures, if unchecked, would fragment the world economy, stripping 5% of global income.Import restrictions have eased since 2018, when then U.S. President Donald Trump was slapping tariffs on goods from China and elsewhere, but export curbs have more than offset their decline.Such curbs averaged 21 per year between 2016 and 2019, but rose to 139 last year.This has triggered a surge in the number of “concerns” raised at the WTO. These have targeted export restrictions such as for Indian rice and the subsidies the clean tech push has unleashed, such as the U.S. Inflation Reduction Act, with a bias for production in North America, or those for electric cars in China that the EU is investigating. ‘TEETERING ON ABYSS OF IRRELEVANCE’U.S. local content requirements are also set to be raised under the Buy American Act, while the European Union, which still preaches adherence to WTO rules, has subsidies and targets to boost home supply of critical minerals and green production.Keith Rockwell, senior fellow at the Hinrich Foundation, says the WTO is “teetering on the abyss of irrelevance”.”People are not feeling in any way constrained by their obligations to the WTO when it comes to policy and that was not the case a decade ago,” he said, adding that for Washington, the driving force behind the creation of the rules-based trading system, the WTO was now “not on the radar screen”.Countries have taken advantage of exceptions to WTO rules, such as for national security used by the United States to limit metal imports and some Gulf states to restrict trade with Qatar.Beijing has restricted exports of critical minerals, while Washington has sought to prevent Chinese access to U.S. technology, with national security trumping global trading rules.The 164 members broadly agree that the WTO, with its 620 staff in an art-deco building on the shores of Lake Geneva, needs reform, although it requires a full consensus to make any change.For some, reform centres on restoring the Appellate Body, something the United States will not accept. The U.S. believes reform must tackle what it says are discriminatory activities of state-owned enterprises, notably China’s, that skew competition.Reforms could also deal with issues not considered when the WTO was formed, such as climate change, data flows or artificial intelligence.Reform is set to be a key topic at the WTO’s 13th ministerial conference (MC13) in February.One Geneva-based WTO delegate said it seemed the Biden administration did not believe further trade liberalisation was in U.S. interests, a belief that may be solidified in 2024, a presidential election year.”And if they don’t believe that is in their interest it somewhat blunts the role of the WTO,” the delegate said. “The same factors that made MC12 difficult will make MC13 difficult, namely Indian obstructionism and U.S. indifference.”The WTO argues the world needs a renewed drive towards integration, what it calls re-globalisation, to tackle challenges from climate change to poverty reduction, while noting that 75% of goods trade is still based on WTO tariff terms members extend to each other.”Take that away, and we are left with chaos and what would become a power-based rather than a rules-based system,” said Director-General Ngozi Okonjo-Iweala. More

The British Retail Consortium said annual shop price inflation cooled to 6.2% last month from 6.9% in August, its lowest since September 2022.Food price inflation fell for the fifth month in a row to 9.9% from 11.5% and was down for the first time in more than two years in month-on-month terms. Non-food inflation eased to an annual 4.4% from 4.7%.”We expect shop price inflation to continue to fall over the rest of the year,” BRC Chief Executive Helen Dickinson said. “However there are still many risks to this trend – high interest rates, climbing oil prices, global shortages of sugar, as well as the supply chain disruption from the war in Ukraine.”The BRC’s shop price inflation measure is seen as an early signal for the broader official consumer price index which has fallen from a peak of over 11% last October to 6.7% in August.The Bank of England paused its run of interest rates in September after 14 back-to-back increases but has stressed it will probably keep them high for a period to squeeze inflation pressures out of the economy. More

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BRUSSELS (Reuters) -The European Parliament’s environment committee on Monday delayed a decision on whether to accept former Dutch foreign minister Wopke Hoekstra as the EU’s next climate change policy chief, after he sought their backing in a three-hour hearing.The decision on Hoekstra, a centre-right conservative, is now due on Tuesday afternoon following a hearing of Maros Sefcovic, a social-democrat who is the nominee to take on the job of coordinating the EU’s overall green policies. “The [committee] coordinators just decided to suspend their final decision,” committee chair Pascal Canfin said in a post on X, formerly known as Twitter.Some EU officials said making the two decisions at the same time was a way for the opposing political groups to make sure their rival’s candidate only gets approved if their own candidate does. Each needs support from two-thirds of the committee to pass.Some lawmakers suggested they would scrutinise Hoekstra further before giving him the green light to lead CO2 emissions-cutting measures in the 27-country EU. “We want to have more information from him,” Green lawmaker Michael Bloss told reporters, adding that while he had been “positively surprised” by some of Hoekstra’s plans, the details of how he would make them happen were “vague”.Hoekstra outlined his plans for the job on Monday – pledging to stand firmly by the EU’s climate targets amid political pushback, and to try to ensure the bloc sets a fresh target to slash its net greenhouse gas emissions by at least 90% by 2040.”I will use all instruments available to aim to enable the EU to reach the minimum recommended target of 90% net reductions,” Hoekstra told lawmakers, adding that he would present an analysis in early 2024 of what the EU’s 2040 goal should be.The EU’s official advisers have said it should commit to slash its greenhouse gas emissions by 90-95% by 2040 – although some industries have called for a weaker target.Climate action is facing political pushback in Europe as tensions mount with China and the U.S. over the race to manufacture green tech, and as countries adapt to record-breaking floods, drought and deadly heat as a result of human-caused global warming.Hoekstra pledged to push at the UN’s COP28 climate summit in November for a global phase-out of CO2-emitting fossil fuels, and said he would seek new sources of climate funding for vulnerable countries – potentially by skimming off revenues from the EU’s carbon market.He pledged tougher action to phase out the 52 billion euros ($54.6 billion) that EU countries spend subsidising fossil fuels each year – including by culling such subsidies from the EU’s next budget. More