Aurelia Butler

WASHINGTON (Reuters) -The World Bank on Thursday proposed steps that would boost its lending to developing countries by an additional $100 billion over a decade as part of an ongoing reform process aimed at helping the bank expand its mission to include climate change.In a 24-page report to the joint ministerial committee that oversees the bank and the International Monetary Fund (IMF), the bank’s management said it would ask shareholders to approve a hybrid capital measure and a new portfolio guarantee platform that together could boost lending by more than $100 billion.That amount would come on top of measures already approved that will boost the bank’s lending to developing countries by up to $50 billion – all part of a big U.S.-led push to create “a better and bigger bank.”The report, published ahead of the Oct. 9-15 IMF-World Bank annual meetings in Marrakech, Morocco, bears the clear imprint of new World Bank President Ajay Banga, who took office in June.It reflects the increasing urgency expressed by its biggest shareholder, the United States, about creating a credible alternative for developing countries to what Washington sees as problematic lending by China.”Extraordinary times require urgent action and new solutions,” the bank wrote in the paper, citing rising geopolitical tensions, the existential threat of the climate crisis and setbacks to global efforts to end poverty.”We need to evolve our ambition, strengthen our solutions, and enhance our financing to do so.”The bank said achieving its development goals would require a “significant increase” in financing by scaling up financing from multiple sources while maintaining low- or zero-interest loans, also known as concessional financing.In addition to the proposed steps on hybrid capital and portfolio guarantees, the bank said it was also increasing its bilateral guarantee limit to $20 billion from $15 billion, which would boost the lending capacity of its main lending arm, the International Bank for Reconstruction and Development (IBRD), by $5 billion over a decade.It said it was also finalizing an agreement for a $1 billion guarantee from the China-led Asian Infrastructure Investment Bank that would further boost IBRD lending.The bank said it had made significant progress in its plans to expand public and private partnerships to leverage even more funding, and could also reach out to non-government institutions and philanthropies.It said it was also proposing a new debt clause that will allow countries to temporarily defer principal debt payments in case of severe natural disasters,Lending could be further expanded by using the bank’s callable capital – funds pledged by members in the event of a crisis – but further discussions were needed with shareholders and credit ratings agencies, it added. More

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(Reuters) – Wall Street’s main indexes eyed a lower open on Thursday as elevated oil prices muddled the inflation outlook amid worries over prolonged restrictive monetary policy, while investors assessed data and awaited Federal Reserve chief Jerome Powell’s remarks.The scope for interest rates staying higher for longer than anticipated has solidified with soaring energy prices keeping headline inflation elevated. Deepening the concerns, U.S. oil futures jumped to a more than one-year high on Thursday.Riding on the back of higher crude prices, energy is set to emerge as the only major S&P 500 sector to notch monthly gains. Meanwhile, rate-sensitive information technology and real estate were on track to be the worst hit.Further, data showed the U.S. economy maintained a fairly strong pace of growth in the second quarter, the government confirmed on Thursday, and appears to have gathered momentum this quarter amid a resilient labor market.”A sharp rise in unemployment and claims isn’t a prerequisite for the Fed to stop raising rates,” said Nancy Vanden Houten, lead U.S. economist at Oxford Economics.”Fed Chair Powell made clear last week, however, that the Fed needs to see other signs that the labor market is continuing to come into better balance if it is to refrain from further rate hikes.”Traders’ bets on the benchmark rate remaining unchanged in November and December stood around 78% and 58%, respectively, according to CME’s FedWatch tool. Meanwhile, a 25-basis-point rate cut is being priced in as early as March, growing to over 31% in June and July.As U.S. Treasury yields resumed their uptrend after briefly slipping following the data, megacap growth stocks including Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Amazon.com (NASDAQ:AMZN) and Tesla (NASDAQ:TSLA) shed between 0.1% and 1.2% in premarket trading.At 8:52 a.m. ET, Dow e-minis were down 32 points, or 0.09%, S&P 500 e-minis were down 6.75 points, or 0.16%, and Nasdaq 100 e-minis were down 45 points, or 0.31%.The S&P 500 and the Nasdaq are on course for their worst monthly performance of the year as Treasury yields hit multi-year highs on uncertainty around interest rates. All the three indexes are set for their first quarterly decline in 2023.Also on radar will be comments by Powell at 4 p.m. ET, as well as remarks by voting member Lisa Cook during the day.With a partial government shutdown just three days away, a procedural vote on a bipartisan short-term spending measure by the Senate on Thursday will also be closely watched.Among individual movers, Micron Technology (NASDAQ:MU) dropped 2.8% after forecasting a bigger-than-expected first-quarter loss.Workday (NASDAQ:WDAY) dipped 9.8% after the human resources software company lowered its subscription revenue growth outlook for the next three years.Meme darling GameStop (NYSE:GME) jumped 7.3% after the company named billionaire activist investor Ryan Cohen as its CEO and chairman. More

German consumer prices, harmonised to compare with other European Union countries, rose by an annual 4.3% in September, preliminary data from the federal statistics office showed on Thursday.Analysts polled by Reuters had forecast it slowing to 4.5% from 6.4% year-on-year in August. Germany’s core inflation rate, which excludes volatile items such as food and energy, fell to 4.6% year-on-year from 5.5% in August. Food prices continued to show above-average growth, posting a 7.5% year-on-year increase. However, energy prices were only 1.0% higher on the year.The end of temporary government energy relief measures and the cheapest public transportation offers added to upward price pressure in September 2022, setting a higher base for this month’s annual comparison.”About 1 percentage point of the decline in inflation is due to the fact that the 9-euro ticket and the fuel discount expired in September last year,” said Ralph Solveen, said Ralph Solveen, senior economist at Commerzbank (ETR:CBKG).But even without this base effect, he said the inflation trend was still pointing downwards because the waves of inflation in energy, food and industrial goods are easing.Meanwhile, five economic institutes predict Germany’s economy will shrink by 0.6% this year, as rising interest rates take their toll on investment and still high inflation depresses consumption. They forecast inflation at 6.1% this year, slowing to 2.6% next year and 1.9% in 2025.The ECB is keeping a close eye on euro zone inflation data, with September’s reading due to be published on Friday. Spain earlier reported a 3.2% harmonised inflation rate for September. Economists polled by Reuters expect the inflation rate across the 20 countries that use the euro to fall to 4.5% in September from 5.2% in August.”At face value, today’s macro data in the euro zone has made the call for a pause at the European Central Bank’s October meeting even stronger,” ING’s Carsten Brzeski said, arguing that confidence continues to weaken and inflation has come down. However, he ruled out that a pause in October would necessarily mark the end of the current hiking cycle. “Given the ECB’s concern about its inflation-fighting credibility, the fear of a de-anchoring of inflation expectations and the ECB’s very own dismal track record in predicting inflation, the risk of further rate hikes remains high,” Brzeski said. More

WASHINGTON (Reuters) – The U.S. Federal Reserve may be on the cusp of “something rare” by lowering inflation without a major blow to jobs and growth, and must be “extra careful” about relying too much on the history of past inflation fights in plotting further policy moves, Chicago Fed President Austan Goolsbee said on Thursday.”Believing too strongly in the inevitability of a large trade-off between inflation and unemployment comes with the serious risk of a near-term policy error,” Goolsbee said in a critique of the “traditionalist view” that slowing inflation requires significant economic pain in the form of rising unemployment and slowed growth, or even recession.Goolsbee’s remarks, prepared for delivery at the Peterson Institute for International Economics in Washington, did not explicitly say he opposed any further interest rate increases, but were stuffed with cautionary language about the risks of misreading the current situation.Inflation remains about double the Fed’s 2% target, but has been slowing.Goolsbee said that longstanding views about what it will take to finish the inflation battle may no longer apply, and he cited recent Chicago Fed staff research indicating inflation could reach the U.S. central bank’s 2% target “soon,” and without any further rate increases. “Holding to the simple historical correlations of what growth and labor market conditions mean for inflation in the face of positive supply developments is a recipe for overshooting and causing an unnecessary downturn,” said Goolsbee, who currently has a vote on Fed interest rate policy.The inflation that erupted in 2021 was largely driven by supply shocks and labor shortages that have gradually eased, he said, making it less necessary to discourage demand with high interest rates, and damaging jobs and growth in the process. Goolsbee also said that “well-anchored” public expectations about inflation can allow the pace of price increases to fall “with less economic pain than was needed in the past.”The Fed held its benchmark overnight interest rate steady in the 5.25%-5.50% range after the end of a policy meeting last week. A majority of Fed officials, in projections released after that meeting, said they believe one more rate hike will be needed. More