Aurelia Butler

TOKYO (Reuters) -Japan’s Prime Minister Fumio Kishida unveiled on Monday the pillars of a new economic stimulus package to be compiled next month to help households ease the pain of price hikes and boost wages.Kishida will instruct his cabinet on Tuesday to put together the package and swiftly set up an extra budget to fund it, he said.It will include measures to protect people from cost-push inflation, back sustainable wage and income growth, promote domestic investment to spur growth, reform to overcome dwindling populations, and encourage infrastructure investment.With the new economic measures, the premier pledged to shift Japan’s economy, which has tended to focus on cost cutting, away from such practices.Kishida also warned investors trying to sell off the yen, which will boost import bills for food and energy, saying he was closely watching currency moves with a high sense of urgency.”It’s important for currencies to move stably reflecting fundamentals,” Kishida said in his rare remarks on the foreign exchange market. “Excessive volatility is undesirable.”The size and substance of the extra budget remains unclear. When asked about the chance of dissolving parliament’s lower house to call a snap election, Kishida said he was not thinking about such an option as he must now focus on the new stimulus and other issues that cannot wait. More

LONDON (Reuters) – The Swiss National Bank is done with interest rate hikes, according to the vast majority of economists polled by Reuters, despite mooting the prospect of further increases last week when it surprised markets by leaving borrowing costs unchanged.On Sept. 21 the SNB held its policy interest rate unchanged at 1.75%, noting inflation – at 1.6% in August and within the central bank’s target range of 0-2% – had ebbed lower, but said further tightening could not be ruled out.Economists thought this was unlikely.An overwhelming 24 of 26 surveyed after Thursday’s announcement predicted no more increases in the current cycle, leaving the SNB in step with the European Central Bank, which a separate Reuters poll suggested was also finished with hikes.”The SNB’s decision to keep rates unchanged at 1.75% was a big surprise, although it left the door open for further hikes. We do not expect any further increases in the policy rate as we expect inflation to fall next year,” said Adrian Prettejohn at Capital Economics.”With inflation easing and the economy weakening, we expect that the SNB is internally more dovish than it is letting on.”After last week’s meeting, SNB Chairman Thomas Jordan kept the door ajar for further hikes, saying “there is still an existing inflationary pressure, and we do not exactly know whether this inflationary pressure will increase again.”The first cut is not expected until the fourth quarter next year, the median of a smaller sample of 17 economists showed. The SNB usually only makes policy decisions once every three months.But forecasters were split on where the key rate would be at the end of 2024, with one putting it at 2.00%, six said 1.75% and only four holding the median view of 1.50%. Five said it would be 1.25% and one predicted 1.00%.That would leave the SNB behind the ECB as the other Reuters poll said the euro zone’s central bank would cut rates in the third quarter, with poll medians showing 75 basis points of cuts in the second half of 2024.(For other stories from the Reuters global economic poll:) More

The CBI’s September monthly retail sales survey – conducted between Aug. 25 and Sept. 13 – showed the headline balance rebound to a three-month high of -14 from August’s more than two year low of -44.”There are some elements of optimism in our survey with retailers expecting the recent fall in sales to continue to ease,” CBI Principal Economist Martin Sartorius said.”Last week’s lower than expected inflation figures, which in turn will ease pressure on household budgets, will also give retailers some hope going into the crucial autumn and winter trading period,” he added.Retailers’ expected sales balance for October rose to a three-month high of -8.Britain’s most recent official retail sales data showed a 0.8% month-on-month growth in sales volumes in August after a sharp 1.1% drop in July, when unusually wet weather upset normal summer spending patterns. Consumer price inflation also fell unexpectedly last month, dropping to 6.7% from July’s 6.8%, its lowest level in 18 months and prompting the Bank of England to hold off from raising interest rates last week.However, the CBI did warn that higher oil and fuel prices “could mean sticky inflation is with us for a while longer.”The chief executive of supermarket Aldi UK said on Monday that cost of living concerns continued to influence food shopping habits. More

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Western companies are slowly insulating their China operations from the mounting tensions over trade and geopolitics between Beijing and the west, as governments call for increased “de-risking”.The notion, which has replaced the radical “decoupling” as a diplomatic buzzword this year, is a sign that the west is seeking a less antagonistic approach to managing relations with China. But businesses have yet to formulate clear strategies to give it substance, analysts say.While a small number of companies such as US toymaker Hasbro have announced plans to quit manufacturing in China completely, the vast majority are still weighing their options, which range from partial divestments to delayed spending decisions and ways to make their China operations disruption-proof by having them serve only the Chinese market.“Europe is still thinking about what de-risking is and how to implement it in practice,” said Agathe Demarais, senior policy fellow at the European Council on Foreign Relations. “Over the past year there’s been much more private sector talk of localisation strategies as a form of de-risking, but it takes several years for investment to come to fruition.”Beijing’s pandemic lockdowns and Moscow’s assault on Ukraine have intensified the sense of urgency as western leaders fret about China’s dominance of key supply chains, the potential for a clash over Taiwan, and trade hostility between Washington and Beijing. On Monday, EU trade commissioner Valdis Dombrovskis is meeting Chinese officials to discuss the EU’s growing trade deficit with China and the EU anti-subsidies investigation into EV imports.You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.There are emerging signs of longer-term shifts in production. A report this year by the European Chamber of Commerce in China found that 11 per cent of European businesses surveyed had already reallocated investments out of China, while 22 per cent had decided to or were considering such a shift. For the first time since 2016, less than half of respondents planned to expand their operations in China this year.The American Chamber of Commerce in China found this year that 12 per cent of US groups surveyed were considering relocating their sourcing outside of China, with another 12 per cent already doing so.“Most companies have no alternative to China”, said Trey McArver at consultancy Trivium China, but “they have to find strategies for operating in an environment of much higher risk”.Apple and Intel have allocated future investments to other countries including India or south-east Asia while maintaining their China plants, in a hedging strategy known as “China plus one”.But the most contemplated strategy is “China for China”, whereby China operations are reorganised so that they produce goods only for domestic consumption.Anglo-Swedish drugmaker AstraZeneca is drawing up plans to spin out its China arm and list it in Hong Kong, partly to insulate it against regulatory moves against foreign companies. Government procurement guidelines mean state bodies, which include hospitals, must increasingly buy from Chinese brands.Apple has allocated future investments to other countries including India or south-east Asia while maintaining China plants More

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