Aurelia Butler

The U.S. Federal Reserve has trounced hopes for a prolonged pause, while Switzerland on Thursday unexpectedly kept rates steady and the Bank of England also chose to leave rates unchanged as latest data suggests inflation pressures easing.So far, nine developed economies have raised rates by a combined 3,965 basis points (bps) in this cycle. Japan is the holdout dove. Here’s where central banks stand, ranked by how much they have hiked so far this cycle: 1) UNITED STATESThe U.S. Federal Reserve held interest rates steady at 5.25%-5.50% on Wednesday but said rates may rise again this year to contain inflation. Markets are not so sure, with futures pricing a roughly 50% chance of another quarter-point hike by year-end. Many economists suspect the rate hiking cycle is over even if the Fed remains hawkish for now. 2) NEW ZEALAND The Reserve Bank of New Zealand lifted its cash rate to a 14-year high of 5.5% in May and has kept it there since. A front-runner in withdrawing pandemic era stimulus, the RBNZ has pushed out when it expects to start cutting borrowing costs to 2025. 3) BRITAINThe Bank of England held interest rates at 5.25% on Thursday, citing increasing signs of the economy slowing, but left the door open to further hikes.Sterling fell sharply after the move and interest rate futures showed traders believe there is a 70% chance the BoE will leave rates unchanged in November, compared with around 50/50 before the decision. 4) CANADABank of Canada Governor Tiff Macklem said on Sept. 7 that monetary policy may not be tight enough to return to target. His hawkish remarks came a day after the Bank of Canada kept its key rate at 5%, but said it could hike again should price pressures persist. Inflation has remained above the bank’s 2% target for 27 months. 5) EURO ZONEThe ECB raised its key rate to 4% on Sept. 14, the highest level since the euro currency was launched in 1999, but signalled this could be its final move in a more-than year-long fight against inflation.Economists polled by Reuters believe the ECB is done hiking rates and will stay on hold until at least July 2024.6) NORWAY The Norges Bank raised its key rate by 25 bps to 4.25% on Thursday, but in a surprise move flagged another hike was likely in December. Core inflation unexpectedly declining to 6.3% in August had boosted expectations that Thursday’s hike would have been Norway’s final one. But underlying price growth is still well above the bank’s 2% target and now seen at 4.7% next year, higher than the Norges Bank previously expected.7) SWEDENSweden’s central bank raised its key policy rate by 25 bps to 4% on Thursday, as expected, and said more tightening may be needed to bring inflation back to 2%.The Swedish crown has tumbled around 7% against the euro in 2023, bolstering the case for rate rises, and inflation was running at 4.7% in August. But policymakers also face a sharply slowing economy, which the government expects to contract 0.8% this year. 8) AUSTRALIA Minutes from the Reserve Bank of Australia’s September meeting showed the central bank considered a 25 bp hike but opted to keep rates steady at 4.1% for a third consecutive meeting, the last under former Governor Philip Lowe.Lowe’s (NYSE:LOW) successor, Michele Bullock, is expected to strike a similar tone on Oct. 3, with markets pricing in one more rate rise by early 2024.9) SWITZERLANDThe Swiss National Bank unexpectedly kept interest rates on hold on Thursday at 1.75%, after three consecutive months of inflation within its 0% to 2% target range.Yet SNB Chairman Thomas Jordan did not rule out a further interest rate hike. “We will not hesitate to tighten our monetary policy further if necessary in order to keep inflation below 2% on a sustainable basis,” he said.10) JAPAN The Bank of Japan, the world’s most dovish major central bank, unveils its latest decision on Friday. The consensus is for no change in its current stance, although Governor Kazuo Ueda suggested in an interview that the central bank’s negative interest rate policy could end within this year.A majority of economists said in a Reuters poll on Thursday that BoJ will end its negative rates policy next year. More

WASHINGTON (Reuters) – U.S. House Speaker Kevin McCarthy will try to restart his stalled spending agenda on Thursday with a procedural vote his Republicans have already twice failed to advance, raising the risk of a government shutdown in just 10 days.A vote to open debate on an $886 billion defense appropriations bill is expected in the House of Representatives, a day after McCarthy’s fractious 221-212 majority met for 2-1/2-hours seeking common ground on legislation to avert a government shutdown beginning Oct. 1. “We’re going to be voting,” McCarthy told reporters late on Wednesday. “I think we’ve got a plan to move forward.”McCarthy said Republicans were also “very close” on a short-term funding measure known as a continuing resolution, or CR.To avert a government shutdown, the House and the Democratic-led Senate must agree on short- or long-term spending legislation Democratic President Joe Biden can then sign into law. The partisan measures Republicans hope to begin passing soon face stiff opposition from Democrats in the Senate and the White House.TRUMP WADES INDonald Trump, the front-runner for the 2024 Republican presidential nomination, added to McCarthy’s distractions with a call to shut the government, as occurred three times during his four years in the White House.”Republicans in Congress can and must defund all aspects of Crooked Joe Biden’s weaponized Government that refuses to close the Border, and treats half the Country as Enemies of the State,” the former president said on his Truth Social platform.Trump is awaiting four criminal trials, including two brought by federal prosecutors, over charges including his attempts to overturn his 2020 election defeat. He has claimed without evidence that all four prosecutions are politically motivated.Political brinkmanship has begun to attract the attention of Wall Street, with rating agency Fitch citing repeated down-to-the-wire negotiations that threaten the government’s ability to pay its bills when it downgraded U.S. debt rating to AA+ from its top-notch AAA designation earlier this year.The Republican spending agenda has run afoul of a small group of Republican hardline conservatives, who want assurances that fiscal 2024 appropriations will not exceed a 2022 top line of $1.47 trillion, $120 billion less than McCarthy and Biden agreed to in May.A bipartisan group of 64 lawmakers known as the “Problem Solvers Caucus” proposed a measure that would fund the government through Jan. 11, though without McCarthy’s support it is unclear how the measure would advance.McCarthy on Tuesday had to pull a procedural vote on a proposed 30-day CR. Then a vote to open floor debate on the defense appropriations bill failed. The defense bill had already been delayed earlier in the month.McCarthy on Wednesday told reporters he had been able to win support from two of the five hardliners who had joined Democrats to oppose the defense appropriations bill on Tuesday.The two hardliners appear to have changed their positions after McCarthy proposed a 30-day CR that would cut spending to the 2022 level, according to two sources familiar with the discussion. The CR would include a commission to tackle the federal debt and conservative restrictions on immigration and the border.McCarthy’s proposal would also set a top line for full-year fiscal 2024 spending at just under $1.53 trillion, the sources said. That is still $60 billion less than he agreed to with Biden in May.It was not clear how much support the CR or the 2024 top line would draw from House Republicans. More

LONDON (Reuters) -The Bank of England halted its long run of interest rate increases on Thursday as Britain’s economy slowed and inflation fell, but Governor Andrew Bailey sought to stress the central bank did not think its job was done.A day after Britain’s fast pace of price growth unexpectedly slowed, the BoE’s Monetary Policy Committee voted by the narrowest margin of 5-4 to keep Bank Rate at 5.25%. Four members – Jon Cunliffe, Megan Greene, Jonathan Haskel and Catherine Mann – voted to raise rates to 5.5%.It was the first time since December 2021 that the BoE did not increase borrowing costs. Sterling fell by more than half a cent against the U.S. dollar, to its lowest since late March, and also weakened against the euro as investors downgraded their bets that interest rates would be increased further.But rate futures suggested they still saw a 50% chance of Bank Rate rising to 5.5% by the end of this year. Britain’s economy, hit hard by Brexit, the COVID-19 pandemic and the surge in gas prices triggered by Russia’s invasion of Ukraine, has been struggling with the highest inflation rate in the Group of Seven. But growth remains fragile, heightening the risk that the BoE’s 14 back-to-back rate hikes will push the economy into a recession. “There are increasing signs of some impact of tighter monetary policy on the labour market and on momentum in the real economy more generally,” the MPC said in a statement.It cut its forecast for economic growth in the July-September period to just 0.1% from August’s forecast of 0.4% and noted clear signs of weakness in the housing market. Growth for the rest of the year was likely to be weaker than previous forecasts, the BoE said.Bailey and his colleagues have faced intense criticism after consumer price inflation surpassed 11% in October last year.At 6.7% in August, inflation is falling towards the 5% level the BoE has predicted for the coming months – and which Prime Minister Rishi Sunak has promised to voters ahead of an election expected next year.But it remains more than three times the central bank’s 2% target.In its statement, the BoE said record growth in workers’ pay, which has been its biggest concern, was not backed up by other measures of the labour market, suggesting it expected wage growth to slow soon.The MPC also sounded unfazed by a recent climb in oil prices. “CPI inflation is expected to fall significantly further in the near term, reflecting lower annual energy inflation, despite the renewed upward pressure from oil prices,” it said.Services inflation was expected to remain elevated, however. “The question now is firmly centred on whether this pause will remain or if another rate rise will be needed in November,” Frances Haque, chief economist with Santander (BME:SAN) UK, said. “Only time and further economic data will tell.”READY TO RAISE IF NEEDEDOn Wednesday the U.S. Federal Reserve also opted to keep borrowing costs on hold. Last week, the European Central Bank raised rates but suggested its move might be the last for now.The MPC reiterated its message that it was prepared to raise borrowing costs again if needed.”Further tightening in monetary policy would be required if there were evidence of more persistent inflationary pressures,” its statement said, repeating the guidance that monetary policy would be “sufficiently restrictive for sufficiently long” to get inflation back to its 2% target from 6.7% in August.Bailey and other MPC members have recently suggested they were close to putting rates on hold but they have also stressed that borrowing costs are likely to remain high to ensure inflation pressures are squeezed out of the economy.Yael  Selfin, chief economist at KPMG UK, said a first cut in rates could come only from November 2024.In a separate statement on Thursday, Bailey welcomed the recent fall in inflation and BoE forecasts that it would continue to ease. “But there’s no room for complacency,” he said. “We need to be sure inflation returns to normal and we will continue to take the decisions necessary to do just that.”Investors sensed the BoE was now done with its run of rate increases, however.”Despite efforts in the statement to keep the door open to further hikes, many investors will now assume that the Bank of England’s hiking cycle has concluded,” Hugh Gimber, global market strategist at J.P. Morgan Asset Management, said.The MPC sped up the pace of its programme to shrink the huge stockpile of government bonds the central bank acquired over nearly 15 years as it sought to steer the economy through the global financial crisis and the coronavirus pandemic.As expected, the stockpile will be reduced by 100 billion pounds over the next 12 months – via sales and allowing bonds to mature – to a total of 658 billion pounds, the BoE said, faster than the 80 billion pounds reduction over the past year. The BoE was not scheduled to hold a news conference to explain the outcome of its September policy meeting. More