Aurelia Butler

Vladimir Putin said the 2024 Brics summit would be held in the Russian city of Kazan, as China’s Xi Jinping urged the leaders of the emerging-markets bloc meeting at this year’s event in Johannesburg to speed up the pace of expansion.Russia’s president spoke to leaders in South Africa from the Kremlin via video link on Wednesday after skipping the meeting following the International Criminal Court’s war crimes charges against him in March.Russia and Brazil, which was originally set to host next year’s Brics summit, agreed to swap places in the rotating chairmanship to avoid clashes with Brazil’s hosting of next year’s G20 meeting.While Xi called for faster expansion, India’s prime minister Narendra Modi on Wednesday stressed the need for consensus among the five members of the Brics club on admitting new members.“We should let more countries join the Brics family and pool wisdom to make global governance more fair and reasonable,” the Chinese leader said, as Beijing seeks to forge the bloc into a bigger rival to the G7.Modi told the summit that India “fully supports the expansion of Brics membership” but also stressed that “we welcome moving forward on this based on consensus”, reflecting New Delhi’s counter-push for a more phased and gradual enlistment of members.The Brics countries have received formal expressions of interest from Argentina, Saudi Arabia, Indonesia and 20 other countries to become the group’s first members since South Africa joined in 2010.But officials have said the summit’s main outcome could be agreement on criteria for new Brics members, leaving actual additions to be approved at a future summit.The summit is also set to announce further steps on the Brics economies using their own currencies to settle trade with each other instead of through the US dollar. “We will continue discussions on practical measures to facilitate trade and investment flows through the increased use of local currencies,” South African president Cyril Ramaphosa said. Given China’s clout as the bloc’s main exporter and biggest economy, this effort was likely to focus on the renminbi, analysts said.Brazilian President Luiz Inácio Lula da Silva has said that he favours Argentina’s entry into the Brics, but Brazil is seen alongside India as being relatively cautious about a rapid expansion of the Brics membership that might dilute their position as the bloc’s biggest democracies. More

The Wall Street bank expects a final 25 basis point hike to now come in October, instead of September, as it predicted earlier.Traders now price in a roughly 40% chance of a 25 bps move in September, down from a more than 50% chance they saw only on Tuesday.They also scaled back bets on further hikes for the rest of the year but still see a just-under-60% chance of a 25 bps hike by December, which will put the ECB’s deposit rate at 4%. More

UK economic activity fell unexpectedly in August for the first time since January as higher borrowing costs hit demand, according to a survey that prompted markets to reassess their interest rate expectations and led to a sterling sell-off. The pound slid against the dollar after the release of the flash UK composite purchasing managers’ index on Wednesday, as investors scaled back their forecasts of peak interest rates to below 6 per cent. Sterling fell 0.8 per cent to $1.2631. The PMI figures, a measure of the health of the economy, were 47.9 in August, down from 50.8 in July and below the neutral 50 threshold for the first time since the start of the year A reading below 50 indicates a majority of businesses reporting a contraction and August’s figure was well below the 50.3 forecast by economists in a Reuters poll.The figures will be scrutinised by Bank of England policymakers as they decide next month whether to lift interest rates for the 15th consecutive time since December 2021. The central bank’s benchmark rate now stands at 5.25 per cent, a 15-year high. Paul Dales, economist at the consultancy Capital Economics, said the data would encourage the BoE “that higher rates are working” and that GDP would soon contract, triggering “a mild recession”. In an indication of markets’ belief that interest rates will not now rise as much as previously thought, two-year gilt yields fell on Wednesday by 0.13 percentage points to 5.01 per cent. The swap market is now pricing in a peak of below 6 per cent in the BoE’s benchmark interest rate early next year, at 5.89 per cent.Dales added that “dual signs of weaker activity and easing price pressures” in the PMI figures strengthened his view that interest rates would “peak around 5.5 per cent rather than the 6 per cent priced into the markets before this release”. Chris Williamson, chief business economist at S&P Global Market Intelligence, which publishes the PMI survey with the Chartered Institute of Procurement & Supply, said a renewed economic contraction “already looks inevitable, as an increasingly severe manufacturing downturn is accompanied by a further faltering of the service sector’s spring revival”.He calculated that the survey was indicative of gross domestic product declining by 0.2 per cent over the third quarter so far.

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Jordan Rochester, a foreign exchange strategist at Nomura, now expects the pound to weaken further to $1.22 by October. “We were at these PMI levels last October when things were pretty darn bad with energy prices — these are numbers that will make the Bank of England think twice when delivering more interest rate rises,” he said. Martin Beck, chief economic adviser to the EY Item Club, a consultancy, said the data reinforced his impression “that a rate rise next month, if it happens, will likely be the last in the current cycle”. But he cautioned the findings “may not be enough to deter the Bank of England from raising interest rates [in September], given recent developments in pay and services inflation”. The figures follow more resilient economic data, including better than expected statistics for public borrowing and growth in the second quarter. Companies responding to the PMI survey reported a fall in orders for goods and services as the cost of living crisis, higher borrowing costs, export losses and concerns about the economic outlook hit demand. Activity in the services sector contracted for the first time since January, with the lowest output reading in 31 months. The downturn in the manufacturing sector accelerated, marking the sixth consecutive month of falling output.

The survey, based on interviews carried out between August 10 and August 21, reported that input costs rose at the slowest pace for two-and-a-half years, while average prices charged by private sector companies increased at the lowest rate since February 2021. Weaker demand will be welcomed by BoE rate-setters after official data showed regular wages rising at the fastest pace on record in the three months to June, which suggested persistently high underlying price pressure. Jobs growth eased between July and August, with employment expanding at the slowest pace since March, but survey respondents pointed to continuing difficulties in recruiting and retaining suitably skilled staff.Faltering activity in the UK was mirrored in the eurozone, where the composite PMI index fell to a 33-month low of 47. More

JOHANNESBURG (Reuters) – The New Development Bank of the BRICS group of nations will not be announcing new members at the BRICS Summit in South Africa this week, its Chief Financial Officer Leslie Maasdorp told Reuters on Wednesday.The bank, which was set up in 2015 to give BRICS members Brazil, Russia, India, China and South Africa a greater say in financing infrastructure than in Western-led institutions like the World Bank, is keen to attract new members to boost its capital base after U.S. sanctions on Russia hobbled its lending. The NDB, which now also has Egypt, Bangladesh and the United Arab Emirates as shareholders, is under pressure to boost local currency fundraising and lending as the BRICS nations seek to reduce dependence on the U.S. dollar and develop the BRICS bloc into a counterweight to the West.”The process of ratifying new countries is happening at the discussion of the (BRICS) leaders, which they are having without us as the bank,” Maasdorp told Reuters in an interview on the sidelines of the summit. “There will be no announcements this week,” he said, adding that it was “likely” there would be more new members applying this year, but that the timing was dependent on political processes in the countries that want to join.At least 15 potential new member countries – including Saudi Arabia, Algeria and Argentina – are under consideration by the governments that are the bank’s shareholders, Maasdorp said. The NDB is registering an Indian rupee bond programme worth $2.5 billion over 5 years, after it issued its first South African rand bond last week, Maasdorp also said on Wednesday during a panel discussion.The size of the first issuance, expected to be later this year, is still under discussion, he told Reuters afterwardsThe bank will register a Brazilian real bond programme “when appropriate” and hopes to issue in Russian roubles in the “medium term” under a 100 billion rouble ($1.06 billion) programme it set up in 2019, Maasdorp told the panel. He added it cannot issue rouble debt at the moment due to sanctions.The NDB has already raised $4.5 billion this year and will raise at least $8 billion by the end of the year, Maasdorp told Reuters, adding that it is working on issuing second U.S. dollar “benchmark” bond and one or two more Chinese yuan issuances, with the sizes and maturities yet to be decided.($1 = 94.4650 roubles) More