Aurelia Butler

WASHINGTON (Reuters) -Argentine Economy Minister Sergio Massa said on Tuesday that he expects the International Monetary Fund (IMF) board to approve the latest reviews of its huge loan program on Wednesday, unlocking $7.5 billion the embattled country desperately needs.The board green light would come after the South American nation reached a staff-level agreement with the IMF in July to unlock the funds and complete the combined fifth and sixth reviews of its struggling $44 billion loan program.”We are convinced that tomorrow the fifth and sixth reviews will be approved, which will allow us to access a disbursement for Argentina of $7.5 billion,” he told reporters at an event in Washington.The IMF did not respond to a request for comment on Massa’s statement.Argentina, a major grains exporter with large troves of lithium, shale oil and gas, is battling triple-digit inflation, rising poverty levels, and net foreign currency reserves that have slid into negative territory, putting payments at risk.Massa added that a sharp peso devaluation in Argentina earlier this month would push up August inflation, a challenge for the government as it looks to claw back support ahead of Oct. 22 general elections.”We understand that in August this will hurt people’s pockets,” he said. “We aim to correct this with measures that we are going to announce within a few days so that in some way in September and October we return to more reasonable levels.” More

The topsy-turvy economic environment of the coronavirus pandemic sidelined those differences, turning U.S. Federal Reserve officials at first universally dovish as they sought to provide massive accommodation to a cratering economy, and then, when inflation surged, into hawks who uniformly backed aggressive rate hikes. Now, divisions are more evident, and the choices – to raise rates again, skip for now but stay poised for more later, or take an extended pause – more varied. All 12 regional Fed presidents discuss and debate monetary policy at Federal Open Market Committee meetings, held eight times a year, but only five cast votes at any given meeting, including the New York Fed president and four others who vote for one year at a time on a rotating schedule. The following graphic offers a stab at how officials stack up on their outlook for Fed policy and how to balance their goals of stable prices and full employment. The designations are based on comments and published remarks; for more on the thinking that shaped these hawk-dove designations, click on the photos in the graphic. Dove Dovish Centrist Hawkish Hawk Austan John Jerome Chistopher Goolsbee, Williams, Powell, Fed Waller, Chicago Fed New York Chair, Governor, President, Fed permanent permanent 2023 voter: President, voter: “It is voter: “If “Hopefully permanent certainly inflation we’re going to voter: “To possible that does not continue to me, the we would continue to see debate is raise the show improvement on really (federal) progress the inflation about: Do funds rate and there front.” Aug 1, we need to again at the are no 2023 do another September suggestions rate meeting if of a increase? the data significant Or not?” warranted, slowdown in Aug 2, and I would economic 2023 also say it’s activity, possible that then a we would second choose to 25-basis-po hold steady int hike at that should come meeting.” sooner July 26, 2023 rather than later” after the July rate hike. July 13, 2023 Patrick Lisa Cook, Philip Michelle Harker, Governor, Jefferson, Bowman, Philadelphia permanent Governor and Governor, Fed President, voter: Vice Chair permanent 2023 voter: “If Designate, voter: “I “Absent any confirmed, permanent expect that alarming new I will voter: “The additional data between stay economy faces increases now and focused on multiple will likely mid-September, inflation challenges, be needed I believe we until our including to lower may be at the job is inflation, inflation point where we done.” banking-secto to the can be patient June 21, r stress, and (Federal and hold rates 2023 geopolitical Open Market steady.” Aug instability. Committee’s 8, 2023 The Federal ) goal.” Reserve must Aug. 7, remain 2023 attentive to them all.” June 21, 2023 Raphael Susan Michael Barr, Loretta Bostic, Collins, Vice Chair of Mester, Atlanta Fed Boston Fed Supervision, Cleveland President, President, permanent Fed 2024 voter: 2025 voter: “I’ll President, “I’d like if voter: “We just say for 2024 voter: at all may be at, myself, I “My view is possible to or near, think we’re that the make sure we the point close.” July funds rate don’t do too where 10, 2023 will need much, and do monetary to move up more than is policy can somewhat necessary to pause further get us to that raising from its 2% target..” interest current Aug 1, 2023 rates.” level and May 25, then hold 2023 there for a while.” July 10, 2023 Mary Daly, San Neel Francisco Fed Kashkari, President, Minneapolis 2024 voter: Fed “Whether we President, raise another 2023 voter: time, or hold “I’m not rates steady ready to say for a longer that we’re period — done.” Aug. those things 15, 2023 are yet to be determined.” Aug. 10, 2023. Lorie Logan, Dallas Fed President, 2023 voter: “The continuing outlook for above-target inflation and a stronger-than -expected labor market calls for more-restrict ive monetary policy.” July 6, 2023 Thomas Barkin, Richmond Fed President, 2024 voter: “The reacceleratio n scenario has come onto the table in a way that it really wasn’t three or four months ago.” Aug 22, 2023 Note: Fed policymakers have been driving up borrowing costs since March 2022 to bring down high inflation, and in July they increased the target policy rate range to 5.25%-5.5%. Most policymakers as of June expected at least one more rate hike by year’s end. Longtime banker Jeff Schmid starts as Kansas City Fed president Aug. 21, and will be a voter in 2025. St. Louis Fed President James Bullard, a vocal policy hawk, left the Fed in July for a job in academia; the new chief will be a 2025 voter. More

US national security adviser Jake Sullivan has called on China to be more transparent about the state of its economy as Beijing grapples with a slowdown that poses risks to global growth. China’s government last week halted publication of data on its soaring youth unemployment amid concerns that it would reveal new weakness in the recovery of the world’s second-biggest economy, and has cracked down on corporate due diligence reporting in the country. “These are not in our view responsible steps,” Sullivan told reporters in Washington on Tuesday. “For global confidence, predictability and the capacity of the rest of the world to make sound economic decisions, it’s important for China to maintain a level of transparency in the publication of its data.”Sullivan added that the White House had in recent months seen a “reduction in the level of transparency and openness with respect to recording basic things” as well as a crackdown on companies that offer “basic information to the world on the puts and takes in the Chinese economy”. Sullivan’s appeal to Beijing came as Gina Raimondo, the US commerce secretary, prepares to travel to China at the end of this month for talks with high-level Chinese officials, in the latest push by Washington to stabilise relations with its economic rival. President Joe Biden earlier this month signed an executive order banning some outbound US investment in Chinese technology sectors, and the administration has made efforts to break the dependence on Chinese supply chains central to Washington’s re-industrialisation and economic strategy. Beijing has countered with an attempt to elevate the Brics bloc of emerging markets into a full-scale rival to the G7. It has also fostered geopolitical ties with countries around the world through its Belt and Road Initiative, focused on infrastructure projects and investments. Sullivan on Tuesday formally announced Biden would travel to India next month for the G20 leaders summit in New Delhi. The president would focus “his energy” on having the US and “like-minded” countries bring more economic support for the rest of the world, particularly in the “global south” — and mainly through the IMF and the World Bank, Sullivan said. “We have heard loud and clear that countries want us to step up our support in the face of the overlapping challenges they face,” Sullivan said. “So as we continue to extend the critical support for Ukraine, we’re going to be delivering for the rest of the world as well.” “And given both the scale of the need and frankly the scale of [China’s] coercive and unsustainable lending through the Belt and Road Initiative, we need to ensure that there are high-standard leverage solutions to the challenges countries are facing,” he added. Sullivan noted Biden had asked for additional funding for international financial institutions in his latest supplemental budget request to Congress. The US commitments would generate $50bn in lending to middle-income countries through the IMF and the World Bank, Sullivan estimated, but the figure would rise to $200bn if other allies and partners participated too. But Sullivan said he did not see those steps as an effort to counter the growing push by Brics countries — including Brazil, India, Russia, South Africa and China — to set their own economic model for the world, and denied Washington saw the bloc as a “geopolitical rival”.“This is a very diverse collection of countries in its current iteration . . . with differences of view on critical issues in the Indo-Pacific, Ukraine, on a range of other things,” he said. More

British companies face a higher risk of corporate defaults, posing a threat to investment and employment, as a result of rising interest rates, the Bank of England warned on Tuesday.The share of non-financial UK companies experiencing debt-servicing stress — those with a low ratio of earnings to interest expenses — will rise to 50 per cent by the end of the year, from 45 per cent in 2022, according to an analysis published on the BoE’s blog. The proportion rose to 70 per cent for medium-sized companies, those with an annual turnover between £10mn and £500mn. Under this scenario, corporate debt stress would hit its highest level since the 2008-09 financial crisis. “Higher interest rates are putting pressure on indebted corporates through higher debt servicing costs,” said the analysis. “Such pressure increases the likelihood of defaults on corporates’ debt and may lead some firms to reduce investment and employment sharply.” The UK interest rate has risen from a record low of 0.1 per cent in November 2021 to its current 5.25 per cent. The BoE analysis used market expectations that the rate will climb to 6.1 per cent. David Bharier, head of research at the British Chambers of Commerce, said: the BoE’s analysis was consistent with what it had heard from thousands of small and medium-sized companies (SMEs). “Rising borrowing costs are putting significant pressure on many smaller businesses, who after three years of economic shocks, are unable to absorb the increases,” said Bharier. “Many . . . will be concerned the real pain is yet to come.”Martin McTague, national chair of the Federation of Small Businesses, said the analysis had mainly focused on bigger firms and “so doesn’t show the whole picture, with small businesses far more exposed to rising interest rates than their medium-sized and large peers”.One in five small businesses reported financing as a main cause of increased business costs, according to FSB data from the second quarter of 2023, which was the highest proportion to date.The BoE said that companies with low-interest coverage were more likely to experience difficulties in managing their debt, and warned that defaults could threaten financial stability in the economy by reducing lenders’ resilience. Sharp reductions in corporate investment and employment — which happens when defaults rise — could indirectly make future economic downturns more severe, it warned. Ruth Gregory, analyst at Capital Economics, said corporate insolvencies were expected to rise “sharply” in the months ahead as a result of surging borrowing costs, a largely stagnant economy and high inflation. Separate data from the Insolvency Service, a government agency that deals with bankruptcies and companies in liquidation, last month showed there were 6,342 registered company insolvencies in England and Wales in the three months to June — the highest figure since the second quarter of 2009.The BoE also forecast that the share of companies in distress will stay below the peaks reached during the financial crisis and the dotcom crash of 2000. This was because many SMEs, which are typically more dependent on bank lending than larger companies, took out fixed-rate loans at a rate of 2.5 per cent cent over a term of six-10 years during the Covid pandemic, according to Gregory. More

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