Aurelia Butler

“At a time when we want industries to ramp up and build capacities, bank interest rates will have to be far more affordable,” the minister, Nirmala Sitharaman, said at an event in Mumbai.Last week, the nation’s trade minister said the Reserve Bank of India (NS:BOI) (RBI) should cut interest rates to boost economic growth and look through food prices while deciding on monetary policy.The comments came after a surge in retail inflation, largely driven by a jump in vegetable prices, dashed hopes of an interest rate cut by the RBI in December.”Inflation gets actually very, very volatile because of the supply demand constraints,” Sitharaman said, while refusing to weigh in on whether perishable items like food should be considered in the nation’s inflation targeting framework and while deciding on monetary policy.Earlier this year, India’s top economic advisor said India’s monetary policy framework should consider targeting inflation that excludes food, the prices of which are more influenced by supply than demand. The trade minister, Piyush Goyal, backed the suggestion. Persistently high food inflation has also squeezed middle class budgets, slowing urban spending in the past three to four months and threatening the country’s brisk economic growth. Sitharaman said there was no cause for undue concern and the government was committed to measures needed to ensure the Indian economy remains on course. More

In their recent note, the brokerage identifies the potential for widespread tariff increases as a major downside risk for international markets and economic growth. This concern is particularly acute in light of ongoing geopolitical tensions and the resurgence of protectionist policies across key economic blocs.Goldman Sachs warns that if implemented, broad-based tariffs—especially on key trade routes involving major economies like the U.S. and China—could disrupt supply chains and drive up costs for businesses and consumers alike. These developments may stifle global trade flows and weigh on corporate earnings, particularly in industries heavily reliant on international supply networks such as manufacturing and technology.In its 2025 economic forecast, Goldman Sachs projects steady growth for major economies, including 4.5% for China and 2.5% for the U.S. However, these projections are underpinned by the assumption that trade tensions do not escalate to the extent of introducing large-scale tariffs. The note says that any deviation from this assumption—such as the imposition of new trade barriers—could result in a downward revision of these growth forecasts.The brokerage also flags the broader market implications of increased tariffs, noting that equity markets could face additional valuation pressures. With risk asset prices already reflecting optimistic macroeconomic forecasts, the introduction of punitive trade measures could trigger heightened volatility and dampen investor sentiment globally. More

The bank’s forecast reflects slower economic growth, labor market cooling, and persistent inflationary pressures. Morgan Stanley (NYSE:MS) highlighted that “lower immigration flows and more tariffs” are weighing on GDP growth and contributing to “stickier inflation.”While Morgan Stanley says inflation is projected to decelerate through early 2025, they add that it is expected to remain above the Fed’s 2% target through 2026.The firm forecasts core PCE inflation at 2.8% for 2024, 2.5% for 2025, and 2.4% for 2026.The bank adds that economic growth is anticipated to slow significantly, with GDP projected to grow 2.4% in 2024, 1.9% in 2025, and 1.3% in 2026 on a year-over-year basis.”The consumer slows” as labor income growth decelerates and tariffs dampen activity, Morgan Stanley said. They believe the labor market will also feel the effects, with unemployment rates rising from 4.1% in 2025 to 4.5% by the end of 2026.Morgan Stanley anticipates the Fed will pause rate cuts in the second half of 2026 as economic growth falls below potential. Quantitative tightening (QT) is also expected to conclude by early 2025.The bank outlined three alternate scenarios, including a “hard landing,” where the Fed overtightens, and GDP contracts in 2025; a “reacceleration,” where rate cuts fuel economic growth; and a “China reflation,” in which U.S. inflation slightly increases due to more expensive imports.Amid these uncertainties, Morgan Stanley emphasized the Fed’s caution: “The Fed cuts 25bp in the next four FOMC meetings, taking the fed funds rate to 3.625% by May 25. Signs of stickier inflation and overall policy uncertainty lead the Fed to pause until 2H26 when rapid cuts bring rates below neutral as growth slows below potential. At the same time, the Fed finishes QT in 1Q25.” More

“I do think it would be premature to come to conclusions as to exactly what it is that the new U.S. administration is going to do, and to start making decisions based on that assumption,” Makhlouf told reporters on Monday.Makhlouf added that it would be going a bit far to say an ECB interest rate cut next month is “in the bag” and that the evidence would need to be “pretty overwhelming” to consider a 50-basis-point cut at the Dec. 12 meeting. More

“The package is agreed with the president (Luiz Inácio Lula da Silva). We’re going to announce it soon, because we’re missing a response from one ministry … the Ministry of Defense,” said Haddad.”We had good meetings with the minister (José Múcio) and the commanders of the forces.”Haddad did not comment on the total amount of spending that the new fiscal measures will reduce, stating only that “the package is the size of our needs to maintain balanced growth.”Haddad also said he believed that a fiscal adjustment could eventually lead to interest rate cuts by helping to slow inflation, after market expectations recently led the central bank to accelerate its monetary tightening pace.The government has been promising to announce measures to contain spending in order to guarantee the sustainability of its fiscal framework, having previously said that the package would be announced after the second round of municipal elections in late October.The delay in the announcement has caused stress in the markets, putting pressure on Brazilian assets. More

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