Aurelia Butler

The reduction is the eighth since libertarian President Javier Milei assumed office in December 2023 and continues a series of cuts since a high of 133% in October last year.The central bank said it based its decision on “the observed consolidation of expectations for a lower inflation rate.”Milei has presided over tough spending cuts. Inflation has slowed but poverty has climbed sharply and industrial activity has slipped as the economy entered recession.The rate decision came shortly after the bank published a market expectations survey which showed analysts had lowered forecasts for inflation this year. On average, they now expect a rate of 118.8% at year-end rather than 120% forecast last month.Rent and utility costs pushed annualized inflation to 193% in October, dipping below 200% for the first time in almost a year, showed data from statistics agency INDEC.As well as high inflation rates, Argentines are being squeezed by a reduction in social services spending and increased public-sector layoffs. More

BENGALURU (Reuters) – Australia’s central bank will hold interest rates steady on Tuesday as a resilient labour market keeps inflation elevated, according to economists polled by Reuters who pushed forecasts for the first cut to the second quarter of next year.The Reserve Bank of Australia is the only central bank among its peers that has not yet begun lowering the cost of borrowing, in part because it raised benchmark rates by a comparatively modest 425 basis points between May 2022 and November 2023. Inflation, which the RBA targets at 2%-3%, fell to 2.8% in the previous quarter from a late 2022 peak of 7.8% as global supply chains gummed up following the pandemic.But core inflation has remained stubbornly high at 3.5%, and with unemployment near a record low the RBA is still likely to prefer keeping interest rates higher for longer.All 44 economists in the Nov. 28-Dec. 5 Reuters poll expected the RBA to hold its official cash rate at 4.35% at the end of its two-day policy meeting on Dec. 10.An over 60% majority, 25 of 40, forecast the RBA to first cut rates by 25 basis points in Q2 2025 to 4.10%, compared with a majority saying the first quarter in a November poll. Three of the major local banks in the survey, ANZ, NAB, and Westpac, shared that view, while CBA forecast the first cut in Q1 2025.”The data flow subsequent to the November RBA meeting was a bit more resilient, particularly on the labour market,” said Luci Ellis, chief economist at Westpac, who switched her forecast for the first rate cut from February to May. Financial markets are currently pricing in over 70% chance of a cut in April.Ellis added “the RBA have shown a digging in of the heels” on the economy in assessing that aggregate demand continues to outstrip supply.Since then, there have been signs the economy is weakening. It grew at its weakest annual pace since the pandemic last quarter. “Given growth has been slow for the last year, we expect that to translate through into some further softening in the labour market but it will be some time before the RBA feels comfortable gradually cutting rates,” Taylor Nugent, senior economist at NAB, said.”The economy is making only very gradual progress towards balance and the RBA will be later and shallower than other central banks having held rates in less restrictive territory for the last year or so.”Falling mortgage rates next year were expected to help Australian home prices to rise steadily next year, a separate Reuters poll showed.With the RBA expected to cut rates by less than the U.S. Federal Reserve, the Australian dollar was forecast to gain nearly 1.5% in a year from about $0.644 currently, according to a Reuters poll of foreign exchange strategists.(Other stories from the Reuters global economic poll) More

Consumer spending dropped 1.3% in October from a year earlier, data from the internal affairs ministry showed on Friday, better the median market forecast for a 2.6% decline. On a seasonally adjusted, month-on-month basis, spending increased 2.9%, versus an expected 0.4% uptick. Economists attributed the underlying softness in consumption to rising prices and warm weather, which held consumers back from purchasing seasonal apparel. The Bank of Japan had been expected to raise interest rates again as early as at this month’s policy meeting, though in recent days many economists have cast doubt about such a move as the economy is yet to show signs of a sure-footed recovery.Separate wage data also released on Friday showed Japan’s base salary grew at the fastest pace in 32 years in October, boosting real wages after two months of decreases.The BOJ ditched negative rates in March and raised short-term rates to 0.25% in July on the view that Japan was progressing towards durably achieving its 2% inflation target. Just over half of economists polled by Reuters last month expect the BOJ to raise rates again on Dec. 19. More

MUMBAI (Reuters) – The Reserve Bank of India (NS:BOI) may ease monetary conditions on Friday by reducing banks’ cash reserve ratios after economic growth slowed to a seven-quarter low, but inflationary pressures may make it reluctant to cut interest rates just yet, analysts said.The six-member monetary policy committee (MPC) is largely expected to hold the key policy rate steady at 6.5% for the eleventh straight meeting, but a few economists have forecast a 25 basis points (bps) cut following the recent growth numbers.GDP expanded 5.4% in the September quarter, the slowest pace in seven quarters and sharply below the polled estimate of 6.5%.”We maintain our out-of-consensus call for a 25 bps repo rate cut to 6.25%, due to weaker growth and a benign one-year forward inflation outlook,” economists at Nomura said in a note.”We do not see any policy tradeoffs from lowering rates at this juncture. We continue to expect 100 bps of cumulative cuts by mid-2025 to a terminal rate of 5.50%,” they added.If the central bank does cut rates, it would be the first time since May 2020.India’s benchmark 10-year bond yield has dropped 12 bps to 6.68% since the GDP data last week, while overnight indexed swap rates, the gauge for future interest rates, have seen a 20 bps decline, suggesting markets are expecting some policy easing.However, cutting rates to boost growth won’t be as easy an option. Annual retail inflation quickened to 6.21% in October, breaching the central bank’s tolerance band for the first time in more than a year.The RBI may infuse liquidity via a possible 50 bps cash reserve ratio (CRR) cut on Dec. 6, and bring out other instruments over the next few months, economists at HSBC said in a note.”It’s time to act, strategically,” they said.CRR is the proportion of deposits that banks must set aside as cash. Reducing it by 50 basis points would free up 1.1 trillion rupees ($12.98 billion) for fresh bank lending and push down market interest rates.A cut in CRR, currently at 4.5%, would be the first since March 2020. “If there is no action on rates or liquidity, we could see an immediate sell-off in bonds, with the benchmark bond yield rising to 6.75% levels and consolidating around that,” said Vikas Goel, managing director at PNB Gilts.($1 = 84.7240 Indian rupees) More

LONDON (Reuters) – One of Britain’s leading employers’ groups on Friday cut its estimate for economic growth next year due to measures in the new government’s first budget, striking a gloomier note than other recent forecasts.Growth in 2025 is now seen at 1.6%, the Confederation of British Industry (CBI) said, down from a projection of 1.9% made in June. The growth outlook for this year was trimmed to 0.9% from the June forecast of 1.0%.”Measures in the autumn budget will increase firms’ costs at a time when their profit margins have already been under pressure,” Louise Hellem, the CBI’s chief economist, said.”Many businesses have told us that these measures will likely push up prices and weigh on their hiring and investment plans going forward.” Finance minister Rachel Reeves announced in her Oct. 30 budget that employers will have to pay higher social security contributions for their workers from April, which is also when the minimum wage is due to rise by almost 7%.Many businesses have said the higher costs will threaten Prime Minister Keir Starmer’s plan to speed up the economy.The Bank of England said on Thursday that more than half of companies taking part in a survey planned to raise prices and cut jobs in response to the budget.On Thursday, Starmer said his government was doubling down on its growth ambitions.Another employers group, the British Chambers of Commerce, said on Wednesday that 2025 was likely to be difficult due to the increase in employment costs and potential tariffs on exports once Donald Trump becomes U.S. president.However, unlike the CBI, the BCC revised up its forecast for growth in 2025 to 1.3% from a previous estimate of 1.0%.The OECD also this week raised its forecasts for Britain’s economic growth in 2025 to 1.7% from 1.2% previously. The CBI said business investment would pick up in 2025 but slow slightly in 2026, reflecting the higher employment costs and the “crowding out” effect from higher public investment. Inflation would remain above the BoE’s target until at least 2027, pushed up in part by the higher labour costs which would also weigh on private sector employment and result in a greater share of employment growth coming from the self-employed. Wage growth was set to weaken and the BoE would cut its benchmark Bank Rate slowly to 3.5% by late 2026 from 4.75% now.Overall economic growth in 2026 was seen at 1.5%.The CBI’s forecasts assumed Britain avoids extra U.S. trade tariffs but the impact on growth and inflation would be marginal if the country was dragged into a trade war, it said. More

Rome’s government believes that signature can only take place on condition of adequate safeguards and compensation.European Commission President Ursula von der Leyen landed in Uruguay on Thursday seeking to finalize a long-delayed trade deal between the EU and the Mercosur bloc while France said the EU was taking a risk in finalising the deal. More

The Bank of Japan must scrutinise various data at its Dec. 18-19 rate review, dovish board member Toyoaki Nakamura said on Thursday, as the market remains split about the timing of Japan’s next interest rate hike between December and January.Base salary, or regular pay, rose 2.7% in October, marking the fastest increase since November 1992, labour ministry data showed, as more companies set higher salaries after major firms agreed to an average 5.1% raise at the spring wage talks. Overtime pay, a barometer of business strength, rebounded to 1.4% growth from a revised 0.9% decrease in the previous month.Combined, nominal wages, or a worker’s average total cash earnings, grew 2.6% to 293,401 yen ($1,955) in October.The inflation rate the ministry uses for wage calculation, which excludes owners’ equivalent rent, was also at 2.6%, its slowest in nine months.That led the inflation-adjusted real wages, a key indicator of consumers’ purchasing power, to stay unchanged in October from a year before, against a revised 0.4% drop in September and 0.8% decline in August.Opposition lawmakers had pressed the government and the BOJ to aim for positive real wage growth after the ruling bloc lost its lower house majority at the October general election.BOJ Governor Kazuo Ueda last week told the Nikkei newspaper in an interview that the timing of the next interest rate hike was “approaching” as the economy was moving in line with the central bank’s forecasts.Meanwhile, Jiji news agency reported on Wednesday that a cautious view toward an early hike was growing among BOJ policymakers, adding to uncertainty around the chance of a December hike.($1 = 150.1500 yen) More