Aurelia Butler

The meeting came as growth in the world’s second-largest economy has slowed in recent months after coming back to life with the lifting of three years of restrictive zero-COVID policies.Markets broadly expect stimulus policies to be unveiled in July when a regular meeting of the Communist Party’s political bureau will be held.”Taking targeted measures to boost (household consumption) is conducive to driving growth in consumer spending and economic recovery,” the report said, citing the cabinet meeting.”Household consumption involves many areas and has a long upstream and downstream chain,” it said. These measures should be coordinated with policies for the renovation of old neighborhoods, the renovation of homes suitable for the elderly, the establishment of convenient neighbourhoods, and the improvement of recycling networks for waste materials, the meeting agreed, according to the report.S&P and major banks have downgraded their 2023 GDP forecasts for China. In May, property investment slumped further, industrial output and retail sales growth missed forecasts, spurring calls for further stimulus.Last week, China cut its key lending benchmarks, the first such reductions in 10 months. Two weeks ago, the People’s Bank of China (PBOC) lowered short- and medium-term policy rates. More

In its quarterly inflation report, the central bank forecasts a 2.0% expansion in gross domestic product (GDP) for 2023, up from the 1.2% estimate in March. The figure came slightly below the 2.18% growth expected by private economists in a weekly survey conducted by the bank and remains weaker than last year’s 2.9% GDP expansion.”The revision mainly reflects positive surprises in some industrial and service sector activities in the first quarter, in addition to improved forecasts for agriculture,” said the report.The central bank emphasized that the outlook ahead points to an economic slowdown as the cumulative effects of domestic monetary policy and the influence of global growth deceleration take hold.The report also revealed a wider projection for this year’s current account deficit at $45 billion from $32 billion in the previous report.The worsening was primarily driven by a lower trade balance surplus of $54 billion compared to the $62 billion estimated in March.Regarding bank lending, the central bank now anticipates a 7.7% increase in 2023, up from the 7.6% reported before.Following last week’s decision to maintain interest rates at a cycle-high of 13.75% for the seventh consecutive policy meeting, the central bank reinforced in the report that its future actions would be data-dependent, focusing on inflation dynamics and expectations. The minutes from the decision indicated that most policymakers see the possibility of a “parsimonious” rate cut at the next meeting in August, contingent upon consolidating a more benign inflation scenario. More

Fernando Haddad’s remarks in an interview with GloboNews aired late on Wednesday came as markets on Thursday closely watch the National Monetary Council’s (CMN) meeting for potential changes on inflation targets.”Next year’s target is already set,” Haddad told the news channel, ruling out changing it.He said that instead of tweaking the target itself, the CMN should alter the reference for the central bank to pursue it from the calendar year to a “continuous” target to be pursued over the years. The council is the country’s top economic policy body.Inflation targets that have the calendar year as a time frame cause “unnecessary pressure,” he said.The CMN, which comprises Haddad, the planning minister and the central bank governor, will meet on Thursday to decide on inflation goals for 2026 amid President Luiz Inacio Lula da Silva’s intense criticism of high interest rates in the country.The central bank currently targets inflation of 3.25% in 2023 and 3% in 2024 and 2025, with a tolerance margin of 1.5 percentage points up or down. Its benchmark interest rate, meanwhile, stands at a six-year high of 13.75%.Lula previously hinted at potentially changing inflation targets to increase them and enable monetary policy easing, a move that helped worsen expectations for consumer price changes.Haddad acknowledged that at other times in history Brazil’s inflation targets were changed, but “unnecessarily,” noting that the current rules do not allow the central bank to “escape the calendar year” when pursuing those goals.The CMN is expected to maintain the 3% inflation target for 2026 but there is a growing belief it may ditch annual targets in favor of the longer-term models favored by Haddad. More

BRUSSELS (Reuters) – European Union leaders will push senior officials on Thursday to find legal ways to funnel proceeds from billions of dollars of frozen Russian assets into projects helping rebuild Ukraine, papers showed.The bloc has said it froze more than 200 billion euros ($218.2 billion) of Russian central bank assets in reaction to Moscow’s invasion of Ukraine in February last year. Another 30 billion euros of Russian oligarchs’ private assets were also immobilised.Leaders of member states meeting in Brussels will ask the EU’s executive Commission and other bodies to press on with research into how they can put the Russian money to work for Ukraine, draft conclusions of the summit showed. During months of debate on the issue, lawyers have said there is no legal precedent to simply take the money, and the Kremlin warned in November it would do everything it could to stop the West “plundering” its assets.EU officials say they have been looking at alternatives, for example taking accrued interest or bond coupons or taxing such profits.”The European Council took stock of the work done regarding Russia’s immobilised assets, and invites the Council, the High Representative and the Commission to take work forward, in accordance with EU and international law, and in coordination with partners,” the draft conclusion read.Estonian Prime Minister Kaja Kallas said Russia and its oligarchs had a legitimate claim on the frozen assets, but Ukraine also had a legitimate claim against Russia over the damage it had caused.”It’s fundamentally wrong that our taxpayers get to pay for something that we haven’t caused. It has to be on Russia, it has to be on their assets,” she said. Russia has not made any public Against the background of possible legal challenges, the EU has been working to coordinate closely with the United States, Canada, Britain and Japan – the G7 – to build international consensus.The EU also needs to establish where to keep any proceeds from the Russian assets and how to disburse them.The sums are substantial. Belgium’s Euroclear, which settles transactions and safeguards assets, said blocked coupon payments and redemptions boosted its balance sheet by 88 billion euros year-on-year by the end of March to 140 billion euros.European Commission head Ursula von der Leyen said last week the EU executive would come up with a proposal before August on how to use the assets for Ukraine .($1 = 0.9164 euros) More

Spanish inflation fell to 1.6 per cent year on year in June, making it the first of the eurozone’s large economies to record annual price rises below the European Central Bank’s 2 per cent target since the Ukraine war.The inflation figure, measured on an EU harmonised basis, fell significantly from the 2.9 per cent rise recorded in May, with slower increases in fuel, electricity and food and drinks prices driving the change, Spain’s national statistics institute said. Spain’s government has positioned itself as a leader in the fight against inflation, arguing that its energy policies have helped to dim the effect of high gas prices. It is the first time Spanish headline inflation has fallen below 2 per cent since March 2021.The reading of 1.6 per cent was higher than the 1.5 per cent forecast by economists polled by Reuters. Core inflation, which strips out volatile energy and fresh food prices, has remained consistently higher, and was 5.9 per cent in June, down from 6.1 per cent in May.The economy ministry said the country was “the first big economy in the eurozone to reduce inflation below 2 per cent” since Russia’s full-scale invasion of Ukraine last year sparked a surge in food and fuel prices. Annual inflation in Italy was 6.7 per cent in June, compared with 8 per cent in May. Germany and France publish consumer price figures later on Thursday and Friday respectively. The figure comes as Spain’s Socialist prime minister Pedro Sánchez is battling for his political life in a snap general election next month.Sánchez has sought to take credit for Spain’s relatively low inflation, linking it to government fuel subsidies and a policy that cut a link between domestic electricity prices and the gas price elsewhere in Europe.Spain was always in a stronger position than many of its peers, notably Germany, because it did not depend on Russian natural gas and generates a significant proportion of its electricity from wind and solar power.But Sánchez’s defeat in local and regional polls in May — the trigger for the snap election — suggested his economic message has not resonated with voters.Instead, discontent over Sánchez’s political alliances, which has been stoked by the opposition People’s party, outweighed any perception that the prime minister had steered the economy successfully through a series of crises.Economists at BBVA said energy prices had contributed more to the inflation slowdown than food, noting that the effects of a prolonged drought in southern Spain this year were stopping food prices from slowing more quickly.Wouter Thierie, an economist at ING, warned that consumer prices were likely to increase in the second half of the year on the back of a rise in oil prices and the “discontinuation of certain government measures which will also put upward pressure on inflation”. ING expected Spanish inflation to average 4.1 per cent in 2023 before falling to 2.5 per cent in 2024. More