Aurelia Butler

“Getting inflation down is Job One, inflation is too high,” Bostic said Friday at an event in Atlanta hosted by the University of Georgia Terry College of Business. “I am trying to minimize the dislocation as we get inflation under control. I am hopeful” the Fed can do that, he added.Fed Chair Jerome Powell, in congressional testimony this week, said policymakers expect interest rates will need to move higher to reduce US growth and contain price pressures, even though they held rates steady at their meeting last week. Fed officials’ forecast for two more quarter-point hikes this year is a “pretty good guess” if the economy performs as expected, he said.Fed officials held rates steady last week after 10 straight increases, giving themselves more time to evaluate how the economy is responding to recent banking stress and higher borrowing costs. The move left the benchmark rate steady in a range of 5% to 5.25%.Officials are starting to become more divided over the best course to take to cool inflation, which is abating but is still running higher than the Fed’s 2% target.  Federal Reserve Governor Michelle Bowman reinforced Powell’s hawkish remarks earlier Thursday, saying “additional policy-rate increases will be necessary” to curb inflation that is still unacceptably high.That sentiment was echoed later by Richmond Fed President Thomas Barkin, who said he’d be “more than comfortable doing more” on rates if price pressures don’t ease as expected.  Officials are seeing some signs that policy is working but other signs are disappointing, Boston Fed President Susan Collins told MassLive.Bostic and Chicago Fed President Austan Goolsbee have been supportive of patience and cited lags in monetary policy affecting price pressures. ©2023 Bloomberg L.P. More

PARIS (Reuters) -Multilateral development banks like the World Bank are expected to find $200 billion in extra firepower for low-income economies by taking on more risk, a move that may require wealthy nations to inject more cash, world leaders said on Friday.The leaders, gathered at a summit in Paris to thrash out funding for the climate transition and post-COVID debt burdens of poor countries, said their plans would secure billions of dollars of matching investment from the private sector.An overdue pledge of $100 billion in climate finance for developing nations was also now in sight, they said. Many in attendance, however, said over the two-day summit that the World Bank and the International Monetary Fund were increasingly ill-suited for tackling the most pressing challenges and needed a broad revamp.”We … expect an overall increase of $200 billion of MDBs’ lending capacity over the next ten years by optimizing their balance sheets and taking more risks,” the summit’s final statement obtained by Reuters said.”If these reforms are implemented, MDBs may need more capital,” it added, recognising in a final summit document for the first time that wealthy nations may have to inject more cash.U.S Treasury Secretary Janet Yellen, whose country is the largest shareholder of the IMF and World Bank, had said ahead of the summit that development banks had to first squeeze out more lending themselves before the possibility of capital increases was considered. The final summit document called for each dollar of lending by development banks to be matched by at least one dollar of private finance, which analysts said should help international institutions to leverage an additional $100 billion of private money in developing and emerging economies.The announcements mark a scaling up of action from the development banks in the fight against climate change and set a direction for further change ahead of their annual meetings later in the year.However, some climate activists were critical of the results.”While the roadmap from the Paris Summit acknowledges the urgency for substantial financial resources to bolster climate action, it leans too heavily on private investments and ascribes an outsized role to multilateral development banks,” said Harjeet Singh, head of global political strategy at Climate Action Network International.DEBT RELIEFAt the summit, the United States and China – long at odds on how to tackle debt restructurings for poor countries – sought to strike a more conciliatory tone after a landmark deal was reached on Thursday to restructure $6.3 billion in debt owed by Zambia, most of it to China.”As the world’s two largest economies, we have a responsibility to work together on global issues,” Yellen said on a summit panel shared with Chinese Premier Li Qiang among other leaders.However, differences remain. China – the world’s largest bilateral creditor – has been pushing for lenders like the World Bank or the IMF to absorb some of the losses, which the institutions and Western countries oppose.”China is ready to be engaged in debt relief efforts in an effective, realistic and comprehensive manner in keeping with the principle of fair burden sharing,” Li said.CLIMATE PLEDGEThe summit statement said there was a “good likelihood” of finalising this year a $100-billion climate finance pledge to developing countries.Many of the topics discussed in Paris took up suggestions from a group of developing countries, led by Barbados Prime Minister Mia Mottley, dubbed the ‘Bridgetown Initiative’.”There is the political consensus that this issue is bigger than each of us and we have to work together and multilateral development banks will have to change how they do business and that is accepted,” Mottley said at the summit’s closing panel.”We leave Paris not with speeches simply, but a commitment to get down into the granular details to make sure that what we agree here can be executed.” The $100 billion pledge falls far short of poor nations’ actual needs, but has become symbolic of wealthy countries’ failure to deliver promised climate funds. This has fuelled mistrust in wider climate negotiations between countries attempting to boost CO2-cutting measures.”If we can’t shape the rules in this time like others before, then we will be accountable for what potentially can be the worst reality of mankind,” Mottley said. More

A quarter of UK services companies reported increasing prices charged to their customers in June, according to a closely watched survey that highlights persistent inflationary pressures in the British economy.The Flash S&P Global / Cips UK purchasing manager index (PMI), a monthly gauge of business activity, showed that about 25 per cent of all service providers reported a rise in their output prices this month compared with May, while only 4 per cent reported a fall.This comes as separate data from the Office for National Statistics showed unexpected resilience in consumer demand, with retail sales rising 0.3 per cent between April and May. That was a stronger reading than the 0.2 per cent contraction forecast by economists polled by Reuters.Martin Beck, chief economic adviser to the EY Item Club, said the widespread rise in services output prices would “give the [Bank of England’s] Monetary Policy Committee reassurance that its decision to go for a 50bp rise in rates this month was justified”.On Thursday, the BoE raised interest rates from 4.5 per cent to 5 per cent, the highest level since 2008, surprising economists who had expected a smaller increase. The bold move followed stronger than anticipated wage growth and inflation data. June’s PMI “won’t do much to ease the Bank of England’s inflation fears, which suggests that yesterday’s interest rate rise to 5 per cent won’t be the last”, said Paul Dales, economist at Capital Economics.Based on interviews collected between June 12 and 21 for the PMI survey, about 40 per cent of services businesses reported their costs had risen, driven by higher wages. This comes as the sector reported the fastest pace of hiring since September last year. These figures would “concern Monetary Policy Committee, who have explicitly tied further interest rate rises to the strength of the labour market”, said Thomas Pugh, economist at consulting firm RSM UK.The survey also showed that overall activity eased in June. The UK composite PMI index, which tracks manufacturing and services activity, declined to a three-month low of 52.8. This was below the 53.7 forecast by economists polled by Reuters, but still above the 50 mark indicating a majority of businesses reporting an expansion.The strength of retail sales had been driven by higher spending on summer goods. ONS senior statistician Heather Bovill said online retailers did “particularly well selling outdoor goods and summer clothes, as the sun began to shine”. She added that sales in garden centres and DIY stores had also grown as the “good weather encouraged people to start home and garden improvements”. May also saw a return to growth for fuel sales after a dip in April.

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The further rebound in retail sales volumes in May suggests “the recent resilience in economic activity hasn’t yet faded”, said Ruth Gregory, economist at Capital Economics.Other data released on Friday showed UK consumer confidence rose for the fifth consecutive month in June, to the highest level since January 2022.The extra bank holiday for the coronation of King Charles on May 8, which has not been removed from the ONS seasonal adjustment, also played a part in May’s sales growth, according to some economists.However, the impact of high inflation was still visible in the data. In May, shoppers spent 17 per cent more than in February 2020, the start of the coronavirus pandemic, but they bought 0.8 per cent fewer goods as the fast rise in consumer prices reduced the amount people could afford.Gregory said that, with this week’s interest rate increase unlikely to be the last, it was “too soon to conclude the rebound in retail sales will be sustained and that the economy will avoid a recession”. More

In its twice-yearly report, Bain increased its annual sales forecasts for the global personal luxury goods market – spanning clothing, accessories and beauty products – and expects growth of between 5% and 12% this year, compared to previous expectations of between 3% and 8%. China is seen as a major driver of growth now that COVID lockdowns have been lifted, but, chiming with company results from retailers over the past weeks, Bain flagged further evidence that strong post-pandemic spending spree is waning in the United States.”There is an overall slowdown mostly driven by the aspiration side of the customer and more entry prices, so categories like streetwear and sneakers are a bit underperforming as we speak,” partner Federica Levato told Reuters.”Brands that are able to cater to the needs of the top customers … are the ones that perform better than others,” she added, noting a divergence between better-peforming labels and less successful ones in that market.Many high end labels are shifting their merchandising strategies or pushing upmarket to cater to their wealthiest clients, seen more resilient to economic headwinds, as younger shoppers are under more pressure from rising prices than older generations with higher incomes.For example, premium fashion retailer Hugo Boss last week raised its sales and profit targets for 2025 and said it continued to see strong growth in the U.S. and was expecting revenue to grow in the Asia-Pacific region. Lovato said that while there were “some questions marks” about China, and possibly a slowing of sales growth with the middle class, there was still appetite there. Luxury sales stood at 345 billion euros last year, according to Bain. More