Aurelia Butler

TEL AVIV (Reuters) – OpenAI CEO Sam Altman predicted on Monday a “huge role” for Israel in reducing risks from artificial intelligence and eyed investment opportunities in the country even as it debates whether and how to regulate the technology behind ChatGPT.Altman is one of the tech world’s most prominent voices urging governments to rapidly come up with regulations to make sure AI is used responsibly.After crisscrossing Europe last month meeting lawmakers and national leaders to discuss the prospects and threats of AI, Altman now plans to travel to Jordan, Qatar, United Arab Emirates, India and South Korea – all this week.He is currently in Israel, which a Stanford University study has ranked among the top five countries for significant machine learning systems and concentration of AI skills. “I have been very heartened as I have been doing this trip around the world, getting to meet world leaders, in seeing the thoughtfulness, the focus, and the urgency on figuring out how we mitigate these very huge risks,” Altman said during a meeting with Israeli President Isaac Herzog. “The energy on making use of the technology and its positive benefits is fantastic to see, and I am sure Israel will play a huge role.”Visiting Microsoft Corp (NASDAQ:MSFT)’s R&D centre in Israel, Altman was asked whether his company might also open a local office. According to a Microsoft statement issued in Hebrew, “he (Altman) said the company prefers to work together in one location but is studying various investment options in Israel”.Altman downplayed fears of the impact AI will have on jobs. He said there will always be jobs for humans, despite the growth of automation, although the jobs of “100 years from now will look almost nothing like the jobs of today.”SAFETY CONCERNSThe rapid development and popularity of generative AI since Microsoft-backed OpenAI launched ChatGPT last year are spurring global lawmakers to formulate laws to address safety concerns linked to the technology.”I think it would be a mistake to go put heavy regulation on the field right now or to try to slow down the incredible innovation,” Altman told an audience of some 1,200 people at Tel Aviv University, but said he would obey regulations unlike some social media companies.The European Union is striding ahead with its draft AI Act, which is expected to become law later this year, while the United States is leaning toward adapting existing laws for AI rather than creating whole new legislation. Britain also wants to avoid heavy-handed legislation that could stifle innovation. “Israel – like Britain, and to a great extent like Canada, too – is at the U.S. end of the spectrum,” Ziv Katzir, director of national AI planning at the Israel Innovation Authority, told Reuters. “It has been working on this matter for the last 18 months or so, with a view to achieving the right balance between innovation and the preservation of human rights and civic safeguards.” Israel published a 115-page draft AI policy in October and is collating public feedback ahead of a final decision.Altman also said that the company plans to open source more models over time. “But I don’t think it’s the right strategy to open source everything,” he said. Altman spoke by phone with Israeli Prime Minister Benjamin Netanyahu, who tweeted that the two discussed opportunities and challenges facing the world and the State of Israel in relation to AI as well as Israeli cooperation to develop the AI field. More

An unheralded revolution has taken place in America’s approach to international economics. As the new thinking emerges, it is reshaping the global economy and the western alliance. The approach was set out most clearly in a speech by Jake Sullivan on April 27. The fact that Sullivan is President Joe Biden’s national security adviser is a clue. Strategic rivalry with China is central to the new thinking.But Sullivan’s speech ranged well beyond geopolitics. It was a highly ambitious effort to pull together the domestic and international goals of the Biden administration — and turn them into a coherent whole. The US intends to use a new strategic industrial policy to simultaneously revitalise the American middle-class and US democracy, while combating climate change and establishing a lasting technological lead over China.Many of America’s allies fear that the bit that slipped off the table was the interests of foreigners. They worry, in particular, that subsidies worth hundreds of billions of dollars to American industry and clean technology, set out in the Inflation Reduction Act, will come at the expense of producers and workers in Europe and Asia. Some also fear that pressure to “de-risk” trade with China will severely disrupt international trade. And many are concerned that US demands for reform of the World Trade Organization will end up crippling the guardian of free trade. US officials bristle at these suggestions — pointing to Sullivan’s repeated references to the interests of western allies and the global south in his speech. They argue that America is at last taking the lead in the battle against climate change — and that this should be welcomed around the world.Sullivan is also at pains to emphasise that “de-risking” does not mean cutting China out of global supply chains. Speaking to me last week, he said: “We’re trying to build a world in which there is more than one source for critical products . . . We’re not saying that China should not build iPhones or produce solar panels, but that other countries should too.”Sullivan is keen to persuade America’s friends that this “new Washington consensus” can work for everyone. He thinks the US made substantial progress at the recent G7 meeting in Hiroshima — arguing that the summit achieved a “really significant step forward”. In particular, he believes America’s allies are now reassured about its plans to subsidise the green transition and have embraced a similar approach. The drive for clean energy, he argues, is “going to be more of a source of co-operation than friction going forward”.There clearly was a significant convergence of language and approach in the G7 communiqué on issues ranging from de-risking to supply chains. But, talking to American allies — both in the G7 and outside it — it is evident that there is still uneasiness about US policy. One repeated concern is that America will continue to roll out measures aimed at China that its “allies and partners” will then come under huge pressure to adopt.Lawrence Wong, the deputy prime minister of Singapore — America’s closest ally in south-east Asia — warned recently that: “If de-risking is taken too far . . . we will end up with a more fragmented and decoupled world economy.” In Europe, there is still concern that a new global economic architecture designed in Washington will inevitably favour US producers and workers.Different US allies are responding in different ways. There has always been a lobby within the EU that favours the creation of European champions, through an industrial policy. That lobby has been empowered by America’s shift towards industrial policy. Last December, the EU committed itself to “an ambitious European industrial policy” for green and digital transitions. But there are also Europeans who are concerned that if the EU goes down the subsidy route, it will undermine its own single market. The EU has much less financial firepower than the US government, so could be blown out of the water in a subsidy race.American allies outside the EU — such as Britain, Japan and Canada — have a separate concern. They worry that if negotiations between the US and the EU become the main way of establishing a consensus in the “global west”, those outside the two main blocs will be disadvantaged. As one diplomat puts it, the EU and the US are “like two giant pandas”. They mate very rarely. But, if they do, it threatens to be an exclusive relationship (although, technically speaking, pandas are not monogamous).In response to the panda problem, the Canadians are examining giving the G7 a formal role in proposing and crafting the new rules for the global economy.The British are intrigued by Sullivan’s talk of “innovative new international economic partnerships”. On his trip to Washington this week, Rishi Sunak, Britain’s prime minister, will explore areas where the UK might strike up that kind of partnership with the US — including defence technology and the regulation of artificial intelligence.Hovering over all these economic discussions is a cloud of geopolitical fear. Russia is waging war on the borders of the EU. The Japanese fear China. All sides look to Uncle Sam for military protection. America’s allies still have their reservations about the Sullivan doctrine. But this is no time to get into an argument with the [email protected] More

Greetings from Brussels, where the Russian invasion of Ukraine has accelerated the move towards a “geopolitical commission”, and I am filling in for Alan. The Australian trade minister is in town to try to clinch a deal within weeks, while ambassadors discuss the latest sanctions measures against Moscow, which could include hitting Chinese companies for the first time for supporting the Russian war machine. But is this muscular posturing the false bravado of an ageing fighter fending off younger rivals by hugging the corner and throwing a few jabs? Today’s Charted waters looks at the EU use of “classic” trade defence instruments.An economic superpower struggling to get its wayTwo of the most sacred tenets of European Unionism are that the bloc derives its power from its single market and its common trade policy.An economic superpower of 450mn consumers with a gross domestic product almost as big as the US. A single market that gives an incentive to domestic producers to scale up and exporters to play by the EU rules, set in Brussels for 27 member states.Such is the rosy picture painted by commissioners and bureaucrats. Talk to businesses and you hear a different story.My colleague Ian Johnston last month pointed out that the internal market was starting to seize up. National politicians have failed to carry out routine maintenance, allowing national burdens to clog up the system. Brussels has in effect turned a blind eye and favours the thrill of a new directive more than the monotonous work of policing the ones it already has. And what of trade? Businesses have been waiting years for new trade deals with Mercosur and Mexico, agreed in principle, to be signed. The EU can flirt with partners offering access to its markets but no longer deliver on its promises. The Australia deal should be done within weeks and one with New Zealand was concluded last year. But these are small, if important, actors with similar standards. The EU has trouble concluding deals with developing countries that account for an ever growing share of world trade.The Mexico deal is bogged down in legal devices to ensure the trade parts can take effect without national parliaments having to approve them. Brussels wants additional commitments from Brazil and others to protect the rainforest before signing the Mercosur deal. Even that may not be enough for Austria and the Netherlands, whose parliaments have already voted against it. France also has doubts. Yet if newly elected Brazilian president Luiz Inácio Lula da Silva saves the rainforest it will be because he wishes to, not because the EU has told him so. As one EU legislator observes, Brazil is bigger than any single member state and considers it has more influence in the world than any of them. It does not take kindly to lectures.The so-called Brussels effect, which holds that other countries have to adopt EU standards because they wish to sell to its market, has surely been overhyped. Anu Bradford, who coined the term, said in 2021 that the EU “really is a global hegemon”.Bradford defines the Brussels effect as the “EU’s unilateral ability to regulate global markets by setting the standards in competition policy, environmental protection, food safety, the protection of privacy, or the regulation of hate speech in social media. Interestingly, the EU doesn’t need to impose its standards coercively on anyone — market forces alone are sufficient.” The EU market is big and companies want to sell to it. Multinationals tend to want to operate to a single standard for efficiency so the EU one becomes global. But things are changing. Europe’s market is becoming less attractive. It accounted for 24 per cent of global GDP when the Single Act laid the foundation for the single market in 1987 to 16 per cent in 2023 — even though EU membership expanded. Average annual growth in labour productivity — measured as real GDP per hour worked — has continuously declined from about 7 per cent in the 1960s to just 1 per cent since the early 2000s, according to the European Central Bank.And the EU can no longer expect other countries to adopt its standards de facto. To protect domestic companies facing tougher regulation it has recently become coercive, extending new standards to trading partners.Malaysia and Indonesia have paused talks because of the impact of the EU’s deforestation law. This bans products made from cattle, cocoa, coffee, palm oil, soya, wood and rubber being sold in the EU unless they are certified as coming from sustainably managed land. Countries will be labelled as low, standard or high risk, with the two big palm oil producers fearing a “high risk” rating that would impose an effective export ban on many SMEs that cannot comply with the standards.It is the first evidence that a battery of new climate-based measures could damage EU trading relationships. The carbon border adjustment mechanism, which will put a tariff on imports from countries without a carbon price, is another. Several countries including China are expected to challenge it at the World Trade Organization. Trade talks with India could hit similar barriers, given its fondness for coal. Charges of “green protectionism” and “regulatory imperialism” need to be addressed, according to a report by the Europe Jacques Delors think-tank. “The EU should acknowledge that greening its trade is affecting, and will disproportionately affect, some of its most vulnerable trading partners and reintegrate more of the development dimension in the conduct of its green trade policy,” the authors, who include former trade commissioner Pascal Lamy, say.“Some countries have the resources to change or can find alternative markets, others will struggle and lose part of the EU’s market which they may depend on,” they add. Those countries should be helped to comply. They also point out the irony of the EU — whose wealth was powered by fossil fuels and environmental destruction — damaging the economies of countries most affected by climate change. David Kleimann, of the Bruegel think-tank, believes a partnership approach could avoid a breakdown in relations. “It is undeniable that the EU’s environmental trade conditions are being advanced in good faith and in a technically sound manner. The EU must now pull out all stops to convince foreign stakeholders of the measures’ legitimacy and advise on compliance,” he says. Meanwhile, Spain’s six months in the rotating presidency from July could “showcase the union’s continued commitment to trade openness and economic engagement with the rest of the world. The ratification of trade agreements negotiated with Mercosur, Chile and Mexico would send the necessary signal.”Josep Borrell, the EU’s foreign policy chief, agrees. A paper prepared by his European External Action Service with the European Commission being published on Wednesday, and seen by the FT, says clinching Mercosur would create a “step change” in the relationship. But while it contains plenty of ideas of how to improve relations with what he calls “natural partners” there is a lot more “what” than “how”. Talking is fine, but frequently it is at cross purposes, as Lula’s recent pronouncements on China and the Russian invasion of Ukraine show.Borrell also urges ratification of the post-Cotonou deal with the Organisation of African, Caribbean and Pacific States, 79 mostly former colonies that are exactly the kind of country courted so assiduously by China and Russia. The post-Cotonou agreement would allow the European Investment Bank to keep lending there and is a framework for economic and development co-operation. It would also improve tensions over migration. Members would agree to take rejected asylum seekers back while the EU would discuss opening legal pathways for people to come to work in the bloc rather than risk their lives in small boats. The EU’s fractured trade policy is at the root of the problem here too. For months Hungary blocked the treaty because it contained language on gender equality, which offended Prime Minister Viktor Orbán’s sensibilities. But when he dropped his objections, Poland raised its own.They stem from an extraordinary dispute over imported Ukrainian grain and other food stuffs. Four member states — Poland, Hungary, Slovakia and Bulgaria — imposed a unilateral ban on imports after grain began piling up in warehouses, reducing prices for farmers locally, who launched widespread protests. The grain arrived after Brussels dropped all tariffs and quotas to support the Ukrainian economy and get food to the developing world. But the prohibitive cost of transport — and the unlikely success of a deal with Russia and Turkey to get grain out through the Black Sea — has left the grain stuck in the region. The commission was forced to implement its own restrictions instead, allowing four types of grain to enter those countries, and Romania, only if they were transiting to somewhere else.Poland has linked the two issues — Russia’s war has “had a negative impact on food security” in many developing countries, its EU ambassador Andrzej Sadoś told the FT. And yet many have not voted to condemn Moscow at the UN or implemented any sanctions. Trade experts are looking through the history books to discover whether a trade defence measure has ever been applied to only some EU countries. One for all, all for one, is the power of EU trade policy, as we saw when China launched a de facto blockade of imports from Lithuania. Indeed, the EU measure expires today — though it is likely the commission will extend it. Yet Hungary refused to drop its unilateral ban. The Brussels effect is fading even a few hundred kilometres away.Charted watersThe EU has several “classic” trade defence instruments — antidumping, antisubsidy and safeguard measures (the latter are very rarely used). Brussels usually opens about a dozen antidumping and antisubsidy cases a year but in 2022 that dropped to just five. And there have only been two so far this year.Member states will increasingly take matters into their own hands unless the commission uses them more frequently, say some lawyers who work for heavy industry and agricultural interests.The unilateral move from certain EU member states also echoes the widespread feeling of ‘unease’ among the bloc’s economic operators who see a lot of EU regulations being adopted that “may severely affect their activities”, Marie-Sophie Dibling, trade partner at King & Spalding, told Trade Secrets. While EU companies and farmers face higher costs from rising energy prices and regulation, and the impact of war, cheap imports continue unabated, with China and India able to use cheap Russian crude.“Because there is an inaction from the commission, the EU member states fill the gap by such unilateral actions. I am not saying that what these eastern countries are doing is the right thing to do, but if the commission does not listen to the EU operators, we will see more and more national unilateral actions which will directly jeopardise EU power and EU integration.”Trade linksChina’s service sector notched a fifth month of expansion in May, according to a closely watched gauge, offering a bright spot in the country’s faltering economic recovery as manufacturing has slowed.China will soon account for less than half of the US’s low-cost imports from Asia for the first time in more than a decade, according to data, but the US and China remain each other’s largest respective trading partners.Negotiations have begun between about 170 countries to agree how to reduce plastic pollution, but divisions remain over various issues.Trade Secrets is edited by Jonathan Moules More

Hello from London, where Prime Minister Rishi Sunak is under pressure to confirm that he will show up to a global climate and development summit French president Emmanuel Macron will host across the channel later this month.Civil society organisations are worried that the gathering, which will primarily be held in a Parisian palace that used to host the city’s stock exchange, has been organised too speedily to be of much use on issues such as phasing out fossil fuels or raising disaster funds for developing countries.It was announced only in November, and clashes with a state visit by Indian prime minister Narendra Modi to Washington as well as a conference on Ukraine’s postwar reconstruction hosted in London.But as my colleagues wrote last week, there are graver concerns that December’s UN climate conference, COP28, is at risk of being undermined by the leadership of United Arab Emirates oil executive Sultan al-Jaber. “It’s like putting the tobacco industry in charge of ending smoking,” a German Green party member of the European parliament told the FT.This makes other attempts to build consensus among world leaders, away from the COP jamboree, more important than ever. Along with Macron’s summit, the Africa Climate Summit in Kenya, the G20 in India and a summit focused on sustainable development goals at the UN’s headquarters in New York will all look to make progress on climate change and other pressing problems over the coming months. Today, we look ahead to the burning issues that will be high on the agenda in Paris. And Kaori explores why coal giant Indonesia is finding it hard to give up the black stuff. (Kenza Bryan)‘A place to eat and a place to sleep’: how useful will Macron’s finance summit be?Climate-vulnerable countries have long argued that redirecting their often punitive interest payments towards conservation and climate resilience projects would benefit the whole world.But reimagining debt frameworks to free up funds for countries to spend on challenges such as climate change, biodiversity loss and poverty is a complex task.Heads of state including German chancellor Olaf Scholz and Barbados prime minister Mia Mottley will discuss how to bring about this “overhaul of the international financial system” at a summit in Paris on June 22 and 23, alongside development bank representatives such as the World Bank’s Ajay Banga and non-profit groups.“It’s not a subject where France itself has a magical idea to solve the whole problem,” Amélie de Montchalin, France’s permanent representative to the OECD club of developed economies, said at a briefing on the summit late last month. The point is to be a convening place that can contribute by offering “le gîte et le couvert” — “a place to eat and a place to sleep” — she added.In the most recent high-profile example of nature-themed debt relief Credit Suisse repackaged $1.63bn of Ecuador’s debt using a development bank guarantee, in exchange for the country agreeing to fund conservation in the Galápagos islands. But the deal was a drop in the ocean of a debt crisis that, fuelled by rising interest rates and a strong dollar, has hit hardest the emerging economies most vulnerable to climate change.

Mia Mottley, prime minister of Barbados, will co-host the Paris summit with Emmanuel Macron © Bloomberg

Paris summit attendees will discuss what a “good” debt-for-nature swap looks like, Montchalin told Moral Money. “The issue is how you can move from specific projects to effective models that can be replicated and be put at scale to become the norm,” she said. Marcos Neto, director of the United Nations Development Programme’s sustainable finance hub, said the summit was in part an attempt by France to “find a space” in climate discussions. But he hopes it will deliver a more effective type of debt swap that frees up significantly more cash and does not tie governments down to specific projects. “The important point here is you are not imposing the utilisation of the money but letting governments use it for their own priorities,” he told Moral Money. So far the G20’s “Common Framework” for debt restructuring, which seeks to bring bilateral creditors of countries with distressed debt to the table for discussions, has been “struggling to deliver”, Neto said. The solution, he suggested, could be increasing the role of multilateral development banks. These hold about a fifth of developing country debt but can punch above their weight by providing credit guarantees to get private investors on board with these deals, he said.Neto made the case for a climate-themed “2.0” version of so-called Brady bonds, which helped slow the 1980s Latin American debt crisis. (This idea, inspired by then US Treasury secretary Nicholas Brady’s attempts to make sovereign debt safer and more liquid for private investors, was put forward by Boston University professor Kevin Gallagher in the FT earlier this year.) Two other nitty-gritty issues will be discussed. One is a potential global tax on shipping fuel, to be administered by the International Maritime Organisation, to accelerate the decarbonisation of transport and feed into a loss and damage fund for developing countries. Another is how far developed countries should funnel their unused IMF special drawing rights, emergency funds that were issued to central banks in 2021, to the African Development Bank. Organisers also hope the summit can address resentment among countries of the global south. These countries “may feel that we do not understand the challenges they face, that we neglect the need for them to grow and develop”, Jean-Pierre Landau, Macron’s special envoy for the summit, told Moral Money. “For that reason, we need a vision of the transition that is respectful of the specific needs, constraints and circumstances of each country,” he said. French organisers describe the gathering as an opportunity for leaders to do their “homework” — so they can figure out ahead of COP28 how to put big ideas into practice. (Kenza Bryan and Kaori Yoshida)A ‘win-win’ plan to reduce Indonesia’s emissionsIndonesia could save $2bn and avoid emitting 1.3 gigatonnes of CO₂ if it closes its least profitable coal-fired power plants, new analysis from TransitionZero, a UK climate analytics non-profit, has estimated. Indonesia is the world’s biggest coal exporter and also relies on the dirtiest fossil fuel for more than 60 per cent of its electricity generation. For Indonesia and other south-east Asian countries, “there’s a huge opportunity . . . to reform their electricity markets to lower electricity costs for consumers”, Matt Gray, chief executive of TransitionZero, told me.For context, one gigatonne of CO₂ is nearly triple the annual amount emitted by all passenger cars in the US, according to the Environmental Protection Agency.TransitionZero estimates that replacing roughly 21 gigawatts of coal plants (roughly a quarter of the country’s current generating capacity) with renewables would come with no net cost for Indonesia, if it uses capital from the Just Energy Transition Plan, a $20bn public and private financing mechanism. The JETP was agreed last year between Indonesia and wealthier nations such as the US, UK and Japan to support Indonesia’s energy transition. “It’s a win-win because these coal plants are not particularly profitable,” Gray said. “They’re being underutilised and therefore they can be shut down and replaced with something cheaper.” The obvious choice would be solar photovoltaic (PV) power, TransitionZero says, given Indonesia’s sunny climate and the dramatic decline in that technology’s cost in recent years.However, “the bottleneck is our state-owned enterprise utility PLN”, Fabby Tumiwa, executive director at the Institute for Essential Services Reform (IESR), a Jakarta-based energy think-tank, told me. The Indonesian state-owned power company is concerned that solar is an intermittent power source that could increase its overall costs, Tumiwa said. And as long as it refuses to close coal power stations that are operating well below capacity, PLN has an incentive to block or avoid measures that would exacerbate that low utilisation rate — such as expanded solar.Tumiwa said that since 2021, PLN had been trying to “limit the growth of rooftop PV” by restricting the capacity that can be installed by consumers, and lengthening the permit process.While the utility has laid out plans to expand its mix of solar, its progress so far means PLN will probably miss its targets “not only for PV but also other renewables”, he said. (Kaori Yoshida, Nikkei) Smart ReadCompanies that buy lots of carbon credits are more likely to decarbonise their own supply chains than those which buy just a few, according to analysis of more than 4,000 companies by Trove Research, a data consultancy. Given evidence of the widespread use of bogus offsets, some of which make dubious claims about removing carbon from the atmosphere, it’s a counter-intuitive finding. More

OTTAWA (Reuters) – The Bank of Canada (BoC) became the first major global central bank to pause its rate-hike campaign in January, but the economy’s surprisingly strong performance since then will test Governor Tiff Macklem’s resolve to stay on the sidelines this week.A return to rate-hike mode would raise questions about how high the bank can take borrowing costs without sending the economy into a tail spin. Between March 2022 and January, the BoC hiked eight times to a 15-year high of 4.50% – the fastest tightening cycle in the bank’s history. Still the rapid rise in the price of money has failed to cool an overheating economy, with the first quarter GDP rising 3.1% – versus the 2.3% forecast by the BoC – and April seen expanding 0.2%. Nor has it loosened the tight labour market or tamed wage growth. Inflation, which peaked at 8.1% last year, accelerated for the first time in 10 months in April to 4.4%, more than double the Bank of Canada’s 2% target. The recent recovery in Canada’s housing market is also putting pressure on prices, analysts say.”Following the rapid turnaround in the housing market and upside surprise to CPI inflation in April, that resilience boosts the case for another interest rate hike, which we now judge to be more likely than not,” said Stephen Brown, deputy chief North America economist at Capital Economics.Strong household spending and exports drove growth in the first quarter. The Bank of Canada will announce its interest rate decision at 10 a.m. ET (1400 GMT) on Wednesday.Money markets see a nearly 40% for a 25-basis-point hike on Wednesday, a more than 80% chance for one by July, and they fully price one in by September..Yet, about two-thirds of economists polled by Reuters last week expect the BoC to keep rates on hold for the rest of this year. Four said they see a hike on Wednesday and three-quarters said there is a risk of at least one increase in June or July.U.S. JOBS DATAThe May unemployment rate in United States rose from a 53-year low to 3.7% in May, the biggest jump since April 2020. The easing of labor market conditions south of the border could allow the Federal Reserve to pause its own tightening campaign this month.Since the United States accounts for about three-quarters of Canada’s exports, indications of slowing growth there could play into Macklem’s decision. But some analysts say Macklem could shrug off market expectations and protectively push rates higher. “The Bank of Canada’s penchant for surprising traders means that nothing can be ruled out,” said Royce Mendes, head of macro strategy at Desjardins Group. Mendes said there could be more than one rate hike in the cards, and Canadians should “brace themselves for a further tightening in financial conditions this summer”.The governing council discussed the possibility of raising rates at its last policy meeting in April, according to the minutes, and Macklem has repeatedly warned rates could go higher if inflation does not slow as expected to 3% this summer.To definitively rule out further hikes, Macklem said the labour market must soften as growth slows, easing wage pressure and price-setting behavior by businesses, especially in the services sector.So far, the data show this scenario is not playing out.”The latest round of data adds weight to our view that the Bank will need to conduct an insurance rate hike at either of its next two meetings,” said Jay Zhao-Murray, FX analyst at Monex Canada. More

The lack of a significant slowdown in lending combined with a resilient U.S. jobs report on Friday could lead to further rate hikes, Georgieva told CNBC in an interview.”The pressure that comes from incomes going up and unemployment being still very, very low, means that the Fed will have to stay the course and perhaps in our view, they may need to do a little bit more,” she told CNBC.She projected the U.S. unemployment rate to go beyond 4%, to up to 4.5%.The U.S. job growth accelerated in May, but a jump in the unemployment rate to a seven-month high of 3.7% suggested that labor market conditions were easing. More