Aurelia Butler

The Bank of Korea said its seven-member monetary policy board voted to keep the base rate unchanged at 3.50%, as it did on Feb. 23. Local markets showed a muted reaction as investors waited Governor Rhee Chang-yong’s news conference from 0210 GMT.The decision was in line with predictions from 39 out of 40 economists surveyed by Reuters, while one respondent had forecast a 25-basis-point hike.It is the first time the Bank of Korea has kept the policy rate steady at successive meetings since it embarked on a tightening campaign in August 2021. South Korea’s annual consumer inflation has eased since peaking at a 24-year high of 6.3% in July 2022 to hit 4.2% in March this year, although it is still more than double the central bank’s target of 2%.Governor Rhee said after the February board meeting his bank would not need to resume rate hikes if inflation continued to moderate, but refused to declare the tightening cycle was over.South Korea’s heavily trade-reliant economy has been losing momentum, hit by the slowing global economy, still sluggish demand from China, and cooling consumer spending at home after aggressive interest-rate hikes. More

“I am going to invite Xi Jinping to come to Brazil, for a bilateral meeting, to get to know Brazil, to show him the projects that we have of interest for Chinese investment,” he said in an interview to state-owned broadcasting company EBC, adding he is planning to “consolidate” the relationship with China.The trip to China comes little more than two months after Lula met with U.S. President Joe Biden at the White House, as Brasilia aims for a pragmatic foreign policy balancing ties with its top trading partners despite growing tensions between the two.”What we want is for the Chinese to make investments to generate new jobs and generate new productive assets in Brazil,” Lula added. Lula’s trip to China, Brazil’s top trading partner, was initially scheduled for March, but was postponed after he was diagnosed with a mild pneumonia. He will meet Xi as well as Chinese Prime Minister Li Qiang next Friday. More

WASHINGTON (Reuters) -U.S. Treasury Secretary Janet Yellen on Wednesday will host a roundtable discussion on further steps to evolve the World Bank and other development lenders to tackle climate change and other global crises beyond a $5 billion annual World Bank lending expansion, the Treasury said.The discussion on the sidelines of the World Bank and International Monetary Fund Spring Meetings will bring together finance ministers from major shareholders and borrowing countries that will cover “ways to maintain momentum to evolve the multilateral development banks to better meet current challenges,” the Treasury said in a statement.The World Bank has proposed balance sheet changes that would quickly allow it to lend an additional $50 billion over 10 years while maintaining its top-tier AAA credit rating, a step that bank shareholders are widely expected to adopt this week.U.S. Treasury Undersecretary Jay Shambaugh said the reforms amounted to a “once in a generation transition” of the institutions, and called the World Bank’s plans a “downpayment” on the reforms that would be deepened in time and spread to other multilateral development banks.”This was the low-hanging fruit. These were the things we could accomplish in six months after the charge went to the bank,” he told an event hosted by the Brookings Institution on Monday. “We definitely don’t view that as a stopping point.” Shambaugh said it was important to fix the banks’ operational structure and incentives and ensure effective use of funds, noting that some of the development banks had “considerable room” on their balance sheets. A senior Treasury official said Yellen would discuss changes aimed at harnessing more private capital and creating public-private partnerships to tackle climate change and other global problems such as pandemic preparedness and economic fragility.    The official said Yellen was hoping to lay out another roadmap to make more progress on the banks’ operational models and financial capacity. More

UK consumer spending increased last month but lagged far behind inflation, according to data published on Tuesday, as households continued to cut back on purchases in the face of high energy bills and other cost pressures.Figures from Barclays, which represent almost half of credit and debit card transactions nationwide, showed that card spending rose 4 per cent year on year in March. According to the bank’s consumer spending index, sales of household and DIY goods increased, as people began to renovate their homes ahead of summer. The latest season premieres of popular television shows also fuelled a rise in subscription purchases. But the 4 per cent increase continued to be outpaced by stubbornly high consumer price inflation, which unexpectedly rose at an annual rate of 10.4 per cent in February, suggesting cuts to real-terms spending by squeezed households. “The below-inflation rise in grocery spending shows that Brits are still trying their hardest to shave money off their weekly shop, as energy bills continue to rise”, said Esme Harwood, director at Barclays.In the spring Budget, chancellor Jeremy Hunt said the government would extend its energy price guarantee for households by three months to June. The cap — which took effect after the surge in wholesale gas and electricity prices sparked by the Ukraine war — has limited average annual energy bills to £2,500 this winter. Nevertheless, 88 per cent of people surveyed by Barclays said they were concerned about the impact of energy bills on their finances. As cold weather in March prompted people to keep the heating on, high bills left them with less to spend on non-essentials. Of all survey respondents, almost two-thirds said they were buying fewer clothes. Meanwhile, 62 per cent of respondents said they had cut down on eating out to save money, with restaurants reporting a 5.6 per cent year-on-year drop in customer spending.

Silvia Ardagna, head of European economics research at Barclays, said that “with food and beverage prices up notably in February, and driving the sharp acceleration in prices set by restaurants and hotels . . . it is not surprising that consumers are moderating spending”. According to data published last month by the Office for National Statistics, prices of food and non-alcoholic drinks rose 18.2 per cent, the highest pace in more than 45 years, as soaring energy costs and bad weather across parts of Europe led to shortages and rationing. Separate figures released on Tuesday by the British Retail Consortium, a trade body, showed the value of total sales for its members — mostly big supermarkets and chains — rose 5.1 per cent year on year in March. “As consumers cut back on eating out, spending on home comforts, accessories and furniture saw the biggest growth, with people looking to entertain at home instead,” said Paul Martin, UK head of retail at KPMG, an advisory firm. More

NEW YORK (Reuters) – The Federal Reserve may not need to raise interest rates further to fight inflation, as the fallout from last month’s turmoil in the banking sector and a series of recent labor data point to a slowing U.S. economy, a BlackRock (NYSE:BLK) executive said on Monday.Though Friday’s closely-followed Labor Department employment report showed that U.S. employers maintained a strong pace of hiring last month, it was also marked by slowing wage gains and jobs growth that was below the three, six and 12 month moving averages, said Rick Rieder, chief investment officer of global fixed income at BlackRock, the world’s largest asset manager. That data, together with labor market numbers released last week and expectations of tighter credit conditions after the failure of two U.S. banks last month, paint a picture of a slowing economy, according to Rieder.”Last Friday’s employment report, while clearly not alarming in any way, allows investors to see more clearly through to what should be a tangibly slower set of economic conditions,” Rieder wrote in a report.”Presumably, this will also see a cessation of Fed policy rate hikes after one more possible hike at the May meeting, although it’s also possible the Fed is done already,” he added in an emailed statement to Reuters.The Fed over the past year has embarked on one of its most aggressive rate hiking cycles in decades to curb price pressures and has forecast borrowing costs will remain around current levels to the end of 2023. For now, traders take a more dovish view and are betting policymakers will cut rates later in the year, taking the fed funds rate to 4.35% from its current 4.75% to 5% range.Investors will be closely watching an inflation report on Wednesday to gauge the near-term trajectory for interest rates. According to Rieder, inflation should ease going forward, in line the economic slowing seen last month.”Hopefully … markets can look forward to a more relaxed Fed from here,” he said. More