Aurelia Butler

WASHINGTON (Reuters) -The International Monetary Fund said on Friday its executive board approved a four-year $15.6 billion loan program for Ukraine, part of a global $115 billion package to support the country’s economy as it battles Russia’s 13-month-old invasion.The decision clears the way for an immediate disbursement of about $2.7 billion to Kyiv, and requires ambitious reforms of Ukrainian officials, especially in the energy sector, the Fund said in a statement.The Extended Fund Facility (EFF) loan is the first major conventional financing program approved by the IMF for a country involved in a large-scale war. The size of the overall package is meant to signal the global community’s commitment to continue supporting Ukraine in the war, sources said.Ukraine’s previous, $5 billion long-term IMF program was canceled in March 2022 when the fund provided $1.4 billion in emergency financing with few conditions. It provided another $1.3 billion under a “food shock window” program last October.The latest loan is expected to unlock about $100 billion worth of additional international support for Ukraine. An IMF official said the $115 billion package includes the IMF loan, $80 billion in pledges for grants and concessional loans from multilateral institutions and other countries, and $20 billion worth of debt relief commitments.Ukraine must meet certain conditions over the next two years, including avoiding steps that could erode tax revenue, keeping adequate foreign exchange reserves to maintain exchange rate stability, promoting central bank independence and strengthening anticorruption efforts. Deeper reforms will be required in the second phase of the program to enhance stability and early post-war reconstruction, returning to pre-war fiscal and monetary policy frameworks, boosting competitiveness and addressing energy sector vulnerabilities, the IMF said.IMF First Deputy Managing Director Gita Gopinath said the program faced “exceptionally high” risks, and its success depended on the size, composition and timing of external financing to help close fiscal and external financing gaps and restore Ukraine’s debt sustainability.”Russia’s invasion of Ukraine continues to have a devastating economic and social impact,” she said, lauding Ukrainian authorities for maintaining “overall macroeconomic and financial stability.”The decision formalizes an IMF staff-level agreement reached with Ukraine on March 21 that takes into consideration Ukraine’s path to accession to the European Union after the war.Ukrainian President Volodymyr Zelenskiy welcomed the new funding.”It is an important help in our fight against Russian aggression,” he said on Twitter. “Together we support the Ukrainian economy. And we are moving forward to victory!” U.S. Treasury Secretary Janet Yellen said the funding package would help secure economic and financial stability and set the foundation for long-term reconstruction.”I call on all other official and private creditors to join this initiative to assist Ukraine as it defends itself from Russia’s unprovoked war,” Yellen said in a statement. “The United States will continue to stand by Ukraine and its people for as long as it takes.”The IMF said that multiple stakeholders, including international financial institutions, private-sector firms, most of Ukraine’s official bilateral creditors and donors are supporting a two-step debt treatment process for Ukraine that includes adequate financing assurances on debt relief and concessional financing during and after the program.LONGER WAR SCENARIOIMF official Gavin Gray told reporters the fund’s baseline scenario assumed the war would wind down in mid-2024, resulting in the projected financing gap of $115 billion, which would be covered by the multilateral and bilateral donors and creditors.The fund’s “downside scenario” saw the war continuing through the end of 2025, opening a much larger $140 billion financing gap that would require donors to dig deeper, he said.Gray said the program had been designed to function, even if economic circumstances were “considerably worse” than the baseline. He said the countries providing financing assurances had agreed to work with the IMF to ensure Ukraine was able to service its debt to the IMF if larger sums if needed.Ukraine will face quarterly reviews beginning as early as June, he said. More

NEW YORK (Reuters) – A gauge of global stocks was on course for its biggest weekly percentage gain in 4-1/2 months on Friday, with the two-year U.S. Treasury yield set for its first quarterly decline in the past nine, as U.S. inflation data fueled hopes the Federal Reserve may be reaching the end of its rate hiking cycle.U.S. consumer spending rose moderately in February, and while inflation cooled, it remained elevated enough to possibly allow the Federal Reserve to raise interest rates one more time this year. (Graphic: Fed’s preferred inflation gauge eases – https://www.reuters.com/graphics/PCE-INFLATION/zdpxdqzbmpx/chart_eikon.jpg) Additional data showed U.S. consumer sentiment fell for the first time in four months in February on concerns of an impending recession, although the impact of the recent banking crisis was muted.Expectations for a 25 basis point rate hike at its May meeting dipped to about 50%, with no hike seen to be just as likely.However, Boston Federal Reserve President Susan Collins said the inflation data doesn’t alter the Fed’s monetary policy path yet, while New York Fed President John Williams said financial conditions will be a key contributor to his thinking about what’s next for central bank interest rate policy.”Fed fund futures are basically pricing in a coin flip of a 25 (basis point) hike in May, but calling that the end of it, if they even go there, so anytime the data doesn’t give the Fed a reason to re-engage hawkishly, the market is going to like it,” said Ross Mayfield, investment strategist at Baird in Louisville, Kentucky.”It’s not like it was a soft print but it was below consensus on pretty much every metric and the core data is creeping closer to where the Fed wants it.”On Wall Street, U.S. stocks rose, with the S&P 500 set to notch its second straight quarterly advance as it closed at its highest level since February 15, after advancing for three straight weeks to close out the month.The Nasdaq Composite, up 16.8% in the first quarter, snapped a streak of four straight quarterly declines.On the session, the Dow Jones Industrial Average .DJI rose 415.12 points, or 1.26%, to 33,274.15, the S&P 500 .SPX gained 58.48 points, or 1.44%, to 4,109.31 and the Nasdaq Composite .IXIC added 208.44 points, or 1.74%, to 12,221.91.European shares were also higher, after a reading of inflation in the euro zone dropped by the most on record in March, although the core price growth, which excludes food and energy, accelerated.The pan-European STOXX 600 index .STOXX closed up 0.66% and MSCI’s gauge of stocks across the globe .MIWD00000PUS gained 1.04%, on track for its biggest weekly gain since mid-November.Even with a slight decline for the month, the STOXX index notched a second straight quarterly gain. MSCI’s index was poised for a fifth straight session of gains, its longest streak in two months, and recorded gains in back-to-back quarters.Expectations the Fed may be nearing the end of its rate hiking cycle have helped send U.S. Treasury yields lower recently. The two-year US2YT=RR U.S. Treasury yield, which typically moves in step with interest rate expectations, was down 4.7 basis points at 4.052% on the day, after touching a low of 4.023%.The two-year yield is set to decline for the first time in nine quarters after a drop of about 75 basis points in March, the biggest monthly drop since January 2008 during the financial crisis then.Benchmark 10-year notes US10YT=RR were down 7 basis points to 3.481%, from 3.551% late on Thursday. The 10-year yield is down more than 40 basis points for the month.The dollar pared some gains against the euro in the wake of the U.S inflation data, as investors see the Fed pausing its rate hiking cycle before the European Central Bank.The dollar index =USD rose 0.342%, with the euro EUR= down 0.53% to $1.0843. The dollar index is on pace for its second straight quarterly decline.The Japanese yen weakened 0.08% versus the greenback at 132.74 per dollar, while Sterling GBP= was last trading at $1.2331, down 0.42% on the day.Oil prices were higher on the session to record their second straight weekly advance.U.S. crude CLc1 recently settled up 1.75% at $75.67 per barrel and Brent LCOc1 settled at $79.77, up 0.63% on the day. More

WASHINGTON (Reuters) -Federal Reserve Bank of New York President John Williams said Friday how financial conditions play out will be a key contributor to his thinking about what’s next for central bank interest rate policy. “The economic outlook is uncertain, and our policy decisions will be driven by the data and the achievement of our maximum employment and price stability mandates,” Williams said in a speech in Bridgeport, Conn. “I am confident that our actions will bring inflation down to our 2% longer-run goal.”But Williams, who also serves as vice-chairman of the rate-setting Federal Open Market Committee, stopped short of saying what he thinks lies ahead for monetary policy in the wake of turbulent financial conditions tied to a two recent bank failures. When the Fed met last week and raised its overnight target rate it noted that tighter financial conditions will likely weigh on growth. Some at the central bank have hinted this restraint may take pressure off the Fed to raise rates much beyond their current 4.75% to 5% range. In thinking about monetary policy, “I will be particularly focused on assessing the evolution of credit conditions and their effects on the outlook for growth, employment, and inflation,” Williams said in his speech. The New York Fed president’s remarks Friday were his first since the FOMC met last week. At that gathering, officials penciled in one more increase for this year and then steady policy for the remainder of the year.On rate rises over the last year, Williams said after his speech that “so far mostly what we’ve done is bring interest rates back to a more normal, slightly restrictive stance.” In his remarks, Williams laid out some short-term pain for the economy as the Fed uses policy to cool inflation. The official said he expects inflation to ebb to 3.25% this year. Earlier Friday, the government reported that the overall level of the personal consumption expenditures price index ticked down slightly to a 5% year-over-year advance in February.Williams said he expects it to hit the 2% target in the next two years. Meanwhile, he sees U.S. gross domestic product growing modestly this year and then faster in 2024, with the jobless rate, now at 3.6%, moving up to around 4.5% over the next year. Williams did not comment on the surge in emergency Fed lending banks have tapped over recent weeks, which was largely stable at very a very high number as of Wednesday. Williams cautioned in comments after his formal remarks that troubles seen by banks over recent weeks are “very different from the financial crisis of 2008.” He said on balance banks are strong and resilient. More

Today’s top storiesDonald Trump will turn himself in to New York prosecutors next Tuesday after his history-making indictment in a hush money case. Here’s our explainer on the four separate investigations and mountain of litigation facing the former US president.The UK economy grew 0.1 per cent in the final quarter of 2022, rather than the initial estimate of flatlining. Business investment however was worse than previously thought.The Biden administration offered limited relief to carmakers worried about being frozen out of new US tax credits for electric vehicles, proposing rules on battery minerals that would expand access to the subsidies.For up-to-the-minute news updates, visit our live blogGood evening.Falls in inflation on both sides of the Atlantic today give some hope to central bankers that their programmes of interest rate rises, even against the backdrop of turmoil in the banking sector, are starting to bear fruit.In the US, the core personal consumption expenditures price index — the Federal Reserve’s preferred inflation gauge — slowed more than expected to 0.3 per cent in February, from 0.5 per cent the previous month, making the annual rate 4.6 per cent, down from 4.7 per cent. Headline inflation fell to 5 per cent from 5.3 per cent.Eurozone data this morning showed inflation falling sharply from 8.5 per cent to 6.9 per cent in the year to March, its lowest level in a year, thanks to plunging energy costs. Although the headline fall was steeper than expected, analysts believe the increase in core inflation, which excludes volatile energy and food costs, to a new high of 5.7 per cent, will make the ECB plump for further increases in rates. The pattern in individual states was mixed. Inflation fell sharply in France and Spain but Germany, the bloc’s biggest economy, reported a smaller decrease to 7.8 per cent, from 9.3 per cent the previous month. Annual inflation fell in 18 of the 20 eurozone countries, rising in just Slovenia and holding steady in Malta.The UK is somewhat of an outlier, last week reporting an unexpected acceleration to 10.4 per cent in February from 10.1 per cent the previous month, a level referred to by chancellor Jeremy Hunt as “dangerously high”. The Bank of England in response raised rates for the 11th month in a row to 4.25 per cent, followed by warnings from governor Andrew Bailey that banking upheavals would not stand in the way of its mission to control inflation.There was also further evidence of the country’s acute cost of living crisis as new data showed supermarket prices rose a record 17.5 per cent in March, adding £837 to the average household’s annual bill.Central banks are turning their attention to companies using high inflation as an excuse for price gouging. Profit margins of US companies last year hit their highest level since the second world war, while eurozone businesses over the past two years have enjoyed their biggest expansion in profitability since the 2008 financial crisis.This surge in profits, in the face of stiff headwinds from the pandemic and the war in Ukraine, with associated problems in energy and supply chains, is causing a new word to catch on among policymakers, economists, and, increasingly, the public: greedflation. Need to know: UK and Europe economyUK prime minister Rishi Sunak hailed the country’s accession to the CPTPP Asia-Pacific trade bloc as a significant post-Brexit opportunity, making exports for products such as cars, machinery, cheese and chocolate eligible for zero tariffs. The government estimated the deal would increase UK GDP by just 0.08 per cent, but said that could rise if Thailand and South Korea later joined the group.UK house prices fell by a more-than-expected 3.1 per cent in March, the largest year-on-year drop since 2009.The EU agreed a compromise on renewable energy targets after making an exception for nuclear power in certain sectors following pressure from France. The bloc’s overall binding target for energy from renewables will now be 42.5 per cent by 2030, up from 32 per cent. In the UK, the government admitted its new net zero strategy would fail to cut emissions enough to hit its own targets. The EU said it needed “new defensive tools” for sectors such as quantum computing and artificial intelligence to tighten oversight of trade in the face of an increasingly assertive China.Need to know: Global economyChina has started to flesh out its new foreign policy aim of creating alternative structures for international co-operation, particularly with the developing world, in the biggest challenge to the US-led world order since the cold war. China’s envoy to the EU warned of the “peril” of following US trade restrictions, while Japan joined in the chip war, restricting semiconductor tool exports.Meanwhile new survey data highlighted the uneven nature of China’s recovery, as services activity expanded at the fastest rate in 12 years, while manufacturing growth slowed.More than a quarter of emerging market economies have found themselves locked out of international bond markets as recent banking sector chaos prompts investors to shy away from riskier assets.The World Bank warned that tech decoupling and trade restrictions from the US-China cold war were having an impact on knowledge generation and innovation and posed a long-term threat to growth across Asia. Need to know: businessThe transatlantic banking panic has fuelled the continuing downturn in global dealmaking. The value of mergers and acquisitions dropped 45 per cent year-on-year in the first quarter. Our Lex Big Read considers the question: how safe are America’s regional banks? This explainer details how rising interest rates are exposing bank weaknesses. And spare a thought for the bankers on Wall Street: their bonuses plunged 26 per cent last year as dealmaking slumped.Passengers flying from London’s Heathrow airport face potential disruption over Easter because of a strike by security staff. European airlines separately warned of strike disruption from French air traffic controllers, who are responsible for planes flying over their airspace as well as those using French airports.Austrian lender Raiffeisen is in talks to sell its Russian banking arm. A Swiss court found bankers at Gazprombank guilty of helping to launder tens of millions of francs linked to Russian president Vladimir Putin. The UK risks becoming a “haven for fraudsters”, according to a parliamentary report. It comes a day after the government announced its plan to tackle economic crime, which drew strong criticism from anti-corruption organisations.Science round upGenomic data around Covid-19 has been made available again to researchers looking into the potential animal link to the original outbreak in China in 2019.China has become a prolific producer of academic research with “paper mills” churning out fabricated scientific studies. But, as our Big Read explains, fraudulent reports risk serious real-world consequences, The UK’s Royal Institution, the London-based organisation founded more than 200 years ago to promote scientific research and education, is relaunching with a new five-year strategy as a “home for science where everyone will feel welcome”. The tech boom in consumer products might be over, but we could be on the verge of a golden era of digital innovation and investment in industry, writes columnist Rana Foroohar. The Tech Tonic podcast series on the quantum revolution continues with a look at how the technology is helping solve bottlenecks at the Port of Los Angeles.And finally, the idea that there could be “another me”, a doppelgänger or identical copy of oneself, has long had a powerful hold on the popular imagination. A new book, Virtual You, explains how science is beginning to bring the concept into reality.Something for the weekendThe FT Weekend interactive crossword will be published here on Saturday, but in the meantime why not try today’s cryptic crossword? Some good newsFour cheetah cubs have been born in an Indian national park, the first since the animals were declared extinct in the country in 1952.From bad news yesterday to renewed hope for #ProjectCheetah this morning. Female cheetah Siyaya gave birth to four healthy cubs. Today, CCF Conservation Biologist Eli Walker confirmed and made visual contact (they’re ~5 days old) in the nest. He took the first photos/videos. pic.twitter.com/gagpTRIxfv— Cheetah Conservation Fund (@CCFCheetah) March 29, 2023 More