Aurelia Butler

MEXICO CITY (Reuters) – Latin American central banks have dashed hopes that they will back off sky-high benchmark interest rates, amid stubbornly high inflation, expected further tightening by the U.S Federal Reserve, and political risks in some cases.Latin American central banks were often in the vanguard of the global battle to quash inflation, with rate hikes totaling over 1,000 basis points in some countries. The central bank of Brazil, the region’s largest economy, held its Selic benchmark interest rate at 13.75% last month, but said it was considering holding the six-year-high rate for longer than markets expected due to fiscal risks under new President Luiz Inacio Lula da Silva. The Brazilian central bank’s weekly survey of private economists last year foresaw cuts in June 2023, but a recent survey pushed the forecast back to November. The bank’s policies have faced increasingly vociferous criticism from Lula, who has said they risk triggering a credit crunch and hurting economic growth.In neighboring Argentina, the central bank put the brakes on a 10-month hiking cycle in October, leaving its eye-popping 75% benchmark rate unchanged since then on signs the country’s nearly 100% annual inflation was cooling.But hopes of a potential rate cut in Argentina have dissipated as prices heat up anew, sources told Reuters recently, adding that it did not “seem appropriate to make monetary changes” in the near future.In Chile, the central bank kept its key interest rate on hold in January, and underscored this week that it was in no hurry to reverse the process as inflation remained above its target.The central bank’s poll of traders now expects cuts won’t come until May, likely making Chile the first mover.LONG HOLDA key issue banks face is bringing down core inflation, a key metric for policymakers which strips out some volatile food and energy prices and has taken longer than expected to slow in Latin America and beyond.”We’ve seen goods inflation peak in most countries, but services inflation is proving a lot more stubborn,” said Kimberly Sperrfechter, an analyst at Capital Economics, explaining that rates are also forecast to stay “quite high” throughout 2024.    “We’ve had a quite a few hawkish comments from central banks across the region, pushing back against the idea of rate cuts,” she added.    Among them is Bank of Mexico deputy governor Jonathan Heath, who told Reuters that rates would be kept steady for an extended period once the bank’s current hiking cycle ends.Alejandro Saldaña Brito, chief economist at Ve Por Mas Bank, also cautioned that inflation is still not fully under control and forecast most countries will not cut rates until late 2023.”Early data globally for 2023 has not been as favorable as expected. That gives central banks the message that it’s not quite time to think about a more relaxed monetary policy,” he said.”If you want to avoid an inflationary spiral, you have to keep a restrictive monetary policy for an extended period.”That view is coupled with expectations the Fed will need to push interest rates higher and keep them up longer than initially projected, while the European Central Bank is also seen hiking more.U.S. rates serve as reference points for borrowing costs around the world, and emerging markets also risk capital outflows as the Fed raises its rates. In Colombia, inflation may have accelerated again in February, fueled by education, rent and transport. That will likely push the central bank to again hike its benchmark interest rate, currently at 12.75%, said Camilo Perez, chief economist at Banco de Bogota.”For now we continue to expect an increase of 50 basis points at the March meeting,” Perez said, adding that the hike would likely be the last before a holding period.Political unrest in Peru may have also moved back the goalpost for cuts, with the central bank warning that protests have caused supply chain disruption and impacted consumer prices.Though the Andean nation’s central bank unexpectedly held its key interest rate at 7.75% last month, it cautioned the “pause does not necessarily mean the end of the rate hiking cycle.” More

“I learned how to drive the scooter easily because I used to ride a bike so I get how to balance,” she said.In conservative Egypt, few women drive scooters, a popular and cheap means of transportation, and many feel uncomfortable hiring men to drive them.So the 36-year-old Al-Adawi started taking female riders for trips on her scooter, earning money to help support her family.After a successful few months she is now hoping to set up a new app-based business with an all-woman team including instructors and mechanics.”When I used to ride the bus it was full of people so I used to sit by the window to get away,” she said. “Now on my scooter I’m in the air, it’s all window.” More

CARACAS (Reuters) – Like many Venezuelans, Carmen Mendoza has learned to get by with a patchwork of different income streams in different currencies – her pension, renting out a property, and roughly $150 per month her two daughters send from Spain.But it is no longer enough.Resurgent inflation is devouring the income of Venezuelans – even the relatively privileged ones like Mendoza who have access to U.S. dollars. That is leaving them hungry and struggling to buy food and medicine, they told Reuters.”Neither dollars or bolivars are enough. I can’t afford anything,” said 68-year-old Mendoza, who lives in Los Teques, the capital of Miranda state.Hunger is a familiar specter in Venezuela, which suffered years of hyperinflation in the second half of the last decade, as the government of President Nicolas Maduro printed money to pay its debts amid a slow-down in oil prices.Many Venezuelans were left to scour through garbage to find food, and millions fled the country to build new lives across South America and beyond.Maduro relaxed currency controls in 2019, allowing a de facto dollarization. Combined with orthodox economic policies including limiting the expansion of credit, reducing public spending, and raising taxes, inflation fell to single digits for about a year.But in late 2022, Venezuela’s consumer price growth began to accelerate sharply. As countries around the world have grappled with rising inflation in the wake of the coronavirus pandemic, Venezuela’s price growth has been spurred by growing demand for dollars, increased government spending, and weakening of the bolivar, prompting fears of a renewed era of hyperinflation.Prices rose over 37% in December compared to the previous month, according to a non-governmental group of economists who calculate indicators in the absence of official data, and who estimated 2022 inflation at over 300%.Even Venezuelans who benefited from dollarization through remittances or salary payments are being hit by the higher prices, while those earning in bolivars have seen their meager earnings decline further.Since the start of this year, Yaselin Garcia, 32, has watched as groceries bought with the $20 she makes each week selling cigarettes and other items have dwindled to just 15 eggs, 3 kilograms (6.6 lb) of corn flour, some grains and some cheese.”If I were earning in bolivars I wouldn’t be able to buy anything,” said the mother-of-four in Los Teques.Monthly private sector pay averages $139 and public sector salaries are around $14 per month, according to the Venezuelan Observatory of Finances, while the average family grocery shop comes in at some $370 per month. “Wage increases are lagging behind,” said economist Asdrubal Oliveros, director of local analyst firm Ecoanalitica. “The purchasing power of salaries paid in dollars has fallen.”Oscar Lochunga, 66, sells vegetables at a street market in capital Caracas, but is seeing demand fall each week as people limit their purchases.”Whether you pay in bolivars or dollars it is not enough,” Lochunga said, sitting in front of his stall.Markets are full of food which few can buy, which pushes people to skip meals or rely on help from charities, said Ania Pulido, a nutritionist at advocacy group the Venezuelan Observatory for Food Security and Nutrition.Money “which today got you 20 products by tomorrow won’t even get you …. half that,” Pulido said.Some 50% of Venezuelan households live in poverty, according to a national poll carried out by the Universidad Catolica Andres Bello, and 41% of those polled said they skip one meal per day. For Yusmary Tovar, 42, who cares for her 5-year-old daughter and her elderly mother, $80 in monthly earnings from cleaning houses and babysitting is no longer enough.Tovar has a kidney problem and must use a catheter to urinate. The catheters’ high cost forces her to boil them in water and reuse them.”You get ill just thinking about how to make it through one day to the next,” she said. More

Beijing has warned the US to “hit the brakes” over its attempts to contain China, highlighting the Chinese Communist party’s concerns over escalating tension between the rival superpowers.Private credit groups are poised to write the largest direct loan ever, underscoring their growing power in the wake of the global financial crisis,Scroll down for more on both stories. Meanwhile, I’ll be keeping tabs on:US Federal Reserve: Chair Jay Powell testifies today before the Senate Banking Committee as fellow Fed officials hint at keeping interest rates higher for longer.US defence: US defence secretary Lloyd Austin continues his Middle East trip and will return to Jordan tonight after a surprise stop in Baghdad.SEC: The District of Columbia Court of Appeals will hear oral arguments in a lawsuit brought by digital currency asset manager Grayscale against the Securities and Exchange Commission after the regulator denied an application to convert the world’s largest cryptocurrency investment vehicle into an exchange traded fund. Separately, Grayscale is being sued by FTX trading affiliate Alameda over crypto investments.Happy to hear any feedback on FirstFT at [email protected]. Thank you for reading.Today’s top news1. China’s foreign minister Qin Gang sent a stark warning to the US over its containment of China today from the annual session of his country’s rubber-stamp legislature, saying: “If the US doesn’t hit the brakes and continues to barrel down the wrong track, no amount of guardrails can prevent the carriage from derailing and crashing, and there will surely be conflict and confrontation.” The FT had earlier revealed that US House Speaker Kevin McCarthy would meet Taiwan’s Tsai Ing-wen in California and not Taipei to avoid an aggressive Chinese military response. More on why the venue was changed.2. The US defence secretary said Iran was doing the “unthinkable” in Ukraine by gaining experience through deploying drones for Russia. Here’s why Lloyd Austin thinks this “doesn’t bode well” for the Middle East.Related: A Ukrainian withdrawal from Bakhmut would not change “the tide of this fight”, said Austin, as he sought to play down the significance of a retreat.Opinion: China has a fateful choice to make on Ukraine, writes Gideon Rachman. Sending arms to Russia would send tensions with Washington into overdrive.3. EXCLUSIVE: Private credit groups are set to write the largest direct loan on record, with Apollo, Ares and Blackstone confident they can land a deal to help Carlyle acquire 50 per cent of healthcare analytics company Cotiviti, sources said. Read the full story. 4. Oil companies are lining up for billions of dollars in subsidies under Joe Biden’s US climate law, taking advantage of generous incentives to plough cash into projects to capture and lock away carbon dioxide, to retool refineries for making biofuels, and produce low-emission hydrogen. Read more here.5. Chinese companies are choosing Switzerland to raise money, shunning the US due to geopolitical tensions and Britain over tougher audit standards. Find out how Chinese companies raised nearly seven times the capital in Zurich as in New York last year.The Big Read

Disposable e-cigarettes at a recycling plant © Amit Lennon/Material Focus/Recycle Your Electricals

Electronic cigarettes have cemented their status as a less harmful way of consuming nicotine — but at a big cost to the environment. Tonnes of electronic waste are being produced, with critical metals inside the disposable “vapes” more likely to be dumped than recycled.We’re also reading and watching . . . El Salvador’s mega prison: The country’s penal experiment will set records for overcrowding by design, an FT investigation has found, with only 0.6 sq metres of cell space for each of its 40,000 prisoners.African superheroes: Local publishers are mining the continent’s forgotten stories and challenging western narratives.🎬 Legend of Sam: Regulators, venture capitalists and celebrities — everyone fell for it. In this film, we explore the collapse of Bankman-Fried’s FTX.Chart of the dayChina’s political leadership announced an unambitious 5 per cent growth target this weekend, despite optimism following three years of closures. Why has Beijing set its lowest goal in decades? Read our analysis to find out.

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Take a break from the newsWhile the Academy of Motion Picture Arts and Sciences hems, haws and nervously assembles a crisis team ahead of awards night on March 12, FT readers can have their say now via our new Oscars voting tool. Cast your ballots below. (Ball gowns and black tie optional.)

Additional contributions by Tee Zhuo, Emily Goldberg and David Hindley More

“It’s clear from the calculations being done to date that the damage figure presented by the government and supported by…international partners would be in excess of $100 billion,” said the UNDP’s Louisa Vinton, by video link from Gaziantep.More than 52,000 people were killed in Turkey and Syria by the Feb. 6 earthquakes, with many being crushed or buried in their sleep. The provisional damage figure, which Vinton said covers just Turkey, is being used as a basis for a donor conference to mobilise funds for earthquake victims in Brussels, Belgium on March 16, she added.The World Bank previously estimated the Turkey damage at around $34.2 billion. Vinton described the scenes in Turkey’s worst-hit Hatay province as “apocalyptic”, saying hundreds of thousands of homes have been destroyed. “The needs are vast but the resources are scarce,” she added. More