Aurelia Butler

OTTAWA (Reuters) -The Bank of Canada said on Monday it has appointed a professor of applied economics at HEC Montreal to be a non-executive deputy governor and the sixth member of its policy-setting governing council for a two-year term, starting in March.Nicolas Vincent was named to take on its fourth deputy governor role, the bank said in a statement published on its website, filling the post vacated when Timothy Lane retired in September. In August, the bank said it would seek an external candidate for the revamped post in order to find “fresh and diverse perspectives.” It said the new deputy governor would work part time, or 50-70% of full-time hours.On Monday, the bank said that Vincent will “maintain his affiliation with HEC Montreal.”Vincent is also co-chair of the Business Cycles and Financial Markets research theme at CIRANO (Centre Interuniversitaire de Recherche en Analyse des Organisations), and has been a visiting faculty member and researcher at Columbia Business School, INSEAD, the Banque de France and the Kellogg (NYSE:K) School of Management. Bank of Canada Governor Tiff Macklem called Vincent “an accomplished scholar and teacher with deep expertise in macro and microeconomic research.””I have no doubt that his broad knowledge of monetary economics combined with his keen interest in public policy will be invaluable in helping the Bank navigate the policy challenges ahead,” Macklem said in the statement.Adding an external voice to the governing council comes as the central bank faces rising public criticism after it misjudged inflation and was seen as having acted too slowly to respond to fast-rising prices, forcing it to hike interest rates sharply. More

Venezuela’s inflation is estimated to have reached 305% last year, according a nongovernmental group of economists who calculate indicators in the absence of official data. The government has not adjusted the salaries of public- sector employees since March last year, part of efforts to reduce spending and increase taxes which allowed Venezuela to emerge from hyper-inflation.But in the second half of last year demand for foreign currency outstripped the weekly supply of dollars made available by the central bank and the bolivar depreciated further. The minimum monthly salary for a public school teacher is about $10, while university professors earn between $60 and $80. “Our salaries are peanuts. I earn 460 bolivars a month (about $23),” said Odalis Aguilar, a 50-year-old teacher who marched in the city of Maracay. “We need a living wage.” In the central state of Carabobo, teachers and public employees also held demonstrations, saying salaries do not cover the cost of food and medicine. “Our food is carbohydrates, no protein, few vegetables, it is very basic,” said Reina Sequera, a professor at the University of Carabobo and the main breadwinner in her family of three. “We can’t even afford acetaminophen.”Economic strife is caused by sanctions imposed on the government by the United States, ruling party Vice President Diosdado Cabello said in comments aired on state television.Teachers also marched in the western states of Zulia and Lara.Over the weekend the government paid public employees a bonus equivalent to $29.80. Dozens of teachers also marched in San Cristobal, capital of border state Tachira.The bonus “does not reach $30. Is that what Maduro lives on? You’re throwing us crumbs,” said Gladys Chacon, president of the Tachira College of Teachers. More

LONDON (Reuters) – Bank of England Governor Andrew Bailey questioned the need for a digital pound on Monday just as euro zone finance ministers backed further preparatory work on a digital euro.Britain is due to launch a public consultation in coming weeks on what should be the legal attributes of a digital pound – if it was decided to go ahead and launch one – which backers say would mean faster transactions.Bailey told parliament’s Treasury Select Committee on Monday that he was not sure if a digital pound was needed for now.The Bank is updating its real-time gross settlement system (RTGS), which holds the accounts of Britain’s banks, building societies and other institutions at the BoE.”I think it’s an open question whether a wholesale digital central bank currency is needed because we’ve got a wholesale central bank money settlement system with a major upgrade,” Bailey said.Bailey was also cautious about a digital pound for retail use such as for making payments, adding there is no plan to abolish cash.”We have to be very clear what problem we are trying to solve here before we get carried away by the technology and the idea,” he said.He was not convinced that retail payment systems “need this sort of upgrade at the moment”.Meanwhile, euro zone finance ministers on Monday said they backed continued preparatory work for a potential digital euro, now being studied by the European Central Bank.The EU is due to publish a draft law this year on how a digital euro would fit into the bloc’s laws.”The Eurogroup considers that the introduction of a digital euro as well as its main features and design choices requires political decisions that should be discussed and taken at the political level,” the ministers said in a joint statement.A digital euro should complement, and not replace cash, and an “offline functionality” should be explored to serve a wider range of uses and contribute to financial inclusion, the ministers said. More

Today’s top storiesGerman defence minister Christine Lambrecht quit after a series of gaffes, sparking fresh uncertainty about the country’s response to Russia’s invasion of Ukraine.Chinese authorities gave ride-hailing group Didi permission to sign up new customers, indicating that Beijing’s crackdown on internet giants is drawing to a close as it tries to revive economic growth.US drugmakers AbbVie and Eli Lilly became the first big pharma groups to pull out of a pricing agreement with the UK after a sharp rise in the levy on branded medicines.For up-to-the-minute news updates, visit our live blogGood evening,Marks and Spencer’s announcement this morning of 20 new stores is a vote of confidence in Britain’s beleaguered high streets after their battering during the pandemic.The £480mn investment, which will create 3,400 new jobs, makes bricks and mortar locations an important part of the company’s future and “serves as a competitive advantage for how customers want to shop today”. M&S will accelerate plans to close older stores and increase the number of food halls, as well as expanding digital services and click-and-collect. The news comes amid better than expected results from the country’s big retail chains in the crucial fourth-quarter trading period, which showed the country’s shoppers flocking back to high streets despite rising prices and the pressures of the cost of living crisis.Next, JD Sports and B&M have all upgraded profit forecasts after a successful Christmas, while M&S reported its largest share of the clothing market in eight years as well as improved sales in its food division.The King’s grocer Fortnum & Mason added to the positive comments emanating from the retail sector by announcing today that it had returned to profit. Fortnum’s said it was also likely to benefit from a range of merchandise launching ahead of the coronation of King Charles, which it predicts will be popular with international shoppers.“The channel shift [back to stores] has been a benefit for the biggest retailers,” said Lisa Hooker, head of UK consumer markets at PwC. “The online share of sales is now only a year ahead of where it would probably have been had Covid never happened.” Shop sales also generally mean higher profit margins than online because the customer bears the cost of “last mile” transport and the running costs of stores are largely fixed.But challenges lie ahead for the sector. A large rise in the UK’s statutory minimum wage in April, higher energy costs and questions over whether inflation has peaked all remain challenges. But factory gate prices and freight rates are falling and big chains such as Next will also benefit from changes to business rates announced in the Autumn Statement.The Lex column offers a note of caution for investors, arguing that frothy festive trading updates were not evidence that consumers were splashing out but that they were simply “swallowing last year’s inflation pill so as not to cancel Christmas”. Despite paying more at the till, Lex points out, they still brought home less than last year. Need to know: UK and Europe economyIn the UK it’s a big week for Brexit (yes, it’s not done yet), with talks about resolving the impasse over Northern Ireland’s trade relations and the government’s proposed bonfire of thousands of EU laws.A think-tank report with a foreword from a former Tory minister calls for the current UK government to prioritise the revival of manufacturing to reduce regional disparities after the shortlived Liz Truss administration ditched a planned industrial strategy.Russian export earnings from fertiliser soared 70 per cent last year as prices increased after its invasion of Ukraine. Food and fertiliser are exempt from western sanctions to protect food security, especially for poorer countries. Russian grain shipments have also returned to prewar levels.Need to know: Global economyGlobal business and political leaders are meeting in Davos against a backdrop of economic uncertainty and companies facing multibillion-dollar writedowns on recent acquisitions. Register here for the free Davos Daily Show, hosted by senior FT business writer Andrew Hill, at midday GMT from January 17-19.China’s fourth-quarter and full-year GDP figures are published tomorrow and are likely to again fall short of government growth targets. Here are five things to watch. The FT editorial board says China’s reopening has crucial implications for growth and inflation around world. Hong Kong is also hoping reopening can help it retain its status as a global financial centre.In the meantime, wealthy Chinese people are increasingly viewing Singapore as a safe long-term home for their money because of its political and economic stability and rising status as Asia’s financial hub, as our Big Read explains. Is the golden age of shale energy, which “vaulted the US back to the top of the table in terms of geopolitical significance”, now over? And if so, what does it mean for the rest of the world? Here’s another detailed Big Read.Peru declared a state of emergency in the capital Lima and three other regions as protests against President Dina Boluarte spread. Dozens of people are now dead as a result of the unrest, which was triggered by the ousting and arrest of leftist former president Pedro Castillo in early December.Need to know: businessBain Capital is preparing to list Virgin Australia, one of the most high-profile company collapses of the pandemic, as the aviation sector rebounds. Aircraft leasing company Avolon forecast a return to profitability for the global airline industry this year and that air traffic would hit pre-pandemic levels by June. An emissions-free start up called for more subsidies to encourage the switch to electric-powered planes.Microsoft’s potential $10bn investment in research group OpenAI, which last month grabbed headlines with the launch of its ChatGPT system, could become the defining deal for a new era of artificial intelligence, changing the way people interact with computers.Social media platforms are expecting user numbers to fall from age checks in the UK’s online safety bill, which goes through its final stages in parliament this week. Culture secretary Michelle Donelan is considering making tech bosses criminally liable if they fail to protect children online.In countries like China and Japan, demographic changes mean a new age of mass loneliness is dawning. Asia business editor Leo Lewis ponders what this means for investment strategies.The World of WorkA growing number of UK companies are changing their youth-first approach and targeting over 50s for key roles, writes economics correspondent Delphine Strauss.South Korea has the worst gender pay gap among OECD countries for the 26th year in a row. Just 55 per cent of the country’s women are in the workforce, compared with 74 per cent for men, even though they have the highest educational attainment among their peer nations.Few businesses disclose the pay of individuals — and for good reason, argues the Lex column. Apart from causing resentment, transparency has the effect of holding back overall worker income, it says.Will the office of the future look more like a home, dressed down and filled with dogs and lounges? Or more post-industrial and nightclubby, all steel beams and ducts? Architecture critic Edwin Heathcote seeks clues from the past.And what kind of add-ons might be available? Yoga, nail bars and beehives are some of those on offer at City of London law firms as they try to retain and attract staff. One partner said: “If I hear the phrase ‘Ottolenghi-style brasserie’ one more time I might kill someone.” Some good newsA laser beam pointing into the sky could divert lightning strikes, in what scientists have said was the most significant advance in lightning protection technology since Benjamin Franklin invented the metal conducting rod in the mid-18th century.Laser vs lightning: the laser beam firing beside the Swisscom transmitter tower on Mount Säntis in Appenzell © Martin Stollberg/TRUMPF More

The Federal Reserve should “stick to its knitting”: that was the verdict delivered last week by Jay Powell, the US central bank chair, who stated that the Fed is “not a climate policymaker and never will be”. He argued that exceeding its remit to pursue “social benefits that are not tightly linked to our statutory goals” would risk the central bank’s independence. Such a position puts the Fed at odds, at first blush, with other major central banks such as the European Central Bank and the Bank of England. Both have prioritised the fight against climate change and taken steps to “green” their corporate bond holdings. Powell is correct. But this does not make the ECB or BoE wrong. The essential thing is for independent central banks to stick to the remits they have been given by elected lawmakers. That is particularly true when their citizens are facing a cost of living crisis. Powell is right to fret that any additional duties that could distract from the task of ensuring price stability might jeopardise its independence. That freedom was granted to enable central bankers to take sometimes unpalatable decisions to raise interest rates to fight inflation, free from political considerations or pressure. In truth, there is no real transatlantic schism on this point. The ECB, Fed and BoE all agree that the main proponents of policy when it comes to the climate emergency must be elected governments — something lawmakers ought to keep in mind. Central banks cannot be expected to be green policymakers through the back door.Powell does concede that there is a valid, albeit narrow, role for the Fed in fighting climate change. As the BoE and ECB have done, the Fed’s banking supervisors also try to ensure that lenders’ balance sheets are resilient against the financial damage that climate change can wreak, be it from extending mortgages to homes on flood plains, or a sudden “fire sale” of brown assets. Such scrutiny is entirely proper when it comes to central banks’ duty to protect financial stability.But it is around their monetary policy obligations where there is a divergence on climate change, or indeed on any other “social benefits”, as Powell puts it. Financial stability is intertwined with monetary policy: instability in the former can affect the transmission of the latter. But monetary policy is central banks’ bread and butter. The Fed’s mandate is tightly defined by Congress to support maximum employment, stable prices and moderate long-term interest rates — no more, no less. While the BoE and ECB both have similar primary objectives, they also have sweeping secondary aims — as long as these do not interfere with their overriding duty to ensure price stability. In both instances, those secondary objectives expressly lay out a duty to combat climate change: in 2021 the BoE’s remit changed to include supporting the government’s ambition to achieve net zero by 2050. Meanwhile, the ECB is statutorily expected to support the general economic policies of the EU, from full employment and “social progress” to improving the environment. Even if the way in which the ECB and BoE are interpreting those objectives is debatable, the fact that they are acting to tackle climate change is appropriate under their respective legal frameworks.The biggest transatlantic divergence is political. Powell is operating in an environment where progressives call on the Fed to do much more, while Republican lawmakers have accused it of over-reach. The ECB and BoE are freer in that respect. That may change, if they lose control of inflation. For now, they are also sticking to their knitting; it just happens that the patterns they are following are different. More

Chief executives have become increasingly concerned that their businesses will fail over the next decade, despite signs of improvement to the economic outlook for this year. The pandemic, energy crises, a war in Europe and heightened geopolitical tensions have left business leaders low on confidence, with a large portion of those surveyed by global accounting firm PwC saying they needed to become more resilient. Some 40 per cent of the 4,410 CEOs polled by the firm late last year said they did not see their own companies as viable in 10 years if they stayed on their current path. The pessimism among business leaders towards the end of 2022 contrasts with better than expected data on the global economy in recent weeks. Instead of the widely predicted world recession, growth figures for major economies such as the UK and Germany have come in higher than expected, while inflation has fallen from the multi-decade highs witnessed in many economies last year. Economic conditions continued to improve on Monday as chief executives and world leaders gathered in the Swiss mountain resort of Davos for the World Economic Forum, with European wholesale gas prices falling below €60 per megawatt hour for the first time since September 2021. Jean Marc Ollagnier, European chief executive of Accenture, the consultancy, said: “Most European CEOs are optimistic about the year ahead.” Bob Moritz, global chair of PwC, said that, while a mood of “inordinate optimism” before Russia’s invasion of Ukraine had turned into “excessive pessimism” before the turn of the year, business leaders were increasingly focusing on the changes needed to become more resilient in the longer term. “Chief executives are thinking, ‘can I move with the speed necessary?’,’’ Moritz said. “They worry: ‘I kind of know what the issues are but can I survive in the next five years and thrive in the next 10’.”Nearly six in 10 said they did not personally spend enough time on strategic questions such as enhancing their company’s technological capabilities, raising skill levels among staff, building resilience into supply chains and decarbonising their operations. Ollagnier said there was a need for European companies in particular to improve technology and “reinvent their business”. So far in 2023 there has been an unexpected resilience in economic data. China’s decision to end its zero-Covid policy and the fall in European gas prices have led some economists to upgrade their projections for 2023. Wholesale food prices have also fallen sharply since reaching a peak last spring. A survey of chief economists by the World Economic Forum reinforced the improvement in sentiment, with two-thirds expecting the economic conditions to improve during 2023. Although the business environment was still challenging, they pointed to an easing of supply chain disruptions, resilient labour markets and an easing in inflationary pressures as reasons for greater optimism.A majority still thought the world would slip into recession due to challenging conditions at the start of the year, any downturn to be shortlived with growth accelerating later in the year. More

US Treasury secretary Janet Yellen will meet her Chinese counterpart Liu He in Zurich this week, in a surprise move that signals Washington and Beijing’s commitment to improving ties between the two nations despite simmering tensions over trade and Taiwan.The US Treasury said that Yellen would meet vice-premier Liu He, China’s finance minister, in Switzerland on Wednesday morning, ahead of her planned 10-day trip to Africa, during which Yellen intends to entice nations on the continent away from their financial ties to Beijing and Moscow.It will be the first in-person meeting for Yellen and Liu, who have spoken virtually three times.Relations between the US and China plunged to a multi-decade low last summer after Beijing launched large-scale military exercises around Taiwan following then House Speaker Nancy Pelosi’s visit to Taipei.Both sides say their positions on the island remain unchanged, with Beijing insisting that Taiwan remains at the core of China’s interests and a red line in US-Chinese relations, and Washington saying it will continue to challenge Beijing on any aggressive actions in the region. Despite this, Joe Biden and Xi Jinping have signalled a desire to improve bilateral ties.At their first in-person meeting in Bali in November, Biden and Xi agreed to “maintain communication” on a range of issues, including climate change, economic stability and food security, according to a White House readout of the talks. In addition to Yellen’s newly scheduled meeting with Liu, plans are under way for US secretary of state Antony Blinken to travel to China in early 2023 to continue the dialogue.A US Treasury official said Yellen and Liu would use their meeting to “exchange views on macroeconomic developments and other economic issues as well as deepen communication between the United States and the People’s Republic of China”.The official noted that Biden and Xi had agreed in November to “empower key senior officials to maintain communication”.Yellen is expected to use a 10-day trip to Senegal, Zambia and South Africa beginning this week to deepen US relations with the three democracies in a bid to counter Chinese and Russian influence in the region. She will urge the nations to take a stronger stance against Russia, following Moscow’s invasion of Ukraine.The trip comes days after Yellen confirmed that the US was expected to reach its $31.4tn debt ceiling limit on January 19. She has warned new US House Speaker Kevin McCarthy that the Treasury will need to take “extraordinary measures” to fulfil its payments, adding that the US could be in danger of defaulting on its debt as early as June.Yellen’s trip to Africa is the first of several planned US administration trips to the continent this year, with Biden and vice-president Kamala Harris each expected to make their own visits in 2023. More