Aurelia Butler

The Bank of Canada has been trying to simplify its public outreach for a number of years, publishing videos and plain-language explainers of monetary policy.”The best way to keep Canadians’ expectations on inflation low is to get inflation back to target,” Rogers told the Globe and Mail. “But in the meantime, we think that the more Canadians understand what we’re doing, and why we’re doing it, the more trust they’ll build in the Bank of Canada.”The Bank of Canada hiked interest rates to 3.25% from 2.50% earlier this month, to their highest level in 14 years, and signaled its most aggressive tightening campaign in decades was not yet done as it battles to tame inflation.”The scenario that we’re worried about is that Canadians look at the current rate of inflation, they think it’s here to stay, they start incorporating that thinking into long-term decision making,” the newspaper quoted Rogers as saying in a news conference after the rate hike. More

BANGKOK (Reuters) -Thailand’s economy is expected to grow by 3% to 3.5% this year and 3% to 4% next year, helped by increased exports and a pickup in the vital tourism sector after reopening the country to visitors, the finance minister said on Saturday.The Southeast Asian country expects eight million to 10 million foreign tourist arrivals this year, having received five million so far this year, Arkhom Termpittayapaisith told a Radio Thailand programme.That is far above last year’s 428,000 visitors when the economy grew 1.5%, among the slowest in the region. In 2019 before COVID-19, there were nearly 40 million foreign tourists.Thailand’s recovery has lagged others in the region due to a slow recovery in the tourism sector, which typically accounts for about 12% of gross domestic product.”Our economic recovery is slow but stable,” Arkhom said.Exports should increase 10% this year, boosted by a weak baht, and continue to support the economy next year, alongside tourism and government investment, he said.The government reported on Saturday the jobless rate dropped to 1.3% in July, its lowest since the start of the pandemic, from 1.4% in June.Thailand’s definition of unemployment is narrow, however, and analysts say the figures do not catch its significant unofficial economy. More

It said an increase in private consumption and higher capacity utilisation rates had helped private-sector capital expenditure reach one of its highest levels in the last decade.Business investment has been encouraged by government spending which climbed 35% in April-August compared to the same period a year ago, the report said, adding that tax revenue growth for the government had been buoyant.The report also said high levels of foreign exchange reserves, sustained foreign direct investment and strong export earnings have provided a reasonable buffer against monetary policy normalisation in advanced economies and the widening of the current account deficit arising from geopolitical conflict.The Reserve Bank of India on Friday forecast the country’s current account deficit would remain within 3% of gross domestic product in the current fiscal year to March 2023 and said it was “eminently financeable”.India is in a better position to calibrate its liquidity levels without abruptly stalling growth, the report said, adding that inflationary pressures in the country appear to be declining. But it also said that in winter months, geopolitical tensions could climb amid a heightened international focus on energy security and that could test “India’s astute handling of its energy needs so far.” “In these uncertain times, it may not be possible to remain satisfied and sit back for long periods. Eternal macroeconomic vigilance is the price for stability and sustained growth,” it added. More

If Jay Powell is the most powerful central banker in the world you would not know it by his pay cheque. Even the worst-paid chief is in no position to lecture workers about curbing wage demands, though inflation-linked settlements have central bankers badly rattled. Powell collects the same $226,000 salary as the secretary of state, attorney-general and other top officials. That is modest by comparison with central banking peers let alone the near-$100mn that JPMorgan Chase boss Jamie Dimon took home last year. But it is a multiple of the average US wage. Powell would be tin-eared if he called on workers to tighten their belts. The Bank of England’s Andrew Bailey whipped up a storm in February when he advised workers to rein in wage demands, especially when he later told MPs he could not remember his exact salary. His basic pay is £495,000 or $730,000 at purchasing power parity exchange rates. That puts Bailey near the top of a league table of central bankers’ pay. Swiss National Bank’s Thomas Jordan is the highest paid in nominal terms, collecting almost $1mn last year. Switzerland, though, is a pricey place to live. If salary is measured as a multiple of average earnings, Jordan slips behind Bailey. Top of the rankings using that measure is the Bank of Italy’s Ignazio Visco, who earned almost 18 times the average Italian worker. That was the case even after Mario Draghi’s efforts to curb excessive pay when he ran the bank up to 2011. Agustín Carstens of the Bank for International Settlements squeezes into the middle of the pack. The BIS, the central banker’s bank, is particularly anxious about workers protecting living standards with index-linked pay deals. Wage indexation is less common than in the past. So is union membership. Those factors lessen the risk of a self-reinforcing wage-price spiral. But labour markets are tight. Businesses with pricing power will be able to pass wage increases on to customers. Central bankers wanting to earn their keep need to crack that conundrum, rather than chastise workers asking for more. More

Supermarkets in Spain are in the line of fire over inflation as the country’s deputy leader wages a campaign to press shops into cutting prices in an effort to help struggling families.Yolanda Díaz, one of Spain’s deputy prime ministers and a contender for the top job, has intensified a political battle over living costs by pushing big supermarkets to offer an affordable “basket” of 20 to 30 staples.Food and energy inflation sparked by the war in Ukraine is stretching family budgets across Europe and leaving governments struggling to limit the damage. Spain is hit especially hard because its relatively low average salaries mean people spend a higher proportion of their income on basics.In an interview with the Financial Times, Díaz said: “Families are telling me they’re only giving their kids pastas and rice. They can’t access fish or meat. The fruit is very expensive. For a family that has two or three kids, it’s extremely complicated. That’s the urgent issue this country has.”She said retailers had a duty to cut prices to help consumers, not least because the government had used public funds to support them and other businesses during coronavirus pandemic lockdowns.“They have profit margins that permit them to reduce their profits a little and contribute to their country,” she added. “If they don’t act in this grave moment for Spain, the reputational risk for them is very high.”Consumer price inflation stood at 10.5 per cent in Spain in August but prices of food and drink rose 13.8 per cent year-on-year, the biggest increase since the data series began in 1994, according to official figures this week. Milk inflation is running at 26 per cent.Yolanda Díaz, Spain’s deputy prime minister, said retailers had a duty to cut prices to help consumers © Juan Carols Hidalgo/EPA-EFE/ShutterstockDíaz, a longstanding member of the Communist party, stressed that she was not proposing legislation or state-mandated price controls, but was instead pushing for an “agreement” between business and government to ensure the prices of good-quality basic goods are accessible. Her efforts have run into firm opposition. The supermarket sector says they are unhelpful even as Díaz invites its representatives for more meetings next week. Spain’s competition regulator, meanwhile, put out a statement recalling that fixing maximum prices between companies is prohibited by national and EU law.In addition to being criticised by the reliably hostile opposition People’s party, Díaz has also been upbraided by members of her own coalition government.Díaz, who is also labour minister, is one of Spain’s most watched politicians. She is a junior partner in the government led by Socialist prime minister Pedro Sánchez, but has already signalled a potential challenge to him in elections next year by launching a new political movement called Sumar.Commenting on her move, Sánchez this week said there was a need for shared responsibility in business. “We have to have a balanced analysis between what the production chain represents and, logically, retail.” Ignacio García Magarzo, head of Asedas, a group representing supermarkets and distributors, acknowledged the “grave” cost challenge facing companies and consumers but said Díaz’s proposal was “not useful for solving the problems”. He added that her analysis of profit margins in the food supply chain was not scientific.García Magarzo said trying to press only the biggest supermarkets into action created unwarranted division in the sector. It failed to recognise the fragmented nature of much of Spanish retail and risked leaving shoppers who did not have access to the largest chains abandoned.He called on the government to instead temporarily slash or eliminate sales tax to tame inflation — and noted that Germany reduced its sales tax in 2020.The only supermarket to go some way towards complying with Díaz has been the Spanish branch of Carrefour, which said it would offer a basket of 30 “essential” products for €30 until January — replicating something it has been doing in France since June.The products include Carrefour-branded canned food, pasta, cooking oil and coffee along with a selection of drugstore items and cleaning materials.But after its announcement, Díaz said: “The basket has to contain products that are fresh — meat, fish, fruit, vegetables and dairy products.” Spain’s other big chains are Mercadona, Lidl and Dia.Agriculture minister Luis Planas, a member of Sánchez’s Socialist party, rebuked his fellow cabinet member, citing the need to protect smaller retail chains. “We must avoid price wars that would lead to a restructuring of the sector that is not in anyone’s interest,” he said.Defence minister Margarita Robles accused Díaz of straying into an area beyond her ministerial remit. “I know that [Díaz] does it with the best will, but there are technical and economic aspects that need to be known.”Farmers across the continent are under immense pressure because of the surging cost of energy and fertiliser, which adds to the difficulty of keeping prices low. Alberto Núñez Feijóo, leader of the People’s party, said: “We have seen once again the frivolity with which people’s important issues are treated. The meat, dairy and vegetable producers can no longer cope because they have to pay more for everything . . . Not taking into account that producers can no longer manage seems to me to be the opposite of any reasonable proposal from the government.”  More

NEW YORK (Reuters) – A tough year in markets is leading some investors to seek refuge in cash, as they capitalize on higher interest rates and await chances to buy stocks and bonds at cheaper prices.The Federal Reserve has roiled markets in 2022 as it implements huge rate hikes in an effort to moderate the steepest inflation in 40 years. But higher rates are also translating into better rates for money market funds, which had returned virtually nothing since the pandemic began in 2020.That’s made cash a more attractive hideout for investors seeking shelter from market gyrations – even though the highest inflation in forty years has dented its appeal. Fund managers increased their average cash balances to 6.1% in September, the highest level in more than two decades, a widely followed survey from BofA Global Research showed.Assets in money market funds have stayed elevated since jumping after the pandemic began, coming in at $4.44 trillion as of last month, not far from their peak of $4.67 trillion in May 2020, according to Refinitiv Lipper.”Cash is now becoming a viable asset class because of what has happened to interest rates,” said Paul Nolte of Kingsview Investment Management, who said the portfolios he manages have 10 to 15% in cash versus less than 5% typically.”It gives me the opportunity in a couple months to look around in the financial markets and redeploy if the markets and the economy look better,” said Nolte.Investors are looking to next week’s Fed meeting, at which the central bank is expected to enact another jumbo rate hike, following this week’s consumer price index report that came in hotter than expected.The S&P 500 fell 4.8% in the past week and is down 18.7% this year. The ICE (NYSE:ICE) BofA U.S. Treasury Index is on pace for its biggest annual drop on record.Meanwhile, taxable money market funds had returned 0.4% so far this year as of the end of August, according to the Crane 100 Money Fund index, an average of the 100 largest such funds. The average yield in the Crane index is 2.08%, up from 0.02% at the start of the year and the highest level since July 2019.”They are looking better and their competition is looking worse,” said Peter Crane, president of Crane Data, which publishes the money fund index.Of course, sitting in cash has its drawbacks, including the possibility of missing a sudden reversal that takes prices for stocks and bonds higher. Inflation, which stood at 8.3% on an annual basis last month, has also dented the appeal of cash.”Certainly you are losing some purchasing power with inflation running at 8-plus percent, but… you are taking some money off the table at a risky time for equity markets,” said Peter Tuz, president of Chase Investment Counsel. “Your equities could be down 8% in two weeks.”While an obvious sign of caution among investors, extreme levels of cash are sometimes viewed as a so-called contrarian indicator that bodes well for equities, said Mark Hackett, Nationwide’s chief of investment research, especially when taken in concert with other measures of investor pessimism.Hackett believes stocks may stay volatile in the near-term, amid various risks including potential earnings weakness along with high inflation and the hawkish Fed, but he is more upbeat about the outlook for equities over the next six months.”There’s a degree of a coiled spring developing where if everybody is already on the sidelines at some point there is nobody left to go on the sidelines and that leads you to potentially any piece of good news resulting in a very outsized move,” Hackett said. David Kotok, chief investment officer at Cumberland Advisors, said his U.S. equity portfolio made up of exchange-traded funds is currently 48% in cash after being almost fully invested in equity markets last year.Stocks are too expensive given risks including rising interest rates, the potential for a Fed-induced recession and geopolitical tensions, Kotok said.”So I want cash,” Kotok said. “I want the cash to be able to deploy back into the stock market at lower prices or substantially lower prices, and I don’t know which opportunity I’ll have but the only way I can seize it is to be holding that amount of cash.” More