Aurelia Butler

Jay Powell did little to dispel expectations on Thursday that the Federal Reserve will deliver a third consecutive 0.75 percentage point rate rise, saying the US central bank needed to act “forthrightly” to ensure elevated inflation did not become entrenched.In his last public remarks before the bank’s policy meeting later this month, the Fed chair doubled down on the hawkish message he delivered at the recent Jackson Hole conference in Wyoming, reiterating that the central bank “has and accepts responsibility for price stability”.“We need to act now, forthrightly, strongly, as we have been doing and we need to keep at it until the job is done,” he said during a moderated discussion at a conference hosted by the Cato Institute.His comments come just days before the scheduled “blackout” period ahead of the next gathering of the Federal Open Market Committee, which is set to be held on September 20 and 21, during which public communications are limited. The blackout begins before the next consumer price index report is released early next week, which economists broadly expect to show an annual inflation rate of 8.1 per cent, down from 8.5 per cent in July.While no official — including Powell on Thursday — has officially endorsed another supersized rate rise, they have in recent weeks emphasised the momentum propelling the economy and resilience of the labour market, which added 315,000 new positions in August alone. Lael Brainard, the vice-chair, cautioned on Wednesday that at some point the Fed will need to consider the risks of overtightening monetary policy, and emphasised it will take time for the effects of the central bank’s actions to filter through to the economy. But she also stressed the Fed must “maintain a risk-management posture” to ensure inflation does not get further out of hand.

Taken together, the recent comments from policymakers have reinforced expectations that the Fed will yet again raise rates by 0.75 percentage points, rather than downshift to a half-point rate rise, in a move that would push the federal funds rate to a new target range of 3 per cent to 3.25 per cent. According to the CME Group, the odds of such move now hover around 86 per cent.Speaking with reporters also on Thursday, Charles Evans, president of the Chicago Fed and a voting member on the Federal Open Market Committee, said he’ll be monitoring wages and whether the “breadth of inflationary pressures” throughout the CPI report is expanding, which would tip the balance towards a 0.75 percentage point rate rise.He supports the benchmark policy rate rising to at least 3.5 per cent in the coming months.Top of mind for Powell and other Fed officials is the cost associated with a situation in which the expectations that households, businesses and market participants have about future price pressures escalate to an extent that they further feed inflationary fears.This dynamic plagued the Fed in the 1970s, forcing then-chair Paul Volcker to aggressively jack up interest rates and crush the economy more than otherwise would have been necessary in order to restore price stability. “The clock is ticking,” Powell said on Thursday. “The longer that inflation remains well above target, the greater the concern that the public will start to just naturally incorporate higher inflation into its economic decision-making and our job is to make sure that doesn’t happen.”Powell reiterated that as the Fed acted to root out high inflation, the labour market was likely to accrue losses as growth slowed. He also called into question whether the pandemic and the war in Ukraine have prompted structural shifts that may mean price shocks going forward are more frequent.When asked about the variety of spending bills either signed into law or championed by the Biden administration, Powell demurred from commenting specifically on any legislation, but warned “our federal fiscal policy is not on a sustainable path, and it really hasn’t been for some time”.“We will need to get back to a sustainable path sooner or later . . . sooner is better than later,” he added. More

LONDON/BERLIN (Reuters) – Britain will cap consumer energy bills for two years and funnel billions to prop up power companies, its new leader Liz Truss said on Thursday in a bid to tackle an energy crisis that has Europe and Russia squaring off in a deepening economic war.European governments are spending hundreds of billions of euros to help consumers and businesses cope with soaring energy bills as the price of gas, already high post the COVID pandemic, went stratospheric in the wake of Russia’s invasion of Ukraine.”This is the moment to be bold, we are facing a global energy crisis, and there are no cost-free options,” Truss told parliament, embarking on a major turnaround after ruling out “handouts” during her campaign to become prime minister.Truss’s package, funded by government borrowing, could cost Britain about 150 billion pounds, rattling financial markets, where the pound is hovering around lows plumbed in 1985.Russia’s invasion of Ukraine has exposed Europe’s reliance on Russian gas with the bloc accusing Moscow of weaponising energy supplies in retaliation for Western sanctions imposed on it over the conflict. Russia blames those sanctions for causing the gas supply problems.European Union energy ministers will meet on Friday to discuss the 27-nation bloc’s response to the crisis, after a mixed initial response to a planned Russian gas price cap that risks provoking Moscow.Just before the EU announced the price cap on Wednesday, Russian President Vladimir Putin threatened to sever all energy supplies if such limits were imposed, warning the West it would freeze like the wolf’s tail in a famous Russian fairy tale.GERMAN SUBSIDIESAs part of measures to shield its economy, Germany plans to subsidise a basic level of electricity usage for households and set aside cheaper power for small and medium-sized businesses, according to measures set out in an Economy Ministry paper seen by Reuters on Thursday.Electricity distributors would be required to grant households a certain electricity quota at a discounted price per kilowatt hour, with a similar contingent planned for small and medium-sized enterprises, the paper said.With Russian deliveries in doubt, Europe has also been on the hunt for alternative sources of gas and delivery routes, with several countries pushing for more liquified natural gas (LNG) import terminals.On Thursday, the Netherlands said the first ship to bring LNG had docked at a new terminal at the Dutch port of Eemshaven.Capacity has been booked by Shell (LON:RDSa), France’s Engie and CEZ of the Czech Republic.Friday’s EU ministerial meeting is not expected to approve any policies, but should make clear which options have strongest support. The Baltic states are in favour of putting a price cap on Russian gas, as do countries that do not rely on Moscow for fuel, including Portugal, diplomats said. Others have warned that unity among EU members would be needed to make it happen. Given the low volumes supplied to Europe – and thus, Moscow’s lower gas revenues – some suggested a price cap would not accomplish much. “It wouldn’t solve anything,” one EU diplomat said.UK SUBSIDIESIn Britain, Truss said average household energy bills would be held at around 2,500 pounds a year for two years, staving off a major price leap expected next month that threatened the finances of millions of households and businesses.She said new methods of supply would also be introduced, with a moratorium on fracking being dropped and new oil and gas exploration licences issued for the North Sea.Separately the Treasury and Bank of England will launch a 40 billion pound scheme to shield energy firms from a liquidity squeeze due to sky-high gas prices.Other countries have set up similar schemes, with Denmark announcing on Thursday that it would provide 100 billion Danish crowns ($13.4 billion) in guarantees to energy firms. Meanwhile, a Russian strategy document, seen by Reuters, showed that Putin’s threat to completely cut off energy supplies could prove to be a double-edged sword for Russia.”A reduction in supplies to foreign consumers will lead to an imbalance in the system, when low prices on the domestic market are offset by export revenue,” said the document, which was discussed at a closed meeting chaired by Prime Minister Mikhail Mishustin in Moscow on Aug. 30. More

Last-mile autonomous delivery has emerged as a focus area for companies as consumers have stuck to ordering meals online from the comfort of their homes even after lifting of COVID-19 lockdowns. Tests with Nuro will begin this fall in Houston, Texas, and Mountain View, California, under a 10-year partnership and the company plans to expand the service to the greater Bay Area. Uber, which aims to have only electric vehicles on its platform in the United States, Canada and Europe by 2030, has also been running tests for autonomous delivery with Serve Robotics that provides sidewalk machines for delivery, and self-driving start-up Motional. Nuro, founded by former lead engineers from Google (NASDAQ:GOOGL)’s self-driving car project, already has partnerships with U.S. retailers such as Kroger (NYSE:KR) and Walmart (NYSE:WMT), as well as restaurant chains including Domino’s Pizza (NYSE:DPZ) Inc and Chipotle Mexican Grill Inc (NYSE:CMG). In the Uber Eats trial, customers will be able to choose driverless delivery as an option when ordering food and groceries. While Uber’s ride-hailing business has recovered from pandemic lows as people resume travel, attend social events and return to offices, its food delivery unit faces risks from restaurant reopenings and rising costs of ordering in. More

By Nick Carey and Ben KlaymanMACCLESFIELD, England (Reuters) – Large corporations are jumping on the “green” bandwagon left and right, which in turn is pushing firms that lease and manage car fleets to convert to electric vehicles (EVs) faster than they had ever thought possible.In late 2020, fleet management company ALD set a to have 30% of its new cars electrified by 2025 – a goal that seemed like a stretch because as recently as 2019 only one in 200 of ALD’s new vehicles was an EV or a hybrid. But corporate clients chasing environmental, social and governance (ESG) goals pushed the leasing giant, a unit of Societe Generale (OTC:SCGLY), past that target in 2021. ALD will likely set a new goal that around 50% of its new vehicles will be either EVs or hybrid models by 2025 as corporations’ hunger for zero-emission options to meet ESG targets keeps growing, Deputy Chief Executive Officer John Saffrett told Reuters. Corporate clients are “all sitting there trying to figure out how they’re going to meet their sustainability objectives,” Saffrett said. “An obvious part of their footprint today that they’re trying to address is their vehicle fleet.”Firms like ALD – which replaces its entire fleet every 42 months – play an important role in the auto industry, buying millions of vehicles globally that also help shape the future of the used car market when they come off lease. ALD also leases cars to both firms and consumers on behalf of some major carmakers including Tesla (NASDAQ:TSLA) Inc and Ford Motor (NYSE:F) Co.According to industry data, leasing has grown as retail sales have fallen – the share of cars bought at retail in Europe fell to 45% in 2021 versus 55% in 2020.BANISHING CARBON FROM SUPPLY CHAIN France-based ALD is taking over Dutch rival LeasePlan, giving it a combined global fleet of around 3.5 million vehicles, as it focuses on scaling up its EV business. Large ALD customers like AstraZeneca (NASDAQ:AZN) Plc have set electrification targets – the drugmaker wants its global fleet of 17,500 vehicles to be fully electric by 2025 – and are pushing carmakers to make those cars greener. That intensifies the pressure on the auto industry to squeeze carbon and other harmful materials out of their supply chains.But electrifying large fleets is easier said than done. A lack of available public charging infrastructure means that for companies with sales representatives who drive long distances, only plug-in hybrids will work for now.”The challenge you have with electrification as a corporate is you can’t just switch drivers on day one,” ALD’s Saffrett said. “You’d love to, but it simply doesn’t work.” In Africa, some parts of Asia and Europe, companies like AstraZeneca also face a lack of available EV or hybrid models. In other areas, where a more rugged pickup truck is needed to reach the doctors served by such companies, suitable EVs are in short supply. AstraZeneca, for instance, has no choice but to buy fossil-fuel models in those regions, said Juliette White, the drugmaker’s head of global sustainability.Around 58% of AstraZeneca’s global fleet are EVs, hybrids or plug-in hybrids.”What we’re absolutely clear about is if there is a plug-in hybrid or EV available, you’re not getting a combustion engine model,” White said at AstraZeneca’s manufacturing site in Macclesfield in Northern England. ‘LOW-HANGING FRUIT’The rush to electrification is intensifying in Europe, where corporations face regulatory pressure to cut carbon footprints. The most immediate focus is on so-called Scope 1 and Scope 2 emissions – those a company generates itself directly and indirectly. AstraZeneca’s fleet, for instance, accounts for just under 17% of its emissions. At German agriculture and pharmaceuticals company Bayer (OTC:BAYRY), its fleet accounts for under 5% of emissions. Bayer is aiming for 30% of its global fleet of 26,000 light-duty trucks, SUVs and sedans to be electric within the next four years. Going electric ticks both of those boxes. “It’s very low-hanging fruit and it’s super easy to focus on your fleet,” said Wolf-Dieter Hoppe, a Munich-based partner at consultancy Arthur D. Little. Passenger cars and commercial vehicles are by far the largest asset class in Europe’s leasing market. According to industry lobby group Leaseurope, in 2020 new vehicle leases totaled 244 billion euros ($249.5 billion), or 69% of all equipment leases.AstraZeneca’s White said large companies are also “pushing for greener and more sustainable EVs … because otherwise what’s the point?”In Europe, EVs can also serve as a marketing tool for companies battling for qualified employees. “Company cars can be a determining factor in the war for talent,” said Piet Briers, Bayer’s head of benefits. “As the availability of zero-emission car models as well as charging infrastructure continue to positively evolve, we see that employees are getting more engaged to opt for sustainable solutions.”But North America is catching up. By 2030, around 40% to 60% of the 1.5 million vehicles Toronto-based Element Fleet Management Corp manages – 75% of which are in the United States and Canada – will be fully electric as businesses pursue ESG goals, said Chief Executive Jay Forbes. Again, though, the availability of suitable models and charging infrastructure will slow the adoption of EVs by corporate customers, he said.”In 2019, I couldn’t get anyone talking about this,” Forbes said. “In 2022, all my clients want to talk about this evolution.”($1 = 0.9780 euro) More