Aurelia Butler

The European Central Bank has said it intends to raise its deposit rate to minus 0.25 per cent at its meeting on July 21, while signalling a bigger raise is likely in September to take the rate above zero for the first time in a decade, followed by further increases if inflation remains high. The ECB is looking at ways to stop banks earning billions of euros of extra profit from the ultra-cheap €2.2tn of subsidised loans it provided during the pandemic once it starts to raise interest rates later this month. But with the central bank now planning to raise rates, it is set to provide a bonanza of extra earnings worth up to €24bn for eurozone lenders, according to analysts. The ECB’s governing council is due to discuss how it could curb the extra margin that hundreds of banks will be able to earn from its subsidised loans by simply placing them back on deposit at the central bank, according to three people familiar with the plans. The people said it would be politically unacceptable for the ECB to provide banks with a taxpayer-backed profit while it is raising borrowing costs for households and businesses and most commercial lenders are paying bonuses to staff and distributing dividends to investors. One option could be for the ECB to change the terms of the loans to reduce the chance for banks to make an automatic return on the money, just as it made them more attractive after the pandemic began in 2020. The ECB defended its cheap loans to banks, saying: “Without them the pandemic would have hit the real economy much harder.” It declined to comment on how it could stop lenders making windfall gains.Do you have any feedback on the newsletter? Tell us at [email protected] or by replying directly to this email. Thanks for reading FirstFT Asia. Here’s the rest of today’s news. — SophiaFive more stories in the news1. China’s rise pushes Asia-Pacific nations to embrace Nato In an unprecedented move, Japan, South Korea, Australia and New Zealand joined Nato leaders in Madrid last week to discuss cyber defence and maritime security, motivated by their alarm at Russia’s invasion of Ukraine and the growing might of an increasingly assertive China.2. Brussels pushes for tougher sanctions enforcement Senior Brussels officials are discussing the creation of an EU-wide sanctions authority as they push for more consistent enforcement of penalties related to the war in Ukraine. The EU’s sanctions policy has thus far been hindered by uneven enforcement, since some countries have stronger infrastructure to implement them.3. Chinese hackers kept up hiring drive despite FBI indictment Hackers with suspected links to China’s intelligence agencies were still advertising for new recruits to work on cyber espionage even after the FBI accused Beijing of setting up companies as a “front” for spying operations against western targets. University students were among those lured to work at a secretive tech company.4. Shipping boss says Japan has no choice but to buy Russian gas Because of soaring energy prices and limited prospects of rebooting nuclear plants, Mitsui OSK Lines president and chief executive Takeshi Hashimoto said the country lacked viable alternatives to Russian liquefied natural gas. Meanwhile, the Japanese government asked residents and businesses to conserve energy to avert blackouts.5. Russia claims control of Luhansk region after seizing last city After weeks of brutal fighting, Sergei Shoigu, Russia’s defence minister, reported to Putin yesterday that Russia’s forces had “liberated” the entire Luhansk region after capturing Lysychansk, Ukraine’s last stronghold in the area. The advance puts Russia closer to capturing eastern Ukraine’s Donbas border region.The day aheadAmerican Independence Day The US observes a federal holiday today to celebrate the anniversary of their separation from Great Britain.Ukraine recovery The international Ukraine Recovery Conference begins in Lugano, Switzerland.What else we’re readingImmune imprinting is driving the debate about Covid-19 vaccines Two years into the coronavirus pandemic, people have acquired very different types of immunity depending on which strains they’ve encountered. This spectrum requires a broad response, and presents a challenge for the next generation of Covid vaccines.

Biden administration split on whether to remove China tariffs President Biden suggested he was in no rush to remove Trump-era tariffs on more than $300bn of Chinese imports when he entered office. But as inflation has soared to 8.6 per cent, the White House is debating whether lifting some tariffs would provide relief to US consumers even amid the fraught politics of China trade issues.Have we had enough of the nanny employer? Employers became very conscientious about attending to staff wellbeing during the pandemic, particularly mental health, often delving into matters that were previously viewed as personal. But have they encroached too far into our personal lives?China’s self-styled Warren Buffett haunted by Fosun’s $40bn debt Chinese billionaire Guo Guangchang, whose global empire includes French resort group Club Med and Portugal’s biggest bank, is back in the spotlight and facing an immense challenge after a sudden sell-off in property bonds put scrutiny on a liquidity crunch and $40bn debts at his expansive conglomerate.Can crypto contagion infect mainstream finance? The cryptocurrency market carnage has had one silver lining: the broader financial system has been spared. Here’s why most regulators and industry heavyweights believe banks and asset managers are protected.Food & drinkFrom glass bottles to linen napkins, freshly cut flowers to sandwiches for everyone — here’s how to host the perfect plastic-free picnic.

A selection of picnic sandwiches © Adrianna Glaviano More

The White House and Jeff Bezos have renewed a spat over Joe Biden’s management of high inflation as the Amazon founder criticised the US president for calling on companies to cut prices at filling stations. On Saturday, Biden demanded on Twitter that companies managing gas pumps decrease soaring fuel prices at “a time of war and global peril”. “Bring down the price you are charging at the pump to reflect the cost you’re paying for the product. And do it now,” he wrote.Later that day, Bezos posted in a tweet in response that inflation was “far too important a problem for the White House to keep making statements like this”.“It’s either straight ahead misdirection or a deep misunderstanding of basic market dynamics,” said the world’s third-richest person.Karine Jean-Pierre, White House press secretary, fired back on Sunday, writing on Twitter that oil prices had fallen approximately $15 in the past month while prices at gas pumps had “barely” dropped, adding it was a sign the market was “failing the American consumer”. She added: “But I guess it’s not surprising that you think oil and gas companies using market power to reap record profits at the expense of the American people is the way our economy is supposed to work.” It was not the first pointed exchange between Bezos and the White House. The billionaire lashed out in May at the Biden administration over the failed Build Back Better bill, which he believed could exacerbate inflation.The proposed legislation aimed to increase taxes on affluent individuals and large companies to help fund spending on education, childcare and schemes to fight climate change. The sharp rise in prices, which Biden has mainly blamed on Russia’s invasion of Ukraine, has become a hot-button topic in US politics ahead of midterm elections in November. It has also exacerbated tensions between corporate America and some Democratic lawmakers, who have accused companies of price-gouging. But most economists argue that several factors have contributed to inflationary pressures, including a post-coronavirus pandemic bounce, bottlenecks in supply chains and government stimulus generating high demand, as well as the Ukraine war.

The spat between Bezos and the White House came as the businessman has ramped up his previously rare use of Twitter after stepping down as chief executive of Amazon last year. John Kirby, the National Security Council’s strategic communications co-ordinator, said he took “great exception” to accusations of misdirection when asked on Fox News Sunday about Bezos’s comments.Kirby added that the president had spoken honestly about efforts to bring gas pump prices down, including releasing 1m barrels of oil from the country’s strategic reserves.Kirby added that before Russia’s invasion of Ukraine, Biden had been clear that supporting Kyiv would not be “cost-free to the American people”.  More

BUENOS AIRES (Reuters) -Argentine President Alberto Fernandez held meetings and telephone calls on Sunday as he scrambled to find a new economy minister, official sources said, after the abrupt exit of ally Martin Guzman shook the country’s center-left government.By Sunday afternoon there was still no sign of a successor. “No news,” a government spokesperson told Reuters.Guzman, 39, submitted his resignation late on Saturday amid rising tensions within the ruling Peronist coalition over how to handle economic crises that have been exacerbated by Russia’s invasion of Ukraine and sky-high inflation.The shock exit has brought deep-seated splits in the government to the surface, threatening to force a sharp shift in direction as factions battle over how to manage the economy.”We are facing a complex political crisis, deepened by the fight for power,” said Rosendo Fraga, a political analyst.Fernandez has yet to publicly address the resignation of Guzman, a moderate who had served as economy minister since the president took office in late 2019. Guzman was the driving force behind major debt restructurings with local and international creditors, and was key to sealing a new $44 billion deal with the International Monetary Fund (IMF) this year to replace a failed 2018 program. Fernandez’s choice for successor will be an important signal on the likely direction of economic policy over a tightly controlled foreign exchange market, ongoing debt deals and trade. Argentina is a major exporter of soy, wheat and corn.Goldman Sachs (NYSE:GS) analyst Alberto Ramos said the departure of Guzman was a political blow to Fernandez, already facing slumping support in opinion polls ahead of elections next year, and may compromise the relationship with the IMF.”A politically weaker and unpopular presidency would increase the risk that macro policy could turn more heterodox and interventionist,” he wrote in a note, adding that FX and other local markets would likely remain under pressure.Guzman had come under fire from the militant wing of the ruling coalition around powerful Vice President Cristina Fernandez de Kirchner, which has been pushing for more state spending to support hard-hit Argentines.He had been balancing that pressure with the need to cut a deep fiscal deficit, which had become tougher amid soaring energy import costs that have hit foreign currency reserves.Economist Joseph Stiglitz, Guzman’s mentor and a close ally, said the minister has done a strong job to resolve a debt crisis left by the previous government and revive growth after the pandemic, but splits in the government made things untenable.”His deep principles made it impossible for him to continue in office without a commitment of the government to a united, integrated and coordinated approach to the enormous challenges facing the economy,” Stiglitz said. More

Turkish authorities have detained a Russian cargo ship accused of carrying stolen grain from Ukraine, a senior Ukrainian diplomat said, as Ankara faces growing pressure from Kyiv to take action over the looting of its resources.Vasyl Bodnar, Ukraine’s envoy to Ankara, said on Sunday that the Russia-flagged Zhibek Zholy had been prevented from entering the port of Karasu on northern Turkey’s Black Sea coast.“We have full co-operation with the Turkish side,” he told Ukrainian television. “The ship has been arrested at the entrance to the port.”Bodnar said Turkish authorities would decide on Monday how to deal with the vessel, which is the first cargo ship to be loaded at the port of Berdyansk, on Ukraine’s Azov Sea coast, since it was occupied by Russian forces earlier this year.“The fate of the ship will be known tomorrow,” he said.The Zhibek Zholy is the first known cargo vessel to have departed from one the newly seized ports for a destination outside Russia. Local Russian authorities heralded its departure as marking the reopening of the commercial port.

A senior Ukrainian government official in Kyiv confirmed the Turkish move, saying the arrest was “part of international co-operation in criminal matters”.Russia’s Tass news agency reported that the ship had been denied entry to Karasu. Turkey’s foreign, trade and transport ministries did not respond to requests for comment.Ukraine’s prosecutor-general asked Ankara last week to halt the ship, whose departure from Berdyansk was described by Bodnar as an attempt to “violate Ukraine’s territorial integrity”. Ukraine has accused Moscow of stealing grain from land occupied by Russian forces, and of using occupied ports to ship it out of the country to sell on international markets. Turkish authorities, who control the Bosphorus and Dardanelles straits that connect the Black Sea to the Mediterranean, have previously appeared reluctant to take action against ships that Ukraine has said were carrying stolen grain, even as some of the vessels have docked at Turkish ports and their shipments sold to Turkish buyers.Ankara has previously argued that, with some ships using falsified paperwork to suggest they were loaded in Russia rather than occupied Ukrainian territory, it is technically difficult to determine the true origin of their cargo. The Zhibek Zholy’s last acknowledged port of call was at Novorossiysk, a Russian harbour on the Black Sea’s north-eastern coast. President Recep Tayyip Erdoğan has performed a difficult balancing act since the outbreak of the conflict between Turkey’s Black Sea neighbours. While his country is a Nato member that has supplied Kyiv with armed drones and limited Russian military access to its waters and airspace, the Turkish president has also sought to avoid angering Moscow, which is an important partner for Ankara on energy, trade and tourism — as well as in conflicts in Syria and Libya. Turkey has, however, engaged in intense diplomacy along with the UN in a bid to establish a grain corridor to ensure safe passage for around 20mn tonnes of wheat currently trapped in Ukraine that must be exported before the summer harvest. Officials in Kyiv have warned that unless Russia ends its blockade of Ukraine’s Black Sea ports, the country’s grain exports — almost 15 per cent of the world’s total — could be in peril, raising the threat of global food shortages.Last week, Ukraine’s trade envoy and deputy economy minister told the Financial Times that Russia was using the blockade to assert dominance over global commodity markets. Kyiv has said it cannot accept Moscow’s terms for ending the blockade, which include granting the Russian navy the right to inspect ships entering and leaving Ukrainian ports. On Thursday, Russian forces withdrew from Snake Island, a strategic outpost close to Black Sea shipping lanes, following heavy bombardment from Ukraine. The move prompted hopes that the blockade would soon be broken.Russia described its withdrawal from Snake Island as a “gesture of goodwill”, but launched deadly missile strikes on a town close to the Odesa port the following day, killing 21 people. More