Aurelia Butler

SYDNEY (Reuters) – Australia’s central bank is finally getting a major shake-up of its policy-making process that adds extra uncertainty to when it might deliver interest rate relief to hard-pressed borrowers.Long-delayed reforms to the Reserve Bank of Australia (RBA) passed parliament late on Thursday after the ruling Labor government secured support from Greens lawmakers, bypassing objections from the main Liberal National opposition.The changes, which were recommended by an independent review in 2023, include splitting the current RBA board into two groups with one dedicated to monetary policy and the other focusing on the central bank’s governance and operations.Analysts are assuming the new monetary policy committee would have some new members, perhaps changing the outlook for interest rate cuts. The current board has held rates at 4.35% for an entire year and signalled there was little chance of easing in the near term, even as many other developed world peers have slashed rates.”While our base case remains for the RBA to start cutting rates in February, the changes raise the uncertainty around the RBA’s reaction function going forward given potential new board personnel,” said Goldman Sachs economist Andrew Boak.The monetary policy committee (MPC) will retain the present structure of six external members appointed by the treasurer and three ‘ex officio’ members comprising the RBA governor, deputy governor and treasury secretary.Governor Michele Bullock has indicated some of the current board members might move to the MPC and others to the governance committee. The reforms recommended the new MPC have members with expertise in monetary policy, macroeconomics and the labour market, among other areas. They will formally vote at board meetings and the overall vote will be published, and members might choose to give public speeches.Speaking at a media conference on Friday, Treasurer Jim Chalmers said the new format would be introduced some time after the RBA’s board meeting on Feb. 18, and likely by March 1.Chalmers said he would consult with the opposition on his choices for the new board, saying the candidates would be “first class and first rate”.The opposition had blocked the reforms in part arguing that Chalmers could pick appointees friendly toward the government.The RBA has already adopted some of the recommendations from the review, including having fewer but longer policy meetings and holding a press conference after each decision.The central bank will maintain its dual mandate of maintaining price stability and full employment. It aims to keep inflation in a target band of 2%-3% over time, with a focus on the mid-point of 2.5%.Headline consumer price inflation did slow sharply to 2.8% in the September quarter but mainly due to temporary government rebates on electricity bills.Core inflation, however, remained stubbornly high at 3.5% and Bullock has repeatedly stated the board will not ease policy until it is confident this measure will return to the mid-point of its 2%-3% target range. More

Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldCanada’s government is to bolster its investment in border security after Donald Trump threatened to impose steep tariffs over illegal immigration and drug smuggling across the US-Canada frontier.Prime Minister Justin Trudeau met Canada’s provincial leaders late on Wednesday to agree a united response to the US president-elect’s pledge this week to impose 25 per cent tariffs on all products from Mexico and Canada, which he said would remain in place “until such time as drugs, in particular fentanyl, and all illegal aliens stop this invasion of our country”.After the meeting with Trudeau, Canada’s public safety minister Dominic LeBlanc said: “We believe that there is a circumstance where we can make additional investments to reassure Canadians that all of the measures necessary are in place and will continue to be in place”, although he declined to say how much extra money the federal government would make available. The US-Canada border is the longest in the world, stretching nearly 9,000km across land and water. Security on land is light; there are few walls or fences and in places it is marked by simple stone markers along residential streets. While major road crossing points have checkpoints, the boundary is largely controlled by mobile patrols, leaving it vulnerable to smugglers of migrants, drugs and weapons. Washington’s incoming border tsar, Tom Homan, said in a television interview earlier this month that “Canada . . . can’t be a gateway to terrorists coming to the United States”. “It’s an extreme national security vulnerability on the northern border, and it’s one of the things I’ll tackle,” he added.A stone bollard making the US-Canada border on a pavement in Stanstead, Quebec More

Starlink, the satellite unit of SpaceX, operates in several African countries but has faced regulatory challenges in others and resistance from state telecom monopolies.Starlink has submitted an application for a telecommunications service license in Namibia, however the regulator has not issued the license as the application is under review.”Following an investigation, CRAN has established that Starlink is operating a network within Namibia without the required telecommunications license,” CRAN said in a statement.”On 26 November 2024, the Authority issued a cease-and-desist order to Starlink, instructing the company to immediately cease all operations in Namibia.”SpaceX did not immediately respond to a request for comment.The regulator also advised the public not to purchase Starlink terminal equipment or subscribe to its services, as such activities are illegal in Namibia.Its investigators have already confiscated illegal terminals from consumers and have opened criminal cases with the Namibian Police in this regard, it added.Earlier this year, Cameroon ordered the seizure of Starlink equipment at ports as it was not licensed. More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.The spirits business suffered a humdinger of a hangover when the pandemic-era cocktail boom unravelled. Trade wars threaten to make the headache considerably worse. This week US president-elect Donald Trump, who had already mooted tariffs of between 10 and 20 per cent on non-Chinese imports, threatened to put a 25 per cent tariff on all imports from Mexico and Canada on his first day in office. Meanwhile China has slapped duties of up to 39 per cent on EU brandy, in response to levies on Chinese electric vehicles.It is a nasty cocktail for Europe’s drinks companies. Those with tequila brands such as the UK’s Diageo and Italy’s Campari are exposed to US-Mexico tariffs. Diageo also faces higher tariffs on Crown Royal whisky shipped from Canada to the US. Those companies along with Rémy Cointreau and Pernod Ricard, both based in France, would also be hit by tariffs on imports from the EU and UK. For some, the impact would be hard to swallow. Imposing a 25 per cent tariff on US imports from Canada and Mexico and 10 per cent on those from the EU and UK would cut earnings per share for Pernod, Campari, Diageo and Rémy by 3 per cent, 8 per cent, 8 per cent and 19 per cent respectively, according to Deutsche Bank.It might not happen. In 2019, Trump’s tariff threats roiled the market for months but were eventually watered down to cover just single malt scotch and Irish whiskey made in the UK, says Ed Mundy of Jefferies. The industry is lobbying hard on the impact on consumers and hospitality job losses.Chinese tariffs are already proving disruptive. Hennessy, owned by French luxury group LVMH, briefly considered bottling its brandy in China to avoid import tariffs. But it suspended the plan after hundreds of workers went on strike. Rémy Cointreau is particularly exposed. On Thursday it said the proposed US 10 per cent tariff “is not going to kill us for sure” but acknowledged that the Chinese tariffs were a concern. It plans to cut costs and adjust prices to mitigate the impact, though weak demand will make it hard to pass on extra costs.Even before Rémy feels the hit from Chinese tariffs, its sales this year will drop by more than analysts expected. There are, however, some early signs of stabilisation in the US market. Thursday’s 3 per cent share price rise is a sign that some investors think the fall in the shares — down by 70 per cent since 2021 — has gone far enough. If tariffs are watered down, investors can start to look ahead to a time when the party gets going again. For now, however, the threat of higher duties is a big dampener on high spirits. [email protected] More

LONDON (Reuters) – French borrowing costs effectively matched those of Greece on Thursday for the first time, as Michel Barnier’s government teetered on the brink of collapse, underlining a dramatic shift in how lenders view the creditworthiness of euro zone members.Far-right and leftist opposition parties have been threatening to bring down Barnier’s government over its budget that includes 60 billion euros ($63 billion) in tax hikes and spending cuts.Bond investors worry that the collapse of the government would mean any effort to cut borrowing is jettisoned.”A no-confidence vote would reset the progress made with the current budget proposal and trigger a new period of political limbo,” said Michiel Tukker, senior European rates strategist at lender ING.In the middle of the euro zone sovereign crisis in 2012, Greece’s borrowing costs, as measured by its 10-year bond yield, shot to more than 37 percentage points above those in France, as Greece looked destined to default on its debts.Fast forward 12-1/2 years and Greek debt on Thursday morning traded within 0.02 percentage points of France at around 3%.France’s rising debt levels have been slowly eroding its advantages in the bond market for years. Then, the risk premium investors demand to buy French debt compared to its neighbours shot higher in June when President Emmanuel Macron called a snap election that resulted in a fragile hung parliament.Meanwhile, the countries once at the centre of the 2012 crisis and labeled the PIGS – Portugal, Italy, Greece and Spain – have cut their debt levels and become more attractive to bond investors.Greek public debt was already running at 100% of GDP before the euro zone crisis and surged to more than 200% as COVID-19 hit in 2020. But it has since fallen to around 160% of GDP and economists expect it to continue to fall. French debt is historically elevated at 112% of GDP and rising. The state has spent heavily in response to the shocks of COVID-19 and the Ukraine war, while tax receipts have lagged expectations. “Even if the government did achieve its planned consolidation, France would still have a pretty elevated budget deficit,” said Max Kitson, rates strategist at Barclays (LON:BARC).”If you look at Greece’s debt-to-GDP profile, you have a downwards trajectory which contrasts with France’s upwards trajectory.”Similar efforts to rein in debt – as well as years of bond purchases by the European Central Bank – in Ireland, Portugal and Spain have seen those countries’ borrowing costs fall below those of France.On the plus side for France, its bond yields have not risen sharply in absolute terms and are in fact down around 16 basis points since the start of the month.Friday evening will prove a test, when S&P Global Ratings will update its assessment of France, after Fitch and Moody’s (NYSE:MCO) downgraded their outlooks on the country last month. More