Aurelia Butler

The second-highest ranking official at the International Monetary Fund, Geoffrey Okamoto, will step down early next year and be succeeded by the fund’s chief economist Gita Gopinath, months after the organisation’s top leadership weathered a major scandal.The IMF on Thursday announced the surprise exit of Okamoto, who was appointed first deputy managing director in March 2020, and named Gopinath, who has served as the fund’s chief economist since 2019, as his replacement.Gopinath, who was expected to return to her position at Harvard University, will assume the role on January 21.“Both Geoffrey and Gita are tremendous colleagues — I am sad to see Geoffrey go but, at the same time, I am delighted that Gita has decided to stay and accept the new responsibility ,” said Kristalina Georgieva, the once-embattled managing director of the IMF, in a statement. “She is the right person at the right time . . . I value highly her sound judgment, good counsel, and unwavering support.”The transition comes after Georgieva was accused in September of manipulating data to benefit China while at the helm of the World Bank — charges she repeatedly denied. The IMF executive board opted to retain her in October after extensive deliberations and affirmed it had “full confidence” in her ability to carry out her responsibilities.In a statement released on Thursday, Okamoto, who previously served in the Treasury department during the Trump administration, said he would be returning to the private sector. More

BEIJING (Reuters) -Advisers to China’s government will recommend authorities set a 2022 economic growth target below the one set for 2021, giving policymakers more room to push structural reforms amid growing challenges to the outlook.Investors are closely watching for clues on next year’s policy and reform agenda as President Xi Jinping and other top leaders hold the annual Central Economic Work Conference due this month.Three advisers told Reuters they have drafted recommendations for annual economic growth targets ranging from as low as 5% to 5.5%, ahead of the closed-door conclave, down from the “above 6%” target set for 2021. “Ideally, we should have growth of 5-5.5% or around 5.5% next year,” one of the advisers said.”It’s necessary to maintain economic stability next year as we unveil a new leadership, and we need some counter-cyclical policies to cope with economic pressures.”Another of the advisers, from a top government think tank, recommended a target of above 5% for next year.The advisers make policy proposals to the government but are not part of the final decision-making process. It was not known when the recommendations would formally be made. The advisers spoke on condition on anonymity.A Reuters poll in October showed economists expect China’s growth to slow to 5.5% in 2022, but some analysts have since trimmed forecasts on fresh risks such as a deteriorating real estate sector. The new Omicron coronavirus variant is also seen adding risks.Separately, Liu Yuanchun, vice president of Renmin University, said last month China should target growth of around 5.5% next year to help create 12 million new urban jobs.Top leaders traditionally endorse a growth target at the December meeting, which is then publicly announced at the opening of the annual parliament meeting, usually held in March.The world’s second-largest economy faces multiple headwinds heading into 2022, due to a property downturn and strict COVID-19 curbs that have impeded consumption.The economy, which staged an impressive rebound from last year’s pandemic slump, has lost momentum in recent months as it grapples with slowing manufacturing, massive property market debt and new COVID-19 outbreaks.Policymakers are likely to boost monetary and fiscal support next year to help the slowing economy, having focused on fending off real estate bubbles this year.”We expect the macroeconomic policy stance to ease in response to the downward pressure on growth,” Louis Kuijs at Oxford Economics said in a note.”Policymakers remain keen to contain financial risks and leverage, and have become more tolerant to reduced growth. However, in our view Beijing still cares deeply about growth and wants to avoid a sharp slowdown.”At last year’s economic work meeting, leaders vowed to use the recovery to focus on structural reforms. Setting a modest growth target of “above 6%” for 2021 in March – well below the over 8% rate forecast by analysts at the time – gave policymakers more room to make ostensibly painful but necessary economic changes.REFORM RESOLVEXi’s reforms are aimed at reducing economic reliance on property and debt, channeling more resources into high-tech manufacturing and creating a greener, more equal economy.  But regulatory crackdowns on tech, education and entertainment have raised questions about the future of China’s private sector growth.Last month, China’s ruling Communist Party approved a rare resolution elevating Xi’s status, consolidating his authority and prospects of a third leadership term next year.”As President Xi Jinping has secured an unprecedented third term, we expect his ambitious reforms to continue. His ‘New Development Concept’ puts less emphasis on economic growth,” ANZ said in a note, forecasting a wider target range of 4.5–5.5%.But some analysts believe new pressures could limit the near-term scope for reform.Hu Yifan, regional chief investment officer and chief China economist at UBS Global Wealth Management, said this week she expects the central bank to cut reserves banks are required to hold by Lunar New Year, in early February.Following a broad-based cut to reserve ratios in July, the central bank has since defied market expectations for further policy easing.China is likely to unveil a new property tax pilot in several major cities next year, with potential candidates including Shenzhen, Hangzhou and Haikou, according to analysts.Beijing hopes a property tax could help cool housing speculation, create new sources of government revenue and reduce China’s yawning rich-poor gap. More

WASHINGTON (Reuters) – The International Monetary Fund on Thursday named its chief economist Gita Gopinath to become its second-ranking official, replacing First Deputy Managing Director Geoffrey Okamoto who will leave the global lender in early 2022.Gopinath had been scheduled to leave the global lender to return to Harvard University in January, but decided to stay on in the wide-ranging policy role under IMF Managing Director Kristalina Georgieva, the IMF said.Georgieva said Gopinath was “universally recognized as one of the world’s leading macroeconomists” and had precisely the expertise needed for the No. 2 job, given the increased macroeconomic challenges facing IMF member countries as a result of the COVID-19 pandemic.”Indeed, her particular skill set — combined with her years of experience at the Fund as Chief Economist – make her uniquely well qualified. She is the right person at the right time,” Georgieva said.She said the IMF would realign some roles and responsibilities in its senior management team, with Gopinath to oversee surveillance activities, and research and flagship publications, while working to “foster the highest quality standards for Fund publications.”The United States, the largest shareholder in the IMF, welcomed the pick of Gopinath, and the move to restore job responsibilities that had been shifted under Okamoto, a source familiar with Treasury’s thinking said.Gopinath, the first woman to serve as the fund’s chief economist, has played a key role in broadening the role of the IMF’s research department, creating a new analytical approach to help countries respond to international capital flows, and also worked on a detailed IMF plan to end the pandemic, she said.Okamoto said he would return to the private sector after over a decade of “intensive public service,” but gave no details about his next position.A dual citizen of the United States and India, Gopinath is due to start her new role on Jan. 21, shortly after the IMF releases an update to its World Economic Outlook. The IMF board is expected to approve the move in coming weeks.The leadership changes come on the heels of an independent report commissioned by the World Bank, which claimed Georgieva, then the CEO of the World Bank, and other senior officials had pressured World Bank staff to alter data to favor China.The IMF executive board cleared Georgieva of any wrongdoing in October, but U.S. Treasury Secretary Janet Yellen said Washington viewed the allegations as legitimate and serious, and demanded the IMF take proactive steps to ensure the integrity of IMF data and protection of any whistleblowers. More

(Reuters) -Federal Reserve policymakers on Thursday sounded sanguine about the economic impact of the latest COVID-19 variant, but flagged rising inflation in remarks that suggested growing consensus for an earlier end to bond buys and, perhaps, earlier interest rate hikes next year.Atlanta Fed President Raphael Bostic told the Reuters Next conference on Thursday it would be appropriate to end the central bank’s bond-buying program by the end of March to allow the Fed to raise rates to deal with inflation. The Fed, which began tapering its bond-buying last month at a pace that would end the program by June, is set to consider compressing that timeline when policymakers meet on Dec. 14 and 15.With robust growth, an improving job market and inflation more than twice the Fed’s 2% target, “I think having this finished some time before the end of the first quarter would be in our interest,” Bostic said. And if inflation continues as high as 4% through next year, as some forecasters project, “there’s going to be a good case to be made that we should be pulling forward more interest rate increases and perhaps even do more than the one I’ve penciled in.” Only half of Fed policymakers in September thought the Fed should start raising rates next year, with the rest expecting the first rate hike in 2023. Since then, several appear to have moved their rate hike expectations earlier. After this week’s hawkish Fed commentary, rate futures traders now see the first Fed rate hike in May.Though the new Omicron variant’s severity and transmissibility will determine how afraid people are, Bostic said each successive wave of COVID-19 has led to milder economic slowdowns. If that holds, the economy will continue to grow through it, he said. Bostic is hardly the Fed’s lone hawkish voice. Earlier this week, Fed Chair Jerome Powell said he wants a faster taper timeline on the table at this month’s meeting. Bostic said he doesn’t see “tension” between the Fed’s two goals of price stability and full employment at the moment. Once the Fed does start raising rates, he said, it will likely do so at a “slow and steady” pace. Though if inflation does not recede as expected over the next year or two, it may need to “take more strident steps” to rein it in, he said.But other Fed policymakers appear increasingly worried they may need to put the brakes on growth before the labor market has fully healed and millions of unemployed Americans find jobs. “If we didn’t have higher inflation readings, you might let the economy go a little bit more to see if we can get through COVID and have those individuals come back,” said San Francisco Fed President Mary Daly, who as recently as last month was calling for “patience” in the face of high inflation. “Right now, we’re dealing with inflation that’s above our target and inconsistent in its current readings with our longer run views on price stability,” Daly said during a virtual event held by the Peterson Institute for International Economics. “We have to deal with that.” Speaking alongside Daly at the Peterson event, Richmond Fed President Thomas Barkin said it is important for the Fed to keep long-run inflation expectations anchored. “I do take seriously actual inflation and its impact, and that’s why I’m supportive of normalizing policy as we’re doing,” he said.HAWKISH STANCEFed Governor Randal Quarles, in his final public appearance before leaving his post this month, took an even more hawkish stance. He said at an American Enterprise Institute event he believes “sustained higher demand” is stoking inflation and the Fed should “constrain that demand” to allow supply chains to catch up. Given strength of economic data, “I certainly would be supportive of moving the end of the taper forward,” he said. If inflation is still over 4% by next spring, the Fed would have to consider rate hikes, he said. The Omicron variant could prolong some of the supply chain challenges. “On the supply side, it means the inflationary pressures will probably persist even longer,” Kristin Forbes, an economics professor at MIT’s Sloan School of Management, told the Reuters Next conference. To watch the Reuters Next conference please register here https://reutersevents.com/events/next/   More