Aurelia Butler

(Reuters) -British inflation slowed sharply last month and key price gauges watched by the Bank of England also fell, bolstering bets on a November interest rate cut and helping finance minister Rachel Reeves before her first budget.Annual consumer price inflation eased to 1.7% in September from 2.2% in August, the lowest reading since April 2021 and driven down by lower airfares and petrol prices, the Office for National Statistics said.A Reuters poll of economists had pointed to a reading of 1.9%.Sterling fell by four-fifths of a cent against the U.S. dollar and fell sharply against the euro too.Interest rate futures showed investors were putting a 90% chance on two BoE quarter-point rate cuts by the end of this year, up from a roughly 80% chance on Tuesday.”Today’s release removes another potential obstacle to the Monetary Policy Committee voting for a 25bps rate cut at its November meeting,” said Martin Swannell, chief economist adviser to the EY ITEM Club consultancy. “The key question now is whether the MPC will step up the pace of rate cuts at subsequent meetings, and this scenario would likely require further good news on pay growth and inflation.”Data on Tuesday showed British pay grew at its slowest pace in more than two years in the three months to August and vacancies fell again.Britain’s finance ministry welcomed the fall in inflation, which offers a helpful backdrop for Reeves as she readies her first budget, due on Oct. 30.A less inflationary outlook would slightly improve the economic and fiscal outlook for the budget as Reeves struggles to find the extra money to invest in public services and new infrastructure without spooking investors.Her spending plans will be watched closely by the BoE.CORE INFLATION COOLS “Though the stars are aligning  for a November rate cut, the upcoming Budget is the final hurdle as rate setters will want to assess the inflationary impact of any measures announced before loosening policy again,” said Suren Thiru, economics director at ICAEW, an accountancy body.September’s inflation reading is also used as a base month for many social benefits. Wednesday’s weaker-than-expected reading may disappoint recipients, although it could offer Reeves a little extra leeway for her budget plans.Core inflation, which excludes energy, food, alcohol and tobacco, slowed to 3.2% from 3.6% in August.Services inflation – which the BoE views as the most important gauge of domestically-generated price pressure – sank to its lowest since May 2022 at 4.9% in September, down from 5.6% in August. However, the drop reflected a plunge in air fares, which are a volatile component of the inflation basket – something the BoE will take into account next month.The BoE had not expected services inflation to fall below 5% this year in forecasts it published in August, and the reading was below all expectations in the Reuters poll. There were also signs of weaker inflation pressure ahead. Prices charged by factories for their goods fell by 0.7% in the year to September, the biggest fall since October 2020, during the COVID pandemic. More

This article is an on-site version of our Moral Money newsletter. Premium subscribers can sign up here to get the newsletter delivered three times a week. Standard subscribers can upgrade to Premium here, or explore all FT newsletters.Visit our Moral Money hub for all the latest ESG news, opinion and analysis from around the FT Welcome back. At a breakfast hosted by Morningstar Sustainalytics yesterday in London, analysts cautioned against inflated expectations for next week’s COP16 UN biodiversity conference in Colombia.“This is probably the third year in a row where we’ve been expecting a big breakout moment for biodiversity investing,” Lindsey Stewart, director of stewardship research, told attendees. However, he predicted, “we’re not going to be quite at that big breakout moment yet”.Morningstar has identified just 34 equity funds or ETFs focused on biodiversity — all of them in Europe — that represent just $3.7bn in assets, said sustainability research head Hortense Bioy. That’s compared with $530bn in climate funds and ETFs Morningstar tracks globally. There was one biodiversity fund in the US, Bioy said, but it closed.Meanwhile, with Moral Money Americas under way today in New York City, I have a story that bucks a persistent narrative that developing countries are energy transition laggards. — Lee Harrisrenewable energy In poorer nations, renewable power is getting its moment in the sun For years, the buildout of solar and wind power in the developing world has lagged behind richer nations. Renewables’ high upfront capital costs have held back investment, even though many countries in the global south are sunny, energy-hungry, and less burdened with legacy fossil fuel infrastructure.But renewables in many emerging markets are now achieving lift-off. Solar and wind power, measured both by energy generated and as a share of total electricity generation, is growing faster in the global south than in the global north, according to a new study by energy consultancy RMI.Over the past five years, renewable energy generation has grown at a compound annual rate of 23 per cent in the global south, versus 11 per cent in the world’s richest economies. RMI defines the global south as Africa, Latin America, south and south-east Asia, and excludes China and the major fossil fuel exporters in Eurasia and the Middle East.Seventeen per cent of energy demand in the global south comes from countries where the solar and wind share of electricity generation is higher than that in the world’s richest economies. These countries include Mexico, Brazil and Morocco.Importantly, these findings compare rates of growth, not total generation capacity installed. (This makes sense, since many developing countries started their energy transitions more recently, and are therefore starting from a lower base.) While the global south is not yet adding more renewable power than rich economies in absolute terms, RMI expects that trend to flip by the end of this decade, largely due to the drastic cost decline in renewable technology.“Even with the lack of commitment from the global north, in terms of their funding for the global south, this technology is very much in the money,” RMI report co-author Vikram Singh told me. “It’s boom time in the global south” for green energy, he said.The bullish projections are due, first and foremost, to Chinese investment in renewables, which has created economies of scale that are making these technologies more affordable globally. The cost of solar and battery technologies halved in 2023, RMI said, making them cost-competitive in middle-income markets such as Brazil and India.But disparities in the cost of capital haven’t evaporated. Investors continue to ascribe higher risk to the global south. In 2022, the weighted average cost of capital for a 100-megawatt solar project in South Africa, Vietnam, Brazil or Mexico was about 11 per cent, while in advanced economies it was about 5 per cent, according to the International Energy Agency.Where the global south’s solar boom has arrived, it is despite development banks’ failed promise to deliver trillions more in blended public and private-sector finance for sustainable development.Despite those persistent challenges, Singh said, “I don’t think that the narrative is any longer that the global south is begging for global north dollars and intervention.”In Vietnam, solar energy will hit “capex parity” in 2024 with coal, RMI found using BloombergNEF data, meaning that the upfront cost of solar buildout will be equal to that of coal.Some regions have even outpaced China’s rate of renewables penetration. Latin America hit the same share of electricity generation from solar and wind as China — and grew more quickly after securing an initial foothold where it provided 0.5 per cent of generation.Some content could not load. Check your internet connection or browser settings.It’s not only falling costs that are driving deployment. The global south could actually achieve a faster energy transition than richer economies, RMI argues, for a few reasons:Richer countries went first: By installing solar and batteries when they were more expensive, more developed countries ate some costs and ironed out the kinks in deployment.More sun: Many developing countries are closer to the equator, meaning more intense sunlight.Less steel in the ground: Many emerging markets have less legacy fossil fuel infrastructure to deal with — and less of an entrenched fossil fuel lobby.Finally, RMI thinks the global south has a geopolitical edge in the transition: developing countries are more open to sourcing the cheapest renewable technologies, which overwhelmingly come from China. By contrast, trade tensions could drive up the cost of the transition in the west.EU member states agreed earlier this month to impose tariffs of up to 45 per cent on imports of Chinese electric vehicles, and the US has said it plans to raise its own tariff to 100 per cent.Efforts to block Chinese technologies such as EVs are “unfortunate”, Singh said, since they “take away from competition and further growth of the sector”. Plus, he said, they made it more likely that China would supply the next generation of energy technologies to the global south.Further challenges await. In addition to commitments to deploy new clean energy at the UN’s COP conference in Dubai last year, countries also pledged to double energy-saving efforts by 2030. Without focusing on efficient use of energy, Singh said, we are pouring more energy supply into “a leaking bathtub”.Smart readGlobal insurers are almost universally opting to include a low-carbon transition goal in their investment plans, Brooke Masters reports.Recommended newsletters for youFT Asset Management — The inside story on the movers and shakers behind a multitrillion-dollar industry. Sign up hereEnergy Source — Essential energy news, analysis and insider intelligence. Sign up here More

WINDHOEK (Reuters) -Namibia’s central bank cut its main interest rate for the second meeting in a row on Wednesday, saying inflation had fallen surprisingly quickly and that the economy needed more support.Its Monetary Policy Committee (MPC) unanimously decided to cut the repo rate by 25 basis points to 7.25%, the same size of cut as at August’s meeting.”The MPC noted the growing momentum in the international monetary policy easing cycle, the retreat in domestic inflation over the medium term, along with the recent downside surprise in the September 2024 inflation print,” Bank of Namibia Governor Johannes !Gawaxab said in a statement accompanying the decision.Annual inflation in the southern African country fell to 3.4% in September , a steep drop from the 4.4% posted in August.The central bank on Wednesday revised down its average inflation forecast for this year to 4.3%, versus a 4.7% forecast given at its last meeting.It attributed the revision to a more favourable outlook for international oil prices and a stronger domestic exchange rate.The bank said private sector credit extension remained subdued, suggesting that further support to the domestic economy was warranted.”The domestic economy, while growing at a moderate pace, was operating below full capacity,” !Gawaxab said.Growth is projected to slow to 3.1% in 2024, compared to 4.2% in 2023.On a $750 million Eurobond redemption due in late 2025, the central bank governor said Namibia had already set aside 82% of the $500 million it wants to retire at maturity. The government still hopes to refinance the remaining $250 million, !Gawaxab said. More

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(Reuters) -Republican presidential candidate Donald Trump on Tuesday defended his protectionist trade policies and other fiscal proposals, dismissing suggestions that they could drive up the federal debt, antagonize allies and harm the U.S. economy.“We’re all about growth. We’re going to bring companies back to our country,” the former president said in a sometimes-tense interview at the Economic Club of Chicago.The interviewer, John Micklethwait, editor-in-chief of Bloomberg News, cited projections by budget analysts that Trump’s plans would add $7.5 trillion to the federal debt through the year 2035, more than twice that of policies favored by Trump’s Democratic opponent in the Nov. 5 election, Vice President Kamala Harris. Trump maintained that his trade policies – which call for pricey tariffs on goods not only from rivals such as China but allies such as the European Union – would revitalize American manufacturing and yield enough revenue to ease concerns about ballooning the deficit. “To me, the most beautiful word in the world is ‘tariff,'” Trump said.In a later all-women Fox News town hall event in Atlanta, taped for broadcast on Wednesday, Trump said he would work toward more tax breaks for lower-income Americans.”W­­­e’re going to readjust things so that it’s fair to everybody, because it’s really not fair to everybody,” he said. “It’s unfair to some people and we’re not going to have that.”Some trade experts have argued Trump’s proposed tariffs could damage the U.S. economy, jeopardize jobs and drive up consumer prices. “All you have to do is build your plants in the United States, and you won’t have any tariffs,” Trump said. “I agree it’s going to have a massive effect, a positive effect, not a negative.”Trump reiterated that he would levy a high tariff on vehicles assembled in and imported from Mexico – as high as 200%, he said. And he said he would impose duties on imported cars from countries such as Germany in order to force foreign companies to manufacture their products in the U.S. When Micklethwait told Trump those efforts might annoy allies the U.S. needs to compete against China, Trump responded by saying, “Our allies have taken advantage of us more than our enemies.”As president from 2017 to 2021, Trump imposed punitive tariffs on imported washing machines, solar panels, steel, aluminum and goods from China and Europe. Trump’s sit-down with Micklethwait was a departure from typical interviews on his economic plans, which involve more friendly broadcasters, such as Fox News’ Maria Bartiromo and Larry Kudlow, who served as Trump’s top economic adviser in the White House. A supportive crowd in the room often cheered his comments and booed some of Micklethwait’s questions.Trump appeared to back away from previous comments that as president, he should be able to exert control over the Federal Reserve.”I think I have the right to say I think you should go up or down a little bit,” Trump said, referring to setting interest rates. “I don’t think I should be allowed to order it, but I think I have the right to put in comments as to whether or not the interest rates should go up or down.”He didn’t answer when asked whether he would remove Fed Chair Jerome Powell.WEIGHING INThe interview covered a wide range of topics beyond the economy, with Trump characteristically refusing to directly answer some questions, changing the subject, indulging in extended tangents and criticizing Micklethwait. Asked if he had spoken with Russian President Vladimir Putin since leaving the White House, Trump said: “I don’t comment on that, but I will tell you that if I did, it’s a smart thing. If I have a relationship with people, that’s a good thing, not a bad thing.”He did not respond directly when asked if the U.S. would defend Taiwan if it were invaded by China.”The reason (China is) doing it now is they’re not going to do it afterward,” he said.Asked if he would try to break up tech giant Alphabet (NASDAQ:GOOGL)’s Google, Trump suggested it was “rigged” against him and said, “I’d do something.” Trump again defended his actions in the wake of the 2020 election and refused to say whether he would accept the 2024 election results and agree to a peaceful transfer of power should he lose.He insisted there was a peaceful transfer of power after his 2020 loss, shrugging off the events of Jan. 6, 2021, when his supporters stormed the U.S. Capitol to halt certification of the election. Four participants died during the chaos and five police officers died afterward, some by suicide.”It was love and peace and some people went to the Capitol and a lot of strange things happened there,” Trump said. More

“The median was for … 50 basis points more, above and beyond the 50 basis points that was done in September. My dot was 25 basis points more,” Bostic said at an event in Atlanta.Bostic said, however, that his projection is not fixed in stone, and he will adjust it as needed in response to incoming data on inflation and the job market.”I am keeping my options open,” he said.The Fed last month cut rates by 50 basis points in the first of what is expected to be a series of reductions over the next year to remove some of the policy restraint it imposed to lower inflation. More