Aurelia Butler

ANTOINE ARMAND, FINANCE MINISTERA relative newcomer to politics, Armand, 33, was first elected to parliament in 2022 on the centrist ticket of Macron’s camp and was re-elected in July’s snap legislative election.In the new parliament, he had been set to head the economic committee in the lower house until Barnier tapped him for the top job at the powerful Ministry of Economics and Finance.Armand is no stranger to “Bercy” as the ministry is often called in France, having joined its elite corps of finance inspectors after graduating in 2018 from the prestigious Ecole Nationale d’Administration – a training college for future senior civil servants that Macron also attended.He will be seconded by Laurent Saint-Martin on budget issues, a delicate portfolio that will report directly to the prime minister, as France struggles to contain a rising budget deficit and contemplates spending cuts and tax hikes.BRUNO RETAILLEAU, INTERIOR MINISTERA conservative senator since 2004, Bruno Retailleau, 63, is known for his hard-right views and is the most senior figure from his Republicans (LR) party to enter Barnier’s government. Retailleau was a driving force behind the party’s shift to the right in an increasingly polarised political landscape, in particular on hot-button issues such as immigration. As leader of the conservative group of senators, Retailleau has criticised Macron’s latest attempts to toughen immigration rules, calling for a much tougher stance that would include constitutional changes allowing welfare benefit cuts. He has also urged tougher policing on left-wing and environmental protesters and opposed Macron’s push to add the right for women to pursue an abortion to the constitution. JEAN-NOEL BARROT, FOREIGN MINISTERBarrot, 41, is promoted to foreign minister after serving as junior minister for European affairs since February 2024. Before that he was Macron’s minister for digital affairs.Barrot comes from a family with a strong political background. His father, Jacques Barrot, was a prominent French politician who served in various ministerial positions and as a European commissioner. He provides essential political balance for the government, hailing from the centrist party of Francois Bayrou, the political veteran whose independent MoDem party Macron needs to keep on his side.BENJAMIN HADDAD, EUROPE MINISTERHaddad, 38, a fluent English-speaker with excellent contacts in Washington, DC, where he spent years working at a think-tank, was first elected to parliament in 2022 under Macron’s party colours.He has been vocal on diplomatic issues and especially the war in Ukraine, having convinced tens of European lawmakers to sign a plea to the U.S. Congress to unlock aid for Ukraine at the end of 2023.SEBASTIEN LECORNU, DEFENCE MINISTERLecornu, a Macron loyalist, remains in his post at the helm of the Defence Ministry.A low-profile minister who started his career in conservative ranks, he was excluded from the Republicans after being named a junior minister in Macron’s government in 2017. More

The Federal Open Market Committee cut its benchmark rate to a range of 4.75% to 5.0%, its first reduction since March 2020, after leaving borrowing costs at a more than two-decade high for over a year. In the past, most of the Fed’s monetary easing cycles were triggered by financial crises that quickly morphed into economy-wide credit crunches, which caused recessions, said analysts at Yardeni Research, in a note dated Sept. 17. Since 1960, the Fed reduced the federal funds rate (FFR) by more than 500 bps during the average easing cycle.So it’s no wonder that the FFR futures market is increasingly expecting another 200 bps of cuts, after Wednesday’s 60 bps cut, over the next 12 months.However, most previous easing cycles started from much higher FFR levels, Yardeni Research added. Additionally, the Fed only cut the FFR by 25 bps three times during the 1995 easing cycle, the most recent soft landing.“In our opinion, lowering the FFR too much too fast could trigger an economic boom, in which real GDP grows at a brisk pace but with higher inflation risks. It could also trigger a 1990s style meltup in the stock market,” Yardeni added. More

In August, consumer price inflation in China hit its fastest pace in half a year, but the data did little to assuage concerns over the state of demand in the world’s second-largest economy. Much of this was due to the fact that food prices — the main driver of the 0.6% uptick in China’s consumer price index compared to a year earlier — were bolstered mainly by inclement summer weather, rather than a more sustainable rebound in domestic demand.Core consumer inflation, stripping out items like food and fuel, came in at 0.3% in August, slowing from 0.4% in July. It was the lowest reading in almost three and a half years.At the same time, producer prices shrank by 1.8% year-on-year, accelerating from a decline of 0.8% in the prior month.Prolonged deflation presents a potential danger to the economic outlook, analysts at Morgan Stanley warned, adding that paycheck sizes in particular could see declines. Such a trend threaten to initiate a domino effect of declining spending, lower corporate revenues, and subsequent layoffs.In the 1990s, Japan entered into a similar stretch of deflation that sparked what has since become known as its “lost decades” — or a time of economic stagnation following the peak of the country’s meteoric post-World War II rise in the 1980s.”[A]s decades in Japan ha[ve] shown, deflation can lead to a cycle that becomes ever more difficult to break,” the Morgan Stanley analysts said in a note to clients.To avoid a similar fate, economists have argued that China’s government may need to roll out sweeping — and potentially expensive — measures to stem the deflationary cycle.Beijing has already attempted to reinvigorate the economy by putting loans into the industrial sector, although the aid for these firms has increased the supply of consumer goods without boosting overall demand, further fueling deflation.”Consequently, the short-run boost to employment, income, and thus domestic spending has been very limited,” the Morgan Stanley analysts said.At the moment, China has laid out a plan to hit 5% in real gross domestic product growth in 2024. But the deflationary pressures could threaten that goal, economists have said.Lawmakers may start to mull over providing fiscal support to housing and social welfare programs, the Morgan Stanley analysts predicted, saying these moves could shore up China’s “critical” real estate sector and bolster savings.However, they warned: “Despite the early signs of some shift in tone from Beijing, it is hard to imagine a meaningful change in direction for policy and subsequently the economy any time soon.”The ongoing battle with contracting prices is not confined to China alone, the analysts added, flagging that, from its position as one of the world’s key trading destinations, the country “continues to export disinflationary pressure globally.”They noted that China’s deflationary cycle has so far dented core inflation in both the US and eurozone by around 0.1 percentage point, adding that this a “meaningful” as central banks in both of the regions are beginning to embark on a fresh cycle of interest rate reductions. More

China should introduce a basket of measures, focusing on enhancing social protections, buying unsold apartments for affordable housing and speeding up urban construction, Liu Shijin, former vice president of Development Research Center of the State Council, told the China Macroeconomy Forum, the Securities Times reported.Liu said the world’s second-biggest economy should not copy the quantitative easing of developed countries because China’s macroeconomic policy should aim at ensuring stability and balance during a “medium-speed growth stage”.Chinese policymakers will likely step up measures to at least help the economy meet this year’s increasingly challenging growth target of roughly 5%, analysts and policy advisers have said, with a sharper focus on boosting demand to fight persistent deflationary pressures.August economic data showed momentum in China’s export-led economic recovery remains frail. Domestic demand struggled to gain traction amid persistent deflationary threat.($1 = 7.0505 Chinese yuan renminbi) More

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Save over 65%$99 for your first yearFT newspaper delivered Monday-Saturday, plus FT Digital Edition delivered to your device Monday-Saturday.What’s included Weekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysis More