Aurelia Butler

The ECB raised interest rates at a record pace in 2022 and 2023 to combat inflation. It expects policy reversal, which began with a rate cut in June, to be slow as price pressures continue to linger and inflation is seen staying above the ECB’s 2% target until the end of next year.”We see that an inappropriate fiscal stance can hamper the efficacy of monetary policy,” said Knot, the Dutch central bank chief. “In this case, a more restrictive fiscal policy would have been desirable.”While new fiscal rules were introduced in May, Knot said these did not mean an automatic improvement in the relationship between the ECB and finance ministries across the 20 nations that share the euro. The new rules give governments increased flexibility to spend more during downturns but they will only work if national governments reduce their debt during upturns.”Whether this happens will largely depend on compliance and enforcement of the rules,” Knot said. “In this regard, the new EU fiscal framework will immediately have to prove itself.”It would be helpful if the bloc had some sort of central budget capacity as during the pandemic, but overall spending should not increase, so any supranational spending must be accompanied by reduced spending in national budgets, Knot argued.EU nations joined forces during the pandemic to fund the Next Generation EU recovery fund but some countries, particularly Germany, insist that this should be a one-off and there must not be any permanent joint borrowing. The ECB has long argued that balancing out a single monetary policy with 20 different fiscal policies is next to impossible, and that some form of a joint budget would make policy more efficient and less costly to growth in periods of excessive inflation. More

$75 per monthComplete digital access to quality FT journalism with expert analysis from industry leaders. Pay a year upfront and save 20%.What’s included Global news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print edition More

ZURICH (Reuters) -Swiss companies and consumers are now able to make instant electronic payments, catching up with other European financial centres where the ultra-fast transfers are increasingly popular.Instant payments allow credit transfers within 10 seconds of a payment being made rather than waiting for days for the transaction to clear. They have been in use in Europe since 2017 and in the U.S. since last year.In Europe, the use of instant payments has risen from 5.2% of all credit transfers in October 2019 to 17.8% in February this year, according to the European Central Bank.Around 60 financial institutions are able to receive and process instant payments, covering more than 95% of Swiss retail payment transactions, the Swiss National Bank said on Wednesday, having launched its scheme with financial systems provider SIX.In the coming months, further banks will announce similar services, the SNB said, with all financial institutions in Switzerland expected to be on board by the end of 2026.Despite the rise of mobile payment apps, the Swiss remain attached to physical cash, which remains the most accepted method of payment by companies with physical points of sale, according to an SNB survey earlier this year.”This market launch represents a further important milestone and reflects the collective stakeholder commitment to the future of cashless payments in Switzerland,” the SNB said. While traditional payments are still possible, the central bank expects instant payments to become established in the medium term, the central bank added.Instant payments reduce settlement risk as the transfer is instantaneous and final, while both parties have an up to date account balance at all times, making planning and budgeting easier.The speeding up of payments could also boost economic development, as companies can more rapidly reinvest the money they receive. More

The brokerage in a note on Monday maintained its base case of a soft landing for the economy with consumer spending broadly determining the trajectory of growth; however, it called the outlook “cloudy”.Earlier this month, J.P. Morgan raised the odds of U.S. recession by the year-end to 35% citing easing labor market pressures, while Goldman Sachs lowered its probability of a recession in the next 12 months to 20%.Last week the U.S. Department of Labor had lowered its estimate for total payroll employment by 818,000 for the period from April 2023 to March 2024, meaning U.S. employers had added far fewer jobs than originally reported in the year through March.This came on the heels of the U.S. unemployment rate jumping to a near three-year high of 4.3% in July amid a significant slowdown in hiring, raising fears the labor market was deteriorating and potentially making the economy vulnerable to a recession.Expectations for a rate cut of up to 50 basis points in the September meeting of the U.S. Federal Reserve have risen, with Chair Jerome Powell signaling in his speech at Jackson Hole last Friday that the ‘time has come’ to reduce rates.With the excess savings built up during the pandemic being used up, “continued income growth will be critical to keep spending rising, since a steady savings rate is probably the best we can hope for,” said Brian Rose, senior U.S. economist at UBS. More

$75 per monthComplete digital access to quality FT journalism with expert analysis from industry leaders. Pay a year upfront and save 20%.What’s included Global news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print edition More

$75 per monthComplete digital access to quality FT journalism with expert analysis from industry leaders. Pay a year upfront and save 20%.What’s included Global news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print edition More

$75 per monthComplete digital access to quality FT journalism with expert analysis from industry leaders. Pay a year upfront and save 20%.What’s included Global news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print edition More

$75 per monthComplete digital access to quality FT journalism with expert analysis from industry leaders. Pay a year upfront and save 20%.What’s included Global news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print edition More