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    ‘Strike Madness’ Hits Germany While Its Economy Stumbles

    A wave of strikes by German workers, feeling the sting of inflation and stagnant growth, is the latest sign of the bleak outlook for Europe’s economic powerhouse.For those striking at the gates of the SRW scrap metal plant, just outside Germany’s eastern city of Leipzig, time can be counted not just in days — 136 so far — but in the thousands of card games played, the liters of coffee imbibed and the armfuls of firewood burned.Or it can be measured by the length of Jonny Bohne’s beard. He vows not to shave until he returns to the job he has held for two decades. Wearing his red union baseball cap and tending the blaze inside an oil drum, Mr. Bohne, 56, looks like a scruffy Santa Claus.The dozens of workers at the SRW recycling center say their strike has become the longest in postwar German history — a dubious honor in a nation with a history of harmonious labor relations. (The previous record, 114 days, was held by shipyard workers in the northern city of Kiel who struck in the 1950s.)Jonny Bohne has vowed not to shave while on strike. It’s been awhile.Ingmar Nolting for The New York TimesWhile monthslong strikes may be commonplace in some other European countries like Spain, Belgium or France, where workers’ protests are something of a national pastime, Germany has long prided itself on nondisruptive collective bargaining.A wave of strikes this year has Germans asking whether that is now changing. By some measures, the first three months of 2024 have had the most strikes in the country in 25 years.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Switzerland becomes first major economy to cut interest rates in surprise move

    The Swiss National Bank on Thursday surprised the market with a decision to lower its main policy rate by 0.25 percentage points to 1.5%.
    Economists polled by Reuters had expected the Swiss central bank to hold rates at 1.75%.
    Switzerland is the first advanced economy to cut interest rates following a prolonged period of high inflationary pressures.

    The Swiss national flag hangs from the Federal Palace, Switzerland’s parliament building, in Bern, Switzerland, on Thursday, Dec. 13, 2018. The Swiss National Bank cut its inflation forecast and showed no inclination of moving off its crisis-era settings, citing the francs strength and mounting global risks. Photographer: Stefan Wermuth/Bloomberg via Getty Images
    Bloomberg | Bloomberg | Getty Images

    The Swiss National Bank on Thursday surprised the market with a decision to lower its main policy rate by 0.25 percentage points to 1.5%, saying national inflation is likely to stay below 2% for the foreseeable future.
    Economists polled by Reuters had expected the Swiss central bank to hold rates at 1.75%.

    “For some months now, inflation has been back below 2% and thus in the range the SNB equates with price stability. According to the new forecast, inflation is also likely to remain in this range over the next few years,” the bank said. Swiss inflation continued to fall in February, hitting 1.2%.
    The SNB also reduced its annual inflation forecasts. The bank now sees average inflation reaching 1.4% in 2024, down from its 1.9% estimate in December, and 1.2% for 2025, trimmed from the previous 1.6% estimate. Its first forecast for 2026 puts average inflation at 1.1% over the period.
    Following the announcement, analysts at Capital Economics said they expect two more SNB rate cuts over the course of this year, “with the Bank sounding more dovish and inflation likely to undershoot its forecasts.”
    “We think inflation will come in even lower than the new SNB forecasts imply and remain around the current level of 1.2% before falling to below 1.0% next year. Accordingly, we forecast the SNB to cut rates at the September and December meetings taking the policy rate to 1%, where we think it will remain throughout 2025 and 2026,” Capital Economics analysts said in a note.
    The September meeting is likely to be the last under the stewardship of SNB Chairman Thomas Jordan, who will step down at the end of that month after 12 years at the helm.

    The SNB said Swiss economic growth is “likely to remain modest in the coming quarters,” with the GDP poised to expand by roughly 1% this year.
    “Our forecast for Switzerland, as for the global economy, is subject to significant uncertainty. The main risk is weaker economic activity abroad. Momentum on the mortgage and real estate markets has weakened noticeably in recent quarters,” the SNB said. “However, the vulnerabilities in these markets remain.”
    On a macro level, the SNB flagged “moderate” global economic growth in the coming quarters, along with likely falls in inflation partly thanks to restrictive monetary policy strategies. It nevertheless acknowledged “significant risks” and geopolitical tensions that could cloud the international economic horizon.

    In a TV interview with CNBC’s Silvia Amaro, Jordan said that the improved inflation forecast has given the bank the breathing room to lower rates, but refused to be drawn on the inevitability of three cuts this year.
    “We will see in June whether the situation is different, whether inflationary pressure continues to decline, then we’ll make a new decision in June,” he said, acknowledging that the bank remains ready to intercede in the foreign exchange market “if necessary” to defend the Swiss franc. High interest rates typically prop up currencies and weaken the relative value of other coins against them.
    “We said very clearly that we remain … available to intervene in the foreign exchange market, if necessary. So we can use this instrument in order to make sure that monetary conditions remain appropriate,” Jordan noted.
    He fell short of commenting on whether other central banks will take a page from the SNB’s trailblazing book and loosen their monetary policy, but signaled no concerns over the potential impact their moves may have on the Swiss currency.
    “We will profit from a situation where we have price stability globally. Of course, it could have an impact on interest rate differentials, but I think a situation where the price stability is re-established everywhere, this is something that is positive for the global economy, and so also for Switzerland,” he said.

    First to blink

    Switzerland is the first advanced economy to cut interest rates following a prolonged period of high inflationary pressures, exacerbated by the Covid-19 pandemic’s impact on global trade and Russia’s war in Ukraine. Switzerland was also affected by jitters in the banking space last year, when the government stepped in to facilitate UBS’ takeover of fallen rival Credit Suisse.
    Jordan on Thursday stressed to CNBC the importance of liquidity to the Swiss banking sector.
    “A key message from us is always that they have to prepare their collateral, so that this collateral … in case they need additional liquidity,” he said.
    Asked whether Swiss lenders are doing enough in this direction, Jordan said there were “very good discussions in Switzerland at the moment” between banks and the SNB.
    “The situation of March last year and also in the United States made it very clear also to smaller banks that liquidity issues could be a problem,” he said. “I think we are on the good way in order to make sure that sufficient collateral will be available in an emergency case … but it’s very important that we continue to go in that direction.”
    The Swiss National Bank’s rate announcement emerged just before Norway’s central bank refused to blink, holding rates steady at 4.5%. 
    “The rate path we’re presenting today indicates… an autumn rate cut, most likely in September,” Norges Bank Governor Ida Wolden Bache told a press conference on Thursday, according to Reuters.

    Later in the session, the Bank of England also left its rates unchanged at 5.25%.
    It comes after the U.S. Federal Reserve on Wednesday held rates steady following its March meeting and reiterated its expectations for three rate cuts in 2024. The European Central Bank has also been keeping policy unchanged, with officials signaling policymakers will consider a rate cut in June — but flagging that the decision remains highly data-reliant. More

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    Why the Panama Canal Didn’t Lose Money When Ship Crossings Fell

    A water shortage forced officials to reduce traffic, but higher fees increased revenue.Low water levels have forced officials to slash the number of ships that are allowed through the Panama Canal, disrupting global supply chains and pushing up transportation costs.But, remarkably, the big drop in ship traffic has not — at least so far — led to a financial crunch for the canal, which passes on much of its toll revenue to Panama’s government.That’s because the canal authority introduced hefty increases in tolls before the water crisis started. In addition, shipping companies have been willing to pay large sums in special auctions to secure one of the reduced number of crossings.In the 12 months through September, the canal’s revenue rose 15 percent, to nearly $5 billion, even though the tonnage shipped through the canal fell 1.5 percent.The Panama Canal Authority declined to say how much money it earned from auctions. At a maritime conference last week in Stamford, Conn., Ilya Espino de Marotta, the canal’s deputy administrator, said the auction fees, which reached as much as $4 million per passage last year, “helped a little bit.”But even now, during a quieter season for global shipping, auction fees can double the cost of using the canal. This month, Avance Gas, which ships liquefied petroleum gas, paid a $401,000 auction fee and $400,000 for the regular toll, said Oystein Kalleklev, the company’s chief executive. Auction fees are ultimately borne by the company whose goods are being shipped.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    What Comes Next for the Housing Market?

    The Federal Reserve still expects to cut rates this year, and a change in selling practices could shake up home shopping. Here’s the outlook.Federal Reserve officials are planning to cut interest rates this year, real estate agents are likely to slash their commissions after a major settlement and President Biden has begun to look for ways his administration can alleviate high housing costs.A lot of change is happening in the housing market, in short. While sales have slowed markedly amid higher interest rates, both home prices and rents remain sharply higher than before the pandemic. The question now is whether the recent developments will cool costs down.Economists who study the housing market said they expected cost increases to be relatively moderate over the next year. But they don’t expect prices to actually come down in most markets, especially for home purchases. Demographic trends are still fueling solid demand, and cheaper mortgages could lure buyers into a market that still has too few homes for sale, even if lower rates could help draw in more supply around the edges.“It has become almost impossible for me to imagine home prices actually going down,” said Glenn Kelman, the chief executive of Redfin. “The constraints on inventory are so profound.”Here’s what is changing and what it could mean for buyers, sellers and renters.Interest rates are expected to fall.Mortgages have been pricey lately in part because the Fed has lifted interest rates to a more-than-two-decade high. The central bank doesn’t set mortgage rates, but its policy moves trickle out to make borrowing more expensive across the economy. Rates on 30-year mortgages have been hovering just below 7 percent, up from below 3 percent as recently at 2021.Those rates could come down when the Fed lowers borrowing costs, particularly if investors come to expect that it will cut rates more notably than what they currently anticipate.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    European Central Bank’s Lagarde signals June cut but says future rate path uncertain

    “By June we will have a new set of projections that will confirm whether the inflation path we foresaw in our March forecast remains valid,” the European Central Bank’s chief Christine Lagarde said in a speech in Frankfurt.
    The euro zone’s central bank has held rates since bringing them to a record high in September.
    June has been flagged as a key month by numerous members of the ECB’s Governing Council, which votes on the path of rates.

    Christine Lagarde, president of the European Central Bank, at the ECB And Its Watchers conference in Frankfurt, Germany, on March 20, 2024. 
    Bloomberg | Bloomberg | Getty Images

    European Central Bank chief Christine Lagarde on Wednesday reiterated that policymakers will consider bringing interest rates down in June, but sketched an uncertain path beyond that.
    “By June we will have a new set of projections that will confirm whether the inflation path we foresaw in our March forecast remains valid,” Lagarde said in a speech in Frankfurt.

    The June meeting has been flagged as a potential turning point by many members of the ECB’s Governing Council — which votes on rate moves — as it will be the first gathering for which data from spring wage negotiations will be available. The ECB is on alert for potential knock-on inflationary effects from rising salaries.
    Data available by June will also provide more insight into the path of underlying inflation and the direction of the labor market, according to Lagarde.
    “If these data reveal a sufficient degree of alignment between the path of underlying inflation and our projections, and assuming transmission remains strong, we will be able to move into the dialling back phase of our policy cycle and make policy less restrictive,” she said.
    “But thereafter, domestic price pressures will still be visible. We expect services inflation, for example, to remain elevated for most of this year. So, there will be a period ahead where we need to confirm on an ongoing basis that the incoming data supports our inflation outlook.”

    Lagarde’s message overall was highly positive on the path on inflation, despite flagging geopolitical uncertainty and ongoing domestic price pressures. Euro zone inflation cooled to 2.6% in February, though the print for services remained stickier at 3.9%.

    “Unlike in the earlier phases of our policy cycle, there are reasons to believe that the expected disinflationary path will continue,” Lagarde said, stressing confidence in the latest set of staff macroeconomic projections, which see inflation averaging 2.3% in 2024, 2% in 2025, and 1.9% in 2026.
    The euro zone’s central bank has held rates steady since bringing them to a record high in September. Until its March meeting, the bank’s messaging was that it was too early to discuss when to start rate cuts. It next meets in April, then June.
    Market attention is now moving to how many rate cuts the ECB is likely to carry out over the course of this year. Money markets indicate three cuts taking place by December, along with a potential fourth, according to Reuters data. More

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    The Global Effort to Make an American Microchip

    Semiconductors are vital to the modern economy, powering everything from video games and cars to supercomputers and weapons systems. The Biden administration is investing $39 billion to help companies build more factories in the United States to bring more of this supply chain back home. But even after U.S. facilities are built, chip manufacturing will […] More

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    Japan’s Labor Market Has a Lesson for the Fed: Women Can Surprise You

    Japan’s improved labor force participation for women is a reminder not to assume that job market limits are clear and finite.Japan’s economy has rocketed into the headlines this year as inflation returns for the first time in decades, workers win wage gains and the Bank of Japan raises interest rates for the first time in 17 years.But there’s another, longer-running trend happening in the Japanese economy that could prove interesting for American policymakers: Female employment has been steadily rising.Working-age Japanese women have been joining the labor market for years, a trend that has continued strongly in recent months as a tight labor market prods companies to work to attract new employees.The jump in female participation has happened partly by design. Since about 2013, the Japanese government has tried to make both public policies and corporate culture more friendly to women in the work force. The goal was to attract a new source of talent at a time when the world’s fourth-largest economy faces an aging and shrinking labor market.“Where Japan did well over the recent decade is putting the care infrastructure in place for working parents,” Nobuko Kobayashi, a partner at EY-Parthenon in Japan, wrote in an email.Still, even some who were around when the “womenomics” policies were designed have been caught off guard by just how many Japanese women are now choosing to work thanks to the policy changes and to shifting social norms.Japanese Women Are Working in Greater NumbersThe share of women who are active in the job market has picked up sharply in Japan.

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    Female labor force participation rate, ages 25-54
    Source: O.E.C.D.By The New York TimesWe are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Fed Meets Amid Worries That Inflation Progress Might Stall

    Inflation had been moderating steadily, but it is now hovering around 3 percent. Will lowering it fully to normal levels prove difficult?Slowing America’s rapid inflation has been an unexpectedly painless process so far. High interest rates are making it expensive to take out a mortgage or borrow to start a business, but they have not slammed the brakes on economic growth or drastically pushed up unemployment.Still, price increases have been hovering around 3.2 percent for five months now. That flatline is stoking questions about whether the final phase in fighting inflation could prove more difficult for the Federal Reserve.Fed officials will have a chance to respond to the latest data on Wednesday, when they conclude a two-day policy meeting. Central bankers are expected to leave interest rates unchanged, but their fresh quarterly economic projections could show how the latest economic developments are influencing their view of how many rate cuts are coming this year and next.The Fed’s most recent economic estimates, released in December, suggested that Fed officials would make three quarter-point rate cuts by the end of 2024. Since then, the economy has remained surprisingly strong and inflation, while still down sharply from its 2022 highs, has proved stubborn. Some economists think it’s possible that officials could dial back their rate cut expectations, projecting just two moves this year.By leaving rates higher for slightly longer, officials could keep pressure on the economy, guarding against the risk that inflation might pick back up.“The Federal Reserve should not be in a race to cut rates,” said Joseph Davis, Vanguard’s global chief economist, explaining that the economy has held up better than would be expected if rates were weighing on growth drastically, and that cutting prematurely risks allowing inflation to run warmer in 2025. “We have a growing probability that they don’t cut rates at all this year.”We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More