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    Russian central bank surprises markets by holding key rate at 21%

    Russia’s central bank on Friday unexpectedly left its key interest rates unchanged at 21%, citing improved monetary tightness that had created the conditions to tame sky-high inflation.
    Markets had widely expected the central bank to hike interest rates by another 200 basis on Friday, after taking such a step in October.
    Russia’s consumer price index hit 8.9% in November on an annual basis, up from 8.5% in October.

    MOSCOW, Russia: The Russian central bank has cut its key interest rate by 300 basis points for a third time since its emergency hike in late February, citing cooling inflation and a recovery in the ruble.
    KIRILL Kudryavtsev | AFP | Getty Images

    Russia’s central bank on Friday unexpectedly left its key interest rates unchanged at 21%, citing improved monetary tightness that had created the conditions to tame sky-high inflation.
    “Monetary conditions tightened more significantly than envisaged by the October key rate decision,” the bank said, noting factors “autonomous” from its monetary policy.

    “Given the notable increase in interest rates for borrowers and the cooling of credit activity, the achieved tightness of monetary conditions creates the necessary prerequisites for resuming disinflation processes and returning inflation to the target, despite the elevated current price growth and high domestic demand,” it added.
    Markets had widely expected the central bank to hike interest rates by another 200 basis on Friday, after taking such a step in October amid an ongoing effort to subdue inflation stoked by the military costs of Moscow’s invasion of Ukraine and by Western sanctions against its key commodity exports.
    The bank on Friday said it would assess the need for a key rate increase at its upcoming meeting in February. It currently forecasts annual inflation will decline to 4% in 2026 and remain at this target in the forward horizon.
    Russia’s consumer price index is currently more than twice this rate — annual inflation hit 9.5% as of Dec. 16, the bank said Friday, noting persisting pressures, especially in the household and business sectors. The consumer price index hit 8.9% in November on an annual basis, up from 8.5% in October. The increase was largely driven by rising food prices, with the cost of milk and dairy products soaring this year.

    Inflation an ‘alarming signal’

    The hold to interest rates comes even after Russian President Vladimir Putin admitted during his Thursday annual Q&A session with Russian citizens that the nation’s inflation was problematic and that there was evidence of the economy overheating. He nevertheless stressed that Russia could still achieve 3.9%-4% of economic growth this year.

    “Of course, inflation is such an alarming signal. Just yesterday, when I was preparing for today’s event, I spoke with the chairperson of the Central Bank, Elvira [Nabiullina] who told me that it was already somewhere around 9.3%. But wages have grown by 9% in real terms, I want to emphasize this — in real terms minus inflation — and the disposable income of the population has also grown,” he said, according to comments reported by Interfax and translated by Google.
    The International Monetary Fund predicts Russia will notch 3.6% growth this year, before a deceleration to 1.3% growth in 2025.
    The “sharp slowdown,” the IMF said, was envisaged “as private consumption and investment slow amid reduced tightness in the labor market and slower wage growth.”
    “What we are seeing right now in the Russian economy, [is] that it is pushing against capacity constraint,” Alfred Kammer, director of the European Department at the IMF, said when the fund released its latest economic outlook in October.
    “So we have a positive output gap, or you could put it differently — the Russian economy is overheating. What we are expecting for next year is simply also the impact that going over your supply capacity, you cannot maintain for very long. So we see an impact on moving into more normal territory there. And of course, that is supported by a tight monetary policy by the Central Bank of Russia,” he said.
    “A tight monetary policy, in order to bring down inflation, slows down aggregate demand, and in 2025 will have these effects on GDP. That’s why we are seeing the slowdown in 2025,” Kammer added. More

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    Starbucks Workers Say They Will Begin a Strike in 3 Cities on Friday

    The planned walkout in Los Angeles, Chicago and Seattle comes after talks between the company and the workers’ union failed to produce an agreement on raises.A union representing Starbucks workers said Thursday that baristas in Los Angeles, Chicago and Seattle would walk off the job Friday morning and that the strikes would spread to hundreds of stores by Christmas Eve unless the company improved its wage offer in contract negotiations.The union, which represents baristas at more than 500 company-owned stores in the United States — about 5 percent of the U.S. total — said it called the strike after a bargaining session with the company this week failed to produce better wage gains.The strike is expected to begin in about 15 stores across the three metropolitan areas, according to a union member familiar with the situation who was not authorized to speak publicly.“Starbucks proposed an economic package with no new wage increases for union baristas now and a guarantee of only 1.5 percent in future years,” the union, Workers United, said in a statement.The guarantee would entitle unionized Starbucks workers to receive a wage increase of 1.5 percent even if the company raises wages nationwide by less than that amount in future years. If the company raised wages by more than that — as it did this year, with a recently announced increase of 2 percent — unionized workers would get the higher amount.Andrew Trull, a Starbucks spokesman, said union delegates “prematurely ended” this week’s negotiations. “It is disappointing they didn’t return to the table given the progress we’ve made to date,” he added.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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    Amazon Delivery Drivers at Seven Hubs Walk Out

    The retail giant said it expected its operations to be largely unaffected by the strike of some drivers at contracting firms Amazon uses to deliver packages.Workers who deliver packages from seven Amazon facilities across the country went on strike Thursday morning, according to the International Brotherhood of Teamsters, the union that represents them.The Teamsters said thousands of workers had struck, but it was unclear how many people were participating in the action. Amazon said it expected the seven delivery hubs to operate normally.The drivers are employees of companies that Amazon uses to deliver packages to customers. Amazon has said it has no obligation to bargain with the drivers because they are not its employees. But the union and the workers said Amazon ultimately controlled their working conditions and was therefore obligated to negotiate a contract that would improve their pay and make the work less taxing.The National Labor Relations Board has investigated some of the cases and issued at least one complaint finding the drivers to be Amazon employees and accusing the company of breaking the law by failing to bargain with them.The Teamsters said in a statement that workers at other Amazon warehouses were prepared to join the strike. The largest group at Amazon represented by the union works at a Staten Island warehouse known as JFK8, which employs more than 5,000 people. Employees at the warehouse voted to unionize in 2022, but the company has yet to bargain with them and is challenging the election outcome.Workers involved in the strike say it could extend into early next week, perhaps into Christmas, but it’s unclear how big an impact the walkout will have on Amazon’s holiday deliveries.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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    Nvidia’s Global Chips Sales Could Collide With US-China Tensions

    The chipmaker expects more than $10 billion in foreign sales this year, but the Biden administration is advancing rules that could curb that growth.In early August, the king of Bhutan, Jigme Khesar Namgyel Wangchuck, traveled from the mountains of his landlocked Asian country to the headquarters of Nvidia, a maker of artificial intelligence chips in the flatlands of Silicon Valley.King Wangchuck did a two-hour tour and listened as Jay Puri, Nvidia’s head of global business, discussed how Bhutanese investment in data centers and Nvidia chips could combine with the kingdom’s biggest natural resource, hydropower, to create new A.I. systems.The pitch was one of dozens that Nvidia has made over the past two years to kings, presidents, sheikhs and government ministers. Many of those countries went on to pour billions of dollars into government efforts to build supercomputers or generative A.I. systems, hoping to gain a competitive foothold in what could be the century’s defining technology.But in Washington, officials worry that Nvidia’s global sales spree could empower adversaries. Now the Biden administration is working on rules that would tighten control over A.I. chip sales and turn them into a diplomatic tool.The proposed framework would allow U.S. allies to make unfettered purchases, adversaries would be blocked entirely, and other nations would receive quotas based on their alignment with U.S. strategic goals, according to four people familiar with the proposed restrictions, who did not have permission to speak publicly about them.The restrictions would threaten an international expansion plan that Nvidia’s chief executive, Jensen Huang, calls “sovereign A.I.” Mr. Huang has hopscotched the globe this fall, logging over 30,000 miles in three months, and the company expects to make more than $10 billion in sales this year from countries outside the United States.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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    Bank of England holds rates but vote split surprises markets

    The Bank of England on Thursday ended its last meeting of the year with a decision to leave interest rates unchanged, after U.K. inflation rose to an eight-month high.
    Three members of the Monetary Policy Committee voted to reduce rates, while six were in favor of a hold. Economists polled by Reuters had forecast only one member would vote to cut.
    BOE staff also downgraded their economic forecast for the fourth quarter of 2024, now predicting no growth, compared with the 0.3% expansion predicted in its November report.

    The Bank of England pictured in December 2024.
    Sopa Images | Lightrocket | Getty Images

    LONDON — The Bank of England on Thursday ended its last meeting of the year with a decision to leave interest rates unchanged, after U.K. inflation rose to an eight-month high.
    Analysts had widely expected a rate hold at the December meeting, as policymakers remain concerned with stubborn services inflation and wage growth.

    The BOE has already taken its key rate from 5.25% to 4.75% this year in two quarter-percentage-point moves.
    In a deviation from expectations, three members of the Monetary Policy Committee voted to reduce rates, while six were in favor of a hold. Economists polled by Reuters had forecast only one member would vote to cut.
    Sterling pared gains against the U.S. dollar directly following the BOE announcement, trading 0.25% higher at 12:40 p.m. The greenback staged a broad rally on Wednesday after the U.S. Federal Reserve cut interest rates by a quarter point but signaled a more hawkish outlook for 2025. It gave up some gains on Thursday morning.

    Stock chart icon

    In a statement, the BOE said the increase in U.K. headline inflation in November to 2.6% was slightly higher than previously expected, adding that services inflation remained “elevated.”
    BOE staff also downgraded their economic forecast for the fourth quarter of 2024, now predicting no growth, compared with the 0.3% expansion predicted in its November report.

    U.K. growth figures have come in weaker than expected in recent months, with the economy posting a surprise 0.1% contraction in October.
    Money markets this week pared back bets on the pace of further trims next year after the publication of data on inflation and summer wage growth, and are now pricing in roughly 50 basis points of upcoming cuts, down from an outlook of around 70 basis points’ worth of cuts on Monday.

    ‘More divided than ever’

    “The split vote decision and the dovish tone of the minutes suggest that a February interest rate cut remains very much in play, if not yet a done deal,” Suren Thiru, economics director at the Institute of Chartered Accountants in England and Wales, said in emailed comments.
    “The Bank of England risks backing itself into a corner over the pace of policy loosening because, with inflation likely to drift higher, the timing of future interest rate cuts could become increasingly complex, especially if stagflation fears become reality.”

    Matthew Ryan, head of market strategy at Ebury, said BOE officials appeared “more divided than ever” on the path ahead for rates, with doves focusing on the fragile U.K. economy, while hawks favored a gradual approach due to the recent uptick in inflation. The recent U.K. budget and the threat of escalating trade tensions under U.S. President Donald Trump next year will also be viewed as inflationary risks, Ryan said.
    U.K. borrowing costs were higher following the Thursday announcement, with the yield on 10-year government bonds up 4 basis points at 4.596%. Gilt yields have been in focus this week, as the U.K.’s risk premium over that of Germany reached its highest level since 1990. German bond yields were also up on Thursday, with the yield on 10-year bunds — the euro zone benchmark — jumping by 5 basis points.
    The European Central Bank last week cut rates by a quarter point in its fourth such move of the year, signaling a firm intention to enact more monetary easing in 2025. More

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    Where Does a ‘Remarkable’ U.S. Economy Go From Here?

    America’s economy is far outstripping its peers, but there are serious risks, including from the president-elect.The U.S. economy is pulling ahead of its global peers. Inflation is moderating, and the Federal Reserve is cutting interest rates.Add in a decrease in unlawful southern border crossings and revved-up domestic production in several critical industries and they amount to a rough list of Donald J. Trump’s campaign promises.It’s a list of economic wins that Mr. Trump is inheriting in large part because of policies that the Federal Reserve and Biden administration have pursued in recent years.The economy is doing better than most economists predicted a few years ago. Forecasters widely warned that the Fed would seriously harm the economy as it tried to control runaway inflation by sharply raising interest rates in 2022 and 2023. Instead, price increases have come down substantially without a broader implosion. The unemployment rate is low. Consumers are spending.“The U.S. economy has just been remarkable,” Jerome H. Powell, the Fed chair, said during a news conference on Wednesday, after the Fed cut rates for a third time this year.But a variety of risks — some sheer happenstance, some floated by Mr. Trump — could interfere with that rosy outcome just as the newly re-elected president takes office.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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    The Economy Is Finally Stable. Is That About to Change?

    President-elect Donald J. Trump’s proposals on tariffs, immigration, taxes and deregulation may have far-reaching and contradictory effects, adding uncertainty to forecasts.After five years of uncertainty and turmoil, the U.S. economy is ending 2024 in arguably its most stable condition since the start of the coronavirus pandemic.Inflation has cooled. Unemployment is low. The Federal Reserve is cutting interest rates. The recession that many forecasters once warned was inevitable hasn’t materialized.Yet the economic outlook for 2025 is as murky as ever, for one major reason: President-elect Donald J. Trump.On the campaign trail and in the weeks since his election, Mr. Trump has proposed sweeping policy changes that could have profound — and complicated — implications for the economy.He has proposed imposing steep new tariffs and deporting potentially millions of undocumented immigrants, which could lead to higher prices, slower growth or both, according to most economic models. At the same time, he has promised policies like tax cuts for individuals and businesses that could lead to faster economic growth but also bigger deficits. And he has pledged to slash regulations, which could lift corporate profits and, possibly, overall productivity. But critics warn that such changes could increase worker injuries, cause environmental damage and make the financial system more prone to crises over the long run.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