Economy

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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Inflation in the U.K. dropped sharply to 1.7% in September, the Office for National Statistics said Wednesday, beating expectations for a fall to 1.9% from 2.2% in August.
Core inflation, excluding the volatile impact of energy, food, alcohol and tobacco, came in at 3.2% for the month, down from 3.6% in August and below the 3.4% forecast of a Reuters poll.
The British pound fell against the U.S. dollar and euro following the cooler-than-forecast print as economists said a November rate cut from the Bank of England looked more likely.

A wet Piccadilly Circus during a rainy morning in the West End, on 26th September 2024, in London, England. 
Richard Baker | In Pictures | Getty Images

LONDON — Inflation in the U.K. dropped sharply to 1.7% in September, the Office for National Statistics said Wednesday, ramping up market expectations for a Bank of England rate cut in November.
Economists polled by Reuters had expected the headline rate to come in at a higher 1.9% for the month, in the first dip below the BOE’s 2% target since April 2021.

Inflation has been hovering around that level for the last four months, and came in at 2.2% in August.

Core inflation, which excludes energy, food, alcohol and tobacco, came in at 3.2% for the month, down from 3.6% in August and below the 3.4% forecast of a Reuters poll.
Price rises in the services sector, the dominant portion of the U.K. economy, eased significantly to 4.9% last month from 5.6% in August, now hitting its lowest rate since May 2022.
Core and services inflation are key watch points for Bank of England policymakers as they mull whether to cut interest rates again at their November meeting.

Cuts ahead?

Money market pricing for a 25-basis-point November rate cut jumped from 80% to 92% following the latest inflation print, with a follow-up trim in December nearly fully priced in. Analysts had on Tuesday said lower wage growth reported by the ONS this week supported the case for a rate cut.

Two more quarter-percentage-point reductions this year would take the BOE’s key rate to 4.5%, after the central bank kicked off rate cuts in August, then held in September.
A fall in the British pound following the publication on Wednesday reflected more dovish expectations for the BOE, with sterling down 0.6% against the U.S. dollar at $1.299, falling below the $1.3 level for the first time since Sept. 11. The British currency moved 0.5% lower against the euro.
The yields on British government bonds, known as gilts, meanwhile dropped across the board. Two-year gilt yields fell 9 basis points as the 10-year gilt yield fell 7 basis points.

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British pound versus U.S. dollar.

Headline U.K. inflation has eased from a peak of 11.1% in October 2022 to September’s 1.7%.
“These figures provide reassurance that the U.K. has moved into a more moderate inflation environment, aided by lower fuel prices,” Suren Thiru, economics director at the Institute of Chartered Accountants in England and Wales, said in a note, with the “notable drop” in services inflation indicating “underlying price pressures are becoming less sticky.”
Thiru nevertheless added that British inflation could reverse its decline in October because of an increase in the regulator-set energy price cap, while the BOE will wait to assess the U.K. Labour government’s keenly-awaited debut budget at the end of the month for any potential inflationary impact before locking in a course.

Capital Economics’ Chief U.K. Economist Paul Dales was similarly cautious, pointing out that a large part of the unexpected weakness in core and services inflation was due to a big fall in airfares price rises. The BOE is slightly more likely to stick to 25-basis-point cuts at every other meeting as a result, Dales said, even if the chance of two more reductions this year has now gone up.
“We still think rates will eventually fall to 3.00%, which is lower than the 3.50-3.75% priced into the market,” he said.
However, Deutsche Bank’s Chief U.K. Economist Sanjay Raja said the inflation figures would be “music to the [Monetary Policy Committee’s] ears” and could lead them to consider a faster unwinding of restrictive policy, including sequential rate cuts.
Raja also noted the risk presented by the budget, which he said was “likely to be expansionary despite the scale of fiscal consolidation coming on 30 October.” 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