Economy

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WASHINGTON (Reuters) -Traffic in Manhattan’s central business district fell by 7.5% last week and 273,000 fewer cars entered the borough’s central business district after the first congestion pricing fee in the U.S. took effect on Jan. 5, New York City transit officials said on Monday.The fee is designed to reduce traffic and raise billions for mass transit, with most of the revenue generated targeted to upgrade the city’s subway and bus systems.”The early data backs up what New Yorkers have been telling us all week – traffic is down, the streets feel safer, and buses are moving faster,” said Janno Lieber, head of the Metropolitan Transportation Authority. Overall travel times are 30-40% faster on inbound river crossings into Manhattan, which has the most congested traffic in the United States.Under the program, passenger vehicles are charged $9 during peak periods in Manhattan south of 60th Street. Trucks and buses pay up to $21.60. The fee is reduced by 75% at night.The fee went into effect after neighboring New Jersey failed to convince a judge to halt it. The city rushed to implement the charge before President-elect Donald Trump’s inauguration on Jan. 20. Trump, who has a Manhattan residence, opposes the fee and said he would seek to block it. The MTA said less traffic means faster bus speeds, especially in the morning peak period.Charged via electronic license plate readers, private cars pay once a day regardless of how many trips they make into the central business district. Taxis pay 75 cents per trip and ride-share vehicles reserved by apps like Uber (NYSE:UBER) and Lyft (NASDAQ:LYFT) pay $1.50 per trip.A few other cities around the world already have congestion pricing systems. London, which implemented its system in 2003, now charges 15 pounds ($18.33). Singapore and Sweden also have congestion pricing plans.The MTA has said the program will eventually result in 80,000 fewer cars a day, about an 11% reduction. Before the fee, the MTA said more than 700,000 vehicles entered the Manhattan central business district daily, slowing traffic to around 7 mph (11 kph) on average, which is 23% slower than in 2010.The city estimates the congestion charge will bring in $500 million in its first year. New York Governor Kathy Hochul said the money would underpin $15 billion in debt financing for mass transit capital improvements, with 80% of the money to be spent on the subway and bus system, and the other 20% spent on the MTA’s two commuter rail systems. More

BENGALURU (Reuters) – The Bank of Korea will cut its base rate by a quarter-point on Thursday, a month earlier than previously expected, to support a struggling South Korean economy amid risks from political uncertainty, according to a Reuters poll of economists.Acting president Choi Sang-mok is facing a delicate task steering Asia’s fourth-largest economy amid public anger around efforts to arrest impeached President Yoon Suk Yeol and the government lowering its 2025 growth outlook to 1.8% from 2.2%.Political turmoil and high domestic household debt have sent the Korean won to its weakest in nearly 15 years while tariff threats from U.S. President-elect Donald Trump have driven expectations of fewer U.S. interest rate cuts this year.Around 80% of economists, 27 of 34, polled Jan. 8-13 expected the BOK to cut its base rate by 25 basis points to 2.75% on Jan. 16. The remaining seven forecast no change.A November poll following a surprise reduction of the base rate to 3.00% saw a majority of economists predict the bank would next cut rates in February.”Against a backdrop of heightened political uncertainty and intensifying growth concerns, we think the Bank of Korea will deliver its third straight 25 bp cut at its upcoming meeting. The case to move sooner rather than later has strengthened,” said Krystal Tan, economist at ANZ. “The main hurdle for successive rate cuts is recent KRW weakness and concerns about financial stability… Prolonged political instability and/or direct U.S. tariffs on South Korea exports would call for more accommodative monetary policy.”Median forecasts showed one cut from the BOK this quarter and the same move in both the second and third quarters taking the rate to 2.25% – considered the neutral rate. That would be followed by a hold until at least mid-2026.Half – 14 of 28 – who had forecasts until year-end expected the base rate at 2.25%. Still, eight predicted it at 2.50% and six at 2.00% highlighting the uncertainty of the outlook ahead of Trump’s inauguration on Jan. 20. “Still-subdued domestic demand recovery, along with the sharp decline in consumer sentiment in part due to the domestic politics, likely mean that the board will continue to lower its policy rate towards neutral,” said Jin Choi, Korea economist at HSBC.”However, we note that a meaningful change in the U.S. Fed’s future policy trajectory could constrain the BOK’s easing going forward.”(Other stories from the January Reuters global economic poll) More

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The Westpac-Melbourne Institute index of consumer sentiment fell 0.7% in January from December, when it dropped 2.0%. The index was still up 13.8% on a year ago, but at 92.1 showed pessimists again outnumbered optimists.The cautious outlook should reassure the Reserve Bank of Australia that consumers are not about to rush out spending and stoke inflation, leaving the door open for some easing in monetary policy in coming months.The breakdown of the survey showed the biggest stumbling block was the assessment of family finances compared to a year ago, which sank 7.8% to 77.7 in December as high mortgage rates outweighed the impact of tax cuts in 2024.The outlook, at least, was brighter with the index of family finances for the next 12 months rising 1.1% to 104.4, showing optimists were in the majority.”The consumer mood has soured for two months in a row and remains on the pessimistic side,” said Westpac chief economist Luci Ellis. “However, sentiment is still less negative than a year ago and some components suggest that consumers expect things to continue to improve from here.”The survey’s measure of the economic outlook for the next 12 months was flat in December, while the outlook for the next five years edged up by 0.7%.The measure of whether it was a good time to buy a major household item rose 1.8%, though it remains historically weak at 90.8. More

Price caps on Russian seaborne crude as well as refined petroleum products were set by G7 countries to curb Moscow’s revenues from oil trade and in this way limit the country’s ability to finance its invasion of Ukraine.”Measures that target revenues from the export of oil are crucial since they reduce Russia’s single most important income source,” Sweden, Denmark, Finland, Latvia, Lithuania and Estonia said in a letter to the EU executive arm.”We believe now is the time to further increase the impact of our sanctions by lowering the G7 oil price cap,” it said. The G7 price cap was set at $60 per barrel of Russian crude and for petroleum products at a maximum of $100 per barrel of premium-to-crude products and $45 per barrel for discount-to-crude products. Andriy Yermak, Ukrainian President Volodymyr Zelenskiy’s chief of staff, said imposing and enforcing price caps were a critical factor in dealing with Russia.”There is a clear correlation between the price of energy carriers and the level of Russian belligerence,” Yermak wrote on the Telegram messaging app. “The export of energy is the main source of war financing for the Kremlin. The higher the price of oil, the greater the number of weapons and aggressive intentions in Russia. The lower the price of oil is, the closer peace will be.”The price cap maximum prices have not changed since December 2022 and February 2023 when they were introduced while Russian crude prices on the market were below that level on average in 2023 and 2024.”The international oil market is better supplied today than in 2022, reducing the risk a lower price cap will cause a supply shock,” the letter of the six countries said.”In view of limited storage capacity and its outsized dependence on energy exports for revenue Russia has no alternative to continue oil exports even at a substantially lower price,” the letter said. More

DUBAI (Reuters) -Cryptocurrency firm Tether plans to move its headquarters to El Salvador, its chief executive said, as the founders of the world’s biggest stablecoin look to capitalize on the Central American country’s bid to become a hub for crypto trading.Tether has emerged as a dominant force in the booming market for stablecoins, which are designed to maintain a constant value by being pegged to traditional currencies and offer users a way to move money between cryptocurrencies without exposure to price swings.CEO Paolo Ardoino told Reuters that Tether would relocate to El Salvador after the cryptocurrency recently obtained a license there as a digital asset service provider. Ardoino and his fellow managers and cofounders of Tether will also move their residences to El Salvador, he said. Previously, the company was incorporated in the British Virgin Islands.”This move to El Salvador will be the first time we’re going to have also a physical headquarters,” he said. But not all of the company’s 100-plus employees will move there, he said, adding that many of the staff work remotely.The company plans to hire 100 Salvadorans over the next several years, he said.The booming market for stablecoins has worried regulators concerned that growing stablecoin reserves expose the broader financial system to bigger risks, because they act as a bridge between the crypto universe and mainstream financial markets.Tether has faced questions around its reserves and does not fully disclose where they are held or in what form. The firm says the vast majority of its stablecoin is backed by traditional currency reserves held with Wall Street brokerage Cantor Fitzgerald, whose CEO, Howard Lutnick, has been nominated to head the U.S. Commerce Department under President-elect Donald Trump. “So we have some liquidity on other banks, but the vast, vast majority of the T-Bills are in Cantor,” Ardoino said. BOOSTING MONITORING OF TOKENSThe company said last year it was increasing monitoring of how its tokens are used to combat illicit finance.Asked whether Tether had considered alternative locations for its headquarters, Ardoino said it lacked a license to operate in the European Union and had ruled out the United States for now. It was “quite premature” to predict possible changes that might be implemented under Trump, he said. Trump’s victory in the November U.S. election sparked a record rise in cryptocurrency prices. The Republican has vowed to introduce a friendlier regulatory environment for crypto and said he planned to create a U.S. bitcoin strategic reserve.El Salvador is seeking to become a hub for digital currency trading, and three years ago President Nayib Bukele made it the first country to establish bitcoin as legal tender, alongside the dollar.”Welcome home,” Bukele wrote on social media platform X in response to Tether’s announcement. In a separate post on Monday, Bukele asked the CEO of Rumble, Chris Pavlovski, to consider moving the headquarters of the video-sharing platform to El Salvador. Days earlier, the company announced a cloud services agreement with Bukele’s government.Tether’s eponymous dollar-pegged token (USDT) accounts for roughly two-thirds of the $212 billion worth of stablecoins in circulation, according to CoinGecko data. The overall market has grown around 45% over the last year, the data shows. More