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The ECB last week kept interest rates unchanged but sounded increasingly upbeat on inflation, boosting markets bets that it will start cutting rates sooner rather than later. “April or June doesn’t really make much of a difference for the economy,” Vujcic told reporters on the sidelines of a conference. “I think it’s more important that we achieve a kind of smooth transition.”Markets see 140 basis points worth of cuts this year and an initial step in April is now almost fully priced in, despite some pushback from conservatives on the ECB’s 26-member Governing Council. “I think that 25 basis point moves are preferable to larger (steps),” Vujcic, Croatia’s central bank chief, said. “It doesn’t have to be continuous … there will some be pauses.”One concern has been that economic growth is so weak, it could accelerate disinflation and price growth may fall below the ECB’s 2% target as soon as this year, ahead of the bank’s own projection for 2025.But the bloc escaped recession last quarter as output stabilised, even if it is now in its sixth quarter of broadly steady economic performance.”The risk of a recession in the euro zone is getting smaller and smaller,” Vujcic said. “We do expect that the economy will pick up this year, so we’re going to a modest rate of growth coupled with a further disinflation.” More

The euro zone economy stabilized in the fourth quarter of 2023, flash figures published by the European Union’s statistics agency showed on Tuesday.
The bloc narrowly avoided the shallow recession that was forecast in a Reuters poll of economists, following a 0.1% fall in GDP in the third quarter.
The euro zone’s seasonally-adjusted GDP was flat compared with the previous quarter and expanded by 0.1% versus the previous year.

Cargo trains stand on the railway tracks at a transshipment station in Frankfurt am Main, western Germany, as in background can be seen the city’s skyline, on January 23, 2024.
Kirill Kudryavtsev | Afp | Getty Images

The euro zone economy stabilized in the fourth quarter of 2023, flash figures published by the European Union’s statistics agency showed on Tuesday.
The bloc narrowly avoided the shallow recession that was forecast in a Reuters poll of economists, following a 0.1% fall in GDP in the third quarter.

The euro zone’s seasonally-adjusted GDP was flat compared with the previous quarter and expanded by 0.1% versus the previous year. In a preliminary estimate, the euro area was seen posting 0.5% growth over the whole of 2023.
Its biggest economy, Germany, posted a 0.3% contraction in the final quarter of the year, according to figures also out on Tuesday. The country narrowly skirted a technical recession due to an upwards revision to its reading for the third quarter, when the economy stagnated.
The French economy was steady in the fourth quarter, while Spain outperformed forecasts to expand by 0.6%.
The European Commission’s euro zone sentiment indicator meanwhile showed a decline in consumer confidence — though the outlook for businesses in services and industrials was slightly brighter.
The euro zone economy is in a “phase of prolonged weakness” that is being driven by Germany, while southern European economies lead the way in growth, Bert Colijn, senior economist at ING, said in a note.

“Germany is struggling with weak global demand for goods and heavy industry is suffering from higher energy prices,” he said.
The euro zone’s divergence from the U.S. is growing, he added, partly explained by a larger decline in inflation-adjusted wages, energy prices hitting industrials, and lower levels of fiscal support.
The euro continued to log narrow losses against the U.S. dollar following the fresh Tuesday data, also posting tight gains against the British pound. The U.S. economy smashed expectations for the end of the year, expanding by 3.3% in the fourth quarter. U.K. figures are due out in the middle of February.
The European Central Bank has hauled interest rates to a record high over the last year and a half, creating tighter financial conditions across the region which have helped cool inflation from a peak of 10.6% in October 2022 to 2.9% in December. The latest euro zone inflation flash figures are due Thursday. More

NEW YORK (Reuters) – If you are a proud parent whose child has grown up and gone off to college, congratulations!Now stop reading this and call your auto insurer. Ask what major discounts you qualify for with your kid away for most of the year.Catherine Valega, a Boston financial planner with four daughters, has saved big bucks whenever each of her three older girls went off to McGill University in Montreal. She either got little-known “student away” discounts or dropped her children off the policy when they got their own car and coverage abroad.Saving a few hundred dollars per child per year can add up to thousands.”It’s a lot of money, so it is 100% worth having the conversation,” said Valega. “No one really knows about this unless they find out from their neighbor – or read this article.”Parents of teenage drivers in particular experience sticker shock when it comes to car insurance.Full coverage averages $2,014 a year, a 2023 survey by financial services provider Bankrate showed. Add a 16-year-old driver along with two adults, and that shoots up to $4,392 a year – or $2,378 more.Savings become even more critical as rates for drivers of all ages keep going up. Average car insurance rates jumped 13.72% between 2022 and 2023, Bankrate said.Parents can expect to save 10-15% on premiums with such discounts, said Greg Smolan, vice president of insurance operations for AAA Northeast in Providence, Rhode Island.Insurance policies are highly specific to your personal situation and provider, but here are a few factors to keep in mind.DISTANCE MATTERSIf little Johnny is going to college down the road, “student away” savings will not apply. Typically, students must live more than 100 miles away from home and they cannot bring their parents’ insured vehicle with them for the school year.”The magic number is 100 miles,” said Smolan. “I have two teenage boys – one of them is over 100 miles away, and the other one isn’t, so I only get the discount for one of them.”ASK ABOUT OTHER DISCOUNTS Parents whose teenagers keep their grades up can see their premiums go down.”A high GPA and driver’s ed courses can help,” said Christopher Giambrone, a financial planner in New Hartford, New York.Depending on your insurer, you may be able to apply only one discount, or “stack” deals to enjoy multiple breaks, AAA’s Smolan said.SHOP AROUND – SMARTLYIf your car insurance is just too pricey even with a “student away” discount, you can always check out other providers. Just be wary of what you might lose with a switch. “It’s always good to price-check, but I would caution against leaving solely for a cheaper rate,” Smolan said. “You might be losing all your longevity discounts – plus any grace and goodwill from being a longtime customer, if you ever have an accident.”CHANGE POLICIES CAREFULLYAn obvious way to save is to take your child off your insurance policy. Be careful, though, because presumably your kid will occasionally visit during the school year. With the “student away” option, they can still drive your car with coverage when they return on weekends or for holidays or summer break.That coverage could also prove useful if they borrow someone else’s car while away at college.The “student away” discount is so under the radar that even your insurer’s customer service reps may be unaware of it. If so, just ask for a supervisor, Valega said.”I don’t think people pay attention to this at all, but this is something every parent should consider.” More

(Reuters) – Decision time is close at hand for the Federal Reserve to plan the mechanics of how it ends the winddown of a balance sheet that remains swollen by historic standards.A readout of the U.S. central bank’s final meeting of 2023 showed “several” policymakers were ready to kick off discussion about how to stop the quantitative tightening (QT) process that has seen roughly $1.3 trillion of bonds roll off a balance sheet that topped out at around $9 trillion in mid-2022. Moreover, market participants reckon a swift removal of cash from a key Fed liquidity facility and rising money market volatility mean central bankers will need to change gears soon to ensure the remainder of QT goes smoothly. The change in outlook echoes fast-shifting expectations for Fed rate cuts amid quickly cooling inflation pressures. Minutes from December’s meeting “make it clear that the FOMC is ready to begin discussing the slowing of QT, likely at the January meeting,” said Nathaniel Wuerffel, a former top New York Fed staffer now head of market structure at Bank of New York Mellon (NYSE:BK).  “The scars from September 2019 – the last time the Fed ran off its balance sheet – run deep for a number of policymakers,” and they’ll want to take steps to avoid a replay. Officials gather in Washington on Tuesday and Wednesday for their first policy meeting of 2024. While considerable uncertainty remains over specifics of the QT endgame, there’s broad agreement it’s time to set the stage for it. To avoid disturbing markets, Evercore ISI, Barclays Capital, J.P. Morgan, Jefferies and TD Securities look for the Fed to announce a plan to slow QT at its March meeting and to begin implementing it quickly, likely at the May meeting. They see the first stage likely marked by slowing the run-off of Treasuries alone. Some estimate QT could be over by summer. Some expect the Fed will continue to let mortgage bonds mature from the balance sheet even after the main part of QT ends given its long-standing desire to get its holdings back to government bonds exclusively. Preliminary details of the conversation will likely be revealed when minutes from this week’s meeting are released in February, analysts say.AMBLING TOWARD AMPLE The Fed currently allows up to $95 billion per month in Treasury and mortgage bonds to mature and not be replaced. Begun in 2022, this effort rolls back some of the roughly $4.6 trillion of bond purchases that kicked off when the COVID-19 pandemic erupted in early 2020.Designed to provide stimulus and promote smooth market functioning in the health crisis, that ultimately doubled the size of Fed holdings to a record $9 trillion by the summer of 2022. Since then, QT has shrunk Fed holdings to $7.7 trillion.The Fed is aiming to have enough liquidity in the financial system to cushion shocks and afford it firm control over short-term rates, something it deems an “ample” reserves system. Fed officials don’t want to push things as they did in the last QT process, lest they repeat the turbulence that struck markets just over four years ago, which forced the central bank to intervene by borrowing and buying Treasuries to rebuild liquidity. The urgency faced by the Fed owes in part to a very swift rundown in the its Reverse Repo Facility. This proxy of excessive liquidity hit a peak of $2.6 trillion at the end of 2022 and has been falling due to QT. It stood at $581.4 billion on Monday, and Curvature Securities said in a recent note the trend of cash moving out of the facility will leave it at zero by the end of March.Some Fed officials, like Dallas Fed chief Lorie Logan, have suggested reserve repo usage would likely fall to zero or thereabouts before a decision on ending QT would be needed. Some market participants believe a higher number will prevail. Meanwhile, the other piece of the puzzle, bank reserves, have remained fairly steady at around $3.5 trillion since December. Reserves will “run off at a fast clip” if QT continues with an expended reverse repo facility, Wuerffel said, adding “This could create some funding frictions for some banks, particularly those that aren’t the largest money center banks.” Fed officials so far have given few signals that QT is up for a near-term change. Speaking earlier this month, New York Fed leader John Williams said rising money market rate volatility is a return to normal. The Fed should start “thinking about and planning about slowing, eventually slowing and stopping the reduction” in the balance sheet, he said, adding reserve levels remain high, suggesting he saw little near-term reason to alter QT. Fed Governor Christopher Waller, speaking on Jan. 16, flagged one key way the Fed will know a shift in QT might be needed. “If we start seeing reserves getting tighter and tighter, we may start seeing a lot of activity coming to the Standing Repo Facility, and that’ll be a good signal for us that, hey, we’re getting to that point,” Waller said. So far, the Standing Repo Facility has seen no real use beyond small tests, so notable action there would signal large banks need liquidity. More

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1. Futures subduedU.S. stock futures were subdued on Tuesday, as investors awaited the release of fresh earnings from several big-name companies, a bevy of key economic data, and a major Federal Reserve policy decision.By 05:30 ET (10:30 GMT), the Dow futures contract had shed 44 points or 0.1%, S&P 500 futures had fallen by 2 points or 0.1%, and Nasdaq 100 futures were mostly flat.The main averages on Wall Street climbed in the prior session, with the benchmark S&P 500 in particular surging by 0.8% to a fresh record high close. The tech-heavy Nasdaq Composite jumped by 1.12% and the 30-stock Dow Jones Industrial Average added 0.6%.In individual stocks, shares in iRobot (NASDAQ:IRBT) slumped by 8.8% after the robot vacuum maker and Amazon (NASDAQ:AMZN) announced they had mutually agreed to terminate a planned merger due to opposition from EU antitrust regulators. Elsewhere, SoFi Technologies (NASDAQ:SOFI) soared by 20.2% after the online personal finance group posted better-than-anticipated quarterly profit.2. Microsoft, Alphabet earnings aheadTech giant Microsoft and Google-parent Alphabet are set to unveil their latest quarterly earnings after the close of trading in New York on Tuesday, in the first wave of potentially market-moving corporate results this week.For Microsoft, the figures come after the Redmond, Washington-based company’s stock market value topped $3 trillion for the first time ever last week.Undergirding this sky-high valuation is Microsoft’s investment in OpenAI, whose ChatGPT chatbot has become one of the focal points of recent growing enthusiasm over generative artificial intelligence. Analysts will likely be paying close attention to any comments from the firm’s executives regarding how they hope to deploy the nascent technology, particularly at its crucial Azure cloud computing division.Alphabet, meanwhile, has recently launched its own advanced AI play, dubbed Gemini. The YouTube-owner has lauded this model as a sophisticated tool for crunching disparate pieces of information like video, text, and audio, with Chief Executive Sundar Pichai calling it “one of the biggest science and engineering efforts we’ve undertaken.”AI will also be front-and-center for Advanced Micro Devices (NASDAQ:AMD) when the chipmaker posts results after the bell later today. Analysts already hiked their price target for the semiconductor group earlier this month, citing the benefits of elevated demand for AI-powered chips.3. Boeing withdraws request for 737 Max 7 safety exemptionBoeing has confirmed that it is withdrawing its request for a safety exemption for a new series of its popular 737 Max planes, as the jetmaker wrangles with the continuing fallout from a dangerous mid-air door plug breach earlier this month.The exemption would have allowed U.S. regulators to expedite the process of approving Boeing’s upcoming 737 Max 7. Investors had widely anticipated that it would receive the official green light in the first half of this year.More doubt now surrounds the timeline for the much-anticipated certification of both the Max 7 and Boeing’s larger Max 10. According to Reuters, the company may be forced to roll out design changes more quickly than it had originally planned.Boeing’s decision also comes after it faced heavy pressure from U.S. lawmakers last week to withdraw its application for the exemption. U.S. Senator and aviation subcommittee chair Tammy Duckworth took a particularly strong stance against the request, arguing that it could have “catastrophic consequences on passenger safety.”4. BYD shares slip after disappointing profit forecastBYD (SZ:002594), the Warren Buffett-backed group that recently dethroned Tesla (NASDAQ:TSLA) as the world’s biggest electric vehicle (EV) maker by sales volume, has forecast full-year profit that missed analyst expectations, sending shares lower on Tuesday.The Chinese EV company said it now expects to report annual profit of between 29 billion yuan and 31 billion yuan, implying a rise of as much as 86.49% versus the prior year. However, the pace would be far slower than its 2022 net earnings growth of 446%.Analysts at Nomura noted that the outlook was 4% to 10% below their projections, the Wall Street Journal reported, citing a research note.BYD flagged that it was facing “fierce competition” in China’s EV industry, which has contributed to an intensifying price war among domestic automakers desperate to entice cost-wary consumers. Even still, the Shenzhen-based company said it has demonstrated “strong resilience” to these pressures, adding that it has been boosted by “rapid” expansion in overseas sales and expense reductions in its supply chain.5. Crude inches up amid Middle East tensionsOil prices inched up on Tuesday after the previous session’s losses, as escalating geopolitical tensions in the Middle East fueled supply concerns.By 05:01 ET, the U.S. crude futures contract traded 0.5% higher at $77.13 a barrel, while the Brent contract climbed by $82.15 per barrel.Crude markets are on edge after the U.S. vowed to take “all necessary actions” to defend its troops following a deadly drone attack in Jordan by Iran-backed militants, potentially resulting in regional energy supply disruptions in the oil-rich Middle East.The crude contracts fell over $1 on Monday as a deepening real estate crisis contributed to worries about demand from China, the world’s biggest crude consumer.Upgrade your investing with our groundbreaking, AI-powered InvestingPro+ stock picks. Use coupon PROPLUSBIYEARLY to get a limited time discount on our Pro and Pro+ subscription plans. 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The central bank is widely expected to lower interest rates this year. But with growth and consumer spending chugging along, explaining it may take some work.The Federal Reserve is widely expected to leave interest rates unchanged at the conclusion of its meeting on Wednesday, but investors will be watching closely for any hint at when and how much it might lower those rates this year.The expected rate cuts raise a big question: Why would central bankers lower borrowing costs when the economy is experiencing surprisingly strong growth?The United States’ economy grew 3.1 percent last year, up from less than 1 percent in 2022 and faster than the average for the five years leading up to the pandemic. Consumer spending in December came in faster than expected. And while hiring has slowed, America still boasts an unemployment rate of just 3.7 percent — a historically low level.The data suggest that even though the Fed has raised interest rates to a range of 5.25 to 5.5 percent, the highest level in more than two decades, the increase has not been enough to slam the brakes on the economy. In fact, growth remains faster than the pace that many forecasters think is sustainable in the longer run.Fed officials themselves projected in December that they would make three rate cuts this year as inflation steadily cooled. Yet lowering interest rates against such a robust backdrop could take some explaining. Typically, the Fed tries to keep the economy running at an even keel: lowering rates to stoke borrowing and spending and speed things up when growth is weak, and raising them to cool growth down to make sure that demand does not overheat and push inflation higher.The economic resilience has caused Wall Street investors to suspect that central bankers may wait longer to cut rates — they were previously betting heavily on a move down in March, but now see the odds as only 50-50. But, some economists said, there could be good reasons for the Fed to lower borrowing costs even if the economy continues chugging along.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?  More