Economy

MOSCOW (Reuters) – Most finance ministers and central bank chiefs from the BRICS group of countries did not attend a high-level meeting in Moscow on Friday ahead of a BRICS summit later this month, sending more junior officials instead, official documents showed.Finance ministers from Egypt and the United Arab Emirates and the head of Iran’s central bank were present as Russian Finance Minister Anton Siluanov called for the creation of an alternative to the Western-dominated global financial system.But finance ministers and bank chiefs from China, India and South Africa stayed away, sending deputies or more junior officials instead, a day after Kremlin aide Yuri Ushakov accused the West of pressuring countries not to attend the BRICS summit.BRICS, originally comprising Brazil, Russia, India, and China, has expanded to include South Africa, Egypt, Ethiopia, Iran, the UAE, and Saudi Arabia.The Moscow meeting is modeled on the Group of 20 schedule, where summits are preceded by meetings of top economic policy officials who outline proposals to be reviewed by leaders at the summit.Russia, heavily sanctioned by the West over its war in Ukraine and cut off from international capital markets, is trying to woo BRICS partners with initiatives such as the creation of the BRICS Bridge international payment system.”The creation of a cross-border payment initiative is our main task,” Siluanov told the officials. Russia is also pushing for the creation of a BRICS clearing centre, a rating agency, a reinsurance company, and a commodities exchange.Siluanov has also proposed setting up a joint investment platform based on the group’s New Development Bank, its only functioning financial institution. The platform will use a new digital form of transactions, he said, without elaborating.TRANSACTION DELAYSRussia has recently experienced delays in international transactions with its trading partners, including BRICS member countries, as banks in these countries fear punitive actions from Western regulators.The payment problems have forced Russian companies to use barter deals and cryptocurrencies to facilitate payments.China was represented in Moscow by Deputy Finance Minister Liao Min and Deputy Central Bank Governor Changneng Xuan, and India by Finance Ministry Secretary Ajay Seth.The summit is scheduled for Oct. 22-24 in Kazan, capital of Russia’s Tatarstan region.President Vladimir Putin’s foreign policy aide, Yuri Ushakov, said nine of the 10 BRICS states would send their leaders, though Saudi Arabia would send its foreign minister, Prince Faisal bin Farhan Al Saud. The Saudi delegation was absent from the Friday meeting. More

(Reuters) – The case for quarter-point U.S. interest-rate cuts at upcoming Federal Reserve policy meetings appeared intact on Friday after a report showed producer prices were unchanged last month compared to the prior month, suggesting inflation continues on track toward the Federal Reserve’s target. Futures contracts that settle to the Fed’s policy rate continued to imply only a 15% chance that the Fed will leave its target for short-term borrowing costs in the current 4.75%-5.00% range when it meets in early November, with the bulk of bets on reductions in each of the last two meetings of this year and for the each of the first several meetings of 2025, to be in the 3.50%-3.75% range by the middle of next year.  More

The unchanged reading in the producer price index for final demand last month followed an unrevised 0.2% gain in August, the Labor Department’s Bureau of Labor Statistics said on Friday. Economists polled by Reuters had forecast the PPI edging up 0.1%.In the 12 months through September, the PPI increased 1.8% after climbing 1.9% in August. Government data on Thursday showed consumer prices rising slightly more than expected in September, lifted by higher food costs. Most economists did not view the uptick in inflation as a sign that price pressures were building up again. Housing inflation cooled considerably in September. Economists expected mild increases in September in the inflation measures tracked by the U.S. central bank for its 2% target.Traders anticipated a 25 basis points rate reduction at the Fed’s Nov. 6-7 policy meeting. They have abandoned expectations for a half-point rate reduction following a strong September employment report as well as other data that have offered a more upbeat picture of the economy than previously thought.The Fed last month cut its policy rate by 50 basis points to the 4.75%-5.00% range. It hiked rates by 525 basis points in 2022 and 2023. More

The U.K. economy returned to growth in August following two consecutive months of stagnation, providing a slight boost for the Labour government.
The U.K. economy grew 0.2% in August on a month-on-month basis, flash figures published by the Office for National Statistics showed Friday.
The reading comes as Finance Minister Rachel Reeves is set to deliver her Autumn Budget at the end of this month.

Alexander Spatari | Moment | Getty Images

LONDON — The U.K. economy returned to growth in August following two consecutive months of stagnation, providing a slight boost as the Labour government prepares to deliver its first budget later this month.
The economy grew 0.2% on a month-on-month basis, flash figures published by the Office for National Statistics showed Friday, meeting expectations of economists polled by Reuters.

It follows an economic flatlining in June and July after the U.K. recorded modest but steady expansion in almost every month this year. Britain emerged from a shallow recession at the start of the year.
Over the three months to August, Britain’s economic growth also expanded 0.2%, compared with the 0.5% recorded in the three months to July.
“The UK economy had a remarkable run through the first few months of 2024, at least if the monthly GDP figures are to be believed. But those same figures now show that this strength was short-lived,” ING’s Developed Markets Economist James Smith said in a note shortly after the release.
“The bottom line is that the economy still seems to be growing at a reasonable pace, but the 0.6/0.7% quarterly GDP readings we became accustomed to in the first two quarters of the year are not going to be repeated in the second half of the year. We’re looking for 0.2% growth in the third quarter overall.”
Sterling rose slightly against the U.S. dollar following the release, trading up 0.05% at $1.3067 by 8:56 a.m. London time. U.K. government bond yields, meanwhile, ticked lower, with the 10-year trading around 4.211%, having climbed sharply over recent days.

The U.K.’s dominant services sector showed slight growth of 0.1% in the month to August, while production and construction output rose by 0.5% and 0.4%, respectively.
Finance Minister Rachel Reeves welcomed the data, saying returning the economy to growth is the government’s “number one priority.”
“While change will not happen overnight, we are not wasting any time on delivering on the promise of change,” she said in a statement. The new Labour administration was voted into power in July during snap elections.

All eyes on the budget

The reading comes as Reeves is set to deliver her Autumn Budget at the end of this month, with tax hikes and spending cuts expected as she tries to overcome an estimated £22 billion ($29 billion) black hole in the public finances. The Conservative opposition party, which led the country until snap elections earlier this year, deny the gap.
ING’s Smith said that if the U.K. Treasury was hoping the strong growth in the first half of the year would unlock some “extra fiscal headroom” in the budget, “it is likely to be left disappointed.”
“Remember the key here is what the Office for Budget Responsibility projects for the UK economy. And like the BoE, they are unlikely to take much inference from the GDP figures so far this year. Indeed, if anything the OBR forecasts already sit at the more optimistic end of the spectrum,” he added.
The government is pitching its vision for an era of “national renewal,” as it attempts to inject some optimism into the public psyche after painting a gloomy picture of the state of the economy.
Lindsay James, investment strategist at Quilter Investors, said Reeves faces a “tricky balancing” to ensure her decisions don’t stifle further economic growth.
“With interest rates beginning to fall, the responsibility has shifted from the Bank of England to Rachel Reeves, who must now make critical fiscal decisions. She and the Prime Minister have indicated that ‘pain’ is necessary for future prosperity, but there is a real risk of overcorrection at the expense of economic growth,” she said. More

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The Bank of Korea (BOK) lowered its benchmark interest rate by a quarter percentage point to 3.25% at its monetary policy review, an outcome expected by 34 of 37 economists polled by Reuters.Governor Rhee Chang-yong holds a news conference at around 0210 GMT, which will be livestreamed via YouTube. More