Economy

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BUDAPEST (Reuters) -Data suggests Hungary has overcome its inflation crisis, its economy minister said on Wednesday, after the country posted the highest rate of price growth in the European Union last year before it started slowing towards the central bank’s target.Marton Nagy said Prime Minister Viktor Orban’s cabinet would still “keep an eye” on inflation, but would also focus on reviving economic growth amid a weaker-than-expected recovery from last year’s inflation-led downturn.The remarks by Nagy, a former central banker, appeared to be at odds with the National Bank of Hungary’s assessment, which last month warned policymakers against prematurely declaring victory over inflation and backed a cautious rate policy.”While many raise questions about our statements that we have managed to push inflation to the ground and it will stay there, this is looking more and more like a certainty based on the latest results and data,” Nagy told a business conference.Nagy said favourable inflation trends were likely to have prevailed in September.Economists polled by Reuters projected an annual inflation rate of 3.1% last month. The NBH targets 3% inflation, with a tolerance band of one percentage point either side.The NBH, which has slashed borrowing costs by a combined 1,150 bps in its current cycle, said a careful and patient policy approach was justified and said policymakers should not overreact to rate easing by the U.S. Federal Reserve.The bank has also flagged a rebound in core inflation to around 5% by the end of 2024 and said its preferred measure of underlying price trends could still exceed 3% next year.The forint, central Europe’s worst-performing currency which has lost more than 4% versus the euro this year, also plumbed its weakest levels per euro this week than at any point since the NBH started cutting rates in May 2023. More

The report added drugs on the list will not be subject to requirements such as prior authorization or quantity limits. The government will ask for feedback on its initial list of 101 generic drugs which will cover common prescriptions such as penicillin, metformin, lithium and albuterol asthma inhalers, according to the Axios report. It would also include common drugs for high cholesterol, high blood pressure and other chronic conditions. The program is not expected to start until January 2027, the report said.The Centers for Medicare & Medicaid Services did not immediately respond to a Reuters request for comment. The U.S. Medicare health program spends billions of dollars annually on drugs for over 67 million people aged 65 and older or who have disabilities.It recently unveiled new maximum prices for the first 10 high-cost prescription medicines negotiated under the Biden Administration’s Inflation Reduction Act. More

LONDON (Reuters) – Ethiopia’s bondholders will have to take a writedown as part of the country’s debt restructuring, State Finance Minister Eyob Tekalign told Reuters, adding he still hoped the debt rework could be completed by year-end. Ethiopia became Africa’s third country to default in as many years in December 2023, but progress on restructuring its international debt has been slow as the country negotiated a $3.4 billion programme with the International Monetary Fund.Investors have rejected the government’s most recent indicative debt rework scenario, which sets out an 18% haircut – or writedown – on its sole $1 billion bond maturing in 2024.Ethiopia needs to abide by the IMF’s debt sustainability analysis which envisages Ethiopia “moving to medium risk distress under low debt carrying capacity in the next two, three years,” said Eyob, referring to the calculations and projections underpinning debt reworks. “Based off of that, some haircut is needed,” he said, adding the latest debt sustainability analysis showed the country had a solvency issue and not just the liquidity crunch bondholders had assumed. Eyob said non-disclosure agreements between the government’s and the bondholders’ advisors were extended last week to spring 2025, allowing for more negotiations. However, formal talks with bondholders were not on the agenda right now though Ethiopia was open to meeting them on the sidelines of the IMF World Bank meetings later this month. “We’re hoping to meet them there,” Eyob said.Speaking about efforts to shelter the poorest section of the population from the fallout of birr depreciation, Eyob said a raft of measures had been taken for which the government had earmarked 30% of its budget in 2024.Measures ranged from subsidies for items such as cooking oil, fertilizer and fuel, to lifting salaries of civil servants by as much as 300% for those on the lower pay scale.Eyob said he did not expect price pressures to materialise on the scale predicted by analysts, who have forecast average inflation could hit 30% in 2025 after 23% this year. “The signs are that we are actually going… on the opposite side of that,” he said, confirming the country was on track for single digit inflation by June 2025.Government reforms had sparked fresh interest from investors, Eyob said, predicting foreign direct investment – which came in at more than $3 billion in the financial year to early-July – to double in the next two or three years.”Mining is a fairly new sector… and we’re seeing significant interest in this,” said Eyob, adding agriculture and manufacturing were also a focus.Asked about a swap line Ethiopia has agreed with China’s central bank according to reports in September, Eyob declined to give details, though said it should be bigger than the $800 million it has with the UAE. “It would significantly enhance business between the two countries,” he added. More

BEIJING (Reuters) – China has recently engaged in “intensive communications” with the United States and the European Union on electric vehicle trade issues, state news agency Xinhua reported on Wednesday, citing people familiar with the matter. The China-EU working team will continue consultations following the EU’s final anti-subsidy ruling on Chinese EVs on Oct. 4, Xinhua reported. More

WASHINGTON (Reuters) – The Federal Aviation Administration could approve a license for the launch of SpaceX’s Starship 5 as soon as this month, a source told Reuters on Tuesday.Last month, the FAA said it did not expect a determination on a license before late November. SpaceX said on social media late on Monday that Starship’s fifth flight test could launch as soon as Oct. 13, pending regulatory approval.The FAA, which has repeatedly said it did not expect to decide on a license until late November, on Tuesday only said it continues to review the proposed mission and would make a decision “once SpaceX has met all licensing requirements.” It made no mention of the November timeframe.SpaceX CEO Elon Musk has harshly criticized the FAA, including for proposing a $633,000 fine against SpaceX over launch issues and for the delay in approving the license for Starship 5, which the company says has been ready to launch since August.Musk has called for the resignation of FAA Administrator Mike Whitaker and threatened to sue the agency.SpaceX suggested last month the delay in FAA approval was over “superfluous environmental analysis”Whitaker faced questions at a congressional hearing last month about the delay and responded that SpaceX had failed to complete a timely sonic boom analysis for the Starship 5 launch.”The delay of the Starship (launch) had to do with SpaceX filing an application and not disclosing that they were in violation of Texas and federal law on some matters, and that’s a requirement to get a permit,” Whitaker said.In an email invitation to VIP guests seen by Reuters, SpaceX said it is targeting the launch for Sunday. The invitation added “as with any test, there is a chance we don’t launch on the first attempt.”On Sunday, the FAA said SpaceX’s workhorse Falcon 9 rocket could return to flight for a mission on Monday for the European Space Agency’s Hera spacecraft from Florida.The FAA on Sept. 30 said SpaceX must investigate why the second stage of its Falcon 9 malfunctioned after a NASA astronaut mission, grounding the launch vehicle for the third time in three months. More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Volatility in the $27tn US Treasury market has surged to its highest level since the start of the year, as nervy investors quickly readjust their expectations for how quickly the Federal Reserve will cut interest rates.Stellar jobs numbers on Friday sparked one of the biggest daily swings in bond yields this year, as investors pencilled in a slower pace of rate cuts. The 10-year yield, which had been falling since late April, jumped 0.13 percentage points on the day as prices fell, and is now trading above those levels at about 4.02 per cent. Investors are now bracing for potential further volatility on Thursday when US consumer price inflation data is released.“The market is still lurching from one narrative to the other on an almost weekly basis,” said William Vaughan, associate portfolio manager at Brandywine Global Investment Management.The Ice BofA Move index, a gauge of bond investors’ expectations of future volatility in the Treasury market, jumped on the jobs data to its highest level since January and has remained elevated.“Because the Fed has been data-dependent, [for] every economic number, you have this volatility risk,” said Leslie Falconio, head of US taxable fixed income strategy in UBS Asset Management’s chief investment office.The jobs data dashed investor hopes of a half-percentage point cut at the Fed’s November meeting. Investors are now expecting two quarter-point cuts by the end of the year, according to swaps markets.New York Fed president John Williams told the Financial Times this week that the central bank was “well positioned” to pull off a soft landing for the US economy. But decisions would hinge on the data, rather than following a “preset course”, he said.Economists are forecasting a slight fall in annual consumer price inflation to 2.3 per cent in September when figures are published on Thursday. “If we see a small miss to the downside on CPI tomorrow then I think the rally in Treasuries could resume,” said Craig Inches, head of rates and cash at Royal London Asset Management.“By contrast, a strong inflation number would likely see a very sharp re-rating of interest rate expectations, and call into question the ability for the Fed to cut further in 2024.”Jeffrey Sherman, deputy chief investment officer at asset manager DoubleLine, said on a webcast on Tuesday that it felt like the US economy is “still in a decent spot”. But “things could fall apart if we decide to all save money and we don’t want to consume any more”, he added. “We’re not out of the woods yet.” More

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