Economy

(Reuters) -Hurricanes Milton and Helene are putting new pressure on the federal government’s emergency response agency FEMA, which is already short of money, hit by a politics-fueled disinformation campaign and burdened by its past failures in handling massive storms.Hurricane Milton was expanding on Tuesday as it chugged past Mexico’s Yucatan Peninsula en route to Florida’s densely populated Tampa Bay area, still reeling from the devastating Hurricane Helene less than two weeks ago.WHAT IS FEMA?The Federal Emergency Management Agency is the U.S. government agency whose mission is to help people before, during and after disasters, including hurricanes, tornados, earthquakes and floods.Its reputation was battered by its poor handling of Hurricane Katrina in 2005 and the agency has struggled to recover.FEMA has a workforce of 20,000 people that can swell to more than 50,000 active members during major disasters, according to its website. It has 10 regional offices and the capacity to coordinate resources from across the federal government.Officially created in 1979, it became part of the Department of Homeland Security in 2004.FEMA STAFFINGFEMA says it is currently supporting 111 major disasters and 16 emergency declarations. According to its daily operations briefing, only 9% of its disaster-response workforce is available for Milton.FEMA Administrator Deanne Criswell said on Tuesday the agency was prepared to meet the needs of people in Milton’s path. FEMA has staffing options, including reassigning people from its longer-term recovery offices, to support immediate needs, she said.The agency can also tap into DHS “surge capacity” that allows it to utilize people from agencies within the department, Criswell said. “We have these layers of staffing models because we know that we are going to have to face multiple events at once, just like this,” she told CNN.FEMA FUNDINGHomeland Security Secretary Alejandro Mayorkas told reporters on Oct. 2 that FEMA did not have enough funding for the remainder of the hurricane season, which lasts from June to November. A group of senators from U.S. states in the paths of the hurricanes sent a letter to Senate leaders last week noting the need for additional money for FEMA by the end of this year. Speaker Mike Johnson would not commit to bringing the Republican-controlled House of Representatives back to augment emergency-relief funding before the Nov. 5 election.FEMA is providing aid to hurricane victims from a disaster-relief fund that received $20.3 billion from Congress for the current fiscal year. However, at the request of the Biden administration, the agency is allowed to spend that money faster than anticipated because of the severity of recent disasters. DISINFORMATION CAMPAIGNIn addition to real-life disasters, the agency has battled a slew of false rumors about how its funds have been used. Former President Donald Trump and his Republican allies have said President Joe Biden and Vice President Kamala Harris, the Democratic candidate for president, had used federal emergency money to help people who were in the country illegally. U.S. Representative Marjorie Taylor Greene went as far as to say officials control the weather.FEMA has been the target of so many falsehoods it has set up a rumor response page on its website to tamp them down. One entry addresses the diversion concerns:”Rumor: Funding for FEMA disaster response was diverted to support international efforts or border-related issues.”Fact: This is false. No money is being diverted from disaster-response needs. FEMA’s disaster-response efforts and individual assistance is funded through the Disaster Relief Fund, which is a dedicated fund for disaster efforts. Disaster Relief Fund money has not been diverted to other, non-disaster related efforts.”FEMA FAILURESThe U.S. disaster agency has been much-maligned over emergency responses to hurricanes that fell short, including in Puerto Rico in 2017 when it was hit by Hurricane Maria. Residents accused then-President Trump of being slow to dispatch aid after Maria and clumsy in his public remarks once it was clear the U.S. territory had been devastated.     In 2005, Hurricane Katrina battered New Orleans and flooded parts of the city as residents crowded into ill-prepared shelters. Katrina devastated the Gulf of Mexico coast and caused more than 1,800 deaths. It also shattered the reputation of FEMA, which was sharply criticized for its response. More

BRASILIA (Reuters) -Brazil’s Senate on Tuesday approved President Luiz Inacio Lula da Silva’s nominee to lead the central bank, Gabriel Galipolo, who emphasized to lawmakers that the leftist leader was emphatic and clear in guaranteeing him freedom in decision-making.Regarded as a heterodox economist with direct access to Lula, Galipolo is currently the central bank’s director of monetary policy. He has sought to ease market concerns about his potential for leniency on inflation if pressured by the president.Speaking at a Senate committee hearing, where his nomination to lead the bank starting next year was approved unanimously, Galipolo reiterated commitment to pursuing a 3% inflation target and noted that policymakers were concerned about unanchored expectations for consumer prices. “It is up to the central bank to pursue this goal unequivocally by maintaining interest rates at a restrictive level for as long as necessary to achieve it,” he said.Later on Tuesday, Galipolo’s nomination was approved by the full Senate with a vote of 66 to 5.During the hearing, Galipolo acknowledged that Brazil’s annual core inflation is on par with that of more stable countries like the U.S, while noting that Latin America’s largest economy is not decelerating, which is why disinflation should be slower and more costly.Galipolo said that while current data such as inflation and labor market figures are important, the central bank’s focus is on a longer-term horizon.”There is unanchoring (of inflation) in the relevant horizon that bothers us,” he said, referring to a variable that economists view as indicative of a potential acceleration in the pace of interest rate hikes.Galipolo, along with the entire rate-setting board Copom, voted last month to kick off a tightening cycle, raising interest rates by 25 basis points to 10.75%. Before the decision, when his nomination was already public, Lula said of policymakers: “If they need to hike interest rates, then they need to hike interest rates.”The remark was viewed as a shift following ongoing calls for lower borrowing costs to support the economy and investment.Brazil’s annual inflation in mid-September reached 4.12%, while expectations of private economists surveyed weekly by the central bank are for inflation to hit 4.38% this year, 3.97% next year and 3.60% in 2026, all above the official target.MARKET SKEPTICISMGalipolo’s connection to Lula, with whom he was in Mexico last week for President Claudia Sheinbaum’s inauguration, has raised skepticism among many market participants since he was first tapped for a central bank position last year.Galipolo previously served as the Finance Ministry’s executive secretary under Lula, and has been the bank’s monetary policy director since July 2023.Markets initially voiced concern about his perceived lack of technical expertise and views on issues such as the need for state intervention to prioritize social needs and the suggestion that the central bank could act across the entire yield curve.Galipolo has since overcome initial resistance to succeed current Governor Roberto Campos Neto, appointed by former right-wing President Jair Bolsonaro. Neto has faced vocal criticism from Lula since the president took office in January 2023. Jefferson Laatus, chief strategist at the Laatus group, said market worries will not cease immediately. “We will only know for sure about it in January, at the first meeting that will actually take place with him as governor,” he said.Asked about financial autonomy of the central bank, a proposal opposed by the Lula administration but supported by Campos Neto, Galipolo said the current discussion marks a “significant advance.” More

Save over 65%$99 for your first yearFT newspaper delivered Monday-Saturday, plus FT Digital Edition delivered to your device Monday-Saturday.What’s included Weekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysis More

Save over 65%$99 for your first yearFT newspaper delivered Monday-Saturday, plus FT Digital Edition delivered to your device Monday-Saturday.What’s included Weekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysis More

Save over 65%$99 for your first yearFT newspaper delivered Monday-Saturday, plus FT Digital Edition delivered to your device Monday-Saturday.What’s included Weekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysis More

BEIJING (Reuters) -China said on Tuesday it was “fully confident” of achieving its full-year growth target but refrained from introducing stronger fiscal steps, disappointing investors who had banked on more support from policymakers to get the economy back on track.China shares rallied in early trade to two-year highs after the long National Day holiday but quickly lost steam after the state planner did not provide details to sustain market optimism. Hong Kong shares slumped as investors also walked back some of the stimulus excitement.Chairman of the National Development and Reform Commission (NDRC) Zheng Shanjie told a press conference the government planned to issue 200 billion yuan ($28.3 billion) in advance budget spending and investment projects from next year.The country will also quicken fiscal spending and “all sides should keep making efforts more forcefully” to strengthen macroeconomic policies, he added.”The international market is volatile, global trade protectionism has intensified, and uncertain and unstable factors have increased. These will have an adverse impact on my country through trade, investment, finance and other channels,” Zheng said.Investors and economists say more policy support is needed on the fiscal side to sustain the market’s optimism, likely to be issued by the finance ministry. “So far, the NDRC press conference appears to run short on details with regards to stimulus measures. Hopes were raised but the delivery was disappointing,” said Christopher Wong, currency strategist at OCBC.In an effort to reverse the economic downturn, China unveiled before the week-long Golden Week holiday its most aggressive monetary stimuluspackage since the COVID-19 pandemic, coupled with extensive property market support.Premier Li Qiang on Tuesday urged all government departments to support growth and improve policy coordination during a special study session on economic policy held by the cabinet, according to state television.Separately, state television quoted Li as saying China would unveil specific plans for policies that are being studied, and consider reserve policies for next year.MORE SUPPORT NEEDEDAnalysts said it would take time to restore consumer and business confidence and get the economy back on more solid footing. A housing market recovery, in particular, could be a long slog.”We anticipate that the government will arrange 1-3 trillion yuan of additional fiscal support this year and next to boost the real economy, recapitalise banks, and stabilise the property market,” said Yue Su, principal China economist at the Economist Intelligence Unit.”This, along with investments from special long-term bonds planned for next year, is expected to primarily impact 2025’s economic growth.” The Economist Intelligence Unit retains its economic forecast of 4.7% growth for this year and 4.8% growth in 2025, Su said. The government set a growth target of around 5% this year, but economic indicators showed growth momentum has waned since the second quarter, weighing on household spending and business sentiment amid a severe property downturn.A private report by recruiting platform Zhaopin showed that average pay offered by recruiters in China’s 38 major cities fell 2.5% in the third quarter from the second, and down 0.6% from a year earlier.To address insufficient domestic demand, Zheng told reporters that policymakers will focus on enhancing people’s livelihood to stimulate consumption and investment, such as supporting disadvantaged people, consumer goods trade-ins, elderly care and births. No further details were announced.Vice Chairman of the NDRC, Liu Sushe, stated that most of the 6 trillion yuan in government investment this year was allocated to specific projects, with 90% of local government special bonds used for project construction issued by September.The government has issued 1 trillion yuan of ultra-long-term special bonds planned for this year to fund major projects, and more such bonds will be issued next year, Zheng said.At the same press conference, another vice chairman of the NDRC, Zhao Chenxin, said that China’s economic growth had remained “generally stable” over the first three quarters.($1 = 7.0597 Chinese yuan) More

LUXEMBOURG (Reuters) – Hungary will hold up a final deal on a $50 billion G7 loan to Ukraine until after the U.S. presidential election by delaying its decision on the timing of the renewal of EU sanctions against Russia, Hungary’s finance minister said.Washington needs the EU to revise its timeframe for the renewal of sanctions to every three years from the current six months for it to contribute some $20 billion to the G7 loan, matching the European Union’s contribution, EU officials said.The remaining $10 billion would be provided by G7 members Canada, Britain and Japan, who are already on board.The loan, agreed in principle by G7 leaders in June, would be serviced with proceeds generated by some $300 billion of Russian central bank assets frozen in the West after Moscow invaded Ukraine in early 2022.Washington does not want to worry every six months whether the Russian assets backing the loan will remain frozen or not, the officials said.”We believe that this issue, the prolongation of the Russian sanctions, should be decided after the U.S. elections. We have to see in which direction the future U.S. administration is going with this issue,” Finance Minister Mihaly Varga told a news conference.The European Union has said that the proceeds from all the Russian assets frozen in the West can finance a loan of up to 45 billion euros ($49.44 billion). Because most of the assets are in Europe, the EU said it can provide up to 35 billion euros for the G7 loan. That amount would be reduced by the sum the United States would contribute.The issue will be further discussed at the G7 finance ministers meeting in Washington in late October, but Hungary’s decision means that the final contributions of each of the G7 countries will only be decided after the Nov. 5 election.($1 = 0.9102 euros) More

BENGALURU (Reuters) – The European Central Bank (ECB) will cut its deposit rate by 25 basis points on Oct. 17 and again in December, according to more than 90% of economists polled by Reuters who now see a quicker decline in euro zone inflation.Only 12% of economists polled last month had predicted an October cut. But most have swiftly changed their view to cuts in both October and December after September inflation dipped below 2% and some Governing Council members, including ECB President Christine Lagarde, hinted a reduction was coming this month.”The latest developments strengthen our confidence that inflation will return to target in a timely manner,” Lagarde told a European Union parliamentary hearing last week. “We will take that into account in our next monetary policy meeting in October.”For the last six months, economists predicted a total of three 25 basis point reductions in the deposit rate this year but are now expecting four.Over 90% of economists, 70 of 75, said in an Oct. 2-8 Reuters poll they expected the ECB to cut the deposit rate for a second straight meeting by 25 basis points next week, taking it to 3.25%. Just five predicted no change. Last month, only around 12% of economists, or nine of 77, forecast an October cut.The central bank will cut again to 3.00% in December, according to 68 of 75 economists, in line with market pricing.”With fading inflation pressures, both on headline and core, we believe the ECB is going to be able to get back to somewhere near its neutral rate more quickly as it manages the accelerating downside risks to growth,” said James Rossiter, head of global macro strategy at TD Securities.”With growth still below trend next year, this is enough for the ECB to cut steadily from October.”INFLATIONThe ECB doesn’t have a neutral rate estimate, which neither restrains or stimulates the economy, but staff published a paper this year showing a real rate of around zero – or about 2% in nominal terms – when adjusted for inflation.An over-55% majority of economists, 41 of 72, predicted the ECB to cut twice next quarter, to 2.50%. The central bank will lower rates twice more later next year, the poll showed.  That is a swifter path than was expected last month but in line with current market pricing.Inflation in the common currency bloc, which declined to 1.8% last month, will pick up a little and be at the ECB’s 2% target next quarter and stay around there until at least 2027, the poll found. Economists last month expected inflation to be 2% later in 2025.However, core inflation will remain elevated this quarter and average 2.7%, where it was in September, before slowing gradually next year.”The closer the ECB moves its key interest rates to the neutral interest rate… the more vigorously the hawks in the ECB Governing Council are likely to argue against rapid interest rate cuts,” said Marco Wagner, senior economist at Commerzbank (ETR:CBKG).”At the beginning of next year, core inflation is still likely to be around 2.75%, and the continued strong wage increases do not yet suggest that inflation, particularly in services, will slow noticeably in the coming months.”Despite recent PMIs suggesting an economic slowdown the euro zone economy was expected to grow at a decent pace over the coming year.The economy will grow 0.2% this quarter, matching Q2’s rate, and average 0.7% growth this year, the poll showed, before expanding by 1.2% in 2025 and 1.4% in 2026.However, growth in Germany, Europe’s largest economy, stagnated last quarter after contracting 0.1% in Q2 and will expand 0.1% this quarter. It would grow 0.8% and 1.3% in 2025 and 2026, respectively.(Other stories from the Reuters global economic poll) More