Economy

Additionally, food inflation slowed to 1.3% from 5.1%, and services inflation decreased to 1.1% from 1.6%. The core B-index, which excludes volatile items, also showed a slowdown in monthly inflation to 1.2% from 1.5%.BofA economists highlighted that on a seasonally adjusted basis, headline inflation in Turkiye slowed to an average of 2.4% in the fourth quarter from 3% in the third quarter, and the B-index fell to 2.4% from 2.6%. The report noted that the recent minimum wage increase, which was at the lower end of expectations, poses limited upside risk to BofA’s inflation forecast of 25%. BofA also suggested that if administrative price changes align with expected inflation rather than being indexed backwards, inflation could be on the lower side.Regarding monetary policy, BofA commented that the Central Bank of the Republic of Turkiye (CBRT) should continue its monetary easing policy with further rate cuts. The CBRT had reduced its policy rate by 250 basis points in December, as anticipated by BofA. Despite a lack of a pre-determined cycle and fewer meetings scheduled for the year, BofA now expects another 250 basis point reduction in January. This prediction comes in light of the fact that there will be no CBRT meeting in February. BofA maintains its projection that the policy rate will drop to 30% by the end of the year through seven cuts in 250 basis point increments.The bank’s analysts believe that Turkish lira (TRY) savings will remain attractive throughout the year as long as positive real interest rates are preserved. They anticipate the TRY to appreciate in real terms, although they note that the potential for appreciation is diminishing as inflation declines. Consequently, BofA has revised its year-end forecast for the USD/TRY exchange rate to 41 from the previous estimate of 44.This article was generated with the support of AI and reviewed by an editor. For more information see our T&C. More

(Reuters) – Federal Reserve Vice Chair of Supervision Michael Barr’s decision on Monday to resign early from his regulatory oversight role sets up an early test of how Donald Trump will try to shape the U.S. central bank during his second term as president.Barr said on Monday he plans to vacate his leadership role on the Fed’s Board of Governors on Feb. 28, but stay on as a governor, with a term that runs through January 2032. The move leaves Trump no immediate opening to shape interest rate setting by nominating someone new to the Fed’s board. But it does give him the option to quickly elevate a current board member to run the Fed’s banking oversight function in a way more in line with his lighter-touch preferences, and avoids what could have been a disruptive legal showdown over political control of the role. Barr is only the second person to be the Fed’s vice chair for supervision, a position created after the 2007-2009 financial crisis and the flurry of regulatory reform that followed. “Regardless of whether or not this was a kowtow or for other reasons, this will likely be precedent-setting for how political the role of the vice chair for supervision is,” said Steven Kelly, associate director of research at the Yale School of Management’s Program on Financial Stability. “Barr stepping down likely means the role will continue to roll over with presidential administrations, much more like the other banking agencies’ leadership roles.”Fed Governor Michelle Bowman, who has repeatedly staked out her opposition to Barr’s tougher regulatory approach, is a likely pick for his successor under the incoming Trump administration, analysts said.At the same time, Barr’s decision to remain a Fed governor, which will see him continue to vote on interest rate decisions, may help fortify the central bank’s political independence as far as monetary policy goes, some observers said. Central bankers and economists generally view insulation from political sway on interest rate decisions to be critical to inflation-control efforts.”The hypothesis that the Fed (Powell) is more willing to work with Republicans on regulation and supervision, as a way to preserve monetary policy independence, might have legs,” LH Meyer analyst Derek Tang wrote.Fed Chair Jerome Powell’s role as the central bank’s chief does not end until 2026.WHITE HOUSE INFLUENCEGraham Steele, an academic fellow at Stanford Law School and former assistant secretary at the Treasury Department in the Biden administration, worries Barr’s move may create long-term issues for the central bank. Quitting the vice chair role now “sends the message that the Fed is not independent – either in the administrative agency sense or the central bank sense.””I imagine that the goal here was to avoid a legal and political fight, but it sets its own precedent about political control,” Steele said of the resignation. “The ones forcing the confrontation are the incoming administration and the banking industry, not Vice Chair Barr, who I think is right on the law.”Barr has only infrequently remarked on monetary policy during his two and a half years at the Fed, but has always voted with Powell. Trump railed frequently against Powell for rate decisions he disagreed with during his first term in the White House, and analysts have speculated on whether he would try to remove the Fed chief in an effort to exert control. Powell has said such a move would not be legal. The president-elect’s advisors have been looking for ways to increase the White House’s influence over the Fed, including potentially removing Barr from his leadership role.Any effort to do so “could also have set the precedent for a president to also fire the Fed’s chairman,” said Brian Gardner, chief Washington policy strategist at Stifel. “That issue has been averted for now.” More

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President-elect Donald Trump is considering a tariff plan that will narrow the focus to a select set of goods and services, according to a Washington Post report.
Trump, however, disputed the report in a post on Truth Social, saying “That is wrong.”

U.S. President-elect Donald Trump looks on during Turning Point USA’s AmericaFest at the Phoenix Convention Center on December 22, 2024 in Phoenix, Arizona. 
Rebecca Noble | Getty Images

President-elect Donald Trump is considering a plan that still would apply tariffs to all nations but narrow the focus to a select set of goods and services, according to a Washington Post report.
The new approach to tariffs likely wouldn’t be as powerful as Trump’s earlier ideas but still would cause major changes to global commerce, the paper said, citing people familiar with Trump’s thinking.

Trump, however, disputed the report in a post on Truth Social.
“The story in the Washington Post, quoting so-called anonymous sources, which don’t exist, incorrectly states that my tariff policy will be pared back. That is wrong,” he wrote.
The report comes amid concerns that the incoming president’s insistence on imposing universal tariffs of 10% or 20% and specifically targeting China and Mexico would cause another spike in inflation.
During Trump’s first term, duties on a wide range of imports did little to raise prices broadly and in fact were kept in place when Joe Biden took over as president. However, economists worry that conditions are different now and aggressive tariffs would have a greater impact.
The Post report said it’s still not clear which sectors would be affected by the plans, though early discussions are looking at various industrial metals, medical supplies and energy.
The U.S. is running a $74 billion monthly trade deficit that exploded during the Covid pandemic.

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The current discussions center on imposing tariffs only on certain sectors deemed critical to national or economic security, the report said, citing three people familiar with the matter.Trump, a Republican who takes office on Jan. 20, had vowed to impose tariffs of 10% on global imports into the U.S. along with a 60% tariff on Chinese goods – duties that trade experts say would upend trade flows, raise costs and draw retaliation against U.S. exports.The new reported plan would represent a marked shift from the promises Trump made during the 2024 presidential campaign.A spokesperson for Trump did not immediately respond to a request for comment on the newspaper report.The aides said the plans are in flux and have not been finalized, according to the newspaper.It was not clear which sectors the tariffs would target.”Preliminary discussions have largely focused on several key sectors that the Trump team wants to bring back to the United States, the Post reported that the people said. “Those include the defense industrial supply chain (through tariffs on steel, iron, aluminum and copper); critical medical supplies (syringes, needles, vials and pharmaceutical materials); and energy production (batteries, rare earth minerals and even solar panels),” two of the people said, according to the Post. More

VIENNA (Reuters) -Austrian President Alexander Van der Bellen tasked the leader of the far-right Freedom Party (FPO) on Monday with forming a coalition government after a centrist bid to assemble one without the FPO collapsed unexpectedly over the weekend.The announcement marks a dramatic reversal for the president, a former leader of the left-wing Greens who has long been critical of the FPO and has clashed with its leader Herbert Kickl, but few options remained to Van der Bellen after the centrists’ failure to forge a coalition. The eurosceptic, Russia-friendly FPO won last September’s parliamentary election with 29% of the vote. It will now enter talks with its only potential partner, the conservative People’s Party (OVP), seeking to lead a government for the first time since it was founded in the 1950s under a leader who had been a senior officer in Hitler’s elite paramilitary SS.”I have… tasked him with launching talks with the People’s Party to form a government,” Van der Bellen said in a televised address after meeting Kickl, adding: “I did not take this step lightly.”As Kickl left his meeting with the president, hundreds of protesters including Jewish students and left-wing activists booed, whistled, chanted “Nazis out” and waved banners with slogans such as “We don’t want a right-wing extremist Austria”.Van der Bellen had infuriated the FPO by not tasking it with forming a government soon after the election since no potential coalition partner was immediately forthcoming. That task fell to the conservative People’s Party (OVP) and its leader Chancellor Karl Nehammer. The OVP came second in the election.Nehammer’s attempts to assemble a three- and then two-party coalition with other centrist parties fell apart this weekend, prompting him to announce his resignation.OVP NOW OPEN TO TALKSNehammer had long insisted his party would not govern with Kickl, saying the FPO leader was a conspiracy theorist and security threat. With Nehammer gone, so is that red line. His interim successor as OVP leader, Christian Stocker, said on Sunday his party would join coalition talks led by Kickl.”We are at the very beginning. If we are invited to these talks, the outcome of those talks is open,” OVP heavyweight Wilfried Haslauer, the governor of Salzburg state who stood next to Stocker at his first statement to the media as designated party leader, told broadcaster ORF.Should those talks fail, however, a snap election is likely, and opinion polls show FPO support has only grown since September.The OVP and FPO overlap on various issues, particularly over taking a tough line on immigration. The thorniest issue in the centrists’ talks, however, was how to shrink the budget deficit, which is forecast to exceed the EU’s limit of 3% of economic output in 2024 and 2025.While both parties call for tax cuts, the FPO has pledged to take a knife to some of the OVP’s vested interests, such as the powerful Chamber of Commerce. They have also clashed over the FPO’s opposition to aid for Ukraine in its war against Russia, and current plans for a missile defence system. Van der Bellen has repeatedly said he will remain vigilant to ensure “cornerstones of democracy” including human rights, independent media and Austria’s membership of the European Union are respected. More

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