SLF is a type of loan that the central bank offers to commercial banks to fulfill their temporary cash demand.According to the People’s Bank of China, the overnight rate was cut to 2.35%, and the seven-day and one-month rates were lowered to 2.50% and 2.85%, respectively. More
Inflation has been slowing for months, which has paved the way for Federal Reserve interest rates cuts.Inflation cooled in August, the latest sign of progress in the Federal Reserve’s yearslong fight to bring rapid price increases back under control.The Personal Consumption Expenditures index climbed by 2.2 percent from a year earlier, data released Friday showed. That is down from 2.5 percent in July and slightly softer than economist forecasts. It was the slowest annual inflation reading since early 2021.After stripping out volatile food and fuel prices for a better sense of the underlying inflation trend, a “core” price index was a bit more stubborn on an annual basis. The core measure came in at 2.7 percent, up from 2.6 percent previously and in line with what economists had expected. But comparing prices from month to month, core inflation slowed to a modest 0.1 percent in August.Altogether, the report offers further proof that price increases are swiftly fading. Already, that has allowed the Fed to begin to lower interest rates from a more than two-decade high of 5.3 percent. After raising borrowing costs sharply and then holding them at a high level to slow the economy and weigh down inflation, officials voted last week to cut rates by a larger-than-usual half percentage point. Policymakers also signaled that more rate cuts are coming, as long as inflation continues to fade.The Fed’s pivot is already helping to bring down mortgage rates, and it could slowly trickle through the economy to stop the job market from slowing more markedly. Central bankers are trying to pull off a rare “soft landing,” in which they cool conditions enough to wrangle price increases without tempering them so much that unemployment spikes and the economy falls into a recession.There were some signs that the economy may be pulling back — but not crashing — in the details of Friday’s report. Consumer spending, which makes up a big part of overall economic activity, grew more slowly in August, the data showed. And personal incomes picked up less than expected.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? Log in.Want all of The Times? Subscribe. More
(Reuters) – Wall Street was set for a marginally higher open on Friday after data underscored the narrative that price pressures were cooling, raising expectations that the Federal Reserve’s next move might be another outsized interest rate cut.A Commerce Department report showed the personal consumption expenditure (PCE) index, the Fed’s preferred inflation measure, rose 2.2% in August on an annual basis, compared with estimates of 2.3%, as per economists polled by Reuters. On a monthly basis, it rose 0.1%.Odds that the central bank will cut rates by 50 basis points at its November meeting stood at about 53%, compared with 50% seen before the data. Those for a 25 bps reduction stand at about 47%, as per the CME Group’s (NASDAQ:CME) FedWatch Tool.Rate-sensitive growth stocks were mixed in premarket trading, as yields on short-term Treasury bonds dipped following the data. Tesla (NASDAQ:TSLA) added 1% and Alphabet (NASDAQ:GOOGL) climbed 0.3% in premarket trading, while Nvidia (NASDAQ:NVDA) and Amazon.com (NASDAQ:AMZN) were flat.”It’s a relief to have (inflation) move in the right direction and hopefully it continues going in that direction,” said Joe Saluzzi, co-head of equity trading at Themis Trading.”It really doesn’t matter whether it’s 50 bps or 25 bps. What matters is, will they continue cutting rates over the next year?”Inflation moderating towards the central bank’s 2% target gave the Fed enough room to commence its policy easing cycle with a 50 basis point rate cut last week. Ensuring that unemployment rates do not shoot up will be its focus now, with all eyes on a slew of job reports due next week.At 8:45 a.m. ET, Dow E-minis were up 90 points, or 0.21%, S&P 500 E-minis were up 10.5 points, or 0.18% and Nasdaq 100 E-minis were up 36.25 points, or 0.18%.Futures tied to the Russell 2000 index, which tracks small caps, outperformed with a 1% rise.The University of Michigan’s final September estimate on consumer sentiment and remarks from Fed Governor Michelle Bowman are also in focus on the day.Late on Thursday, Fed Governor Lisa Cook said the central bank’s rare move earlier this month could address increased “downside risks” to employment.Wall Street’s main indexes ended higher in the previous session, with the S&P 500 closing at its highest levels on record after an upbeat forecast from Micron (NASDAQ:MU) invigorated optimism around artificial intelligence. The benchmark index along with the blue-chip Dow and tech-heavy Nasdaq are on track for their third-straight week of gains.Among other stocks, Bristol Myers (NYSE:BMY) Squibb surged 3.75% after the U.S. FDA approved its schizophrenia drug.Costco Wholesale (NASDAQ:COST) dropped 1% after posing downbeat fourth-quarter revenue.Dollar General (NYSE:DG) slipped 1.9% after Citigroup downgraded to “sell” from “neutral”.U.S.-listed shares of Chinese firms such as Alibaba (NYSE:BABA) rose 1%, PDD Holdings climbed 2.5% and NetEase (NASDAQ:NTES) gained 2.1% after China’s central bank lowered interest rates and injected liquidity into the banking system, in its latest stimulus move. Miners such as Albemarle (NYSE:ALB) added 2.9% and U.S.-listed shares of BHP rose 1% after a report showed top Chinese cities Shanghai and Shenzhen are planning to lift key remaining restrictions on home purchases to attract potential buyers. More
Consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose 0.2% last month after an unrevised 0.5% gain in July, the Commerce Department’s Bureau of Economic Analysis reported on Friday. Economists polled by Reuters had forecast consumer spending climbing 0.3%.Consumer spending continues to be supported by still-solid wage gains even as the labor market has slowed considerably.Annual revisions to national accounts data published on Thursday showed stronger wages and salaries growth in the second quarter than had been previously estimated. The saving rate also was higher than previously thought. Higher incomes and savings bode well for consumer spending for the rest of the year.There had been worries that consumers were drawing down savings to fund spending. Labor market jitters, with the unemployment rate rising above 4%, had raised the specter of precautionary saving, which would undermine spending.The Federal Reserve last week cut its benchmark overnight interest rate by 50 basis points to the 4.75%-5.00% range, the first reduction in borrowing costs since 2020, which Fed Chair Jerome Powell said was meant to demonstrate policymakers’ commitment to sustaining a low unemployment rate.Growth estimates for the third quarter are around a 2.9% annualized rate, with consumer spending seen matching the April-June quarter’s pace. The economy grew at a 3.0% pace in the second quarter. The personal consumption expenditures (PCE) price index rose 0.1% in August after an unrevised 0.2% gain in July. Economists had forecast PCE inflation advancing 0.1%. In the 12 months through August, the PCE price index increased 2.2% after rising 2.5% in July.Excluding the volatile food and energy components, the PCE price index increased 0.1% after an unrevised 0.2% rise in July. In the 12 months through August, core inflation advanced 2.7% after climbing 2.6% in July. The U.S. central bank tracks the PCE price measures for its 2% inflation target.Early on Friday, financial markets saw a roughly 50% chance of another half-percentage-point rate cut at the Fed’s Nov. 6-7 policy meeting, according to CME’s FedWatch tool. The odds of a 25 basis points rate reduction were around 50%.The Fed raised its policy rate by 525 basis points in 2022 and 2023. More
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The People’s Bank of China (PBOC) has lowered interest rates and reduced the amount of cash banks must hold as reserves by 50 basis points.Reuters also reported that top Chinese cities Shanghai and Shenzhen are planning to lift key home purchase restrictions in the coming weeks, while more fiscal measures are expected to be announced before the country’s week-long holidays starting Oct. 1.The U.S. listings of Chinese e-commerce giants Alibaba (NYSE:BABA) Group rose 0.7% before the bell, while JD (NASDAQ:JD).com and PDD Holdings were up 3% and 1.6%, respectively.Chinese electric-vehicle maker Nio (NYSE:NIO) gained 4%, while gaming company Bilibili (NASDAQ:BILI) rose 2.8%.Exchange-traded funds tracking the China market also jumped as domestic stocks notched their best week since 2008.The iShares MSCI China ETF rose 1% premarket, after notching its highest close since March 2023 on Thursday, while tech-focused KraneShares CSI China Internet ETF rose 1.9%.Still, many analysts question whether the stimulus measures are enough to renew the interest in China, formerly one of the world’s top growth stories, as deflationary pressures, weak consumer demand and a severe downturn in the property market have kept investors cautious.”Chinese equities, China-plays and other pro-cyclical assets are likely to post further tactical gains,” said analysts at BCA Research. “However, the implications for the Chinese economy remain unclear at the current juncture.”Shares had rallied on Tuesday after the PBOC launched its biggest easing measures since the pandemic, but retreated on Wednesday as investors questioned whether the measures were sufficient.Pledges from policymakers for necessary fiscal stimulus to meet this year’s 5% growth target, however, appeared to allay certain concerns. More
Market pricing now reflects around an 80% chance of such a rate cut, which would follow reductions at the ECB’s June and September meetings. Euro zone business activity contracted sharply and unexpectedly in September, surveys showed, as the bloc’s dominant services industry flatlined and a downturn in manufacturing accelerated, while inflation in France and Spain for September came in very soft. Sources told Reuters that ECB policy doves are preparing to fight for an October rate cut – though this would likely meet resistance from more conservative peers – a turnaround from the aftermath of the ECB’s September meeting when they saw an October move as unlikely. Here are the latest forecasts from some brokerages. Rate cut Brokerage estimates (bps) Terminal Oct ’24 Dec rate/ end ’25 forecast ’24 Goldman 25 25 2.0% (June 2025) Sachs Deutsche – 25 2.0%-2.5% (mid-2025) Bank HSBC 25 25 2.25% (April 2025) BNP 25 25 2.25% (end-2025 Paribas forecast) RBC 25 25 2.25% (April 2025) 25 25 2.0% (June 2025) JP Morgan Barclays – 25 2.50% (end 2025 forecast) Citi – 25 likely under 2% UBS IB – 25 2.25% (end-2025 forecast) ING – 25 2.25% (end 2025 forecast) BBVA (BME:BBVA) – 25 2.75% (November 2025) SEB – 25 2.00% (end 2025) More
DUBLIN (Reuters) – The glum faces of Ireland’s finance and spending ministers after hearing the country received an unexpected 14 billion-euro windfall in Apple (NASDAQ:AAPL) back taxes earlier this month made one thing clear: Money alone is not the answer to Ireland’s problems.While France, Britain, Germany and others all struggle to find money for government spending, Ireland’s latest cash infusion is widely seen as an awkward gift on the eve of an expected election.The problem is it has shone an unwelcome spotlight on government failure to turn a much larger recent multinational-driven corporate tax boom into real progress with intractable problems in housing, health and transport.The ministers will use Tuesday’s budget to lay out a general plan for how the 14 billion – equivalent to 15% of annual spending – will be invested with water, energy and housing projects likely beneficiaries.But they are already being goaded by the opposition about their record: a metro system first mooted in the 1990s that has yet to break ground, and a long-delayed new children’s hospital set to be one of the world’s most expensive. Their fear is that the hard, slow work economists say is necessary may be a hard sell to voters in an election that polls currently suggest the coalition government is set to win – particularly as their rivals gleefully point out what the money could buy. LEGACY OF THE CRASHThe challenges facing Dublin have their roots in the economic crash 15 years ago, when austerity brought capital spending to a standstill. Despite recent sharp increases in the capital budget, Ireland’s central bank estimates public investment will only recover to 2008 levels in real terms by 2026.Analysts say the failure of institutional capacity to keep up with the demands of a fast-growing economy and population – from a complex planning system to under-resourced regulatory bodies and the European Union’s lowest number of judges per capita – has compounded the problem.”We’re out of practice and any muscle you don’t use for a long period of time is going to be harder to get working again,” said Gerard Brady, chief economist at business lobby group Ibec.”Growth is only a problem if you don’t plan for it and don’t resource the systems to deal with it.”Brady said Ibec members operating across Europe say that while Ireland has the same bureaucratic processes for industrial projects, it takes much longer to get through them. Former European Central Bank chief Mario Draghi’s recent EU competitiveness report called out Ireland for some of the longest timelines for completing solar and wind energy projects, for example.’DELAY, DELAY, DELAY’At the Construction Industry Federation’s annual conference this week, money was barely mentioned.At a time when some EU countries are contemplating spending cuts and tax hikes, Ireland is an outlier with an economy set to grow by 2% this year and a budget surplus heading for around 3% of national income for the third successive year.Instead the engineering, housebuilding and construction executives were calling for action to tackle persistent deficits in energy, water and planning – constraints the National Competitiveness Council recently warned risked choking off economic growth.Despite public spending on homes swelling to the second highest proportionately in the EU, Ireland has its highest ever rate of homelessness, house prices are rising at almost 10% a year, and sky-high rents have long outstripped income growth.A tight labour market only adds to the conundrum with minimal unemployment in the construction sector, few apprentices and warnings from the country’s fiscal watchdog that Ireland’s attractiveness to foreign labourers has waned markedly.Ireland is not alone in facing a tight labour supply: An Ifo survey this year found 36% of German firms are suffering from a shortage of qualified workers. A CBI survey last year found more than two-thirds of UK businesses suffered labour shortages in the previous 12 months.The Irish central bank last week warned of major challenges scaling up to the more than 50,000 homes needed every year until 2050 from the 33,000 units built in 2023 and said clear policy changes were required.Long-promised government planning reforms aimed at restructuring and better resourcing the national planning body, introducing statutory timelines for decision-making and streamlining court challenges, are due to become law shortly, though some critics say they could make things worse.Everyone agrees change needs to happen quickly, however.”Unless you fix things, you could end up allocating loads of money to projects and not getting them over the line because of planning. Just delay and delay and delay,” said Owen Sisk, a senior executive at Sisk, Ireland’s largest provider of construction services.”If you could deal with that, you could unlock a lot.” More
