Economy

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The People’s Bank of China (PBOC) said it cut the rate on 300 billion yuan ($42.66 billion) worth of one-year medium-term lending facility (MLF) loans to some financial institutions to 2.00% from 2.30%.The bid rates in Wednesday’s operation ranged from 1.90% to 2.30%, and the total balance of MLF loans now stands at 6.878 trillion yuan, the central bank said in an online statement.A batch of 591 billion yuan worth of MLF loans expired this month.On Tuesday, Beijing unveiled its biggest stimulus since the pandemic to pull the economy out of its deflationary funk and back towards the government’s growth target.($1 = 7.0318 Chinese yuan) More

SINGAPORE (Reuters) – The Australian and New Zealand dollars scaled multi-month peaks on Wednesday while sterling hit its highest in more than two years against a weaker dollar, as China’s aggressive stimulus package provided the latest shot in the arm for risk appetite.The Aussie peaked at $0.6907 in the early Asian session, its highest since February 2023, while the kiwi rose to a nine-month top of $0.6353, extending their strong gains from the previous session.Markets globally were basking in the afterglow of China’s latest slew of support measures announced on Tuesday ranging from outsized rate cuts to aid for its stock market, in a move that encouraged investors.The buoyant risk sentiment in turn kept the dollar broadly on the back foot.Sterling similarly advanced 0.1% to trade at $1.3429, a level not seen since March 2022. It drew additional support from less aggressive expectations of rate cuts from the Bank of England this year as compared to the Federal Reserve.”Judging by the financial market reaction, those announcements were actually bigger than market expectations,” said Carol Kong, a currency strategist at Commonwealth Bank of Australia (OTC:CMWAY), noting they particularly benefited currencies with strong links to the Chinese economy like the Australian and New Zealand dollars.”The kiwi dollar was actually the outperformer amongst its G10 peers, and I think it’s because market participants think that the measures announced yesterday are supportive of consumer demand and therefore it’s usually a good sign for demand for New Zealand’s dairy exports,” she said.The dollar – a traditional safe-haven currency – meanwhile came under pressure, with growing bets of another outsized U.S. rate cut in November adding to headwinds for the greenback.Markets are now pricing in a 58% chance of a 50-basis-point rate cut at the Fed’s next policy meeting, up from just 29% a week ago, according to the CME FedWatch tool.Data on Tuesday showed U.S. consumer confidence unexpectedly fell in September, amid mounting worries over the health of the labour market.”Consumers remain downbeat on the economy,” economists at Wells Fargo said in a note.”While we expect there are a number of reasons households are growing more pessimistic, the moderating labor market remains top of mind.”Against a basket of currencies, the dollar last stood at 100.28, languishing near a more than one-year low of 100.21.The dollar index had fallen more than 0.5% in the previous session, its largest one-day percentage fall in a month.Elsewhere, the yen was steady at 143.19 per dollar, while the euro gained 0.08% to $1.1188, hovering near a 13-month high hit last month. More

(Reuters) – Argentina’s government may condense negotiations with the International Monetary Fund (IMF) staff on its $44 billion program before opening talks on a new agreement that could include new money, Bloomberg News reported on Tuesday, citing people with direct knowledge.Economy Minister Luis Caputo told investors in New York that the South American country could combine the final two staff-level reviews of the current program into one, then proceed with negotiations for a new program that would take about three to six months, Bloomberg News reported. More

In an update to its Asian Development Outlook report, the ADB left most growth projections for economies in the region unchanged from its July report, maintaining its growth outlook for developing Asia at 5.0% this year and 4.9% next year. It revised down its inflation forecasts for developing Asia, which groups 46 countries in the Asia-Pacific, to 2.8% for this year and 2.9% for next year from previous forecasts of 2.9% and 3.0%, respectively. The Manila-based lender highlighted some downside risks to its outlook, including rising protectionism, escalating geopolitical tensions, adverse weather conditions, and a deterioration in China’s property market.China, the world’s second-largest economy, is battling deflationary pressures, and struggling to lift growth despite a series of policy measures aimed at spurring domestic spending.On Tuesday, China’s central bank announced broad monetary stimulus and property market support measures as authorities look to restore confidence in the economy.”Whether that will work remains to be seen because a lot of the structural problems in the property sector remain persistent,” ADB Chief Economist Albert Park said at a briefing.”It may take more effort and work by their government” to alleviate concerns of consumers and investors, Park said, adding “more proactive government policy would be helpful.” Park also said the ADB was not so concerned about deflation in China as it sees prices recovering. Last week, the U.S. Federal Reserve kicked off its own easing cycle with a hefty half-percentage-point rate cut.”With the Fed’s 50 basis point rate cut, central banks have more space to ease, and we expect more of them to do so,” Park said.The ADB kept its 2024 growth forecast for China at 4.8%, below the government’s official target of about 5%. Growth for 2025 is still forecast at 4.5%.”The PRC (People’s Republic of China) growth forecast is retained despite the prolonged downturn in the property sector, on the assumption that further fiscal and monetary easing will help sustain the economy,” Park said.GDP GROWTH 2023 2024 2024 2024 2025 2025 2025     APR JULY SEPT APR JULY SEPT Caucasus and 5.3 4.3 4.5 4.7 5.0 5.1 5.2 Central Asia   East Asia 4.7 4.5 4.6 4.6 4.2 4.2 4.2 China 5.2 4.8 4.8 4.8 4.5 4.5 4.5   South Asia 6.3 6.3 6.3 6.6 6.5 6.5 6.9 India 8.2 7.0 7.0 7.0 7.2 7.2 7.2   Southeast 4.1 4.6 4.6 4.5 4.7 4.7 4.7 Asia Indonesia 5.0 5.0 5.0 5.0 5.0 5.0 5.0 Malaysia 3.7 4.5 4.5 4.5 4.6 4.6 4.6 Myanmar 0.8 1.2 n/a 0.8 2.2 n/a 1.7 Philippines 6.0 6.0 6.0 6.2 6.2 6.2 5.5 Singapore 1.1 2.4 2.4 2.6 2.6 2.6 2.6 Thailand 1.9 2.6 2.6 2.3 3.0 3.0 2.7 Vietnam 6.0 6.0 6.0 6.2 6.2 6.2 5.1   The Pacific 3.5 3.3 3.3 3.4 4.0 4.0 4.1   Developing 4.9 5.0 5.0 4.9 4.9 4.9 Asia 5.1   INFLATION      Caucasus and 7.9 7.6 6.9 7.0 6.8 6.2 Central Asia 10.2   East Asia 0.6 1.3 0.8 0.8 1.6 1.6 1.3 China 0.2 1.1 0.5 0.5 1.5 1.5 1.2   South Asia 8.4 7.0 7.1 7.0 5.8 5.8 6.1 India 4.6 4.6 4.7 4.5 4.5 4.5 5.4   Southeast 4.1 3.2 3.2 3.3 3.0 3.0 3.2 Asia Indonesia 3.7 2.8 2.8 2.8 2.8 2.8 2.8 Malaysia 2.5 2.6 2.6 2.4 2.6 2.6 2.7 Myanmar 22.0 15.5 n/a 20.7 10.2 n/a` 15.0 Philippines 6.0 3.8 3.8 3.6 3.4 3.4 3.2 Singapore 4.8 3.0 3.0 2.6 2.2 2.2 2.2 Thailand 1.2 1.0 0.7 0.7 1.5 1.3 1.3 Vietnam 3.3 4.0 4.0 4.0 4.0 4.0 4.0 The Pacific 3.0 4.3 4.3 3.6 4.1 4.1 4.1 Developing 3.3 3.2 2.9 2.8 3.0 3.0 2.9 Asia More

TOKYO (Reuters) – The prices Japanese companies charge each other for services rose 2.7% in August from a year earlier, steady from the previous month, central bank data showed on Wednesday.Service-sector inflation is closely watched by the Bank of Japan (BOJ) for clues on whether prospects of rising wages are prodding firms to hike prices and leading to broader-based inflation, a prerequisite for raising interest rates. More

NEW YORK (Reuters) – The central bank official responsible for implementing monetary policy at the New York Federal Reserve said on Tuesday financial markets were prepared to properly interpret a bigger-than-expected interest rate cut as something other than a sign of trouble. While futures markets did not fully price in the half percentage point rate cut delivered by the Fed last week, market intelligence collected by the New York Fed indicated investors “were likely to interpret a 50-basis-point cut exactly for what it was – a recalibration of the FOMC (Federal Open Market Committee) policy toward a more neutral stance that will help maintain the strength of the economy and the labor market while continuing to enable further progress on inflation,” said Roberto Perli, manager of the Fed’s System Open Market Account, in a speech text.Last week, the Fed, confronted with falling inflation pressures and rising risks to the job market, lowered its overnight target rate range by half a percentage point to between 4.75% and 5.5%, and penciled in 50 basis points’ worth of additional cuts into the end of the year. Going into the Fed meeting, some had worried a larger-than-expected Fed rate cut might signal central bank worry about the outlook, rather than what it turned out to be: a move to withdraw unneeded policy restrictiveness from the economy. The Fed also said last week it was pressing forward with plans to shrink its balance sheet. Perli said in his speech “market intelligence had been indicating clearly for many months that market participants understood well that there is no mechanical link between interest-rate and balance-sheet decisions.” More