Economy

MEXICO CITY (Reuters) -The Bank of Mexico on Thursday lowered its benchmark interest rate by 25 basis points for a third straight meeting, underscoring progress on bringing down core inflation and signaling future rate cuts were possible. The five-member governing board of Banxico, as Mexico’s central bank is known, voted unanimously to cut the key rate to 10.25%.Analysts polled by Reuters had overwhelmingly forecast the reduction, which comes a week after the Federal Reserve cut borrowing costs in the United States by a similar magnitude. In a statement announcing its decision, Banxico noted the inflation outlook has improved while the closely watched core inflation rate, considered a good indicator for price trends, is expected to keep decreasing.”Looking ahead, the Board expects that the inflationary environment will allow further reference rate adjustments,” the statement said.In October, core inflation, which excludes volatile energy and food prices, slowed to 3.80% in the 12 months through October, down from 3.91% in September. Meanwhile, annual headline inflation rate ticked up to 4.76% in October, from 4.58% in September.Banxico targets headline inflation at 3%, plus or minus one percentage point.”The board left the door open to further interest rate cuts over the coming months, but officials will be keeping a close eye on the peso – especially if the incoming Trump administration steps up its threats to impose tariffs on Mexico,” said Jason Tuvey, deputy chief emerging markets economist at Capital Economics. Mexico’s peso currency has weakened sharply over the past six months, as a series of post-Mexican election reforms shook investor confidence in the country’s legal system, and as Donald Trump’s U.S. election victory last week fuels uncertainty over the future of the critical bilateral trade relationship. Alberto Ramos, head of Latin America research at Goldman Sachs, said the bank expects Banxico to deliver another 25-basis-point cut at its December meeting.However, Ramos said “the bar to accelerate the pace of cuts to 50 basis points is relatively high given prevailing domestic and external uncertainty, in particular around a number of issues in the U.S.-Mexico bilateral agenda,” namely concerning tariffs.Banxico’s board raised its forecast for average headline inflation in the fourth quarter, but still sees the rate converging to its target in the fourth quarter of 2025. More

On Thursday, Gerard Malouf & Partners launched a lawsuit against the country’s top two supermarkets, Woolworths and Coles, accusing the duo of promoting misleading discount claims on daily-use products.Earlier in September, Australia’s consumer watchdog took the supermarket chains to court over “illusory” discounts, claiming that the firms had benefitted from revenue derived from the affected millions of units of products.The country’s incumbent prime minister, Anthony Albanese, who has faced pressure to do more to combat rising grocery prices and who goes to an election within a year, said the actions alleged by the regulator would be unacceptable if true.Gerard Malouf & Partners, however, clarified that its lawsuit was different from that of the Australian Competition and Consumer Commission (ACCC), as the former is seeking refunds for the affected customers. The consumer protection law firm said its suit had been launched to retrieve the price difference consumers had to fork out between the advertised ‘discounted’ prices and the real prices for hundreds of commonly purchased products at Coles between February 2022 and May 2023, and at Woolworths between September 2021 and May 2023.”We estimate that the average Australian consumer could be eligible for a refund ranging between A$200 and A$1,300 +, depending on their shopping habits and purchases at these retailers,” the law firm’s chairman, Gerard Malouf, said in a statement on Thursday.The law firm alleged that everyday items at both the companies had been subject to price hikes and the discounted prices were either higher or same as the price before the increase. More

(Reuters) -Britain should stand up for free trade and rebuild ties with the European Union as the global economy fragments, Bank of England Governor Andrew Bailey said in a speech on Thursday that cast an eye towards Donald Trump’s White House return.Bailey said a commitment to open trade was vital to boost weak investment in Britain and restore productivity growth, along with an unlocking of capital from businesses and pension funds, something planned by finance minister Rachel Reeves.Brexit – which was backed by voters in 2016 and took effect in early 2020 – had contributed to a weakening of Britain’s trade flows and weighed on the potential productive capacity of its economy, Bailey said. “As a public official I take no position on Brexit per se. That’s important. But I do have to point out consequences,” Bailey said in his annual Mansion House speech to financial services leaders in London.”It underlines why we must be alert to and welcome opportunities to rebuild relations while respecting the decision of the British people.”While the new Labour government has ruled out rejoining the EU’s single market or customs union, Prime Minister Keir Starmer has said he wants to improve trade ties and diplomatic relations with the bloc.Finance minister Rachel Reeves, speaking just before Bailey at the same event, said Britain needed to “reset” its relationship with the EU and that she also looked forward to working closely with Trump to strengthen trade ties.Bailey said Britain needed to look at the wider picture for growth, and not just the impact of Brexit.While Bailey did not refer directly to the U.S. election in his speech, policymakers around the world are still digesting Trump’s victory and the prospect of double-digit tariffs on goods imported by the United States.These would have far-reaching implications for global trade and inflation, the BoE governor said.”The picture is now clouded by the impact of geopolitical shocks and the broader fragmentation of the world economy,” Bailey said.”Amidst the important need to be alert to threats to economic security, let’s please remember the importance of openness… We must do what we sensibly can to preserve safe openness of the economy,” Bailey said. Earlier on Thursday, fellow BoE rate-setter Catherine Mann, who is a U.S. economist, said the BoE should keep interest rates on hold until upside risks to inflation – including those posed by the election of Trump – dissipate.Bailey said he backed finance minister Reeves’ plans to boost public investment announced in a budget two weeks ago.But he agreed with the government’s budget forecaster that the budget measures alone would not raise long-run potential economic growth in Britain by much.”That needs to be accompanied by stronger business investment… And that business investment will depend on quite a few things including good public infrastructure,” he said. More

WASHINGTON (Reuters) -The U.S. Postal Service said on Thursday it must continue to cut costs and boost revenue or risks requiring a government bailout to help the organization avoid financial collapse.USPS reported on Thursday a net loss of $9.5 billion for its fiscal year ending Sept. 30, a $3-billion bigger loss than last year, largely due to a year-over-year increase in non-cash workers’ compensation expense. Total (EPA:TTEF) operating revenue was $79.5 billion, up 1.7%.”If we do nothing more, we remain on the path to either a government bailout or the end of this great organization as we know it,” the Postal Service said in its revised restructuring plan issued on Thursday, adding it was facing a “still-precarious financial condition.”USPS has lost more than $100 billion since 2007.USPS is implementing a 10-year restructuring plan announced in 2021 that aims to eliminate $160 billion in predicted losses over the next decade. USPS now projects $80 billion in losses over the period and plans further cuts to address the shortfall.At a board meeting on Thursday, Postmaster General Louis DeJoy expressed optimism about the plan for a “financially sustainable, competitive and service-excellent driven future.” First-class mail volume continues to fall, dropping 3.6% year-over-year to 44.3 billion pieces. First-class mail use is down 80% since 1997 and is at its lowest level since 1968.USPS, which had vowed to break even in 2023 but abandoned that timetable, said despite cutting costs it does not plan to reduce its nationwide network of 31,000 retail locations.In September, USPS said it would not hike stamp prices in January for the first time in two years. USPS in July raised the price of a first-class mail stamp to 73 cents from 68 cents and increased overall mailing services product prices by 7.8%.Stamp prices are up 36% since early 2019 when they were 50 cents.In 2022, President Joe Biden signed legislation providing USPS with about $50 billion in financial relief over a decade. Congress separately gave USPS a $10-billion pandemic expenses loan that it later forgave. More

Powell, asked at an event in Dallas whether he would consider being the first Fed chair in more than seven decades to remain on the Fed board after no longer serving as its leader, said only that he is committed to serving out his term as chair.”I’ll certainly serve to the end … of my chair term,” Powell said. “And that’s really all I’ve decided, and all I’m thinking about.”Powell’s term as a Board of Governors member expires in January 2028. The last former Fed chair to continue serving beyond their term as its leader was Marriner Eccles, who ceased being the Fed’s leader in January 1948, but continued on the board until July 1951.The question follows a suggestion by one individual under consideration for a leading economic role in Donald Trump’s incoming administration that the next president nominate and the Senate confirm a successor to Powell long before the current central bank chief’s term expires. The idea, floated last month by Scott Bessent, whom Trump is considering for Treasury secretary, would be to weaken Powell’s authority for the remainder of his tenure while an already-approved successor advocated in the wings for monetary policy more palatable to Trump.“You could do the earliest Fed nomination and create a shadow Fed chair,” Bessent told Barron’s. “And based on the concept of forward guidance, no one is really going to care what Jerome Powell has to say anymore.”Bessent later told the Wall Street Journal he no longer thought the idea was worth pursuing.Nonetheless, Trump’s propensity for flouting norms and his open criticism of Powell, whom he appointed chair during his first term as president, has the Fed-watching world on high alert for more challenges to the U.S. central bank’s independence after Trump becomes president for a second time in January.Presidents typically do not wait for the current chair’s term to expire before nominating a successor or renominating the incumbent, but the window is normally on the order of three to four months, a period largely consumed by the Senate confirmation process and not one that would allow the nominee to usurp authority from a current Fed chief. Trump, for instance, nominated Powell, then a Fed governor, to take over as chair from Janet Yellen in November 2017, about three months before her term as chair was due to expire. President Joe Biden did the same in renominating Powell in November 2021.The next Fed vacancy available for Trump to fill is the board seat held by Adriana Kugler, who was appointed by Biden and started at the Fed in September 2023. Her seat expires in January 2026.On Thursday, she devoted a substantial portion of a speech she delivered in Uruguay to the subject of Fed independence.”It has been widely recognized – and is a finding of economic research – that central bank independence is fundamental to achieving good policy and good economic outcomes,” Kugler said. Asked about Kugler’s remarks at the beginning of his event in Dallas, Powell echoed her sentiment, adding that Fed independence is widely embraced by both parties in Congress. More

LONDON (Reuters) -Finance minister Rachel Reeves on Thursday promised a reboot of regulation governing Britain’s “crown jewel” financial industry, which she said has shackled the City’s prospects since the global financial crisis and stifled British economic growth.In a speech at the City of London’s ornate Mansion House, Reeves vowed not to take Britain’s status as a global financial centre for granted and pledged a raft of growth-focused reforms.Her speech came as leaders across the industry brace for a possible bonfire of regulation on Wall Street during President-elect Donald Trump’s second term in office, with leaner taxes and lighter rules on capital likely to widen an earnings gap between U.S. banks and their global competitors.”While it was right that successive governments made regulatory changes after the global financial crisis, to ensure that regulation kept pace with the global economy of the time, it’s important we learn the lessons of the past,” Reeves said. “These changes have resulted in a system which sought to eliminate risk taking. That has gone too far and, in places, it has had unintended consequences which we must now address.” The former Bank of England economist proposed five areas to maximise growth in British financial services: capital markets, fintech, sustainable finance, asset management and wholesale services, and insurance and reinsurance.Reeves said the government would publish a financial services strategy early next year as part of a broader 10-year industrial plan.”The UK has been regulating for risk, but not regulating for growth,” the chancellor said, announcing that she had written to the Bank of England and Britain’s Financial Conduct Authority to instruct them to put greater effort towards supporting government growth goals as well as financial stability.BoE Governor Andrew Bailey, speaking immediately after Reeves, did not address her criticism of regulators but welcomed the government’s focus on growth and recommended rebuilding trade ties with the European Union.Reeves and Prime Minister Keir Starmer promised voters in July’s election that they would turn Britain into the fastest-growing Group of Seven economy after years of sluggishness.Her latest proposals were broadly backed by financiers.”It’s crucial the UK’s regulatory framework is effective and well-calibrated. We therefore welcome the chancellor’s recognition of the need for a more balanced approach to risk,” said Patrick Thomson, EMEA CEO of J.P. Morgan Asset Management and chair of Britain’s Investment Association trade body.But campaign group Positive Money said Reeves appeared to have caved in to lobbyists.”Financial deregulation has a habit of ending in tears,” said Simon Youel, Positive Money’s head of policy and advocacy.INNOVATIONBesides rebalancing rules that curb risk, the government is also exploring ways to help finance firms reduce costs linked to supervising less senior managers.Further action is being taken to jumpstart Britain’s capital markets, with a commitment to establish by May 2025 a regulated market known as PISCES for trading private company shares in a tax-efficient manner.This pledge to boost investment in capital-starved British firms complements plans outlined on Wednesday to build a slew of “megafunds” in what the government said was the biggest shake-up in British pensions seen in decades.Reeves wants to consolidate about 60 public-sector defined contribution pension schemes and 86 local government pension schemes into eight structures large enough to bankroll ambitious infrastructure projects and undersupported growth firms.Britain’s finance ministry also launched a consultation into encouraging more than 1,000 private-sector defined contribution pension schemes to merge, pointing to evidence a minimum size of 50 billion pounds ($63 billion) would boost their investment capability in infrastructure and private equity.A collapse in allocations to domestic assets among Britain’s pension funds – forecast to hold 1.3 trillion pounds in assets by the end of the decade – is seen as one possible factor behind lacklustre economic growth.Britain will also pilot a “digital” government bond, or gilt, that uses distributed ledger technology, Reeves said.Mindful of its manifesto commitments to make Britain the global hub for green finance, Reeves said the government would join forces with the City of London Corporation, the governing body for London’s financial district, to launch a transition finance council. The Treasury will also publish draft legislation for tighter regulation of environmental, social and governance ratings providers and a consultation on the value case for a UK Green Taxonomy to boost investor confidence in sustainable companies.The chancellor also committed to consult on economically significant companies disclosing information using future UK Sustainability Reporting Standards. Tackling one of the finance sector’s greatest scourges, Reeves said she and the interior and science ministers had set tech and telecommunication firms a deadline of March 2025 to show how they are reducing fraud on their platforms.($1 = 0.7895 pounds) More

WASHINGTON (Reuters) -No major U.S. trading partner manipulated its currency in the year to June 30, the Treasury Department said on Thursday in the Biden administration’s final semi-annual currency report before turning over policing of foreign exchange practices to President-elect Donald Trump.Trump, who has frequently complained that the strong dollar is eroding U.S. trade competitiveness, ended his first term in the White House with Treasury declarations of Vietnam and Switzerland as currency manipulators in December 2020 over their market interventions to weaken the value of their currencies.Trump also directed then-Treasury Secretary Steven Mnuchin to label China a currency manipulator in August 2019, a move made at the height of U.S.-China trade tensions. The Treasury Department dropped the designation in January 2020 as Chinese officials arrived in Washington to sign a trade deal with the U.S. For much of the past four years, however, foreign exchange interventions by U.S. trading partners have moved in the opposite direction, to push up the values of their currencies against the dollar, mainly to fight inflation.President Joe Biden’s term will end with the Treasury Department having made no manipulation declarations, but frequently raising concerns about China’s foreign exchange practices in its semi-annual currency reports.The department’s latest analysis found that for the four quarters ended June 30, no major U.S. trading partners met all three criteria for “enhanced analysis” of their currency practices. That process leads to intensive consultations and can ultimately produce trade sanctions. The Treasury Department said China, Japan, South Korea, Taiwan, Singapore, Vietnam and Germany were on its “monitoring list” for extra foreign exchange scrutiny. Malaysia, which was on the previous report’s list, dropped off, while South Korea was added due to its large global current account surplus and its sizable goods and services trade deficit with the U.S.Countries that meet two of the criteria – a trade surplus with the U.S. of at least $15 billion, a global account surplus above 3% of GDP, and persistent, one-way net foreign exchange purchases – are automatically added to the list.CHINA DISCREPANCIESChina was kept on the monitoring list because of its large trade surplus with the U.S. and because of a lack of transparency surrounding its foreign exchange policies, the Treasury Department said.The report noted that despite a slight decline in China’s current account balance to 1.2% of GDP, its export volumes had risen sharply, indicating a decline in export prices. It said that trend continued beyond the monitoring period to the third quarter of 2024.”Partially as a result of weak domestic demand, China has increasingly relied on foreign demand to drive growth this year, with net exports contributing an unusually high share (43%) of real growth in the third quarter,” the report said. “Thus, while the reported current account surplus is not material, the rapidly growing export volumes amid falling prices will likely have large impacts on China’s trading partners.”The report also reiterated a call for more transparency in China’s foreign exchange practices, including use of a daily fix to prevent weakening of the yuan without official explanation. It said these policies “make China an outlier among major economies and warrant Treasury’s close monitoring.”Trump has vowed to impose tariffs of at least 60% on imported Chinese goods, regardless of Beijing’s currency practices, and wants a 10%-20% duty on imports from the rest of the world.The currency report said Japan was kept on the monitoring list because of its $65 billion trade surplus with the U.S. during the review period as well as an increase in its global current account surplus to 4.2% of GDP from 2% a year earlier.The Treasury Department said Japan’s Ministry of Finance had intervened three times since April to shore up the yen’s value: on April 29, May 1 and July 11-12. It noted that Japan’s actions were transparent, but reiterated that intervention “should be reserved only for very exceptional circumstances without prior consultations. More

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