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%CA$149 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
BENGALURU (Reuters) – The South Korean economy likely returned to growth last quarter after a mild contraction in the prior quarter thanks to an export-led expansion that offset higher borrowing costs squeezing domestic demand, a Reuters poll found.After an unexpected 0.2% contraction in the April-June quarter, Asia’s fourth-largest economy was projected to have grown a seasonally adjusted 0.5% in the third quarter, according to a median forecast from 23 economists.On an annual basis, the economy expanded 2.0% last quarter, according to the median forecast of 26 economists polled Oct. 15-21, down from 2.3% in the previous quarter.”We expect…Q3 GDP data to show lackluster growth. While exports remained robust, sluggish domestic demand, as reflected by various high-frequency indicators, including retail sales and construction, was a drag,” said Khoon Goh, head of Asia research at ANZ.South Korea’s monthly exports have grown by almost 10% this year on average up to September, largely driven by semiconductor demand from the United States, helping the trade-dependent economy avoid a technical recession commonly defined as two consecutive quarters of contraction.However, the pace of export growth has cooled in recent months as trade moderated with China – South Korea’s top trading partner – as well as Japan and India.High borrowing costs are impacting domestic consumption amid household debt levels that are among the highest in the developed world.In a bid to revive ailing demand, the Bank of Korea (BOK) cut its policy rate by 25 basis points this month from a 15-year high of 3.50%.However, the BOK is expected to maintain its current stance for the rest of the year and only cut 50 basis points next year, while the U.S. Federal Reserve is expected to reduce rates by 150 basis points by end-2025, according to separate Reuters polls.”A modest rebound in GDP growth should support the BOK pivot that we saw at the October meeting, but a back-to-back rate cut in November is unlikely, in our view, given the lingering concerns on the housing market,” said Suktae Oh, chief Korea economist at Societe Generale (OTC:SCGLY).Amid an uneven recovery in China, and slowing demand from the U.S., South Korea’s economic growth was expected to average 2.4% this year, aligning with the central bank’s downwardly revised forecasts. More
(Reuters) -Four Federal Reserve policymakers on Monday expressed support for further interest-rate cuts, but appeared to differ on how fast or far they believe any cuts should go. Three of them, citing the strength of the economy and an uncertain outlook, expressed a preference for going slow, using words like “modest” and “gradual” to describe their views on the right pace for rate cuts.The fourth, San Francisco Fed President Mary Daly, said she feels Fed policy is “very tight” and does not believe that a strong economy, as long as inflation continues to fall, should keep the central bank from continuing to reduce rates. The remarks provide a small taste of what’s expected to be a broad but closed-door debate of the appropriate path for policy at the Fed’s upcoming policy meeting, on Nov. 6-7. After Friday, U.S. central bankers will observe a communications blackout — abstaining from any public comments on their monetary policy views — until the Fed announces its policy decision at the close of the two-day meeting on Nov. 7.”While I support dialing back the restrictiveness of policy, my preference would be to avoid outsized moves, especially given uncertainty over the eventual destination of policy and my desire to avoid contributing to financial market volatility,” Kansas City Fed President Jeffrey Schmid told the Certified Financial Analysts Society of Kansas City, in Missouri. He said he believes rate cuts should be gradual and deliberate. Dallas Fed President Lorie Logan, speaking earlier in the day to the Securities Industry and Financial Markets Association in New York, made similar remarks. “If the economy evolves as I currently expect, a strategy of gradually lowering the policy rate toward a more normal or neutral level can help manage the risks and achieve our goals,” she said. The Fed last month cut the policy rate by a bigger-than-expected half of a percentage point, to a range of 4.75% to 5%, given cooling in both inflation and labor markets. It was the first rate cut in four years. Fed policymakers’ economic projections published at the time showed that most thought further, and likely smaller, interest-rate reductions would be appropriate.Since then, strong retail sales and bigger-than-expected job growth in September have boosted speculation that the Fed could cut rates even more slowly, perhaps even pausing at next month’s rate-setting meeting or the one in December. Daly, in a webcast interview with the Wall Street Journal, gave no indication she would support a pause.”I haven’t seen any information that would suggest we wouldn’t continue to reduce the interest rate consistent with achieving that durable expansion,” she said, when asked about the November decision. “This is a very tight interest rate for an economy that already is on the path to 2% inflation, and I don’t want to see the labor market slow further.” The Fed, she added, should be “open-minded” to the possibility that stronger productivity growth may be allowing the economy to grow faster without pushing up on inflation, allowing the central bank to continue to reduce rates. Of the four Fed officials who spoke on Monday, Daly is the only current voter on the policy-setting Federal Open Market Committee, though all policymakers attend meetings and voice opinions.Minneapolis Fed President Neel Kashkari on Monday appeared to endorse a go-slow approach to rate cuts, repeating his call for “modest” interest rate cuts over the next “several quarters.” He said the economy’s strength shows the eventual resting point for the policy rate — what is known as the neutral rate, where borrowing costs neither slow nor stimulate growth — may be higher than it was in the past, a point that Schmid also made. “We want to keep the labor market strong and we want to get inflation back down to our 2% target,” Kashkari said, and the appropriate path of interest rates will “depend on the data.”But Kashkari said that a sharp deterioration of labor markets could move him to advocate for faster cuts. “If we saw a weakening, like real evidence that the labor market is weakening quickly, then that would tell me, as one policymaker, ‘Hey, maybe we ought to bring down our interest rate more quickly than I currently expect,'” Kashkari said in a town hall at the Chippewa Falls Area Chamber of Commerce. More
Daly, in a webcast interview with the Wall Street Journal, added that the goal is a “soft landing” where inflation cools to 2%, the labor market stays healthy, and wages catch up with higher prices.She said the Fed needs to continue to lower the policy rate as inflation comes down, or risk allowing policy to become overly tight and hurt the labor market. The policy rate, after the Fed’s 50-basis-point rate cut last month, is now in the 4.75%-5% range; Daly on Monday said she estimates that a policy rate of around 3% would be a level that is neither tight nor loose but what economists call “neutral.” More
LONDON (Reuters) – Britain will lend Ukraine 2.26 billion pounds ($2.94 billion) as part of a much larger planned loan from the Group of Seven nations backed by frozen Russian central bank assets to help buy weapons and rebuild damaged infrastructure.Defence minister John Healey said the money donated by Britain would be solely for Ukraine’s military and could be used to help develop drones capable of travelling further than some long-range missiles.Healey said the use of Britain’s share of the G7 loan had been a feature of talks between Ukrainian President Volodymyr Zelenskiy and Prime Minister Keir Starmer in talks in London two weeks ago and G7 defence ministers in Italy over the weekend.Asked if Britain would allow Ukraine to use the money to buy British-made Storm Shadow missiles to hit targets deep inside Russia, Healey told reporters: “They are developing very heavily the use of even longer-range drones. They will work with us over how they use this money, and on the weapons they most need.”The G7 announced in June it would provide a $50 billion loan to help Ukraine, serviced by profits generated by about $300 billion in Russian sovereign assets immobilised in the West.The assets were frozen shortly after Russia launched a full-scale invasion of Ukraine in February 2022. Russia has repeatedly threatened retaliation to any use of frozen Russian assets to finance Ukraine, which it describes as illegal.Talks about the G7 loan are accelerating as Western countries want to secure funding to Ukraine due to concerns that if Republican presidential candidate Donald Trump wins the U.S. election next month, he could reduce support. The European Union, where the bulk of the Russian assets are blocked, has already agreed to provide 35 billion euros ($38 billion) as part of the bloc’s share. The British contribution is on top of the 12.8 billion pounds ($16.61 billion) it has already committed in support to Ukraine.Finance minister Rachel Reeves said the one-off loan would be released in tranches. ($1 = 0.7678 pounds)($1 = 0.9223 euros) More
Recruitment consultancy Robert Walters’ new monthly Global Jobs Index showed global vacancies dropped by 5% last month from August.Companies in Singapore, the United States, Britain, Australia, and Germany reported the biggest falls in vacancies, with firms citing low business confidence as a key factor. In some European countries which typically experience a seasonal jump in vacancies in September, firms reported a more muted increase than in previous years.”September’s decline in professional job roles globally is a departure from the usual surge of hiring activity we expect at this time of year, and is a direct reflection of the geopolitical tensions, economic outlooks, and industry-specific issues on the global jobs market,” said Toby Fowlston, chief executive of global talent solutions business at Robert Walters.The survey was based responses from 500 firms across professional sectors including health, real estate and construction, and energy and utilities.Fowlston said US firms were putting the brakes on hiring ahead of the Nov. 4 elections and potential policy shifts. Official data showed the US labour market added 254,000 jobs in September, the most since March.”The UK is experiencing increased uncertainty as businesses hold back on hiring in anticipation of the government’s budget announcement,” Fowlston added. Britain’s new Labour government will deliver its inaugural budget on Oct. 30 and finance minister Rachel Reeves has warned that some taxes will go up to plug what she called a 22 billion-pound ($28.64 billion) fiscal hole. Government sources have said Reeves is looking for tax rises and spending cuts to the tune of 40 billion pounds. The survey showed that on a quarterly basis, vacancies were 19% higher in the July-September period compared to the three months before.($1 = 0.7682 pounds) More
