Economy

BUENOS AIRES (Reuters) – Argentine farmers are under pressure to sell their soy stocks, with the government rolling out carrot and stick incentives and punishments for stock hoarding in the world’s top exporter of soy oil and meal and the No. 3 for raw beans.The government unveiled a preferential exchange rate for soy exporters on Sunday of 200 pesos per dollar versus the official rate of around 140 pesos. On Thursday it said farmers hoarding soy would face higher financing costs, a bid to push sales harder.”They are trying to seduce farmers to sell and then we see the other side of the coin with these pressure tactics,” Jorge Chemes, president of major farming body the Argentine Rural Confederations (CRA), told Reuters on Friday.Sales have spiked this week to some 3.6 million tonnes since the new exchange rate, dubbed the “soy dollar”, came into effect on Monday. That has helped the central bank build up reserves, though the government still wants more.The South American country, also a major producer of corn and wheat, is the largest global debtor to the International Monetary Fund (IMF) and needs to rebuild its foreign currency reserves to meet future debt obligations with its creditors.Argentina’s soybean industry as a whole brought in $21.5 billion in export earnings for the country last year and is the country’s main cash crop. It is seen as key to rebuilding depleted foreign currency reserves.However, with inflation running at over 70% and economic malaise raising fears of a currency devaluation, local farmers had been holding onto more grain than last year as a proxy for coveted dollars in which exports are priced.Nicolás Pino, the head of Sociedad Rural Argentina (SRA), another important farming body, criticized the new threat of higher financing costs for farmers who hold soy stocks of more than 5% of their production.”The rules must not be altered and must be fair, because in this way the operation of the supply chain is being complicated and altered,” he said.Chemes echoed the sentiment.”Right where the producer needs attention, with special financing, he is being punished,” he said, adding that the move would hurt farmers who need financing to build up their operations. “What is it they want from the farm sector?”The agriculture secretariat declined to comment. More

NEW ALBANY, Ohio (Reuters) -President Joe Biden made an election-year visit to an overwhelmingly Republican part of Ohio on Friday for the groundbreaking of a semiconductor plant that he promoted as evidence that his economic policies are working.But his trip was punctuated by comments from a fellow Democrat, Ohio Representative Tim Ryan, who is now running for the U.S. Senate. On Thursday, Ryan publicly questioned whether the party needed new leadership after he was asked if the 79-year-old president should run for re-election in 2024.Biden traveled to Licking County near Columbus to speak at the site of Intel Corp (NASDAQ:INTC)’s new $20 billion semiconductor manufacturing facility and hailed it as a sign of things to come.”The future of the chip industry is going to be made in America,” he said. “The industrial Midwest is back.” The trip is part of a White House pre-midterms push to tout new funding for manufacturing and infrastructure Biden’s Democratic Party pushed through Congress, while decrying opposition Republicans backed by former President Donald Trump as dangerous extremists.Previous trips to Maryland, Pennsylvania and Wisconsin have landed the president in areas where Democrats already have strong support, but Licking County voted Republican 63% to 35% in the 2020 presidential election.Democrats have lost Ohio in the past two presidential contests, but Republican Senator Rob Portman’s retirement may give Democrats a chance to pick up a Senate seat.Some recent forecasts show Democrats favored to maintain control of the Senate, after a series of wins in Congress. But not all candidates welcome Biden’s campaigning support. Ryan, who currently represents Ohio’s 13th congressional district, is running against Republican J.D. Vance, a venture capitalist and author of the book “Hillbilly Elegy,” who has Trump’s backing. Asked Thursday if Biden should seek a second term, Ryan told Youngstown, Ohio, network WFMJ, “My hunch is that we need new leadership across the board – Democrats, Republicans, I think it’s time for a generational move.”Ryan, who has broken with the president on some issues, has not asked Biden to campaign with him in the state, but was present at the Intel groundbreaking for the president’s remarks. Pressed later by reporters if Biden should run again, Ryan said that was up to the president. “The president said from the very beginning he was going to be a bridge to the next generation, which is basically what I was saying,” he said.Vance accused Ryan of hypocrisy. “It takes a real two-faced fraud for someone to tell Ohioans he doesn’t support Biden running for reelection, the literal day before he appears at an event with him,” he said.Trump’s political organization announced on Monday that Trump will appear at a rally for Vance in Youngstown, Ohio, on Sept. 17. CHIPS ACT PROJECTS Intel backed the Ohio project in anticipation of the passage of the Chips and Science Act, a funding law that Biden signed last month after some Republicans joined Democrats to support it, the White House says.The Chips act is aimed at jumpstarting the domestic production of semiconductors in response to supply-chain disruptions that have slowed the production of automobiles.A string of other companies have announced new semiconductor plants resulting from passage of the Chips act, which authorized about $52 billion in government subsidies for U.S. semiconductor production and research, and an investment tax credit for chip plants estimated to be worth $24 billion.”Industry leaders are choosing us – the United States – because they see America’s back and America’s leading the way,” Biden said. Intel timed an announcement that it has distributed $17.7 million to Ohio colleges and universities to develop semiconductor-focused education and workforce programs, part of a $50 million education and research investment in the state, to Biden’s visit.The Intel facility will contain at least two fabricating plants that the White House said will be built by union labor, creating more than 7,000 construction jobs and 3,000 full-time jobs producing cutting edge chips. More

A governor on the board of the Federal Reserve has backed “another significant increase” in interest rates later this month, saying the resilience of the economy gives officials “flexibility to be aggressive” in the fight against inflation.The comments from Christopher Waller, who sits on the Federal Open Market Committee, come on the final day officials can make public remarks ahead of their next rate-setting meeting.“The fears of a recession starting in the first half of this year have faded away and the robust US labour market is giving us the flexibility to be aggressive in our fight against inflation,” he said on Friday at an event hosted by the Institute for Advanced Studies in Austria. “Based on what I know today, I support a significant increase at our next meeting on September 20 and 21 to get the policy rate to a setting that is clearly restricting demand,” he added.In contrast to past meetings, most policymakers have resisted endorsing a specific-sized rate rise before the gathering, leaving open a debate over whether the Fed will deliver a third consecutive increase of 0.75 percentage points or shift to a half-point. Expectations have grown in recent days that the central bank will opt for the more aggressive option, which would lift the federal funds rate to a new target range of 3 per cent to 3.25 per cent. Waller was the latest top official to this week say the Fed was committed to rooting out elevation and to stress the risks of easing monetary policy prematurely. If inflation does not ease or rises further this year, he said the federal funds rate will “probably” need to move “well above” 4 per cent. Earlier on Friday, James Bullard, the hawkish president from the St Louis Fed, told Bloomberg TV he is leaning “more strongly” towards a 0.75 percentage point rate rise. Esther George, president of the Kansas City Fed, who also spoke Friday, said that by taking “deliberate” action, the central bank could prevent higher inflation from becoming entrenched.Waller said: “While I welcome promising news about inflation, I don’t yet see convincing evidence that it is moving meaningfully and persistently down along a trajectory to reach our 2 per cent target. The consequences of being fooled by a temporary softening in inflation could be even greater now if another misjudgment damages the Fed’s credibility.”Waller’s comments echo those of Jay Powell, who spoke on Thursday. While the Fed chair did not comment on the size of the next rate rise, he said the central bank needs to “act now, forthrightly, strongly, as we have been doing and we need to keep at it until the job is done”.Lael Brainard, vice-chair, on Wednesday delivered a similar message, saying the Fed is “in this for as long as it takes to get inflation down”. However, she balanced those comments by pointing to forces that might mean the Fed will not need to be as aggressive. She also said that “at some point” the central bank would need to consider the risks of overtightening monetary policy. Another inflation report will be released this week before the September meeting, with economists expecting a fall in the consumer price index on a month-on-month and annual basis.Waller said decisions about the size of additional rate rises and when the Fed could stop tightening monetary policy should be “solely determined by the incoming data”. More

WASHINGTON (Reuters) -Federal Reserve officials on Friday ended their public comment period ahead of the U.S. central bank’s Sept. 20-21 policy meeting with strong calls for another oversized interest rate increase to battle high inflation.”Based on what I know today, I support a significant increase at our next meeting … to get the policy rate to a setting that is clearly restricting demand,” Fed Governor Christopher Waller told the Institute for Advanced Studies in Austria.While he did not explicitly call for another three-quarters-of-a-percentage-point hike at this month’s meeting, his comments leaned in that direction. Waller noted he was not convinced that inflation was yet “moving meaningfully and persistently downward,” while fears about an economic recession were receding. As other Fed officials have begun to emphasize, Waller said that even as prices for goods moderate, it is less clear when the costs of services will slow. He said rising rents will continue to push inflation higher also.Fed policymakers will receive a final round of monthly inflation data on Tuesday ahead of their meeting. But officials this week downplayed the importance of any single data point, and emphasized their determination to keep raising rates until there is a sustained drop in inflation, which has been running at 40-year highs.While the economy has slowed somewhat under the influence of the Fed’s aggressive monetary tightening – it has lifted its benchmark overnight interest rate by 225 basis points this year – the job market remains strong and overall growth appears to have rebounded after a lull in the first half of the year.”I believe the policy decision at our next meeting will be straightforward … Right now, there is no tradeoff between the Fed’s employment and inflation objectives, so we will continue to aggressively fight inflation,” Waller said. “Inflation is widespread, driven by strong demand that has only begun to moderate, by an ongoing lag in labor force participation, and by supply chain problems that may be improving in some areas but are still considerable.”Traders in contracts tied to the Fed’s policy rate put about a 90% probability that policymakers will opt to raise that rate by 75 rather than 50 basis points this month. A three-quarters-of-a-percentage-point move would be the third consecutive hike of that size and lift the federal funds rate above 3.00% for the first time since 2008.St. Louis Fed President James Bullard, in comments to Bloomberg, reiterated his call for a hike of 75 basis points at the meeting, saying recent data showing continued strong job growth had him “leaning more strongly” towards the larger rise in borrowing costs.INFLATION DATAKansas City Fed President Esther George, in comments to the Peterson Institute for International Economics, did not state a preference for a rate increase of any particular size at the next meeting, but said she favored “steadiness and purposefulness over speed.” Meanwhile in Vienna, Waller said it would be a mistake for the Fed to say much about the policy path from there, because incoming data could quickly reshape expectations.Economists and investors expect the Fed will stop raising rates once the policy rate gets a bit above 4.00%.But “if inflation does not moderate or rises further this year, then, in my view, the policy rate will probably need to move well above 4%,” Waller said in the Austrian capital. “If inflation suddenly decelerates, then, in my view, the policy rate might peak at less than 4%.” More

“We are at war,” Emmanuel Macron said on Monday as he outlined the emergency measures France was taking to shore up its energy supply and shelter its citizens and business from soaring costs. For months following Russia’s full-scale invasion of Ukraine, the president of France, aspired to act as intermediary and peacemaker between Kyiv and Moscow. This week he and fellow European leaders became belligerents in a sharply escalating energy conflict between Russia and the west. It was time, Macron said, for a “general mobilisation”.The Kremlin’s weaponisation of its fossil fuel has forced European governments to take drastic action, unthinkable only a few months ago, to blunt the Russian attack and shield their energy markets and economies from the impact. Sweden and Finland had to provide emergency liquidity assistance to their power producers that were facing surging demands for collateral for their hedging operations. Finland’s economy minister Mika Lintilä said the region could be on the verge of the energy sector’s version of the Lehman Brothers bank collapse in 2008.Germany unveiled a second support package for households and businesses, worth €65bn, bringing to some €350bn the amount earmarked so far by EU governments to offset rocketing prices and diversify supply. Only two days after taking office as the UK’s new prime minister, Liz Truss announced a cap on energy bills for households and businesses that is expected to cost at least £150bn over two years. G7 powers on September 2 also agreed to impose a global price cap on Russian crude oil, a bigger source of revenue for the Kremlin than gas, although it could be hard to implement and other big importers such as China, India and Turkey may refuse to take part. European Commission president Ursula von der Leyen, who is to outline a package of emergency measures next week, said the price of Russian gas imports should also be capped — an idea proposed by Italy’s Mario Draghi which gained support from EU energy ministers on Friday, despite fears it would provoke the Russian leader to turn off the taps completely. Russia has been holding back gas supplies to European markets since September last year, sending wholesale prices 10 times higher, pushing inflation to 40-year highs and economies to the brink of recession. All along, Moscow denied what it was doing or said it was for technical reasons — which Brussels and member states have disputed.This week it finally dropped the pretence. On Monday, in what looked like retaliation for the oil and gas price cap proposals, the Kremlin said gas deliveries through the Nord Stream 1 pipeline, its main conduit to European markets, would only resume once the west dropped economic sanctions against Russia.“The last mask has fallen,” von der Leyen said.Russia is still pumping gas through Ukraine and via the TurkStream pipeline — about a fifth of the total amount it was sending in June — but the prospect of a complete stop in gas flows has arrived sooner than many in Europe anticipated. Putin played up the threat at an economic forum in Vladivostock on Wednesday. “We will not supply anything at all if it is contrary to our interests. No gas, no oil, no coal, no fuel oil, nothing,” he said.Moscow also received a show of support from other oil producers this week — three days after the G7’s oil price cap — when the Opec Plus group of countries, which includes Russia, agreed to shave 100,000 bpd from output. Alexander Novak, Russia’s top energy official, crowed about the “collapse” of Europe’s energy markets. “Winter is coming, and many things are hard to predict,” he said.However, some officials and analysts believe this may have been the week when Moscow’s pressure campaign began to lose its potency. An indefinite shutdown of Nord Stream 1, Russia’s gas conduit, was supposed to be the Kremlin’s big weapon that would send the wholesale price to new stratospheric levels. But by Wednesday wholesale prices fell below Monday’s level.“If that’s it, then that might mean the end of the show,” said Simone Tagliapietra, senior fellow at the Bruegel think-tank in Brussels. Confidence is growing in European capitals that Europe can get through the winter without severe economic and social dislocation or energy rationing. Von der Leyen said the EU had “weakened the grip that Russia had on our economy and our continent”.Gas storage at facilities in the EU stands at 82 per cent, well ahead of the 80 per cent target the bloc set for the end of October. Member states have diversified supplies, increasing pipeline imports from Norway, Algeria and Azerbaijan and LNG from the US and other producers.European Commission president Ursula von der Leyen, who is to outline a package of emergency measures next week, said the price of Russian gas imports should also be capped © Olivier Hoslet/EPA/ShutterstockBefore its invasion of Ukraine, Russia accounted for 40 per cent of the EU’s gas imports but now only 9 per cent, von der Leyen noted. “Everyone expected [Russia] to get to the shut off of Nord Stream in the winter, because the winter is when they could maximise the pressure,’’ said Tagliapietra. “This acceleration of events tells us that probably the Kremlin did not factor in the possibility for Europe to come up with such a response.”One EU official said: “Putin has not achieved his goals — our dependency on him has come down much more quickly than expected.”Economists at Deutsche Bank now think Germany’s economy would contract by 3-4 per cent in 2023 rather than 5-6 per cent, on higher than expected storage and reduced consumption.Still, EU leaders are also aware of the pain that will come with soaring energy bills this winter, and the escalating cost to EU governments of cushioning households from sky-high costs. “All the member states are suffering, and they feel it could be a winter of discontent,” said the official.With inflation expected to remain high into next year, consumers are bracing for the biggest hit to living standards in a generation as wages fail to keep pace with prices. Consumer confidence dropped to the lowest level since records began in 1974 in the UK and it plunged to a near record low in the eurozone. The latest S&P Global PMI, a monthly business survey, showed business activity contracting in August in the eurozone and the UK. The UK economy started to contract in the second quarter and even the latest government aid has not dispelled a possible recession. The European Central Bank now expects the eurozone to stagnate in the last quarter of the year and the first three months of 2023, and to shrink altogether next year in a downside scenario.

Vladimir Putin played up the threat at an economic forum in Vladivostock on Wednesday. He said: ‘We will not supply anything at all if it is contrary to our interests. No gas, no oil, no coal, no fuel oil, nothing’ © via REUTERS

Angel Talavera, head of European Economics at Oxford Economics, said it was “inevitable” that governments would come up with larger support packages.Roberto Cingolani, Italy’s energy transition minister, said: “For as long as we are in this terrible situation it makes sense to have extraordinary measures to protect citizens and companies.”

Video: How Putin held Europe hostage over energy | FT Energy Source More

Some of the EU’s biggest member states have vowed to implement a planned global minimum corporate tax despite opposition from Hungary, which has refused to back the bloc’s proposals for the levy.In a joint statement on Friday, the finance ministers of Germany, France, Italy, Spain and the Netherlands pledged to introduce a minimum 15 per cent effective corporate tax rate in their own countries “swiftly”, adding that they wanted the new regime in place by 2023. “We stand ready to implement the global minimum effective taxation in 2023 and by any possible legal means,” they said in a statement issued during Friday’s meetings of finance ministers in Prague. The European Commission has proposed an EU directive implementing the minimum rate, which forms part of the landmark international OECD corporate tax agreement struck last year. The deal aims to stamp out the use of tax havens by multinationals. But the rules have been blocked, initially by Warsaw and more recently by Budapest. Warsaw has since dropped its objections. Changes to EU tax rules usually require unanimity among member states, but some capitals have called for the tax plan to be implemented via a process called “enhanced co-operation”, meaning other member states could press ahead without Hungary’s approval or participation.Bruno Le Maire, French finance minister, told reporters ahead of the meetings in Prague that enhanced co-operation was one way of pushing forward but that “national options” should also be on the table.Germany said earlier this week that it was prepared to implement the measure unilaterally if an EU-wide agreement could not be found. Christian Lindner, German finance minister, said on Friday that while Berlin strongly supported a European approach, it would use domestic law to bring the tax regime into force if necessary.The five ministers’ joint statement did not explicitly mention enhanced co-operation. Some EU capitals are wary of attempting to use the complex process on a tax matter, scarred by a failed attempt to deploy it to ram through a levy on financial transactions a decade ago. Valdis Dombrovskis, commission executive vice-president, told reporters his preferred solution remained an EU-wide one. The five ministers said introducing the minimum rate was an important step towards “tax justice”, adding in their statement: “Should unanimity not be reached in the next weeks, our governments are fully determined to follow through on our commitment.” Hungary has vociferously defended its 9 per cent corporate tax rate. Its foreign minister Péter Szijjártó said earlier this year that given the current economic downturn, the minimum tax would be a lethal blow for the European economy and would expose Hungary to “extraordinary challenges”. However, many EU capitals see Hungary’s move as an attempt to create leverage in other conflicts with Brussels rather than being about the merits of the tax proposal. Budapest has been locked in dispute with the EU over the rule of law and has yet to strike a deal with the commission on unlocking its share of the bloc’s post-Covid-19 recovery fund.Budapest was willing to agree to the minimum corporate tax earlier this year, before withdrawing its support in June. Gergely Gulyás, Hungarian prime minister Viktor Orbán’s chief of staff, insisted on Thursday that the EU could not get the measure through unless his country agreed to it. The Hungarian finance ministry and government spokesmen could not immediately be reached for comment on Friday. Additional reporting by Marton Dunai in Budapest and Mary McDougall in London More

People are buying electric vehicles at a record pace, snapping up battery-powered cars and trucks as quickly as automakers can make them. In just a few years, electric vehicles have gone from expensive novelties for the superrich to a must-have product for many people.We’re doing a story on who’s buying electric cars today, hoping to better understand people’s decisions and what they think of the vehicles. We particularly want to speak to people who bought their first electric vehicle in the last year or so.We will not publish any part of your submission without contacting you first. We may use your contact information to follow up with you.Tell us about your electric car purchase.Required questions are noted with * More

LONDON (Reuters) -The Bank of England has received a short-term boost in its fight against inflation from Prime Minister Liz Truss’s huge power bill bailout, but it still looks set to raise interest rates sharply later this month.Truss’s tariff cap – announced on Thursday and expected to cost 100 billion pounds ($116 billion) or more over two years – will allow inflation to peak as much as five percentage points lower than earlier forecasts, according to economists.But at 11% – the new estimate of several analysts – the high point of inflation’s recent surge would still be way above the BoE’s 2% target, doing little to ease policymakers’ concerns about inflation expectations getting entrenched in the economy.The BOE’s policy decision got pushed back to Sept. 22 from Sept. 15, due to the national mourning after the death of Queen Elizabeth, but economists said they did not expect the week-long delay to change the policy outlook. A preliminary Reuters poll of 30 economists taken after Truss’ss price cap announcement Thursday showed most were predicting a 50 basis-point rate hike this month.That would match last month’s increase but would be only the second time since 1995 that the BoE has raised Bank Rate by that much. Bets in financial markets on an even bigger 75 basis-point hike have diminished sharply since Truss’s announcement.Further ahead, the scale of the support from Truss’s power tariff cap and planned tax cuts are likely to create inflation pressures as households will be thousands of pounds better off than they would otherwise have been.To counter that, the BoE could raise rates higher than previously anticipated. “I suspect that the size of the package is probably going to weigh on the minds of Monetary Policy Committee members,” George Buckley, an economist with Nomura, said.He predicted a half-percentage point rate rise on Sept. 15 – with more hikes to follow.BoE Chief Economist Huw Pill said this week the central bank would ensure government spending did not generate inflation.James Smith at ING said the BoE might wait longer than other central banks before reversing its rate hikes in 2023. “It probably means they’re going to be looking at rate cuts much less urgently than the Fed or some of the other central banks which might be cutting rates by the middle of next year,” Smith said.RECESSION AVERTED?Samuel Tombs, at consultancy Pantheon Macroeconomics, said the recession forecast by the BoE might be avoided narrowly, clearing the way for a half-percentage point rate hike next week and another in November.That would take Bank Rate to 2.75%, its highest since 2008, where Tombs thought it would remain, a long way below bets in financial markets of more than 4%.Philip Shaw at Investec said there was potential for the government with its stimulus push and the BoE with its rate hikes to end up pulling in different directions, raising the risk of policy confusion.”The fact that the chancellor and the governor appear to be engaging in twice-weekly conversations is encouraging from the point of view of policy coordination,” Shaw said.New finance minister Kwasi Kwarteng and BoE Governor Andrew Bailey will meet regularly, initially twice a week, to coordinate economic support, the Treasury said on Wednesday. Kwarteng is expected to announce an emergency budget, including tax cuts, later this month. Also likely to push up BoE rates is the inflation-fuelling fall of the pound, which this week sank to its lowest level against the U.S. dollar since 1985, in part due to concerns about the scale of borrowing planned by Truss.Other central banks are also raising rates aggressively to fight inflation. The European Central Bank increased its benchmark rate by 75 basis points this week, its biggest move ever. As well raising rates, the BoE is about to start selling down the stockpile of British government bonds that it began racking up after the global financial crisis of 2007-08.The MPC said last month it would hold a confirmatory vote in September on the start of the sales “subject to economic and market conditions being judged appropriate.”Some economists have suggested that the recent upheaval in the bond market might slow the BoE’s sale plan.($1 = 0.8630 pounds) More