Nagy said the bank sector will have to contribute 300 billion forints per year on top of existing taxes, while energy firms mostly MOL will have to pay 300 billion forints, bearing the brunt of the burden.($1 = 366.07 forints) More
Speaking by video link to leaders of ex-Soviet states, Putin said Russia would keep working to find substitutes for foreign imports no longer available to it, even though this was not a “panacea for all ills”.Russia has become increasingly isolated from the West since invading Ukraine three months ago in what it calls a “special military operation”. Scores of companies have left the country for good and unprecedented Western sanctions have targeted its economy and businesses.”Representatives of our businesses face problems, of course, especially in the field of supply chains and transport. But nevertheless, everything can be adjusted, everything can be built in a new way,” Putin said in televised comments. “Not without losses at a certain stage, but it helps us in a way become stronger. In any case, we are definitely acquiring new competencies, we are starting to concentrate our economic, financial and administrative resources on breakthrough areas.”Putin said the exit of some foreign companies from the Russian market might be for the best.He acknowledged Russia’s need for access to foreign technology, adding: “We are not going to cut ourselves off from this – they want to squeeze us out a bit, but in the modern world this is simply unrealistic, impossible.”He did not elaborate on how Russia would find ways to maintain access to western components and software.Apparently referring to the United States, he said no “world gendarme” would succeed in using sanctions to weaken countries like Russia, China and many others that were pursuing what he called an independent policy. More
It announced the move, which followed two previous 300 basis point cuts which took the rate to 14%, at an extraordinary meeting. The bank has been gradually reversing an emergency rate hike to 20% in late February that was triggered by Russia’s Feb. 24 move to send tens of thousands of troops into Ukraine and the imposition of Western sanctions in response. Governor Elvira Nabiullina said inflationary risks were easing, but warned that the economy was entering a period of structural transformation and that banks needed additional capital support.Inflation expectations of households and businesses are falling, she told a banking conference in Moscow, helping to significantly lower inflationary risks.The rouble’s recent appreciation to multi-year highs has had a significant, if temporary, disinflationary impact, she said.The Russian currency has been supported this year by capital controls imposed in late February to cap financial stability risks and defend the economy against sweeping western sanctions.”Thanks to these factors, inflation is falling faster than we expected,” Nabiullina said. “This allows us to lower the key rate today without creating new pro-inflationary risks.””We allow for the possibility of further easing of the key rate at upcoming meetings.”RISKS ARE EASINGThe central bank said external conditions for the Russian economy are still challenging but financial stability risks have somewhat decreased, opening room for easing of some capital control measures.”The first months (since February) were a time for tactical decisions: we had to counteract the first sanctions shock,” Nabiullina said. “We managed to protect financial stability and not allow an inflation spiral to unfold.”But this, of course, absolutely does not mean that we can breathe easily.”The rouble’s performance has “given policymakers room to reverse emergency measures introduced since February”, Capital Economics analysts said in a note.”We suspect that the CBR won’t continue this pace of easing … A further easing of capital controls and additional rate cuts seem likely,” they said.The rouble extended intraday losses as Nabiullina spoke, sliding to 63.41 against the dollar, down 6.9% on the day.The central bank could cut its key rate further by 50-100 basis points at the next rate-setting meeting scheduled for June 10, said Dmitry Polevoy, head of investment at LockoInvest.Deputy Prime Minister Yuri Borisov said Russia needed cheap money and monetary policy that does not solely aim to curb inflation, hoping the central bank was embarking on a new trend.”I would have liked to have (the rate) at 6-8% today,” he said.INFLATION FORECASTNabiullina said the bank would adjust its 2022 inflation forecast, which previously stood at 18-23%, adding that inflation would slow to 5-7% in 2023 before reaching its 4% target in 2024.Inflation is hovering near its highest since early 2002, although May 20’s reading of 17.51% marked a decline from 17.69% a week earlier, reflecting a fall in consumer activity.High inflation dents living standards and has been one of the key concerns among Russians for years.On Wednesday, President Vladimir Putin ordered 10% rises in pensions and the minimum wage to cushion Russians from inflation.He denied the country’s economic problems were all linked to what Moscow calls its “special military operation” in Ukraine, which has prompted the West to impose unprecedented sanctions against Russian banks, companies, business leaders and figures close to the Kremlin. More
BENGALURU (Reuters) – The Bank of Canada will hike its overnight rate by 50 basis points on June 1, according to all 30 economists polled by Reuters, who see interest rates at least a half-point higher by year-end than predicted just one month ago. The BoC seems set to follow an aggressive path similar to that taken by the Federal Reserve to tame soaring inflation, which hit over a three-decade high of 6.8% in April and has now been above the central bank’s 1-3% range for more than a year.After a 50 basis-point hike in April, its biggest single increase in 22 years, BoC Governor Tiff Macklem said interest rates may need to go above the neutral range – currently estimated to be between 2% and 3% – for a period of time to get inflation back to target.The BoC was expected to lift its overnight rate by another half a percentage point at its June 1 meeting, taking its lending rate to 1.50%, according to all respondents in a May 20-25 poll. That was in line with money markets pricing. Just a month back, economists forecasted a 25-basis-point hike in June. cf8ff7e6-0022-4765-aef6-2cedd974b6441Reuters Poll: Canada monetary policy outlook: https://fingfx.thomsonreuters.com/gfx/polling/dwvkrnjozpm/Reuters%20Poll-%20Canada%20monetary%20policy%20outlook.png “The BoC is laser-focused on taming inflation but once the overnight rate reaches a more neutral level, it will be more conscious of the potential trade-off between returning inflation expediently to target and prolonging the economic cycle,” said Josh Nye, senior economist at Royal Bank of Canada.”We don’t expect the BoC will make monetary policy restrictive but if stubbornly high inflation forces it to do so that would amplify recession risk.”A smaller sample of economists who answered an additional question were nearly split on whether the current tightening campaign would lead to a recession, with seven of 14 saying it would not and the remaining it would trigger one. 3b027676-eac9-431b-a886-40d58ab52c3e2Reuters Poll- Canadian recession sentiment: https://fingfx.thomsonreuters.com/gfx/polling/klpykomxdpg/Reuters%20Poll-%20Canadian%20recession%20sentiment.png Canada’s economy is likely to be particularly sensitive to higher rates after Canadians borrowed heavily during the pandemic to participate in a red-hot housing market.Thirteen of 30 respondents in the poll forecasted rates to rise to 2.25% in the third quarter, 10 expected rates to be 2.00% and six expected 2.50%. Only one economist expected rates to be 1.75% by end-September.After that, 25 of 30 respondents expected rates to rise to 2.50% or more in the fourth quarter, including six predicting them to reach 2.75% and another six expecting rates at 3.00% by end-2022. Only four expected rates to be 2.25% and one predicted rates to be 1.75%.Poll medians showed rates at 2.25% next quarter and 2.50% in the fourth quarter. The BoC was expected to hike rates to 2.75% in the first quarter of 2023 and stay on the sidelines at least until the end of next year.Inflation was expected to average 5.9% this quarter before easing to 5.0% and 4.4% in the next two quarters, according to a separate poll. [ECILT/CA]While inflation was expected to cool significantly next year it was still forecast to stay above the central bank’s target until at least 2024.”Right now, the BoC’s attention remains firmly focused on inflation. Governor Macklem hinted that market expectations of a 50-basis-point hike in June would likely be met as he promised to restore price stability ‘forcefully’ if needed,” noted Christian Lawrence, senior cross-asset strategist at Rabobank. “That said, the dangers of hiking into a recession are not lost on the bank, but dampening demand is the only tool they have to try to slow inflation, and that spending needs to be moderated to try to reach an equilibrium. Rising inflation expectations are a core concern,” Lawrence said.(For other stories from the Reuters global economic poll:) More
DAVOS, Switzerland (Reuters) – The World Economic Forum will revert to January for its 2023 annual meeting in the Swiss ski resort of Davos after moving to the spring for the first time due to the coronavirus pandemic. After a hiatus of more than two years, the annual gathering this year attracted a mix of global political and business leaders, who met amid the usual high security.By returning to the start of the year, the privately-funded WEF will hope to regain its place where the global agenda for the months ahead is discussed and in some cases set.For those attending this year’s summit the main talking points included Russia’s invasion of Ukraine, threats to the global economy and investment shifts prompted by climate change.”This is not a place that even the most optimistic person expects to come to and get all the answers. In fact they might leave with more questions. This is the place to build the relationships that lead to long-term engagement and hopefully a focus on strategy,” Nela Richardson, Senior Vice President and Chief Economist for HR services firm ADP, said. Many participants at this year’s event, which wrapped up on Thursday, have welcomed occasional sunshine, alpine spring flowers and screeching swifts circling overhead as a welcome change from sub-zero temperatures and perilous icy sidewalks. Others have missed the winter wonderland atmosphere.”There’s never been anything like this, walking around not slipping and falling on the ice and bundling up with coats and jackets in the snow, it’s actually fun,” Jay Collins, Citigroup (NYSE:C)’s Vice Chairman of Banking, Capital Markets and Advisory, said this week. “I love winter in Davos, I’ve been doing it for years, but I definitely think springtime has been a nice change,” The event is scheduled for Jan. 15-20 in 2023, provided that there are no problems as a result of COVID or other issues, a WEF official told Reuters.After a coronavirus-enforced cancellation in 2021 and the postponement of the event from January 2022, many participants asked by Reuters about its relevance said the WEF event remains a unique talking shop.”The WEF and Davos is a unique forum for leaders from across industry – public, private – from across the globe to come together to talk about some of the most pressing issues that face the globe,” Dave Fredrickson, AstraZeneca (NASDAQ:AZN)’s Executive Vice-President of Oncology, told Reuters this week.’CRISIS OF TRUST’ There are also questions about the relevance of the WEF event at a time of global fragmentation and public scepticism.The final day of the 2022 meeting was marked by a demonstration by activists calling for more urgent action on climate change. Their protest echoed previous ones at the last WEF meeting in January 2020, when Swedish activist Greta Thunberg warned participants that the world was “still on fire”. by international research agency Glocalities found public mistrust of the WEF just months before the event.The poll in February and March of more than 26,000 respondents in 25 countries found nearly four out of 10 said they did not trust the WEF, compared to slightly fewer than three out of 10 who said they did, with the rest undecided.”The survey data clearly show that trust in the WEF is closely related to the larger crisis of trust,” said Martijn Lampert, research director at Amsterdam-based Glocalities. But attendees at the event say it has much to offer.”It’s the last place where people can gather and say what they think,” Akash Shah, Bank of New York Mellon’s Chief Growth Officer, told Reuters this week. More
Russia has relaxed some capital requirements for banks in response to sweeping Western sanctions levied against the Russian financial sector following Moscow’s move to send thousands of troops into Ukraine.Central Bank governor Elvira Nabiullina dismissed on Thursday the idea of ditching the Basel requirements – international standards that dictate the levels and kinds of assets lenders must keep on their balance sheets – and instead called for a readjustment in how they are applied in Russia.Nabiullina told a forum that the central bank was considering extending a number of the support measures until the end of the year but acknowledged that some banks may require a capital injection. She did not provide details. “It seems that sanctions-hit banks will have to focus on domestic rouble operations, primarily on lending to the state sector, sanctioned companies… Keeping in mind a risk of secondary sanctions, this is important to avoid splitting the banking system into two isolated parts,” she said. Kostin told the same forum that by his estimates, the entire sector could get a capital boost of 3.3 trillion roubles if Basel rules are abandoned, of which VTB alone would gain 550 billion roubles.Nabiullina also said the central bank is considering allowing banks to group together and form banking associations, without buying out each others’ shares, in order for smaller banks to team up with bigger lenders and benefit from their support. ($1 = 63.5000 roubles) More
LONDON (Reuters) – Britain’s economy regained its pre-COVID size late last year, but in one crucial way it has not recovered: there are 400,000 fewer workers than at the start of the pandemic.This stands in contrast to most other big, rich economies where the labour force has recovered more, and adds to the Bank of England’s inflation worries after surging energy prices and other bottlenecks pushed it to a 40-year high.The central bank fears a tight labour market will limit the economy’s growth potential and put fresh upward pressure on wages, making it harder to bring inflation back to its target.People have dropped out of the workforce not for want of jobs: the number of job vacancies advertised exceeded the number of those looking for work for the first time on record this year and the unemployment rate is the lowest since the 1970s.Instead, Britain has seen a sharp rise in people reporting long-term sickness – potentially due to the after-effects of high rates of COVID – as well as an exodus of older workers and more full-time study by the young.The Bank of England is not sure any of these factors will turn around soon. And with the pool of European Union workers no longer readily available after Brexit, labour shortages risk trapping Britain in a stagflation rut.Before the pandemic, Britain enjoyed steady labour force growth and high rates of participation.The number of people employed or looking for work in Britain was 34.2 million in the fourth quarter of 2019, but by the first quarter of this year it had fallen to 33.8 million.Britain stands out here. According to OECD data, across the Group of Seven countries only Italy has seen a bigger percentage drop in the share of those aged 15-64 active in its workforce. Inactivity among the working-age population has increased in Britain by a higher margin than any of its peers.The decline in Britain’s workforce is also the longest since the early 1990s, when a recession caused unemployment to soar and some people gave up looking for work.”The persistence and scale of this drop has been a surprise to us,” BoE Governor Andrew Bailey told lawmakers earlier this month as he sought to explain why inflation is forecast to be stickier in Britain than elsewhere. a06f1014-e6b2-441a-96a6-7940d660ef7d1 UK workforce shrinks more than most in G7: https://graphics.reuters.com/BRITAIN-ECONOMY/EMPLOYMENT/xmvjoxjnxpr/chart.png SICKER BRITSSome 233,000 people left the labour market because of long-term sickness between the fourth quarter of 2019 and the first quarter of 2022, around two thirds of the total outflow. Early retirement accounted for 49,000 and full-time study for 55,000 of the departures.One category which has seen a big fall is “looking after family/home”, with 156,000 fewer people citing as a reason for leaving the workforce than in late 2019.Hannah Slaughter, an economist at the Resolution Foundation, said this could reflect how remote working in the pandemic had made it easier to juggle a job with other duties. 5d92dc04-1e12-4f05-96ca-c2281215004c2 Long-term illness is behind smaller UK workforce: https://graphics.reuters.com/BRITAIN-ECONOMY/EMPLOYMENT/lgpdwejravo/chart.png LONG COVID TO BLAME?How much of the increase in long-term sickness is directly due to COVID is hard to pin down.Around 1.8 million Britons reported in early April that they had COVID symptoms lasting more than a month, with some 346,000 saying they were so bad that they “limited a lot” their day-to-day activities, possibly a reason for those of working age to drop out of the labour market.Michael Saunders, a BoE policymaker, also suggested in a recent speech that a big rise in waiting times for non-emergency medical care due to pandemic backlogs could have made more Britons too sick to work.Directly comparable data for other countries is hard to find. Annual EU figures show no consistent trend in the percentage of those unable to work because of sickness or disability between 2019 and 2021, with a sharp fall in France but a rise in Italy, for example.A comparison with Spain might suggest the severity of the pandemic may have played a role. Spain – which had a 13% lower COVID death rate than Britain – shows a 4% rise in sickness being cited as a reason for staying out of the workforce between late 2019 and early 2022, compared with a 12% increase in Britain. e790a586-e1c0-49b8-b9c1-f01fa27e82b53 Britain has bigger rise in sickness than Spain: https://graphics.reuters.com/BRITAIN-ECONOMY/EMPLOYMENT/byvrjdxomve/chart.png NO REMISSIONBefore Brexit, the strong demand in Britain’s labour market – where wages rose by an annual 7% in the first quarter – would encourage more people into work and bring in EU workers where needed.But over the past two years the number of EU nationals working in Britain has fallen by 211,000 while the number of non-EU nationals rose by 182,000. And hiring from abroad has become tougher as almost all foreign workers now require a visa and filling vacancies quickly with those with the right skills became more challenging. Saunders said Brexit could be “limiting the extent to which domestic capacity strains and specific skill shortages can be eased through imports and inward migration”.The BoE revised down its expectations for labour force participation in its latest forecasts and sees further falls over the coming years while a looming economic slowdown caused by high inflation is expected to push up unemployment.In addition, almost all of those citing illness as a reason for not working say they no longer want a job. More
Investing.com — The U.K. government is to impose a “temporary and targeted” windfall tax of 25% on the profits of oil and gas companies, Chancellor of the Exchequer Rishi Sunak said on Thursday.Sunak said the tax scheme would raise over £5 billion in revenue. The money will go in part to funding a broader package of income subsidies for lower-income families, aimed at relieving a growing cost-of-living crisis. Setting out his proposals in the House of Commons, Sunak said the government will send a one-time £650 ($820) cost of living payment directly to around 8 million of the lowest-income households in the U.K. He also laid out plans for further handouts to pensioners and disabled people in the autumn, when regulated household energy prices are expected to show another steep increase. In addition, the government is doubling a £200 rebate promised to all households irrespective of income level.”Millions of the most vulnerable households in the country will in total receive £1,200 of support – roughly the same as the entire energy bills increase,” Sunak said. The pound hit its highest in nearly three weeks on the news, rising 0.3% to $1.2605.The shares of the two biggest U.K.-based oil and gas producers, BP (LON:BP) and Shell (LON:SHEL), shrugged off the news. BP stock rose 0.4% to its highest since February 2020, while Shell stock hit a three-year high with a gain of 0.6%.Sunak’s announcement, which had been largely anticipated, is a much-needed diversion of the news agenda from a damaging scandal around illegal partying during lockdown by senior government figures including Prime Minister Boris Johnson.The news comes a day after the publication of a damning report into the parties, which repeatedly violated the government’s own rules on social gatherings. The report was accompanied by pictures of Johnson standing at tables well stacked with food and alcohol, and included testimony of repeated drunkenness at 10 Downing St. The report’s author, a senior civil servant named Sue Gray, said the Prime Minister and Head of the Civil Service must take responsibility. Boris Johnson countered that the report exonerated him of lying to parliament about the parties, and said he wouldn’t resign. A number of Conservative lawmakers have published letters withdrawing their support for him since. More
