Economy

OTTAWA, Sept 10 (Reuters) – Global trade disruptions could make it harder for the Bank of Canada to consistently meet its 2% inflation target, and it will have to balance the risks of controlling higher prices with ensuring economic growth, Governor Tiff Macklem said on Tuesday.Inflation in Canada has been consistently falling this year, pushed down by interest rates that were at a two-decade high of 5% for more than a year before the central bank cut rates three times in a row from June.Macklem said with globalization slowing, the cost of global goods might not decline to the same degree and this could put more upward pressure on inflation. “Trade disruptions may also increase the variability of inflation,” he said in a speech to the Canada-UK Chamber of Commerce in London, citing the effect that supply shocks can have on prices.”Trade disruptions may mean larger deviations of inflation from the 2% target.”This means the bank is focusing on risk management to balance inflation and growth and investing to better understand global supply chains, he said.Overall inflation in Canada in July fell to a 40-month low of 2.5%.Canada is a small open economy which relies heavily on trade and is therefore particularly vulnerable to disruptions.Supply shocks such as the one seen during the pandemic are creating a difficult trade-off for central banks since monetary policy cannot stabilize growth and inflation at the same time, Macklem said.”We’re updating our models to use scenarios when periods of uncertainty make central forecasts less reliable,” said Macklem, adding that the bank was using more micro-data to track and understand the consequences of trade and industrial policy.Canada needs to be ready for the trade disruptions that seem inevitable amid a changing trade landscape, he said. It has to ensure inflation is “low, stable and predictable even as global trade is being rewired, recast and redirected.”He said while the BoC does not set trade policy, it needs to understand shifts in global trade because they affect Canadians and drive costs and inflation. The BoC in June became the first G7 central bank start to trim borrowing costs as inflation continued to stay within its target range of 1-3% since this year. The bank has cut its key policy rate by 75 basis point to 4.25% this year. (Reuters editorial)((Reuters Ottawa bureau, [email protected])) More

LONDON (Reuters) – Global shares dipped on Tuesday, struggling to draw momentum from a rally on Wall Street as concerns about faltering economic growth dampened investor sentiment, which also weighed on oil. Data from China showed exports grew at their fastest since March 2023 in August, suggesting manufacturers were rushing out orders ahead of tariffs expected from a number of trade partners, while imports missed forecasts amid weak domestic demand.That followed Monday’s inflation figures that pointed to still-fragile domestic demand as producer price deflation worsened, keeping alive calls for further stimulus from Beijing to shore up its economy.This took a chunk out of Asian shares, as well as commodities such as copper and crude.Across the broader equity market, MSCI’s All-World index was flat, reflecting modest gains in Europe, where the STOXX 600 fell 0.3% and as U.S. stock futures tilted into negative territory.Investors are anticipating a series of rapid interest rate cuts from the Federal Reserve in the coming months, after last week’s U.S. jobs report painted a picture of a labour market that was slowing. “Markets are now on hard-landing alert essentially and we’ve seen a return to ‘good news is good news’,” Investec chief economist Philip Shaw said.Stocks had traded at record highs just two weeks ago, as expectations built for the Fed to deliver some fresh stimulus to the economy by cutting borrowing costs. But with the all-important labour market slowing, activity across the manufacturing sector in contraction and inflation subsiding, the mood has shifted.Futures show traders are banking on U.S. rates dropping by a full percentage point by the end of the year, with a near-30% chance of a half-point cut coming as early as next week, according to CME’s Fedwatch tool.Wall Street had staged an impressive rebound in the previous session, after all three major U.S. stock indexes surged more than 1%, recovering from last week’s selloff.Later on Tuesday, Democrat Kamala Harris and Republican Donald Trump will debate for the first time ahead of the presidential election on Nov. 5, with the two locked in a tight race.THE CASE FOR CUTSInvestors now turn their attention to Wednesday’s U.S. inflation report, which could provide more clarity on whether the Federal Reserve would deliver an outsized 50-basis-point cut when it meets next week.”(Inflation) numbers have been pretty critical over past few months, but it is arguably less this time around. Markets have it firmly established in their minds that price pressures are easing back. What matters more are the projected trends in U.S. economy and the extent to which activity holds up or slows down,” Investec’s Shaw said.Expectations are for headline inflation in the United States to have slowed to an annual rate of 2.6% in August, compared with July’s 2.9%.”If the inflation number is any different, or significantly different from expectations, then the number of rate cuts (priced in) will be changed,” Jun Bei Liu, a portfolio manager at Tribeca Investment Partners, said.”At the moment, I think the market is reasonably aggressive in pricing quite a lot this side of the year, and so that probably opens up for a bit more … volatility that we have seen in the last couple of weeks.”Oil, which has lost nearly 20% in the last two months alone, driven by concern about global energy demand, was down another 1% at $71.13 a barrel.Copper futures fell 0.2% to $9,076 a tonne, while iron ore futures dropped 0.5% to $91.30 a tonne, after data showed a drop in Chinese imports. In currencies, the U.S. dollar surrendered earlier gains against the yen to fall 0.1% to 143.03. The euro was flat at $1.10323, while sterling rose 0.2% to $1.3095. Data earlier showed UK wage growth cooled in the three months to July but remained above 5%. More

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

LONDON (Reuters) -British pay growth cooled in the three months to July to a more than two-year low and employment shot higher, according to data on Tuesday which is likely to keep the Bank of England on track to cut interest rates again before the end of the year.British average weekly earnings, excluding bonuses, were 5.1% higher than a year earlier in the three months to the end of July, the Office for National Statistics said, matching the consensus in a Reuters poll of economists. It was the lowest reading since the three months to June 2022.Sterling ticked higher against the dollar briefly on the back of the figures, which were broadly as expected, before settling back again.When it cut interest rates on Aug. 1 after keeping them at a 16-year high of 5.25% for nearly a year, the BoE said it would continue to keep a close eye on wage growth. Investors see a roughly one-in-four chance of a September BoE rate cut.”The slowdown in pay is quite clear now, despite the effects of awards in the public sector this summer. This should give confidence to the Bank on the future path for interest rates,” said Neil Carberry, chief executive of the Recruitment and Employment Confederation trade body.In July, Britain’s new finance minister Rachel Reeves approved pay rises of at least 5% for millions of public sector workers.Most economists polled by Reuters expect the next rate cut to take place in November, rather than on Sept. 19.The BoE is more focused on private sector pay, which it forecasts will slow to 5% in late 2024 and 3% in late 2025.Excluding bonuses, private sector pay growth cooled to 4.9% in the three months to July – putting it on track to meet the BoE’s forecast of 4.8% for the third quarter as a whole.EMPLOYMENT PICKS UPBritain’s economy added 265,000 jobs in the three months to July, the ONS said, far more than expected by economists in the Reuters poll which had pointed to a 123,000 increase.But the ONS repeated its warnings about the flaws of the Labour Force Survey, which produces employment and unemployment data, but not the headline wage figures. The methodology is due to be refreshed in December’s release.A different measure of employment based on tax data, which some economists say may give a better steer on the health of the labour market though it is prone to revision, showed the biggest drop in payrolled jobs during August since late 2020.The unemployment rate in the three months to July fell to 4.1%, slightly down from 4.2% in the three months to June, and its lowest since the three months to January 2024.The data pointed to progress in reducing the number of economically inactive people of working age – a priority for Britain’s new Labour government – which fell in the three months to July by 136,000 from the three months to April, the biggest such fall since mid-2022.The number of people who were inactive because of long-term sickness also fell.The BoE also looks at other inflation pressures such as labour shortages, which leapt during the COVID-19 pandemic.The number of unfilled job vacancies fell to a more than three-year low of 857,000 in the three months to July, down from 1.3 million in mid-2022 but still higher than in early 2020. More

Frigo-Trans network includes temperature-controlled warehousing and freight forwarding capabilities, as well as a pan-European cold chain transportation solution, UPS said.Under the deal, UPS will also buy Frigo-Trans’ sister company BPL. The transaction is expected to close in the first quarter of 2025, the package delivery firm said. More

Investing.com – Bank of America  has adjusted its projections for Brazil’s basic interest rate and now expects the Selic rate to close the year at 11.75%. As such, the expectation is that the Central Bank’s Monetary Policy Committee (Copom) will increase the rate by 0.25 percentage points next week, initiating a tightening cycle, according to a report released to clients and the market on Monday.
“We expect Brazil to increase rates while other central banks are cutting, which may further reduce the pressure for future increases,” the bank stated in the report.
Besides the increase in September, the projection is for two subsequent half-point increases and a final 0.25 percentage point hike in January, reaching a peak of 12% in January 2025.
“As the Fed and other central banks are expected to cut interest rates, there is a risk of fewer increases for Brazil. We maintain the view that interest rates in Brazil are already above neutral,” highlighted economists David Beker, Natacha Perez, and Gustavo Mendes.
BofA estimates inflation at 3.9% in 2024 and 3.6% in 2025. Inflation expectations, the dollar being above R$5.50, higher-than-expected activity levels, and the pricing of the interest rate curve are among the reasons for the bank’s projection change. They believe that the tightening cycle “should help re-anchor inflation expectations and reinforce the credibility of the Brazilian Central Bank.”
The economists noted the robustness of economic activity, with a strong labor market, credit acceleration, and strong demand, in addition to the boost from fiscal policy.
“We believe that local interest rates above neutral, combined with less fiscal impetus, will lead to a slowdown in economic activity,” the economists added, mentioning upside risks to their growth estimate of 2.7% this year and downside risks to their 2.5% forecast for 2025.
On Monday, the Central Bank’s Focus Bulletin report showed that economists consulted by the monetary authority raised their expectations for the Selic basic interest rate at the end of 2024 from 10.50% to 11.25%. More

LONDON (Reuters) -UK fund managers Schroders (LON:SDR) and abrdn named new CEOs on Tuesday, appointing insiders to reboot performance at firms running nearly 1.3 trillion pounds ($1.7 trillion) in assets against a backdrop of skittish investor sentiment and industry-wide pressure on fees.Schroders appointed current chief financial officer Richard Oldfield to succeed Peter Harrison in November, while abrdn – which had faced calls to break up amid shrinking demand for its funds – separately announced interim boss and former CFO Jason Windsor would become its permanent CEO.Both take over at a testing time for the asset management industry.Mid-sized British firms like Schroders and abrdn focused on active funds have been particularly squeezed by competition from cheaper index-tracking products sold by giants such as BlackRock (NYSE:BLK) and State Street (NYSE:STT) Global Advisors, as well as inflationary pressures on costs.Analysts say these structural forces are largely out of any CEO’s control.The promotions were described as unanimous choices by the asset managers’ chairpersons.Shares in Schroders, a 224-year old fund firm which built its business on transatlantic trade, have tumbled 21% in 2024 and were little changed on Tuesday. Abrdn’s stock fell 0.3%, bringing year-to-date losses to 16%. Schroders’ former CEO Harrison announced his plan to retire in April after eight years in the top role, prompting the largest UK standalone fund manager, which manages 774 billion pounds of assets, to hunt for a successor.Oldfield, 53, a seasoned finance veteran, joined Schroders last October as its finance chief from PricewaterhouseCoopers, where he spent three decades in senior roles.Underwhelming half-year earnings from Schroders in August underscored the challenge, after the company missed profit forecasts and flagged pressure on its margins.The firm started out financing trade between America and Europe, railways, ports and power stations and today is focused on managing money for pension funds, wealthy families and rich entrepreneurs. But even the richest of investors are now looking to pay less for investment services.Senior equity analyst at CFRA Research Firdaus Ibrahim said Schroders’ problems were significant, but a decline in interest rates offered some hope if they encouraged investors to look for higher-return products.The new CEO should position Schroders “to take advantage when the tide finally turns” by prioritising cost-saving plans, improving its products and considering M&A, he told Reuters.In the run-up to Tuesday’s announcement, Schroders had been linked with a variety of external candidates by media reports, including former UBS chief Ralph Hamers.BREAK-UPAbrdn’s Windsor took on the role of interim CEO in May, after predecessor Stephen Bird abruptly stepped down from a firm with 506 billion pounds of assets under management and administration.Borne from a merger of Aberdeen Asset Management and Standard Life (LON:ABDN) in 2017, abrdn has come under particular strain in recent years, reporting more than 10 billion pounds of outflows over each of the last two years, although this year it beat performance forecasts and has been axing costs.Since the merger was announced, abrdn shares have lost more than half their value. Analysts have previously said that a change in leadership at abrdn could re-ignite calls for a break-up of the company, which spans traditional fund management through to retail investing platform interactive investor.Windsor has a background in dealmaking himself, having spent 15 years at Morgan Stanley, although he told reporters in August that strategic repositioning of the group was not a high priority.”(Windsor) has made a huge impression both internally and externally since he joined abrdn, particularly as someone whose actions evidence he cares deeply about our clients and customers and our people,” abrdn Chairman Douglas Flint said in a statement.Ian Jenkins will continue in the role of abrdn’s interim group CFO and a search process for a permanent appointment to this role will now begin, the company said.($1 = 0.7641 pounds) More

The former president has proposed using tariffs to fund child care, boost manufacturing, quell immigration and encourage use of the dollar. Economists are skeptical.It has been more than five years since former President Donald J. Trump called himself a “Tariff Man,” but since then, his enthusiasm for tariffs seems only to have grown.Mr. Trump has long maintained that imposing tariffs on foreign products can protect American factories, narrow the gap between what the United States exports and what it imports, and bring uncooperative foreign governments to heel. While in office, Mr. Trump used the threat of tariffs to try to convince Mexico to stop the flow of undocumented immigrants across the U.S. border, and to sway China to enter into a trade deal with the United States.But in recent weeks, Mr. Trump has made even more expansive claims about the power of tariffs, including that they will help pay for child care, combat inflation, finance a U.S. sovereign wealth fund and help preserve the dollar’s pre-eminent role in the global economy.Economists have been skeptical of many of these assertions. While tariffs generate some level of revenue, in many cases they could create only a small amount of the funding needed to pursue some of the goals that Mr. Trump has outlined. In other cases, they say, tariffs could actually backfire on the U.S. economy, by inviting retaliation from foreign governments and raising costs for consumers.“Trump seems drawn to trade tariffs as a bargaining tool with other countries because tariffs have powerful domestic political symbolism, are much easier to turn on and off than financial sanctions and can be tweaked with shifting circumstances,” said Eswar Prasad, a trade economist at Cornell University.“The irony is that using tariffs to punish countries that use unfair trade practices or are trying to reduce their dependence on the dollar is likely to end up hurting the U.S. economy and consumers,” he said.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More