Economy

Prabowo, who took office in October, told his ministers and government officials that such tensions are expected to slow the growth of the world’s major economies, without mentioning any country although citing a “military emergency” as an example.”We cannot tolerate leaks, heavy spending, things that do not address the problems of our people, that aren’t productive,” he said, calling for fewer ceremonial events and seminars.”Tensions, wars, heavy competition between major powers … this causes economic uncertainties.”On Tuesday, Prabowo also presided over a launch of an application for state agencies to procure products which he said could make state spending more efficient.About 3,621 trillion rupiah ($228.31 billion) has been allotted in the state budget for government spending next year, which represents an increase of 6% over this year, with the budget deficit forecast at 2.53% of the country’s gross domestic product, lower than this year’s outlook of 2.7%.Prabowo has long touted his aim to accelerate Indonesia’s economic growth to 8%, from 5% now, by developing industries that process the country’s rich natural resources and relying on the economic impact of his flagship programmes, such as giving students free school meals.During the speech, Prabowo also called for a more targeted subsidy scheme and to make sure all subsidies reach the poor.($1 = 15,860.0000 rupiah) More

The VDMA said it anticipated production would decline by 8% and 2% in real terms in 2024 and 2025 respectively, unchanged from its previous forecast, as it warned of intensifying competition in China and new challenges in the U.S. from Trump’s presidency.”A growing number of companies is no longer able to adequately cushion production through their order backlogs in the face of sharply declining orders,” VDMA President Bertram Kawlath said in a statement.Kawlath added that falling interest rates are likely to benefit consumption as well as boost investment and trigger an economic recovery next year, but that he expected no dramatic upturn as conflicts, protectionism and structural breaks weigh on global economy. More

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By Swati BhatMUMBAI (Reuters) – Restoring a balance between inflation and growth in India remains an important task for the Reserve Bank of India (NS:BOI), the outgoing central bank governor, Shaktikanta Das, said.”The inherent potential of the Indian economy to grow is very much there,” Das said, ahead of leaving office later on Tuesday.A day earlier, India appointed career civil servant Sanjay Malhotra as the new central bank governor in a surprise move that has left markets guessing about the future direction of monetary policy.Financial markets had expected Das to be handed an unprecedented second extension as his term ended on Tuesday.Malhotra’s appointment at the RBI’s helm comes at a time when economic growth has slowed and inflation has risen.   GDP growth in the September quarter slowed to 5.4%, its weakest in seven quarters, and inflation rose to above the central bank’s 6% tolerance band in October for the first time in over a year.At last week’s policy review, the central bank left interest rates unchanged, but reduced the cash reserve ratio that banks are required to hold in order to ease monetary conditions and support growth.”I think growth is impacted by multiplicity of factors, not just one factor of the repo rate,” Das said.”Our effort has been to follow and make monetary policy as appropriate as possible, keeping in mind the prevailing conditions and the overall outlook.” (This story has been refiled to add attribution in paragraph 1) More

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ORLANDO, Florida (Reuters) -An extraordinary year for investors is poised to end with a monetary policy bang, with almost every G10 central bank scheduled to deliver interest rate decisions over a 10-day period this month.    Four of the G10 central banks meet this week and five, including the Federal Reserve, meet next week. Remarkably, four of those – Bank of Japan, Bank of England, Riksbank and Norges Bank – will deliver their policy verdicts on the same day, Thursday December 19.    The sweep of decisions and guidance will be felt most acutely in FX markets, where implied volatility across G10 currencies is already at the highest pitch since April last year.    Importantly, most of these currencies will be going into these meetings on the back foot. Sterling is the only one that has held its own against the dollar this year, and, even then, only barely. All other G10 currencies are between 4% and 9% weaker against the greenback in 2024.    It’s easy to see why implied FX ‘vol’ is so elevated going into the end of the year. Uncertainty over U.S. trade policy following Donald Trump’s election victory, rising geopolitical tensions, and the ebb and flow of monetary policy expectations are all playing their part.On that note, in addition to the nine G10 central banks cited above, monetary policymakers in Brazil, Indonesia, Thailand and Colombia also meet within this 10-day period, just as market liquidity will be thinning out for seasonal reasons.    It’s a different story for stock and bonds, at least in the United States. The VIX, Wall Street’s so-called ‘fear index’, and the ‘MOVE’ index of implied volatility in Treasuries are the lowest they’ve been in months. The latter is notable given how much Treasuries have moved since the U.S. presidential election on November 5 and the potential policy changes that could accompany Trump’s return to the Oval Office in January.LONG VOLWall Street analysts are warning that the second Trump administration’s agenda could cause FX volatility to outlast the holiday season.    In their 2025 outlook, currency analysts at JP Morgan advise clients that “elevated” U.S. policy uncertainty makes a strategic short vol stance “untenable.”    “2025 will not be a year for the faint-hearted to be short vol,” they wrote on Nov. 28, citing President-elect Trump’s hardline stance on trade and his threats to slap massive tariffs on some of America’s key trading partners.    Karen Reichgott Fishman at Goldman Sachs last week echoed these statements, noting, “this makes it a good time to assess the value of hedging any exchange rate exposure in global portfolios”.     But before Trump is sworn in, currency traders will have to navigate the looming tsunami of rate decisions this month. Mark your calendars for a bumpy year end.    Dec. 10 Reserve Bank of Australia: Markets are pricing in a 90% probability that the cash rate will be held at 4.35%, with around 70 basis points of easing expected by the end of next year. The RBA hasn’t yet started its easing cycle.    Dec. 11    Bank of Canada: Markets are pricing in a quarter point cut and a 75% probability of a half point move, with around 115 bps of cuts over the next year. The BOC has already cut its Bank Rate by 125 bps in this cycle, the most among all G10 central banks.Dec. 12European Central Bank: Markets are pricing in a quarter point cut, with around 150 bps of easing expected over the next 12 months.    Swiss National Bank: Markets are pricing in a quarter point rate cut and a 65% chance of a half point reduction. Traders are expecting around 85 bps of easing over the next 12 months. SNB Chairman Thomas Jordan recently floated the idea that the SNB could return to negative interest rates, if necessary.Dec. 18    Federal Reserve: Markets are pricing in a 90% probability of a quarter point cut, with around 80 bps of easing expected by the end of next year.Dec. 19    Bank of Japan: Traders expect the key policy rate to be raised by 10 bps, and around 45 bps of tightening anticipated over the next 12 months.    Norges Bank: Markets are pricing in a 20% chance of a quarter point cut, with around 120 bps of easing expected over the next year.     Riksbank: Markets are pricing in a 70% likelihood of a quarter point cut, with around 100 bps of rate cuts expected by the end of next year.    Bank of England: No rate change anticipated at this meeting, but markets are pricing in around 75 bps of easing over the next 12 months.     (The opinions expressed here are those of the author, a columnist for Reuters.) More