<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107366350-17066268512024-01-30t110014z_2101305001_rc2as5axkmg4_rtrmadp_0_usa-fed-balance-sheet-820x547.jpeg" alt="" class="wp-image-467638" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107366350-17066268512024-01-30t110014z_2101305001_rc2as5axkmg4_rtrmadp_0_usa-fed-balance-sheet-820x547.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107366350-17066268512024-01-30t110014z_2101305001_rc2as5axkmg4_rtrmadp_0_usa-fed-balance-sheet-300x200.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107366350-17066268512024-01-30t110014z_2101305001_rc2as5axkmg4_rtrmadp_0_usa-fed-balance-sheet-135x90.jpeg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107366350-17066268512024-01-30t110014z_2101305001_rc2as5axkmg4_rtrmadp_0_usa-fed-balance-sheet-768x512.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107366350-17066268512024-01-30t110014z_2101305001_rc2as5axkmg4_rtrmadp_0_usa-fed-balance-sheet-1536x1024.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107366350-17066268512024-01-30t110014z_2101305001_rc2as5axkmg4_rtrmadp_0_usa-fed-balance-sheet-scaled.jpeg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">An eagle tops the U.S. Federal Reserve building’s facade in Washington, July 31, 2013. REUTERS/Jonathan Ernst/ Jonathan Ernst | Reuters</figcaption></figure>



The Federal Reserve and the European Central Bank look poised to make “major progress” in cutting interest rates this year, according to the central bank of central banks.



Agustín Carstens, general manager of the Bank for International Settlements, told CNBC on Monday that major central banks had so far made “very impressive advances” in lowering inflation and suggested that they could soon shift toward a looser monetary policy stance.



“If everything goes fine, I think that, certainly this year, we will see major progress, especially toward the second part of the year,” Carstens told Annette Weisbach.



BIS serves as a bank and forum for national central banks, and as such has close understanding of their monetary policies. It holds no sway over policymakers’ decision-making.



Carstens warned that the “last mile” on the path of disinflation was likely to prove the trickiest.



“We have done the tightening, but the effect on the rest of the economy is still going. The uncertainty is how much impact will that be,” he said.



“Central bankers have to be very observant about the path of disinflation, and they have to keep going until the job is fully done.”



Investors are closely watching the future course for interest rates, with expectations of a shift toward looser monetary policy already bringing some relief to markets after months of interest rate hikes designed to dampen persistently high inflation.



During its March meeting, the ECB held interest rates steady, but hinted at a June rate cut as it trimmed its annual inflation forecast. ECB chief economist Philip Lane sought to temper those expectations last week, telling CNBC that any decision would depend on the latest economic data.



The Fed and the Bank of England are expected to shine future light on their plans for interest rates during their monetary policy meetings this week.



Higher-than-expected U.S. inflation data released on Thursday prompted some economists to curb predictions for a swathe of 2023 cuts. JP Morgan and Goldman Sachs said they now see the Fed reducing rates three times this year from June onwards.



The BoE is also expected to lower rates starting from June, according to analysts, with Goldman Sachs forecasting as many as five 25 basis point cuts.



The Bank of Japan is meanwhile predicted to lift interest rates on Tuesday, according to a Reuters poll, marking a major turn in its nearly two-decade-long cycle of negative interest rates.

107366350-17066268512024-01-30t110014z_2101305001_rc2as5axkmg4_rtrmadp_0_usa-fed-balance-sheet

Fed and other banks to make ‘major progress’ on rates this year, BIS chief says

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107388104-1710510554127-gettyimages-1967839257-776099513_uae_dicenzo_cloudseeding_17-820x461.jpeg" alt="" class="wp-image-467547" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107388104-1710510554127-gettyimages-1967839257-776099513_uae_dicenzo_cloudseeding_17-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107388104-1710510554127-gettyimages-1967839257-776099513_uae_dicenzo_cloudseeding_17-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107388104-1710510554127-gettyimages-1967839257-776099513_uae_dicenzo_cloudseeding_17-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107388104-1710510554127-gettyimages-1967839257-776099513_uae_dicenzo_cloudseeding_17-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107388104-1710510554127-gettyimages-1967839257-776099513_uae_dicenzo_cloudseeding_17-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107388104-1710510554127-gettyimages-1967839257-776099513_uae_dicenzo_cloudseeding_17.jpeg 1920w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">A view of the UAE city of Al Ain during a cloud-seeding mission on January 31, 2024 in Al Ain, United Arab Emirates.  Andrea Dicenzo | Getty Images News | Getty Images</figcaption></figure>



Rising global temperatures have added a strain on regions like the Middle East, which is extremely vulnerable to the impacts of climate change.



These nations are now faced with a big problem, how can they solve their water shortage issues?&nbsp;



The United Arab Emirates averages less than 200 millimeters of rainfall a year, in stark contrast to London’s average of 1,051 millimeters and Singapore’s 3,012 millimeters.



In the UAE, temperatures can reach as high as 50 degrees Celsius (122° Fahrenheit) during the Summer, where 80% of the country’s landscape is covered with desert terrain.&nbsp;



Extreme heat could exacerbate water scarcity issues and impose restraints on agricultural productivity in the country.&nbsp;



The United Nations projects that by 2025, 1.8 billion people will face absolute water scarcity across the world. The Middle East stood out as one of the most water-stressed areas with around 83% of the population in the region prone to experiencing high levels of water stress. 



With water scarcity at the core of the region’s challenges, the Gulf state implemented a program aimed at addressing this issue.&nbsp;



<h2 class="wp-block-heading" id="h-introduction-of-cloud-seeding"><a></a>Introduction of cloud seeding</h2>



In the 1990s, the UAE introduced a rain enhancement methodology called cloud seeding. Cloud seeding is the process of increasing the amount of rain produced from the clouds above, which is designed to improve water shortage issues in arid regions around the emirate. 



By the early 2000s, Sheikh Mansour Bin Zayed Al Nahyan, the vice president of the UAE, allocated up to $20 million for research into cloud seeding. The UAE partnered with the National Center for Atmospheric Research in Colorado and NASA to set up the methodology for the cloud seeding program.



The government introduced a task force called The National Center of Meteorology (NCM) in Abu Dhabi where more than 1,000 hours of cloud seeding is performed each year to enhance rainfall.&nbsp;



The NCM has a weather radar network and more than 60 weather stations where it manages seeding operations in the country and closely monitors atmospheric conditions.



<h2 class="wp-block-heading"><a></a>How it works</h2>



Weather forecasters at the center can observe precipitation patterns in clouds and identify suitable clouds to seed, with the aim of increasing the rate of rainfall.



Once they spot the right cloud, they instruct pilots to take to the air with their specialized aircrafts loaded with hygroscopic flares on the plane’s wings. 



Each flare contains about 1 kilogram of salt material components and can take up to three minutes to burn and shoot into the right clouds. After the seeding agent is introduced into the cloud, the droplets increase in size, surpassing the cloud’s capacity to sustain them against gravity, resulting in their release as raindrops.



<h2 class="wp-block-heading"><a></a>Seeding agents</h2>



Skeptics have long argued that governments who have introduced weather modification techniques to their skies are “playing God.”



During a visit to the NCM, General Director Abdulla Al Mandous told CNBC that the technology is “based on scientific background.”



Al Mandous added that Abu Dhabi’s program does not use silver iodide, a common crystal-like material used as a seeding agent in other countries. This material has been widely criticized for potential harmful effects on the environment and the public, however, some cloud seeding studies show there has been no substantial evidence to prove that at current levels it poses any toxic effects. 



The NCM said it does not use any harmful chemicals in its operations. “Our specialized aircrafts only use natural salts, and no harmful chemicals,” the organization told CNBC.



Al Mandous said the center started manufacturing its own seeding agent called nano material, a fine salt coated with titanium oxide, which is more effective than what it uses currently.&nbsp;



“It will give us three times more effective results than the hygroscopic flares,” he said.



The nano material is presently undergoing trials and experimentation in various atmospheres, both in the UAE and the U.S.

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United Arab Emirates is using cloud seeding tech to make it rain

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="462" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107388489-1710720164910-gettyimages-2057346478-AFP_34KV6K8-820x462.jpeg" alt="" class="wp-image-467543" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107388489-1710720164910-gettyimages-2057346478-AFP_34KV6K8-820x462.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107388489-1710720164910-gettyimages-2057346478-AFP_34KV6K8-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107388489-1710720164910-gettyimages-2057346478-AFP_34KV6K8-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107388489-1710720164910-gettyimages-2057346478-AFP_34KV6K8-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107388489-1710720164910-gettyimages-2057346478-AFP_34KV6K8.jpeg 929w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Around 970 million registered voters are expected to cast their votes for India’s next prime minister. Sajjad Hussain | Afp | Getty Images</figcaption></figure>



India will hold the world’s largest general elections starting April this year with nearly a billion voters set to exercise their franchise.



The seven-stage election process will start from April 19 and last till June 1, 2024, according to the schedule announced by the Election Commission of India. The country has about 970 million registered voters.



India’s Prime Minister Narendra Modi’s Bharatiya Janata Party is projected to win more than the required 272 seats to form a government, according to several opinion polls.



Experts also forecast that the BJP is set to win a third straight term.&nbsp;



“Given the economic growth momentum in the domestic economy created by a Modi-led government and an increased image of India on a global stage, many are confident that Modi will win again,” Kranthi Bathini, equity strategist at WealthMills Securities told CNBC.&nbsp;



Opposition parties have often alleged that electronic voting machines can be “hacked,” benefiting the ruling BJP, a claim refuted by the country’s election body.



In December, Modi’s party was accused by opposition members of orchestrating a power grab after 141 lawmakers were suspended for disrupting parliamentary proceedings.



Chief Election Commissioner Rajiv Kumar appealed to voters in a press conference on Saturday to “maintain decorum when campaigning and refrain from abuses and personal attacks.” 



Since Modi won a second term in the 2019 general election, India has seen the economy strengthen, with Indian equity benchmarks hitting record highs. The Nifty 50 and BSE Sensex have both hit all-time highs this year after the country overtook Hong Kong in December to become the world’s seventh largest stock market.



International Monetary Fund executive director Krishnamurthy Subramanian said earlier in March that India is “easily” the fastest-growing economy and is poised for 8% growth this year.



Warming relations with the U.S. after Modi’s state visit to the White House in June has also boosted India’s appeal as investment destination, with several firms keen to expand their manufacturing presence in the South-Asian nation as they diversify away from China.

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India to hold the world’s biggest election starting April in over a month-long exercise

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107388485-1710716931527-gettyimages-2079406255-cfoto-realesta240315_npjH7-820x547.jpeg" alt="" class="wp-image-467526" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107388485-1710716931527-gettyimages-2079406255-cfoto-realesta240315_npjH7-820x547.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107388485-1710716931527-gettyimages-2079406255-cfoto-realesta240315_npjH7-300x200.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107388485-1710716931527-gettyimages-2079406255-cfoto-realesta240315_npjH7-135x90.jpeg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107388485-1710716931527-gettyimages-2079406255-cfoto-realesta240315_npjH7-768x512.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107388485-1710716931527-gettyimages-2079406255-cfoto-realesta240315_npjH7-1536x1024.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107388485-1710716931527-gettyimages-2079406255-cfoto-realesta240315_npjH7-scaled.jpeg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">High-rise residential and commercial buildings are being constructed near Dongyu Road, Qiantan, in the Pudong New Area of Shanghai, China, on March 15, 2024.  Nurphoto | Nurphoto | Getty Images</figcaption></figure>



BEIJING — &nbsp;China’s economic data for the first two months of the year beat analysts’ expectations across the board on Monday.



Retail sales rose 5.5%, better than the 5.2% increase forecast in a Reuters poll, while industrial production climbed 7%, compared with estimates of 5% growth.



Fixed asset investment rose by 4.2%, more than the 3.2% estimated by analysts.



The unemployment rate in February for cities came in at 5.3%.



Online retail sales of physical goods rose 14.4% from a year earlier during the first two months of the year.



Investment into real estate fell 9% in the first two months of the year from a year ago. Investment in infrastructure rose by 6.3% while those in manufacturing increased by 9.4% during that time.



“We believe China’s sequential growth momentum remained solid in Q1 despite notable divergence across sectors,” Goldman Sachs analysts said in a report Monday following the data release.



“However, to secure the ambitious “around 5%” growth target this year, more policy easing is still necessary, especially on the demand-side (e.g., fiscal, housing and consumption).”



Despite the upbeat results, National Bureau of Statistics Spokesperson Liu Aihua cautioned that domestic demand remains insufficient.



She told reporters that real estate remains in a period of “adjustment,” and that the overall economy is “in a critical period of recovery, transformation and upgrading,” according to a CNBC translation of her comments in Mandarin.



When asked about the unemployment rate for people aged 16 to 24, Liu said the figures would be released a few days after the monthly press conference on economic data.



<h2 class="wp-block-heading" id="h-holiday-boost"><a></a>Holiday boost</h2>



Economic figures for January and February are typically combined in China to smooth out variations from the Lunar New Year, which can fall in either month depending on the calendar year. It is the country’s biggest national holiday, in which factories and businesses remain closed for at least a week.



This year, the number of domestic tourist trips and revenue during the holiday grew compared with last year as well as pre-pandemic figures from 2019. But Nomura’s Chief China Economist Ting Lu pointed out that “average tourism spending per trip was still 9.5% below pre-pandemic levels in 2019.”



Retail sales did not rebound from the pandemic as strongly as many had expected as consumers have grown uncertain about their future income.



“Consumers were buoyed temporarily by festivities-related spending at this start of the year. In the absence of decisive consumption-related stimulus this year, we think it would be difficult to sustain a robust consumer spending pace this year,” Oxford Economics’ Chief Economist Louise Loo said in a report on Monday.



<h2 class="wp-block-heading" id="h-lackluster-demand"><a></a>Lackluster demand</h2>



New loans in February missed expectations and fell from the prior month, “even after adjusting for seasonality,” Goldman Sachs analysts said in a report on Friday.



“The persistent weakness in property transactions and low consumer sentiment may continue to weigh on household borrowing,” the analysts said. “More monetary policy easing is needed.”



People’s Bank of China Governor Pan Gongsheng said earlier this month there was still room to cut the reserve requirement ratio, or the amount of cash banks need to have on hand.



Goldman expects 25 basis point cuts to that ratio in the second quarter of this year, as well as in the fourth quarter.



Real estate, which accounts for a significant part of household assets, has slumped over the last few years after Beijing’s crackdown on developers’ high reliance on debt for growth.



The average property price for 70 major Chinese cities fell by 4.5% in February from January on a seasonally adjusted, annualized basis, according to Goldman Sachs’ analysis using a weighted average of official figures.



That’s steeper than the 3.5% month-on-month drop in property prices in January, Goldman Sachs said.



“Our high frequency tracker suggests that 30-city new home transaction volume declined by 53.2% [year-on-year] in early March after adjusting to the lunar calendar basis,” the analysts said in a report.



<h2 class="wp-block-heading" id="h-focus-on-manufacturing"><a></a>Focus on manufacturing</h2>



Chinese authorities did not reveal significant new support for the massive real estate sector during an annual parliamentary meeting that ended last week.



Instead, Beijing emphasized the country’s focus on developing manufacturing and technological capabilities.



When asked Monday about overcapacity concerns, Liu said that China’s manufacturing capacity utilization rate was 76% in the fourth quarter, a 0.2 percentage point increase from a year earlier.



She described efforts to increase the level of high-end manufacturing a “strategic decision for achieving high-quality development,” while noting that efforts are needed to prevent inefficient and ineffective investments in the sector.



Data earlier this month showed China’s exports for January and February rose by 7.1% in U.S. dollar terms, beating expectations for a 1.9% increase.



Imports climbed by 3.5% during that time, also topping Reuters’ forecast for growth of 1.5%.

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China kicks off the year on strong note as retail, industrial data tops expectations

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107387314-1710403838407-gettyimages-1168663318-UK_LANE-820x547.jpeg" alt="" class="wp-image-466196" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107387314-1710403838407-gettyimages-1168663318-UK_LANE-820x547.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107387314-1710403838407-gettyimages-1168663318-UK_LANE-300x200.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107387314-1710403838407-gettyimages-1168663318-UK_LANE-135x90.jpeg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107387314-1710403838407-gettyimages-1168663318-UK_LANE-768x512.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107387314-1710403838407-gettyimages-1168663318-UK_LANE-1536x1024.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107387314-1710403838407-gettyimages-1168663318-UK_LANE-scaled.jpeg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Photo: via CNBC</figcaption></figure>



The European Central Bank must take its time to get interest rate cuts right and will have a clearer picture of inflationary pressures in June, the institution’s chief economist told CNBC.



“A lot of evidence is accumulating, but what’s also fair to say is that the transition from this holding phase, we’ve been on hold since last September since a substantial hiking cycle, we do have to take our time to get that right, from holding to dialing back restrictions,” Philip Lane told CNBC’s Steve Sedgwick on Thursday.



Lane, a Governing Council member, said the euro zone central bank’s March meeting had been an “important milestone” in the accumulation of evidence, and showed the “disinflation process has been ongoing.” During the meeting, the ECB held rates and released updated macroeconomic projections, which lowered its inflation forecast for this year to 2.3% from 2.7%.



Inflation in the 20-nation bloc eased to 2.6% in February.



In line with the ECB’s March messaging, Lane said that more data was required, particularly around wages, and that the Governing Council would “learn a lot by April, a lot more by June” — the dates of its next two meetings.



In a press conference following the March meeting, ECB President Christine Lagarde said market pricing on the timing of rate cuts — which indicate a start in June as of Thursday — “seems to be converging better” with the central bank’s view.



June emerged as a key date in market commentary, as it’s set to mark the first meeting where the ECB can assess spring data on wage negotiations for the year.



Asked about other colleagues on the ECB’s Governing Council who have suggested rate cuts could take place before the summer, Lane said he believed this was a reference to the second quarter, which would include June.



“I think Q2 is a time when we will be far enough into 2024 to see more of the wage dynamic, to see more of the price pressures.”



He stressed that it was important, in his own role, to “avoid trying to provide calendar guidance to the market.”



“Once we are sufficiently confident that we will get back to target in a sustainable manner, in a timely manner, that’s the right time to move to the next phase,” he said.



<h2 class="wp-block-heading" id="h-room-for-profits-to-come-down"><a></a>Room for profits to come down</h2>



Policymakers have repeatedly stressed that many of the causes of the inflationary cycle have subsided, such as the energy price spike and supply chain issues. But they remain concerned about domestic inflationary pressures from corporate profits and wage rises.



Bank of England Governor Andrew Bailey caused controversy in 2022 for suggesting workers should not ask for a pay rise in order to avoid stoking inflation.



Lane said Thursday that, while the ECB’s forecast relied on some moderation in wage growth, it was “important” for people’s inflation-adjusted salaries to improve, and that companies should shoulder lower profits to allow this to happen.



“Wages were not the source of this inflation problem. But in terms of making sure we get back to target, the interplay between wages and profits, our forecast is built on a degree of wage deceleration,” he said.



“It’s important to say, we need to see workers’ real incomes improve, to rebuild, not just this year, [but] the year after. So we allow for higher to normal wage increases.”



Lane added, “But we also need to see, essentially, firms absorbing a fair amount of that in lower profits. Profits were quite high in 2022, there is some room for profits to come down. And that is part of the open questions we have.”

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European Central Bank chief economist: Must ‘take our time’ on rate cuts, clearer picture due in June

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107386786-1710332256577-gettyimages-2066794515-porzycki-bahraind240304_npQj7-820x461.png" alt="" class="wp-image-465841" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107386786-1710332256577-gettyimages-2066794515-porzycki-bahraind240304_npQj7-820x461.png 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107386786-1710332256577-gettyimages-2066794515-porzycki-bahraind240304_npQj7-300x169.png 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107386786-1710332256577-gettyimages-2066794515-porzycki-bahraind240304_npQj7-160x90.png 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107386786-1710332256577-gettyimages-2066794515-porzycki-bahraind240304_npQj7-768x432.png 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107386786-1710332256577-gettyimages-2066794515-porzycki-bahraind240304_npQj7.png 1200w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">A view of an oil well at Arab Desert in Jebel Dukhan, Bahrain on March 4, 2024. Nurphoto | Nurphoto | Getty Images</figcaption></figure>



Investors could be caught off guard by the strength of an oil price rally this summer, according to Morgan Stanley’s Martijn Rats.



His comments came as oil prices rose on Wednesday amid fears of potential supply disruption after Ukrainian drone attacks on Russian refineries, and hopes that the Federal Reserve may soon start cutting interest rates which traditionally boosts demand.



International benchmark Brent crude futures for May delivery traded at $83.23 a barrel at 12:20 p.m. London time, up $1.3 for the session, while U.S. West Texas Intermediate (WTI) futures for April delivery stood at $78.95, roughly $1.37 higher.



Brent futures have largely been trading in a narrow $75 to $85 interval since the start of the year.



“They are quite benign. We’ve had a nice rally [in] December, January and first half of February but the last couple of weeks we’ve been fairly rangebound,” Rats told CNBC’s “Squawk Box Europe” on Wednesday.



“There is a view in the market that the non-OPEC producers can meet all of the demand growth this year and therefore there isn’t much incremental room for OPEC oil and that means you rely on continued OPEC cuts,” Rats said.



“Now, they are doing that, but people think that that dynamic for now puts a little bit of a cap on the price. We’ve had a good amount of spare capacity. I think the summer could be tighter than people expect but this is the dynamic that currently exists.”



Earlier this month, OPEC+ agreed to extend voluntary output reductions until the end of the second quarter in a bid to shore up the short-term stability of crude markets.



OPEC+ refers to a group of some of the world’s largest oil producers, including heavyweights such as Saudi Arabia and Russia.



<h2 class="wp-block-heading" id="h-really-elevated-prices"><a></a>‘Really elevated prices’</h2>



Asked why fuel supplies could be tighter in the summer, Rats said that the oil research community had been “quite cautious” about the outlook at the start of the year. However, a flurry of stronger-than-expected data had convinced many to upwardly revise oil demand forecasts.



“On the supply side, we’re seeing a slowdown in U.S. shale, we’ve seen a wobbly start in Brazil [and] we’ve seen a wobbly start in Canada. We expected inventories to build but year-to-date they are kind of flat. If in the first quarter, inventories [are] flat then they can draw possibly quite significantly during the summer period.”



Rats said there were plenty of indicators, such as physical differentials and refining margins, among others, that indicate the oil market has already tightened a bit more than the current spot price suggests.



“Now, at the moment we are going through oil refinery maintenance so [this] is always a bit of a soft part of the year but I think as the summer driving season unfolds, inventories draw … look, we’re not calling for the super cycle, but we could have a bit of strength in the summer.”



The summer driving season typically refers to the months between the U.S. Memorial Day and Labor Day holidays when people in the Northern Hemisphere tend to hit the roads.



Speaking to CNBC’s Dan Murphy in late January, Amrita Sen of Energy Aspects said geopolitical factors such as the Israel-Hamas war and tensions in the Red Sea could also push oil prices higher this summer.



Reflecting on attacks in the Red Sea, Sen said that naphtha (a hydrocarbon mixture) and jet fuel markets had been significantly impacted.



“This is the weak period for jet demand,” Sen said.



“Summer jet is ahead of us, and we think these attacks are going to go on for months so we could see some really elevated prices into the summer.”



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Oil strategist says the market could be caught off guard by a crude spike this summer

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/106941351-1639158059467-106941351-1631619886115-gettyimages-1234643404-US-ECONOMY-CPI-820x461.jpg" alt="" class="wp-image-465499" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/106941351-1639158059467-106941351-1631619886115-gettyimages-1234643404-US-ECONOMY-CPI-820x461.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/106941351-1639158059467-106941351-1631619886115-gettyimages-1234643404-US-ECONOMY-CPI-300x169.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/106941351-1639158059467-106941351-1631619886115-gettyimages-1234643404-US-ECONOMY-CPI-160x90.jpg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/106941351-1639158059467-106941351-1631619886115-gettyimages-1234643404-US-ECONOMY-CPI-768x432.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/106941351-1639158059467-106941351-1631619886115-gettyimages-1234643404-US-ECONOMY-CPI-1536x864.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/106941351-1639158059467-106941351-1631619886115-gettyimages-1234643404-US-ECONOMY-CPI.jpg 1600w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Photo: via CNBC</figcaption></figure>



Inflation rose again in February, keeping the Federal Reserve on course to wait at least until the summer before starting to lower interest rates.



The consumer price index, a broad measure of goods and services costs, increased 0.4% for the month and 3.2% from a year ago, the Labor Department’s Bureau of Labor Statistics reported Tuesday. The monthly gain was in line with expectations, but the annual rate was slightly ahead of the 3.1% forecast from the Dow Jones consensus.



Excluding volatile food and energy prices, the core CPI rose 0.4% on the month and was up 3.8% on the year. Both were one-tenth of a percentage point higher than forecast.



While the 12-month pace is off the inflation peak in mid-2022, it remains well above the Fed’s 2% goal as the central bank approaches its two-day policy meeting in a week.



A 2.3% increase in energy costs helped boost the headline inflation number. Food costs were flat on the month, while shelter rose another 0.4%.



The BLS reported that the increases in energy and shelter amounted to more than 60% of the total gain. Gasoline jumped 3.8% on the month while owners’ equivalent rent, a hypothetical gauge of what homeowners could get renting their properties, rose 0.4%.



“Inflation continues to churn above 3%, and once again shelter costs were the main villain. With home prices expected to rise this year and rents falling only slowly, the long-awaited fall in shelter prices isn’t coming to the rescue any time soon,” said Robert Frick, corporate economist at Navy Federal Credit Union. “Reports like January’s and February’s aren’t going to prompt the Fed to lower rates quickly.”



Airline fares posted a 3.6% increase, apparel prices rose 0.6% and used vehicles were up 0.5%. Medical care services, which helped feed a higher-than-expected CPI increase in January, decreased 0.1% last month.



The year-over-year increase for headline CPI was 0.1 percentage point higher than January, while core was one-tenth of a point lower.



Wall Street opened higher following the report, major stock averages as well as Treasury yields positive in early trading.



While the 12-month pace is off the inflation peak in mid-2022, it remains well above the Fed’s 2% goal as the central bank approaches its two-day policy meeting in a week.



Fed officials in recent weeks both have signaled that rate cuts are likely at some point this year and expressed caution about letting up too soon in the battle against high prices. The statement after the January meeting indicated that policymakers need “greater confidence” that inflation is moving back to target.



Chair Jerome Powell, in congressional testimony last week, echoed those concerns, though he did mention that the Fed is probably “not far” from the point where it can start easing up on monetary policy.



Tuesday’s report “leaves Fed officials some way from attaining the ‘greater confidence’ needed to begin cutting interest rates,” said Paul Ashworth, chief North America economist at Capital Economics.



For financial markets, the shift in the Fed stance from its apparent policy pivot in late 2023 has meant a repricing on the pace of rate cuts. Where futures traders entered the year expecting cuts to start coming in March, with six or seven total on the year, they have pushed out the first reduction to June, with two or three to follow, assuming cuts in quarter percentage point increments.



A bustling economy has helped the Fed focus on incoming data and allowed policymakers to avoid having to rush to lower rates. Gross domestic product expanded at a 2.5% annualized pace in 2023 and is on pace to increase at a 2.5% pace in the first quarter of 2024, according to the Atlanta Fed’s GDPNow tracker.



One key ingredient in that growth has been a resilient consumer boosted by a strong labor market. The economy added another 275,000 nonfarm jobs in February, though the increase skewed heavily to part-time positions and the unemployment rate rose to 3.9%.



Such strength can be a double-edged sword: While the growth in the face of aggressive rate hikes has bought the Fed time on policy, it also raises concerns that inflation could be more durable than expected.



Housing costs in particular have caused concern.



Shelter comprises about one-third of the CPI weighting and has been slow to decelerate, at least according to the BLS measure. Fed officials see rental prices coming down through the year, and other measures outside the CPI computation of owners-equivalent rent have shown easing price pressures.



Correction: The BLS reported that the increases in energy and shelter amounted to more than 60% of the total gain. An earlier version misstated a sector.

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U.S. consumer prices rose 0.4% in February and 3.2% from a year ago

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107382361-1709644253010-gettyimages-1244106391-AFP_32LT92T-820x461.jpeg" alt="" class="wp-image-465380" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107382361-1709644253010-gettyimages-1244106391-AFP_32LT92T-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107382361-1709644253010-gettyimages-1244106391-AFP_32LT92T-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107382361-1709644253010-gettyimages-1244106391-AFP_32LT92T-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107382361-1709644253010-gettyimages-1244106391-AFP_32LT92T-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107382361-1709644253010-gettyimages-1244106391-AFP_32LT92T-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107382361-1709644253010-gettyimages-1244106391-AFP_32LT92T.jpeg 1600w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Shoppers are seen in a Kroger supermarket in Atlanta on Oct. 14, 2022. Elijah Nouvelage | AFP | Getty Images</figcaption></figure>



Rising gasoline prices likely put a floor under inflation in February, potentially reinforcing the Federal Reserve’s decision to take a go-slow approach with interest rate reductions.



Economists expect that prices across a broad spectrum of goods and services rose 0.4% on the month, just ahead of the January pace for 0.3%, according to the Dow Jones consensus. Excluding food and energy, the increase for core inflation is forecast at a 0.3% gain, also one-tenth of a percentage point above the previous month.



On a year-over-year basis, headline inflation is expected to show a 3.1% gain and core inflation a 3.7% increase when the Labor Department’s Bureau of Labor Statistics releases its latest reading on the consumer price index Tuesday at 8:30 a.m. ET. The respective 12-month readings in January were 3.1% and 3.9%.



Though it has fallen sharply since its peak in mid-2022, inflation’s resilience almost certainly will assure no Fed rate cuts at its next meeting March 19-20, and possibly into the summer, according to current market pricing. Markets were rattled in January when the CPI data came in higher than expected, and Fed officials shifted their rhetoric afterward to a more cautious tone about easing policy.



“While we do not expect the trend in inflation to re-accelerate this year, less clear progress over the next few months is likely to keep the Fed searching for more confidence that inflation is on course to return to target on a sustained basis,” Sarah House, senior economist at Wells Fargo, said in a recent client note.



Energy prices had eased earlier in the winter, putting some downward pressure on headline readings.



But Wells Fargo estimates that energy services rebounded 4% in February, leading to an increase at the pump, where a gallon of regular gas is up about 20 cents, or more than 6%, from a month ago, according to AAA.



The bank also estimates that goods prices have held their ground despite an easing in supply chain pressures and pressure from higher interest rates. On the brighter side, the House said lower prices on travel, medical care and other services helped keep inflation in check.



Still, Wells Fargo has raised its full-year inflation forecast.



The bank’s economists now expect core CPI to run at a 3.3% rate this year, up from the previous 2.8% estimate. Focusing on the core personal consumption expenditures price index, the preferred Fed gauge, Wells Fargo sees inflation at 2.5% for the year, versus a prior estimate of 2.2%.



Wells Fargo isn’t alone in expecting a higher pace of inflation.



In its February survey of consumers, the New York Fed found that while respondents held to their one-year outlook for inflation at 3%, their expectations at the three- and five-year horizons accelerated to 2.7% and 2.9% respectively, both well ahead of the central bank’s 2% target.



While increases in gas prices can play an outsize role in monthly fluctuations for the survey, the outlook for gas price increases was actually relatively benign.



An Atlanta Fed measure of “sticky price” inflation held at 4.6% on a 12-month basis in January. The gauge is weighted toward items such as housing and insurance, and Fed officials are hoping that shelter costs decrease through the year, taking some pressure off the cost of living gauges.



On Thursday, the BLS will release the February producer price index, which measures what producers get for their goods and services at the wholesale level. The two indexes will be the last inflation data the rate-setting Federal Open Market Committee will see before it meets next week.

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A key U.S. inflation reading is due out Tuesday morning. Here’s what to expect

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107370056-1707285383185-gettyimages-1868371082-THAILAND_GOLD-820x461.jpeg" alt="" class="wp-image-465022" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107370056-1707285383185-gettyimages-1868371082-THAILAND_GOLD-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107370056-1707285383185-gettyimages-1868371082-THAILAND_GOLD-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107370056-1707285383185-gettyimages-1868371082-THAILAND_GOLD-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107370056-1707285383185-gettyimages-1868371082-THAILAND_GOLD-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107370056-1707285383185-gettyimages-1868371082-THAILAND_GOLD-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107370056-1707285383185-gettyimages-1868371082-THAILAND_GOLD.jpeg 1920w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">An employee holds one kilogram gold bullion at the YLG Bullion International Co. headquarters in Bangkok, Thailand, on Friday, Dec. 22, 2023. Bloomberg | Bloomberg | Getty Images</figcaption></figure>



A record-breaking rally for gold may yet continue, particularly as investors position for interest rate cuts — but analysts say silver appears well placed to outshine the yellow metal in the second half of the year.



Spot gold prices on Monday edged higher to $2,178 per ounce, after settling at their highest since 1979 on Thursday last week.



Spot silver prices, meanwhile, were last seen up 0.2% at $24.36 per ounce at 6:24 a.m. London time (1:24 a.m. ET). The contract, which rose over 5% last week, on Thursday settled at its highest level since late December.



Precious metal prices have pushed higher in recent weeks amid growing expectations of U.S. interest rate cuts. Federal Reserve Chair Jerome Powell on Thursday said that inflation is “not far” from where it needs to be for the central bank to start cutting rates.



Gold, which is typically considered a “safe haven” asset at times of financial uncertainty, has rallied despite high interest rates and a relatively strong U.S. dollar.



“If you look at gold’s correlations, what you can see is that actually despite the narrative of it being a defensive asset, really it oscillates between the two. It can sometimes perform in line with risk and sometimes against risk,” Marcus Garvey, head of commodities strategy at Macquarie, told CNBC’s “Street Signs Europe” on Friday.



“What you need to then get back to is what is the underlying causation of those moves and why is gold reacting in one way or the other, and I think here, really the thing that is setting up gold very well … is expectations of rate cuts. That’s clearly risk positive.”



Garvey said near-term U.S. jobs and inflation data could determine whether gold prices, which he described as “incredibly resilient” so far, push as high as $2,300 or drop back to around $2,100.



“From silver’s perspective, I mean it is sort of round numbers really, you want to get comfortably clear of the $24 level to feel that you have got a bit more room to run. While you are only just north of it, the scope for a correction back down is clearly still a vulnerability,” Garvey said.



“The last thing I might add on silver though, as a dual precious and industrial metal, if we start to see global growth pick up a bit more over the course of this year — which is very much our base case — then I would expect silver to go from a relative underperformer to gold to being a relative outperformer to gold over really the third and fourth quarter of this year.”



<h2 class="wp-block-heading" id="h-a-terrific-year-ahead-for-silver"><a></a>A ‘terrific year’ ahead for silver?</h2>



Gold and silver prices have traditionally shown a strong positive correlation, although silver has sometimes been described as the “poorer cousin” of gold.



Earlier in the year, the Silver Institute said in a report that global silver demand was expected to reach 1.2 billion ounces in 2024, hitting its second-highest level on record.



The institute, a non-profit international association composed of various members across the silver industry, told CNBC last month that it expects silver to have a “terrific year,” particularly in terms of demand.



Silver is primarily used for industrial purposes and commonly incorporated in the manufacturing of automobiles, solar panels, jewelry and electronics.



“Here’s what usually happens with silver: it does move with gold, but it moves later,” Randy Smallwood, CEO of Wheaton Precious Metals, told CNBC in early February.



“Gold will shoot up first and then you will see silver take off rapidly. And silver always outperforms. It’s just late.”



— CNBC’s Lee Ying Shan contributed to this report.

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Gold prices could keep climbing — but analysts expect silver to steal the show before long

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107363787-17061085342022-09-01t184946z_946092228_rc2f8w90zj6x_rtrmadp_0_usa-economy-820x547.jpeg" alt="" class="wp-image-464081" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107363787-17061085342022-09-01t184946z_946092228_rc2f8w90zj6x_rtrmadp_0_usa-economy-820x547.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107363787-17061085342022-09-01t184946z_946092228_rc2f8w90zj6x_rtrmadp_0_usa-economy-300x200.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107363787-17061085342022-09-01t184946z_946092228_rc2f8w90zj6x_rtrmadp_0_usa-economy-135x90.jpeg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107363787-17061085342022-09-01t184946z_946092228_rc2f8w90zj6x_rtrmadp_0_usa-economy-768x512.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107363787-17061085342022-09-01t184946z_946092228_rc2f8w90zj6x_rtrmadp_0_usa-economy-1536x1024.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107363787-17061085342022-09-01t184946z_946092228_rc2f8w90zj6x_rtrmadp_0_usa-economy-scaled.jpeg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Photo: via CNBC</figcaption></figure>



Job creation topped expectations in February, but the unemployment rate moved higher and employment growth from the previous two months wasn’t near as hot as initially reported.



Nonfarm payrolls increased by 275,000 for the month while the jobless rate moved higher to 3.9%, the Labor Department reported Friday. Economists surveyed by Dow Jones had been looking for payroll growth of 198,000, a step slower from the downwardly revised gain of 229,000 in January. The December gain also was revised down to 290,000 from 333,000.



The jobless level increased even though the labor force participation rate held steady at 62.5%.



Average hourly earnings, watched closely as an inflation indicator, showed a slightly less than expected increase for the month and a deceleration from a year ago. Wages rose just 0.1% on the month, one-tenth of a percentage point below the estimate, and were up 4.3% from a year ago, below the 4.5% gain in January and slightly below the 4.4% estimate.



Markets showed little reaction to the news, with futures tied to the major averages around flat. Treasury yields, however, were sharply lower.



“It’s got literally a data point for every view on their spectrum,” Liz Ann Sonders, chief investment strategist at Charles Schwab, said of the report.



Job creation skewed toward part-time positions. Full-time jobs decreased by 187,000 while part-time employment rose by 51,000, according to the household survey. That count is used to calculate the unemployment rate and showed a decline of 184,000 in total employment.



From a sector standpoint, health care led with 67,000 new jobs. Government again was a big contributor, with 52,000, while restaurants and bars added 42,000 and social assistance increased by 24,000. Other gainers included construction (23,000), transportation and warehousing (20,000) and retail (19,000).



This is breaking news. Please check back here for updates.

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U.S. job growth totaled 275,000 in February but unemployment rate rises to 3.9%

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107384081-1709831185690-gettyimages-2058827167-powell_banking_402_030724-820x461.jpeg" alt="" class="wp-image-463959" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107384081-1709831185690-gettyimages-2058827167-powell_banking_402_030724-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107384081-1709831185690-gettyimages-2058827167-powell_banking_402_030724-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107384081-1709831185690-gettyimages-2058827167-powell_banking_402_030724-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107384081-1709831185690-gettyimages-2058827167-powell_banking_402_030724-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107384081-1709831185690-gettyimages-2058827167-powell_banking_402_030724-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107384081-1709831185690-gettyimages-2058827167-powell_banking_402_030724.jpeg 1600w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Federal Reserve Chairman Jerome Powell testifies during the Senate Banking, Housing and Urban Affairs Committee hearing titled “The Semiannual Monetary Policy Report to the Congress,” in Dirksen Building on Thursday, March 7, 2024. Tom Williams | Cq-roll Call, Inc. | Getty Images</figcaption></figure>



Federal Reserve Chair Jerome Powell on Thursday indicated that interest rate cuts may not be too far off if inflation signals cooperate.



In remarks to the Senate Banking Committee, the central bank leader didn’t provide a precise timetable of when he sees easing happening, but noted that the day could be coming soon.



“We’re waiting to become more confident that inflation is moving sustainably at 2%. When we do get that confidence, and we’re not far from it, it’ll be appropriate to begin to dial back the level of restriction,” Powell said in response to a question about rates and inflation. He said the cuts would be so the Fed doesn’t “drive the economy into recession rather than normalizing policy as the economy gets back to normal.”



Powell spoke at a time when financial markets have swung considerably in their expectations on Fed policy.



At the beginning of the year, futures traders were betting the Fed would start in March and keep going until it had cut six or seven times this year. The outlook now is for the first cut to come in June, with four reductions totaling a full percentage point by the end of 2024.



Inflation data recently has indicated the pace of price increases is continuing to slow, though the consumer price index rattled markets when it came in higher than expected for January. Still, Powell noted&nbsp;<a href="https://www.cnbc.com/2024/03/06/powell-reinforces-position-that-the-fed-is-not-ready-to-start-cutting-interest-rates.html">in congressional testimony this week</a>&nbsp;that inflation is progressing lower, though not at the point yet where the Fed is ready to cut.



“I think we’re in the right place,” Powell said of the current policy stance.

107384081-1709831185690-gettyimages-2058827167-powell_banking_402_030724

Powell says the Fed is ‘not far’ from the point of cutting interest rates

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107383366-1709744654782-gettyimages-2063429688-_s2_1412_35lefe16-820x461.jpeg" alt="" class="wp-image-463622" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107383366-1709744654782-gettyimages-2063429688-_s2_1412_35lefe16-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107383366-1709744654782-gettyimages-2063429688-_s2_1412_35lefe16-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107383366-1709744654782-gettyimages-2063429688-_s2_1412_35lefe16-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107383366-1709744654782-gettyimages-2063429688-_s2_1412_35lefe16-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107383366-1709744654782-gettyimages-2063429688-_s2_1412_35lefe16-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107383366-1709744654782-gettyimages-2063429688-_s2_1412_35lefe16.jpeg 1600w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Photo: via CNBC</figcaption></figure>



Federal Reserve Chair Jerome Powell on Wednesday reiterated that he expects interest rates to start coming down this year, but is not ready yet to say when.



In prepared remarks for congressionally mandated appearances on Capitol Hill Wednesday and Thursday, Powell said policymakers remain attentive to the risks that inflation poses and don’t want to ease up too quickly.



“In considering any adjustments to the target range for the policy rate, we will carefully assess the incoming data, the evolving outlook, and the balance of risks,” he said. “The Committee does not expect that it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent.”



Those remarks were taken verbatim from the Federal Open Market Committee’s statement following its most recent meeting, which concluded Jan. 31.



During the question-and-answer session with House Financial Services Committee members, Powell said he needs “see a little bit more data” before moving on rates.



“We think because of the strength in the economy and the strength in the labor market and the progress we’ve made, we can approach that step carefully and thoughtfully and with greater confidence,” he said. “When we reach that confidence, the expectation is we will do so sometime this year. We can then begin dialing back that restriction on our policy.”



Stocks posted gains as Powell spoke, with the Dow Jones Industrial Average up more than 250 points heading into midday. Treasurys yields mostly moved lower as the benchmark 10-year note was off about 0.3 percentage point to 4.11%.



<h2 class="wp-block-heading" id="h-rates-likely-at-peak"><a></a>Rates likely at peak</h2>



In total, the speech broke no new ground on monetary policy or the Fed’s economic outlook. However, the comments indicated that officials remain concerned about not losing the progress made against inflation and will make decisions based on incoming data rather than a preset course.



“We believe that our policy rate is likely at its peak for this tightening cycle. If the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year,” Powell said in the comments. “But the economic outlook is uncertain, and ongoing progress toward our 2 percent inflation objective is not assured.”



He noted again that lowering rates too quickly risks losing the battle against inflation and likely having to raise rates further, while waiting too long poses danger to economic growth.



Markets had been widely expecting the Fed to ease up aggressively following 11 interest rate hikes totaling 5.25 percentage points that spanned March 2022 to July 2023.



In recent weeks, though, those expectations have changed following multiple cautionary statements from Fed officials. The January meeting helped cement the Fed’s cautious approach, with the statement explicitly saying rate cuts aren’t coming yet despite the market’s outlook.



As things stand, futures market pricing points to the first cut coming in June, part of four reductions this year totaling a full percentage point. That’s slightly more aggressive than the Fed’s outlook in December for three cuts.



<h2 class="wp-block-heading" id="h-inflation-easing"><a></a>Inflation easing</h2>



Despite the resistance to move forward on cuts, Powell noted the movement the Fed has made toward its goal of 2% inflation without tipping over the labor market and broader economy.



“The economy has made considerable progress toward these objectives over the past year,” Powell said. He noted that inflation has “eased substantially” as “the risks to achieving our employment and inflation goals have been moving into better balance.”



Inflation as judged by the Fed’s preferred gauge is currently running at a 2.4% annual rate — 2.8% when stripping out food and energy in the core reading that the Fed prefers to focus on. The numbers reflect “a notable slowing from 2022 that was widespread across both goods and services prices.”



“Longer-term inflation expectations appear to have remained well anchored, as reflected by a broad range of surveys of households, businesses, and forecasters, as well as measures from financial markets,” he added.



Powell is likely to face a variety of questions during his two-day visit to Capitol Hill, which started with an appearance Wednesday before the House Financial Services Committee and concludes Thursday before the Senate Banking Committee.



Questioning largely centered around Powell’s views on inflation and rates.



Republicans on the committee also grilled Powell on the so-called Basel III Endgame revisions to bank capital requirements. Powell said he is part of a group on the Board of Governors that has “real concerns, very specific concerns” about the proposals and said the withdrawal of the plan “is a live option.” Some of the earlier market gains Wednesday faded following reports that New York Community Bank is looking to raise equity capital, raising fresh concerns about the state of midsize U.S. banks.



Though the Fed tries to stay out of politics, the presidential election year poses particular challenges.



Former President Donald Trump, the likely Republican nominee, was a fierce critic of Powell and his colleagues while in office. Some congressional Democrats, led by Sen. Elizabeth Warren of Massachusetts, have called on the Fed to reduce rates as pressure builds on lower-income families to make ends meet.



Rep. Ayanna Pressley, D-Ohio, joined the Democrats in calling for lower rates. During his term, Democrats frequently criticized Trump for trying to cajole the Fed into cutting.



“Housing inflation and housing affordability [is] the No. 1 issue I’m hearing about from my constituents,” Pressley said. “Families in my district and throughout this country need relief now. I truly hope the Fed will listen to them and cut interest rates.”

107383366-1709744654782-gettyimages-2063429688-_s2_1412_35lefe16

Powell reinforces position that the Fed is not ready to start cutting interest rates

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="482" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107322262-16981550392023-10-24t134236z_46329598_rc2nu3aqwna3_rtrmadp_0_china-economy-bonds-820x482.jpeg" alt="" class="wp-image-462538" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107322262-16981550392023-10-24t134236z_46329598_rc2nu3aqwna3_rtrmadp_0_china-economy-bonds-820x482.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107322262-16981550392023-10-24t134236z_46329598_rc2nu3aqwna3_rtrmadp_0_china-economy-bonds-300x176.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107322262-16981550392023-10-24t134236z_46329598_rc2nu3aqwna3_rtrmadp_0_china-economy-bonds-153x90.jpeg 153w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107322262-16981550392023-10-24t134236z_46329598_rc2nu3aqwna3_rtrmadp_0_china-economy-bonds-768x452.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107322262-16981550392023-10-24t134236z_46329598_rc2nu3aqwna3_rtrmadp_0_china-economy-bonds-1536x904.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107322262-16981550392023-10-24t134236z_46329598_rc2nu3aqwna3_rtrmadp_0_china-economy-bonds.jpeg 1700w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">A Chinese flag flutters on top of the Great Hall of the People ahead of the opening ceremony of the Belt and Road Forum (BRF), to mark 10th anniversary of the Belt and Road Initiative, in Beijing, China October 18, 2023. Edgar Su | Reuters</figcaption></figure>



BEIJING — China is set this week to kick off its annual parliamentary meetings, which investors are watching closely for signals on economic stimulus.



The country’s gross domestic product grew by 5.2% in 2023, but overall recovery from the Covid-19 pandemic was slower than many had expected. A prolonged slump in the massive real estate market and falling global demand for Chinese exports have contributed to low levels of consumer and business sentiment.



That’s all led to questions over whether Beijing will step in with large-scale support. So far, authorities have been relatively reserved.



Beijing signaled in December that any new policy support would be “appropriate,” said Wang Jun, chief economist at Huatai Asset Management, adding “there’s no way” that stimulus would be as large as it was in 2008. That’s according to a CNBC translation of his Mandarin-language remarks.



China’s economic policy is typically set at an annual meeting in December by leaders within the ruling Communist Party of China.



The meetings this month, known as the “Two Sessions,” are at the government, instead of party, level and typically release more details on policy plans, such as the GDP target for the year.



Wang said he is watching for comments on authorities’ plans for the real estate sector, capital markets and local government finances.



Back in 2008, when the world was reeling from the financial crisis, China unleashed a massive stimulus package to sustain growth with greater demand. While the economy rebounded, the measures drew criticism for a resulting surge in local government debt.



Beijing in recent years has emphasized the need to stem financial risks and clamped down on real estate developers’ high reliance on debt for growth, an issue tied to local government finances. This time around, China’s monetary policy also faces constraints on how far it can deviate from the U.S. Federal Reserve’s interest rate path.



<h2 class="wp-block-heading" id="h-gdp-and-other-economic-targets"><a></a>GDP and other economic targets</h2>



The Chinese People’s Political Consultative Conference, an advisory body, is set to kick off its annual meeting on Monday.



The following day the National People’s Congress legislature is due to begin its meeting. Tuesday is also when the country’s premier is expected to share the year’s targets for GDP, employment and other economic indicators in what’s called the “Government Work Report.”



“The target will likely remain relatively high,” said Bank of China’s chief researcher Zong Liang, noting GDP grew by 5.2% last year. That’s according to a CNBC translation of his Mandarin-language remarks.



He expects the target for the fiscal deficit will be around 3.5% and that monetary policy will also be relatively loose.



China in October made a rare announcement that it was raising the fiscal deficit to 3.8%, from 3%.



“We expect the on-budget deficit – which excludes special bonds, policy bank bonds, and local government financing vehicle (LGFV) debt – to be set at 3.0%-3.5% of GDP, narrowing from last year’s 3.8% of GDP,” Louise Loo, lead economist at Oxford Economics, said in a report Thursday.



“We expect a modest step-up in the local government special bonds (LGSB) quota, to RMB4.0tn from RMB3.8tn last year,” Loo said. “Authorities may also finally put pen to paper on the reported RMB1tn in planned central government special bonds (CGSBs), reflecting the increasing role of central coffers amid a continued debt cleanup process among local government entities this year.”



“On balance, the additional fiscal impulse this year, assuming a bazooka-like fiscal package is not forthcoming, is unlikely to be particularly large.”



<h2 class="wp-block-heading"><a></a>Watching for comments on real estate and tech</h2>



The Two Sessions is also a period for releasing the budget and for delegates to discuss needed policy changes and plans.



“Speeches by top policymakers will be key to watch, including interviews of key ministers, such as Minister of Industry and Information Technology, Minister of Science and Technology, and Minister of Housing and Urban-Rural Development. These key ministers will discuss various policies in more detail,” Goldman Sachs analysts said in a report.



During the parliamentary meetings, Chinese officials will likely also discuss plans to bolster tech and innovation, in line with a recent high-level call to bolster “new productive forces.”



Authorities announced Monday that China’s premier would not hold the usual press conference at this year’s parliamentary meeting, and that such press meetings are canceled for the rest of the current congressional term, which would typically run for another three years. The announcement noted there would be more ministry-level press conferences on the economy and foreign affairs, but did not say whether the foreign minister would hold a press conference as has been the case in past years.



The advisory body is set to conclude its annual meeting on Sunday, March 10, according to an official announcement. The National People’s Congress is set to end the afternoon of the following day, Monday, March 11.



Bank of China’s Zong expects that policymakers will send signals on opening up borders or other business opportunities to foreigners, as well as improving the environment for non-state-owned enterprises.



However, specific implementation details are typically left to individual ministries to announce, following high-level directives from Beijing.



Any direct support for consumption is unlikely, but broader moves to improve the social safety net would be of note.



“On the demand side, the delayed Third Plenum [of the Chinese Communist Party’s Central Committee] (originally set for December) suggests that longer term demand policies – including on fiscal, tax, and pensions reforms – may still be in initial stages of discussion, but could still warrant a mention here,” Loo said.



<h2 class="wp-block-heading"><a></a>The macro context</h2>



This year’s Two Sessions follow regular leadership reshuffles that have strengthened the ruling Communist Party of China’s control of the government.



At the parliamentary meeting last year, Beijing announced an overhaul of finance and tech regulation by establishing party-led commissions to oversee the two sectors. Chinese President Xi Jinping, who is also the party’s general secretary, gained an unprecedented third term as president.



No major Chinese government or party leadership positions are scheduled to change this year, while the U.S. is set to hold its presidential election in November.



Since last summer, Chinese authorities have already announced a slew of policies to bolster growth and acknowledged the need to increase confidence. Critics say the measures are relatively piecemeal.



Recent economic data releases point to a mixed picture for growth, with some improvement in manufacturing but real estate at best only stabilizing.



Huatai’s Wang expects the economy will recover gradually this year, and that in contrast to last year, nominal GDP will be better than real GDP. That means the perceived improvement this year will be more tangible for consumers and businesses.

107322262-16981550392023-10-24t134236z_46329598_rc2nu3aqwna3_rtrmadp_0_china-economy-bonds

Chinese leaders to hold annual ‘Two Sessions’ meeting as debate about bazooka-like stimulus swirls

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="518" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/7VFJAVAAS5MPLCGIMEWXWDNEG4-820x518.jpg" alt="" class="wp-image-461443" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/7VFJAVAAS5MPLCGIMEWXWDNEG4-820x518.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/7VFJAVAAS5MPLCGIMEWXWDNEG4-300x190.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/7VFJAVAAS5MPLCGIMEWXWDNEG4-142x90.jpg 142w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/7VFJAVAAS5MPLCGIMEWXWDNEG4-768x485.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/7VFJAVAAS5MPLCGIMEWXWDNEG4-1536x970.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/7VFJAVAAS5MPLCGIMEWXWDNEG4-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">FILE PHOTO: A logo is seen at the World Trade Organization (WTO) headquarters before a news conference in Geneva, Switzerland, October 5, 2022. REUTERS/Denis Balibouse/File Photo</figcaption></figure>



ABU DHABI, March 1 (Reuters)&nbsp;&#8211;&nbsp;World Trade Organization (WTO) negotiators extended talks again in Abu Dhabi on Friday as they struggled to break a political deadlock after five days of high-level negotiations.



It was far from clear whether a consensus could be reached among the WTO&#8217;s 164 members before a new deadline of 10 p.m. local time (1800 GMT). Several delegates warned that countries remained far apart as organisers announced a fifth extension.



&#8220;I think we&#8217;re leaving here empty-handed,&#8221; one delegate said.



On the fifth day of the ministerial meeting, most ministers had already gone home, although India&#8217;s Piyush Goyal and European Trade Commissioner Valdis Dombrovskis remained.



Goyal was smiling and shaking hands outside a meeting room barely 30 minutes from an informal ministerial meeting, as delegates gathered in small groups next to a coffee stand.



Delegates were seen earlier on Friday huddled outside meeting rooms, drinking coffee while others were poring over documents or typing urgently on mobile phones. One participant mimed pulling the pin out of a hand grenade.



Negotiators released new draft deals on Friday, which showed that all-night talks failed to reach a breakthrough.



The biennial high-level meeting of trade ministers from around the world is seeking to revise global commerce rules on a broad range of issues from fishing and farming to e-commerce.



A document circulated by the WTO said that &#8220;time is running out&#8221;. &#8220;It is everyone&#8217;s hope that this postponement allows reaching agreement,&#8221; it said.



WTO spokesperson Ismaila Dieng said the discussions were &#8220;intensive and difficult&#8221;.



India, along with South Africa, has opposed extending a moratorium on digital trade tariffs &#8211; a move that has overwhelming support of most governments and from business.



WTO talks have failed before and this year&#8217;s negotiations, held in the oil-rich Gulf state the United Arab Emirates, has highlighted fissures between some of the world&#8217;s top economies.



<h2 class="wp-block-heading" id="h-brics-disagreement">BRICS DISAGREEMENT</h2>



U.S. President Joe Biden&#8217;s trade chief Katherine Tai said in an interview with Reuters late on Thursday that if talks failed, fragmentation among the BRICS group would have contributed.



India and China, core members of the BRICS group of nations, have disagreed on key issues including on investment. India&#8217;s commerce minister joined the negotiations two days after they started and after his Chinese counterpart had left Abu Dhabi.



Pacific islands nations have also complained at the talks about feeling marginalized and overlooked by most major powers.



U.S. support for global trade and multilateral groups like the WTO has been renewed under Biden. But negotiators are mindful that former President Donald Trump, who disrupted the multilateral system, could win a second term in the U.S. presidential election in November.



So far, no deals have been agreed after nearly five days of talks in Abu Dhabi and even the formal acceptance of completed negotiations on improving investment was blocked at an organisation where all 164 members must agree by consensus.



However, many of the disputes are seen as political theatre and so one breakthrough could lead nations to drop opposition to other deals, as happened at the Geneva conference in 2022.



A consensus is also seen as important to the United Arab Emirates, which in recent years has appeared to place an increased emphasis on multilateralism and dialogue and a turnaround from the assertive foreign policy it was pursuing a decade ago.



It has served as a non-permanent member of the U.N. Security Council, hosted the U.N. COP28 Climate Conference, joined China and India as members of the BRICS grouping of nations, established ties with Israel and repaired fractured relations.



Ahead of the talks, UAE foreign minister Sheikh Abdullah bin Zayed Al Nahyan, a member of Abu Dhabi&#8217;s ruling family, announced a $10 million grant to support WTO initiatives.



(Reporting by Emma Farge and Rachna Uppal, writing by Alexander Cornwell and Emma Farge; Editing by Jacqueline Wong, Kim Coghill, Angus MacSwan and Emelia Sithole-Matarise)

FILE PHOTO: A logo is seen at the WTO in Geneva

Deadlocked WTO talks drag into fifth day with no breakthrough

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="615" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/02/GettyImages-2036339260-820x615.jpg" alt="" class="wp-image-461198" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/02/GettyImages-2036339260-820x615.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/GettyImages-2036339260-300x225.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/GettyImages-2036339260-120x90.jpg 120w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/GettyImages-2036339260-768x576.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/GettyImages-2036339260-1536x1152.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/GettyImages-2036339260-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Photo taken on Feb. 27, 2024, shows the venue of a four-day World Trade Organization ministerial conference through Feb. 29 in Abu Dhabi, the United Arab Emirates. (Photo by Kyodo News via Getty Images)</figcaption></figure>



ABU DHABI, Feb 29 (Reuters)&nbsp;&#8211;&nbsp;Negotiations at the World Trade Organisation (WTO) ministerial meeting in Abu Dhabi were set to go into overtime on Thursday, with the trade body announcing the closing session had been delayed, and no sign of a breakthrough in negotiations.



The biennial conference is seeking deals on ending fishing subsidies and extending a moratorium on digital trade tariffs &#8211; a move that India and South Africa oppose.



The scheduled announcement of a final agreement after four days of intergovernmental talks was pushed back four hours until midnight in the Gulf State (2000 GMT).



Some delegates expressed scepticism that a deal would be reached by then, telling Reuters that serious differences remained on a range of issues meant to address global trade.



&#8220;Tense! Difficult,&#8221; said one delegate on condition of anonymity.



India&#8217;s trade minister said he was &#8220;sad&#8221; some countries were still obstructing significant outcomes. He gave little sign New Delhi would drop its opposition to extending a waiver on digital tariffs.



&#8220;Of course we feel sad that some countries are still obstructing significant outcomes that could have helped less developed countries and developing countries gain confidence in the working of&nbsp;WTO,&#8221; Piyush Goyal told reporters on the final day of the talks.



Still, he voiced optimism that &#8220;significant outcomes&#8221; could be achieved in the negotiations.



<h2 class="wp-block-heading" id="h-fisheries-draft-deal-faces-opposition">FISHERIES DRAFT DEAL FACES OPPOSITION</h2>



A grouping of Pacific islands, including Papua New Guinea and the Solomon Islands, were also opposing a draft deal on changes to fisheries subsidies, with Fiji&#8217;s deputy prime minister telling Reuters it did not go far enough.



&#8220;We would like the large subsidising countries to put a cap on the current level of subsidies,&#8221; Manoa Seru Kamikamica said.



India&#8217;s Goyal did not name the countries that he said were blocking results at the talks. But he said his top priority was fixing the&nbsp;WTO&#8217;s dispute system, adding he had raised the lack of progress with U.S. Trade Representative Katherine Tai in a Wednesday meeting.



&#8220;The first and highest priority is to get the Appellate Body of the dispute resolution mechanism in place because without that all the decisions we are taking cannot be adjudicated upon,&#8221; he said.



The WTO&#8217;s top appeals court has been hamstrung for four years due to U.S. opposition to judge appointments and remains out of service. Tai already ruled out an agreement on WTO dispute settlement appeals reform this week, but said negotiations were showing progress.



Asked whether India would drop its opposition to a waiver on tariffs on digital goods like film downloads, he said: &#8220;Let us see what everybody else is budging on&#8221;.



(Reporting by Emma Farge, Alexander Cornwell and Rachna Uppal; Editing by Alex Richardson and Emelia Sithole-Matarise)

WTO ministerial conference in Abu Dhabi

WTO talks head into overtime with no sign of breakthrough

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/02/GettyImages-2020618884-820x547.jpg" alt="" class="wp-image-460817" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/02/GettyImages-2020618884-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/GettyImages-2020618884-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/GettyImages-2020618884-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/GettyImages-2020618884-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/GettyImages-2020618884-1536x1025.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/GettyImages-2020618884-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Group of 20 signage at City Hall in Rio de Janeiro, Brazil, on Wednesday, Feb. 21, 2024. The Group of 20 nations is so split on the conflicts in Gaza and Ukraine that they may be forced to reduce the forum&#8217;s scope and avoid geopolitical issues altogether this year, according to people familiar with the matter. Photographer: Lucas Landau/Bloomberg via Getty Images</figcaption></figure>



SAO PAULO, Feb 28 (Reuters)&nbsp;&#8211;&nbsp;Brazil&#8217;s Finance Minister Fernando Haddad on Wednesday warned of global economic challenges, as G20 finance leaders gathered in Sao Paulo for a meeting overshadowed by deep divisions in the group over the wars in Ukraine and in Gaza.



As finance leaders kicked off their two-day discussions on Wednesday, their host Hadded said the global economic conjuncture was &#8220;challenging&#8221; and required the G20 to address issues ranging from climate change and poverty.



Brazil&#8217;s coordinator of the finance track at the G20, Tatiana Rosito, said negotiations for the economic portion of the group&#8217;s communique were successfully completed by finance ministry and central bank deputies in a &#8220;very positive&#8221; atmosphere.



But German Finance Minister Christian Lindner said his country will only agree on the G20 communique if geopolitical issues such as the war in Ukraine are mentioned.



He also said the G20 finance leaders are discussing financing for Ukraine to raise pressure on Russia, adding that funds could be mobilized for Kyiv by using proceeds from frozen Russian assets.



His remarks highlight challenges the group may face in agreeing on a G20 communique. A draft version, seen by Reuters on Tuesday, had made only a passing reference in their closing statement to regional conflicts due to deep divisions over wars in Gaza and Ukraine.



It was far shorter than previous years, reflecting Brazil&#8217;s hope to sidestep controversial geopolitical issues with language mentioning &#8220;wars&#8221; left in brackets, underscoring a lack of consensus on the matter.



The smaller G7 group of advanced nations also met on Wednesday, where they likely discussed measures to apply pressure on Russia.



U.S. Treasury Secretary Janet Yellen on Tuesday called on allies to move urgently to unlock the value of frozen Russian sovereign assets to help Ukraine, prompting an angry response from Russian officials.



Canada threw its support behind the U.S. idea with Finance Minister Chrystia Freeland saying on Tuesday the two countries agreed on the urgent need to move forward with confiscating frozen Russian sovereign assets to help Ukraine.



Finance officials and central bankers from the G20 are meeting at a time of lingering global economic uncertainties, increasing strains of record debt burdens, and worries that inflation may not yet be tamed.



Another source of tension is Brazil&#8217;s push to give developing nations of the Global South more voice in G20 meetings as well as global lenders like the International Monetary Fund and World Bank, where leadership is currently dominated by advanced economies.



(Reporting by Marcela Ayrer and Christian Kraemer; Writing by Leika Kihara; editing by Gabriel Araujo and Chizu Nomiyama)

G-20 Foreign Ministers Meeting in Rio de Janeiro

Brazil warns of global economic challenges as G20 finance chiefs meet

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="511" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/02/VUWEHZ7LJVPHXABMJEQQZHIP5M-820x511.jpg" alt="" class="wp-image-460080" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/02/VUWEHZ7LJVPHXABMJEQQZHIP5M-820x511.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/VUWEHZ7LJVPHXABMJEQQZHIP5M-300x187.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/VUWEHZ7LJVPHXABMJEQQZHIP5M-144x90.jpg 144w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/VUWEHZ7LJVPHXABMJEQQZHIP5M-768x478.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/VUWEHZ7LJVPHXABMJEQQZHIP5M-1536x957.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/VUWEHZ7LJVPHXABMJEQQZHIP5M-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">FILE PHOTO: U.S. dollar banknotes are seen in this illustration taken March 10, 2023. REUTERS/Dado Ruvic/Illustration</figcaption></figure>



LONDON, Feb 26 (Reuters)&nbsp;&#8211;&nbsp;The dollar inched lower on Monday ahead of a macro-packed week that could shed more light on the global rate outlook, with a U.S. inflation reading taking centre stage.



The core personal consumption expenditures (PCE) price index, the Federal Reserve&#8217;s preferred measure of inflation, is due on Thursday, with a 0.4% rise on a monthly basis forecast.



Inflation figures in the euro zone, Japan and Australia also land this week, alongside a rate decision from the Reserve Bank of New Zealand (RBNZ) and China PMI surveys.



The euro&nbsp;EUR=EBS&nbsp;was up 0.3% at $1.0854, after gains against the dollar in eight of the last nine trading sessions.



ECB officials have reiterated their focus on inflation in the euro zone, particularly the service sector and wage growth.



European Central Bank President Christine Lagarde on Friday said wage growth had moderated, but it was too early to assume inflation had been conquered.



&#8220;Euro zone inflation is expected to cool to 2.5% and yet the ECB minutes still show the reluctance from the ECB to even talk about cutting rates,&#8221; City Index market strategist Fiona Cincotta said.



&#8220;We also saw inflation expectations in the euro zone ticked up very slightly, but also that upbeat mood on the back of earnings has been pulling some safe-haven flows out of the dollar and has pushed the euro higher,&#8221; she said.



A major driver behind the euro&#8217;s strength has been the narrowing gap between where traders believe U.S. and euro zone interest rates will finish the year.



Only two weeks ago, investors were assuming the Fed would cut rates by around 80 basis points this year, compared with around 100 bps from the ECB. By Monday, that gap had all but disappeared.



<h2 class="wp-block-heading" id="h-spotlight-on-inflation">SPOTLIGHT ON INFLATION</h2>



The main event for investors this week will be Thursday&#8217;s U.S. core PCE. Hotter readings of producer and consumer inflation have increased the likelihood that this measure might top expectations as well, which could further push back expectations for when the Fed might deliver its first cut.



Markets are currently pricing in just about a 20% chance that the Fed will begin easing rates in May, versus a nearly 90% chance a month ago, according to the CME FedWatch tool.



&#8220;If anything, the (data) may be stronger than markets currently expect, and that will likely give a modest boost to the dollar,&#8221; said Carol Kong, a currency strategist at Commonwealth Bank of Australia (CBA).



The dollar index&nbsp;=USD&nbsp;was down 0.2% at 103.74.



Japan&#8217;s nationwide consumer prices are due on Tuesday and are forecast to show core inflation slowed to an annual rate of 1.8% in January, the lowest since March 2022.



That would complicate the Bank of Japan&#8217;s (BOJ) plans to end negative interest rates in coming months, keeping the yen under pressure in the near term.



The yen&nbsp;JPY=EBS&nbsp;was last steady at 150.57 per dollar, having already fallen more than 6% against it this year.



&#8220;News that Japan fell into technical recession in H2 2023 will have dampened some of the market&#8217;s enthusiasm regarding the pace of monetary tightening from the BOJ,&#8221; said Jane Foley, head of FX strategy at Rabobank.



Sterling&nbsp;GBP=D3, meanwhile, rose 0.2% to $1.2696, but eased by 0.1% against the euro&nbsp;EURGBP=D3&nbsp;to 85.50 pence.



In cryptocurrencies, ether ETH= rose by as much as 6.5% above $3,130 to another two-year high. It was last up 3.9% at $3,055, while bitcoin BTC= rose 0.3% to $51,140.



(Additional reporting by Rae Wee in Singapore; Editing by Jamie Freed, Jacqueline Wong, Ed Osmond and Alexander Smith)

International

Fed and other banks to make ‘major progress’ on rates this year, BIS chief says

United Arab Emirates is using cloud seeding tech to make it rain

India to hold the world’s biggest election starting April in over a month-long exercise

China kicks off the year on strong note as retail, industrial data tops expectations

European Central Bank chief economist: Must ‘take our time’ on rate cuts, clearer picture due in June

Oil strategist says the market could be caught off guard by a crude spike this summer

U.S. consumer prices rose 0.4% in February and 3.2% from a year ago

A key U.S. inflation reading is due out Tuesday morning. Here’s what to expect

Gold prices could keep climbing — but analysts expect silver to steal the show before long

U.S. job growth totaled 275,000 in February but unemployment rate rises to 3.9%

Powell says the Fed is ‘not far’ from the point of cutting interest rates

Powell reinforces position that the Fed is not ready to start cutting interest rates

Chinese leaders to hold annual ‘Two Sessions’ meeting as debate about bazooka-like stimulus swirls

Deadlocked WTO talks drag into fifth day with no breakthrough

WTO talks head into overtime with no sign of breakthrough

Brazil warns of global economic challenges as G20 finance chiefs meet

Dollar lower before inflation-heavy data deluge

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International

Fed and other banks to make ‘major progress’ on rates this year, BIS chief says

United Arab Emirates is using cloud seeding tech to make it rain

India to hold the world’s biggest election starting April in over a month-long exercise

China kicks off the year on strong note as retail, industrial data tops expectations

European Central Bank chief economist: Must ‘take our time’ on rate cuts, clearer picture due in June

Oil strategist says the market could be caught off guard by a crude spike this summer

U.S. consumer prices rose 0.4% in February and 3.2% from a year ago

A key U.S. inflation reading is due out Tuesday morning. Here’s what to expect

Gold prices could keep climbing — but analysts expect silver to steal the show before long

U.S. job growth totaled 275,000 in February but unemployment rate rises to 3.9%

Powell says the Fed is ‘not far’ from the point of cutting interest rates

Powell reinforces position that the Fed is not ready to start cutting interest rates

Chinese leaders to hold annual ‘Two Sessions’ meeting as debate about bazooka-like stimulus swirls

Deadlocked WTO talks drag into fifth day with no breakthrough

WTO talks head into overtime with no sign of breakthrough

Brazil warns of global economic challenges as G20 finance chiefs meet

Dollar lower before inflation-heavy data deluge

News Tips

Advertise With Us

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