<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="569" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/11/W3M4E5EAIBMIBMKXJYHDJL26PE-820x569.jpg" alt="" class="wp-image-421010" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/11/W3M4E5EAIBMIBMKXJYHDJL26PE-820x569.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/11/W3M4E5EAIBMIBMKXJYHDJL26PE-300x208.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/11/W3M4E5EAIBMIBMKXJYHDJL26PE-130x90.jpg 130w, https://cms.cnbcafrica.com/wp-content/uploads/2022/11/W3M4E5EAIBMIBMKXJYHDJL26PE-768x533.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/11/W3M4E5EAIBMIBMKXJYHDJL26PE-1536x1067.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/11/W3M4E5EAIBMIBMKXJYHDJL26PE-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>FILE PHOTO: United Nations Secretary-General Antonio Guterres addresses the 77th Session of the United Nations General Assembly at U.N. Headquarters in New York City, U.S., September 20, 2022. REUTERS/Brendan Mcdermid</figcaption></figure>



UNITED NATIONS, Nov 3 (Reuters)&nbsp;&#8211;&nbsp;U.N. Secretary-General Antonio Guterres pushed rich and poor countries on Thursday &#8220;to close the ambition gap, the credibility gap and the solidarity gap&#8221; when they come together for a global climate summit starting next week in Egypt.



&#8220;It is time for an historic pact between developed and emerging economies,&#8221; he told reporters. &#8220;A pact in which developed countries deliver on the commitment made in Paris and make an additional effort to reduce emissions in line with the 1.5 degree goal.&#8221;



&#8220;And a pact in which wealthier countries provide financial and technical assistance – along with support from Multilateral Development Banks and technology companies – to help emerging economies speed their renewable energy transition,&#8221; he said.



This is a developing story&#8230;



(Reporting by Michelle Nichols; editing by Rami Ayyub)

World leaders address the 77th Session of the United Nations General Assembly at U.N. Headquarters in New York City

U.N. chief urges focus on ambition, trust at Egypt climate summit

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="462" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/11/106878997-1620285560596-gettyimages-1231784837-UK_BOE-820x462.jpeg" alt="" class="wp-image-421004" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/11/106878997-1620285560596-gettyimages-1231784837-UK_BOE-820x462.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/11/106878997-1620285560596-gettyimages-1231784837-UK_BOE-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/11/106878997-1620285560596-gettyimages-1231784837-UK_BOE-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2022/11/106878997-1620285560596-gettyimages-1231784837-UK_BOE-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/11/106878997-1620285560596-gettyimages-1231784837-UK_BOE.jpeg 929w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>A passageway near the Bank of England (BOE) in the City of London, U.K., on Thursday, March 18, 2021. Hollie Adams | Bloomberg | Getty Images</figcaption></figure>



LONDON — The&nbsp;Bank of England&nbsp;on Thursday raised interest rates by 75 basis points, its largest single hike since 1989, but struck a dovish tone as policymakers looked to temper market expectations for further aggressive monetary policy tightening.



The 75 basis point increase takes the Bank Rate to 3%, its eighth consecutive hike to the main lending rate, after the Monetary Policy Committee voted 7-2 in favor. One member voted for a 0.5 percentage point rise while one preferred a 0.25 increase.



However, the Bank appeared to challenge the market’s pricing of future rate rises.



“The majority of the Committee judges that, should the economy evolve broadly in line with the latest Monetary Policy Report projections, further increases in Bank Rate may be required for a sustainable return of inflation to target, albeit to a peak lower than priced into financial markets,” the MPC said, offering uncharacteristically specific guidance to the market.



The MPC noted that its updated projections for growth and inflation indicate a “very challenging” outlook for the U.K. economy as it looks to bring inflation back toward its 2% target.



U.K. GDP is projected to decline by around 0.75% over the second half of 2022, reflecting the squeeze on real incomes from surging energy and tradable goods prices. Conditioned on the elevated path of market interest rates, growth is projected to continue to fall throughout 2023 and the first half of 2024, as “high energy prices and tighter financial conditions weigh on spending,” the Bank said.



Economists had anticipated a less hawkish tone&nbsp;from the central bank after the change in the U.K. government. New Prime Minister Rishi Sunak’s likely return to a more conventional fiscal policy after the brief and chaotic tenure of predecessor Liz Truss calmed the markets and meant that monetary and fiscal policy were no longer pulling in opposite directions.



However, inflation spiked to 10.1% in September and is expected to rise to 11% in the fourth quarter, the Bank said, while mortgage rates have risen sharply on higher interest rate expectations, placing further strain on households.



“For the current November forecast, and consistent with the Government’s announcements on 17 October, the MPC’s working assumption is that some fiscal support continues beyond the current six-month period of the Energy Price Guarantee (EPG), generating a stylised path for household energy prices over the next two years,” the MPC said.



“Such support would mechanically limit further increases in the energy component of CPI inflation significantly, and reduce its volatility. However, in boosting aggregate private demand relative to the August projections, the support could augment inflationary pressures in non-energy goods and services.”



Sterling&nbsp;dropped 2% against the dollar after the decision to trade around $1.116, while U.K. government bond yields rose.



After its emergency bond-buying intervention last month prevented the possible collapse of the U.K.‘s pension fund market, in light of plunging government bond prices caused in large party by Truss’ fiscal policy announcements, the&nbsp;Bank of England revived its plan to start selling gilts (U.K. sovereign bonds) — which commenced on Tuesday.



<h3 class="wp-block-heading" id="h-little-choice-but-to-meet-market-expectations">‘Little choice’ but to meet market expectations</h3>



All eyes will now turn to Finance Minister Jeremy Hunt’s fiscal statement on Nov. 17, where the government will need to “strike a fine balance between supporting the economy and a credible medium-term plan for debt consolidation,” according to Hugh Gimber, global market strategist at JPMorgan Asset Management.



Gimber suggested the Bank had “little choice” but to deliver on the market’s expectations of a 75 basis point hike on Thursday.



“Such a large hike may appear unwarranted given signs that U.K. activity is already contracting, but there is scant evidence as yet that the slowdown is sufficient to tame inflation,” Gimber said.



“Open job vacancies continue to exceed the number of people looking for employment and wage growth at 6% is far above the level that would be consistent with the Bank’s inflation target.”



However, he also suggested that a more modest hike against a backdrop of double-digit inflation, and following aggressive action from the&nbsp;U.S. Federal Reserve&nbsp;and the&nbsp;European Central Bank, would have risked “reigniting questions about the Bank’s credibility and further volatility in sterling markets.”



The&nbsp;Fed on Wednesday approved a fourth consecutive three-quarter point hike, taking its short-term borrowin grate to a target range of 3.75%-4%, its highest level since January 2008.



The&nbsp;ECB last week also implemented a 75 basis point hike, taking its main benchmark to 1.5%, a level not seen since 2009.

106878997-1620285560596-gettyimages-1231784837-UK_BOE

Bank of England raises its benchmark rate by 75 basis points, its biggest hike in 33 years

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/09/107094949-16589488462022-07-27t185755z_1401356456_rc2ikv9v3blg_rtrmadp_0_usa-fed-820x547.jpeg" alt="" class="wp-image-419969" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/09/107094949-16589488462022-07-27t185755z_1401356456_rc2ikv9v3blg_rtrmadp_0_usa-fed-820x547.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/09/107094949-16589488462022-07-27t185755z_1401356456_rc2ikv9v3blg_rtrmadp_0_usa-fed-300x200.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/09/107094949-16589488462022-07-27t185755z_1401356456_rc2ikv9v3blg_rtrmadp_0_usa-fed-135x90.jpeg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2022/09/107094949-16589488462022-07-27t185755z_1401356456_rc2ikv9v3blg_rtrmadp_0_usa-fed-768x512.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/09/107094949-16589488462022-07-27t185755z_1401356456_rc2ikv9v3blg_rtrmadp_0_usa-fed-1536x1024.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/09/107094949-16589488462022-07-27t185755z_1401356456_rc2ikv9v3blg_rtrmadp_0_usa-fed-scaled.jpeg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>Federal Reserve Board Chairman Jerome Powell speaks during a news conference following a two-day meeting of the Federal Open Market Committee (FOMC) in Washington, July 27, 2022.
Elizabeth Frantz | Reuters</figcaption></figure>



The Federal Reserve on Wednesday approved a fourth consecutive three-quarter point interest rate increase and signaled a potential change in how it will approach monetary policy to bring down inflation. In a&nbsp;well-telegraphed move&nbsp;that markets had been expecting for weeks, the central bank raised its short-term borrowing rate by 0.75 percentage point to a target range of 3.75%-4%, the highest level since January 2008. The move continued the most aggressive pace of monetary policy tightening since the early 1980s, the last time inflation ran this high. Along with anticipating the rate hike, markets also had been looking for language indicating that this could be the last 0.75-point, or 75 basis point, move.



The&nbsp;new statement&nbsp;hinted at that policy change, saying when determining future hikes, the Fed “will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.”



Economists are hoping this is the much talked about “step-down” in policy that could see a rate increase of half a point at the December meeting and then a few smaller hikes in 2023.



<h2 class="wp-block-heading" id="h-changes-in-policy-path"><a></a>Changes in policy path</h2>



This week’s statement also expanded on previous language simply declaring that “ongoing increases in the target range will be appropriate.“ The new language read, “The Committee anticipates that ongoing increases in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time.”



Stocks initially rose following the announcement, but turned negative during&nbsp;Chairman Jerome Powell’s&nbsp;news conference&nbsp;as the market tried to gauge whether the Fed thinks it can implement a less restrictive policy that would include a slower pace of rate hikes to achieve its inflation goals.



On balance, Powell dismissed the idea that the Fed may be pausing soon though he said he expects a discussion at the next meeting or two about slowing the pace of tightening.



He also reiterated that it may take resolve and patience to get inflation down.



“We still have some ways to go and incoming data since our last meeting suggests that the ultimate level of interest rates will be higher than previously expected,” he said.



Still, Powell reiterated that there may come a time to slow the pace of rate increases.



“So that time is coming, and it may come as soon as the next meeting or the one after that. No decision has been made,” he said.



<h2 class="wp-block-heading" id="h-soft-landing-path-narrows"><a></a>Soft-landing path narrows</h2>



The chairman also sounded some pessimism about the future. He noted that he now expects the “terminal rate,” or the point when the Fed stops raising rate, to be higher than it was at the September meeting. With the higher rates also comes the prospect that the Fed will not be able to achieve the “soft landing” that Powell has spoken of in the past.



“Has it narrowed? Yes,” he said in response to a question of whether the path has narrowed to a place where the economy doesn’t enter a pronounced contraction. “Is it still possible? Yes.”



However, he said the need for still-higher rates makes the job more difficult.



“Policy needs to be more restrictive, and that narrows the path to a soft landing,” Powell said.



Along with the tweak in the statement, the Federal Open Market Committee again categorized growth in spending and production as “modest” and noted that “job gains have been robust in recent months” while inflation is “elevated.” The statement also reiterated language that the committee is “highly attentive to inflation risks.”



The rate increase comes as recent inflation readings show prices remain near 40-year highs. A historically tight jobs market in which there are nearly two openings for every unemployed worker is pushing up wages, a trend the Fed is seeking to head off as it tightens money supply.



Concerns are rising that the Fed, in its efforts to bring down the cost of living, also will pull the economy into recession. Powell has said he still sees a path to a “soft landing” in which there is not a severe contraction, but the U.S. economy this year has shown virtually no growth even as the full impact from the rate hikes has yet to kick in. At the same time, the Fed’s preferred inflation measure showed&nbsp;the cost of living rose 6.2%&nbsp;in September from a year ago – 5.1% even excluding food and energy costs. GDP declined in both the first and second quarters, meeting a common definition of recession, though it rebounded to 2.6% in the third quarter largely because of an unusual rise in exports. At the same time, housing demand has plunged as 30-year&nbsp;mortgage rates have soared past 7%&nbsp;in recent days. On Wall Street, markets have been rallying in anticipation that the Fed soon might start to ease back as worries grow over the longer-term impact of higher rates. The&nbsp;Dow Jones Industrial Average&nbsp;has gained more than 13% over the past month, in part because of an earnings season that wasn’t as bad as feared but also due to growing hopes for a recalibration of Fed policy.&nbsp;Treasury yields&nbsp;also have come off their highest levels since the early days of the financial crisis, though they remain elevated. The&nbsp;benchmark 10-year note&nbsp;most recently was around 4.09%. There is little if any expectation that the rate hikes will halt anytime soon, so the anticipation is just for a slower pace. Futures traders are pricing a near coin-flip chance of a half-point increase in December, against another three-quarter point move. Current market pricing also indicates the fed funds rate will top out near 5% before the rate hikes cease. The fed funds rate sets the level that banks charge each other for overnight loans, but spills over into&nbsp;multiple other consumer debt instruments&nbsp;such as adjustable-rate mortgages, auto loans and credit cards.

107094949-16589488462022-07-27t185755z_1401356456_rc2ikv9v3blg_rtrmadp_0_usa-fed

Fed approves 0.75-point hike to take rates to highest since 2008 and hints at change in policy ahead

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/11/107076508-1667332344080-jer-820x547.jpg" alt="" class="wp-image-420977" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/11/107076508-1667332344080-jer-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/11/107076508-1667332344080-jer-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/11/107076508-1667332344080-jer-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2022/11/107076508-1667332344080-jer-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/11/107076508-1667332344080-jer-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/11/107076508-1667332344080-jer-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>U.S. Federal Reserve Board Chairman Jerome Powell takes questions from reporters after the Federal Reserve raised its target interest rate by three-quarters of a percentage point to stem a disruptive surge in inflation, during a news conference following a two-day meeting of the Federal Open Market Committee (FOMC) in Washington, June 15, 2022. Elizabeth Frantz | Reuters</figcaption></figure>



The Federal Reserve is expected to raise interest rates by three-quarters of a percentage point Wednesday and then signal that it could reduce the size of its rate hikes starting as soon as December.



Markets are primed for the fourth 75-basis point hike in a row, and investors are anticipating the Fed will slow down its pace before winding down the rate-hiking cycle in March. A basis point is equal to 0.01 of a percentage point.



“We think they hike just to get to the end point. We do think they hike by 75. We think they do open the door to a step down in rate hikes beginning in December,” said Michael Gapen, chief U.S. economist at Bank of America.



Gapen said he expects Fed Chair Jerome Powell to indicate during his press briefing that the Fed discussed slowing the pace of rate hikes but did not commit to it. He expects the Fed would then raise interest rates by a half percentage point in December.



“The November meeting isn’t really about November. It’s about December,” Gapen said. He expects the Fed to raise rates to a level of 4.75% to 5% by spring, and that would be its terminal rate — or end point. The 75 basis point hike Wednesday would take the fed funds rate range to 3.75% to 4%, from a range of zero to 0.25% in March.



“The market is very fixated on the fact there’s going to be 75 in November, 50 [basis points] in December, 25 on Feb. 1 and then probably another 25 in March,” said Julian Emanuel, head of equity, derivatives and quantitative strategy at Evercore ISI. “So in reality, the market already thinks this is happening, and from my point of view, there’s no way the outcome of his press conference is going to be more dovish than that.”



The stock market has already rallied on expectations of a slowdown in rate hikes by the Fed, after a final 75 basis point hike Wednesday afternoon. But strategists also say the market’s reaction could be violent if the Fed disappoints. The challenge for Powell will be to walk a fine line between signaling less-aggressive hikes are possible and upholding the Fed’s pledge to battle inflation.



For that reason, market pros expect the Fed chair to sound hawkish, and that could rattle stocks and send bond yields higher. Yields move opposite price.



“I think he’s going to try to execute the fine art of getting off the 75 [basis points] without creating euphoria and influencing financial conditions too easy,” said Rick Rieder, BlackRock chief investment officer of global fixed income. “I think the way the market is pricing, I think that’s what they’re going to do, but I think he’s really got to thread the needle on not getting people too excited about the direction of travel. Fighting inflation is their primary objective.”



As the Fed has raised interest rates, the economy is beginning to show signs of slowing. The housing market is slumping, as some mortgage rates have nearly doubled. The 30-year fixed rate mortgage was at 7.08% in the week of Oct. 28, up from 3.85% in March, according to Freddie Mac.



“I think [Powell] will say that four 75-basis point hikes is an awful lot and with this long and variable lag, you need to step back and see the impact. You’re seeing it in housing. You’re starting to see it in autos,” said Rieder. “You’re seeing it in some of the retailer slowdowns, and you’re certainly seeing it in the surveys. I think the idea that you’re slowing, it’s important how he describes it.”



The Fed should be dependent on incoming data, and while inflation is coming down, the pace of decline is unclear, Rieder said.



“If inflation continues to be surpisingly high, he shouldn’t shut off his options,” he said.



Consumer inflation in September ran at a hot 8.2% annual basis.



Gapen expects the economy to dip into a shallow recession in the first quarter. He said the equity market would be concerned if inflation were to stay so high the Fed would have to raise rates even more sharply than expected, threatening the economy even more.



“The markets want to be relieved, particualy the equity maket,” said Rieder. “I think what happens to the equity market and the bond market are different because of the technicals and the leverage. &#8230; But I think the market wants to believe that the Fed, they’re going to get to 5% and stay there for awhile. People are tired of getting bludgeoned, and I think they want to believe the bludgeoning is over.”

107076508-1667332344080-jer

The Fed is expected to raise interest rates by three-quarters of a point and then signal it could slow the pace

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/11/GettyImages-1319228121-820x547.jpg" alt="" class="wp-image-420940" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/11/GettyImages-1319228121-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/11/GettyImages-1319228121-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/11/GettyImages-1319228121-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2022/11/GettyImages-1319228121-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/11/GettyImages-1319228121-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/11/GettyImages-1319228121-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>China&#8217;s national flag in Hong Kong. Photographer: Paul Yeung/Bloomberg</figcaption></figure>



China previously “sailed on” economically while other countries struggled, but the world’s second largest economy may have a difficult path ahead, according to one strategist.



“China has reached that level of its development where a lot of emerging markets typically find the going getting tougher,” said Mark Jolley of CCB International Securities.



He pointed to the trend of deglobalization, friction between the U.S. and China as well as the weak global economy.



“On both sides of the Pacific we hear a lot of wishful thinking that decoupling will promote rather than hurt domestic growth. We disagree,” Ethan Harris wrote in a BofA Global Research note published Friday.



“Decoupling is a negative sum game that hurts both countries. It means abandoning comparative advantage and stranding capital,” the global economist at Bank of America Securities added, though he acknowledged that there may be “strong geo-political and reliability reasons” for decoupling.



Domestically, Beijing also has to manage its troubled real estate sector, Jolley told CNBC’s “Squawk Box Asia” on Monday.



“I certainly think that the economic outlook for China over the next five to 10 years is deeply challenging,” he said.



“In the past, China has sailed on while everyone else has kind of struggled. Now China’s probably going to be more like other countries,” he added.



BofA’s Harris said “adverse demographics” and the limits of an export or construction driven economy are challenges for Beijing.



“Beyond the near-term rebound in growth we see ongoing downward pressure on potential or trend growth in China,” he said, pointing to a return to “more of a command economy” and concerns that are dampening foreign investment flows.



<h2 class="wp-block-heading" id="h-shining-spot"><a></a>‘Shining spot’</h2>



That said, Jun Bei Liu, a portfolio manager at Tribeca Investment Partners, said 2023 will be a “pretty good year” for China as the economy is expected lift strict Covid measures and domestic consumption rebounds.



“Compared to the rest of the world [where the] consumer is going to struggle in the next 12 months, China is going to be the shining spot,” she told CNBC’s “Squawk Box Asia.”



The sell-off in Chinese tech stocks presents an “enormous” opportunity, she said, though she warned that investors have to be mindful of policy changes for income redistribution.



“You just have to be very selective in what you choose — be focusing on businesses and sectors that [are] not so much policy driven, because that’s probably where most of the risk lies,” she said.



— CNBC’s Evelyn Cheng contributed to this report.

Chinese National Flag

China’s economy could rebound soon, but longer-term growth will be ‘deeply challenging’

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="522" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/10/107142279-1666930377202-gettyimages-1208436658-AFP_1Q86RN-820x522.jpeg" alt="" class="wp-image-420886" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/10/107142279-1666930377202-gettyimages-1208436658-AFP_1Q86RN-820x522.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/107142279-1666930377202-gettyimages-1208436658-AFP_1Q86RN-300x191.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/107142279-1666930377202-gettyimages-1208436658-AFP_1Q86RN-141x90.jpeg 141w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/107142279-1666930377202-gettyimages-1208436658-AFP_1Q86RN-768x489.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/107142279-1666930377202-gettyimages-1208436658-AFP_1Q86RN-1536x978.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/107142279-1666930377202-gettyimages-1208436658-AFP_1Q86RN-scaled.jpeg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>Asia has more to lose than any other region if the global trade system splits up, the International Monetary Fund warned. Olivier Douliery | Afp | Getty Images</figcaption></figure>



Asia-Pacific has more to lose than any other region if the global trade system splits up in the wake of geopolitical tensions, the International Monetary Fund warned.



Asia and Pacific countries could lose over 3% in gross domestic product if trade is cut off in sectors hit by recent U.S. chip sanctions on China and if non-tariff barriers in other areas are raised to “Cold War-era levels,”&nbsp;the IMF said in research released on Friday.&nbsp;



That’s twice the amount of projected global annual losses.&nbsp;



Sectors in Asian countries forced to contract because of reduced trade could suffer average employment losses of as high as 7%, the IMF added.



“When we talk about progression from rising trade uncertainty and more restrictive measures, [it] will eventually escalate into fragmentation where the world is divided,” Krishna Srinivasan, director of the Asia and Pacific Department at the IMF, said at a press conference in Singapore on Friday.&nbsp;



“Asia risks losing a lot because it is a key player in global supply chains and in a fragmented world, it risks losing more than anybody else.”&nbsp;



<h2 class="wp-block-heading" id="h-u-s-china-trade-tensions"><a></a>U.S.-China trade tensions</h2>



Signs of global fragmentation emerged during the trade war between the U.S. and China in 2018. But more worrying signs, such as the Russia-Ukraine war, have since emerged. Sanctions on Russia have added even more uncertainty around trade relations, the IMF said.&nbsp;



Policy uncertainty around trade, not just the restrictions themselves, could hamper economic activity as firms pause hiring and investments and new firms postpone entries into markets, the IMF said.&nbsp;



For example, the IMF found that&nbsp;2018 U.S.-China trade tensions&nbsp;reduced investments by about 3.5% after two years.&nbsp;



The impact of trade fragmentation is greater for emerging markets in Asia and for firms with high debt.&nbsp;



The IMF said while its research focused on the impact of fragmentation on trade, there could be other deeper downsides, such as the “unraveling of financial ties.”



“Financial fragmentation may lead to short-term costs from a rapid unwinding of financial positions, and long-term costs from lower diversification and slower productivity growth because of reduced foreign direct investment,” the IMF said.&nbsp;



The international body is urging countries to roll back damaging trade restrictions and reduce uncertainty through clearer communication of policy objectives.&nbsp;&nbsp;



“Greater emphasis can be placed on digitalization, investing in education … but most importantly, international cooperation, because we want to avoid the risk of fragmentation … it’s important that we all act now, act together,” Srinivasan said.&nbsp;



<h2 class="wp-block-heading"><a></a>Capital flows</h2>



There have been concerns over capital flows out of Asia as interest rates in the region lag behind those of the United States. But so far, they are still “manageable,” Srinivasan said.



The situation in Asia has been mixed, Srinivasan added.



“For example, we saw a lot of capital flow for India, we saw capital flows for Taiwan, China, and moderate flows from Indonesia, moderate flows for Malaysia, but we saw some net inflows into Thailand. And more recently, we see flows back into India. So the picture is a bit mixed,” he said.

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Asia would be the biggest loser if the global economy splits up, IMF warns

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="462" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/10/107141563-1666861566182-gettyimages-1243912604-IIF_MEETING_2022-820x462.jpeg" alt="" class="wp-image-420870" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/10/107141563-1666861566182-gettyimages-1243912604-IIF_MEETING_2022-820x462.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/107141563-1666861566182-gettyimages-1243912604-IIF_MEETING_2022-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/107141563-1666861566182-gettyimages-1243912604-IIF_MEETING_2022-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/107141563-1666861566182-gettyimages-1243912604-IIF_MEETING_2022-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/107141563-1666861566182-gettyimages-1243912604-IIF_MEETING_2022.jpeg 929w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>The European Central Bank has announced its third consecutive increase in interesr rates this year. Bloomberg | Bloomberg | Getty Images</figcaption></figure>



The European Central Bank announced Thursday a 75-basis-point interest rate hike — its third consecutive increase this year — while also scaling back support for European banks.



Following much speculation by market participants,&nbsp;the ECB said it was&nbsp;now&nbsp;changing the terms and conditions of its targeted longer-term refinancing operations, or TLTROs. These are a tool that provides European banks with attractive borrowing conditions, designed to incentivize lending to the real economy.



However, because the ECB has been increasing rates faster than expected in the face of soaring inflation, European lenders are benefiting from both TLTROs and higher interest rates. The situation has been described by some as effectively providing a subsidy to banks.



“During the acute phase of the pandemic, this instrument played a key role in countering downside risks to price stability. Today, in view of the unexpected and extraordinary rise in inflation, it needs to be recalibrated,” the ECB said in a statement.



It said the interest rates applicable to the tool, known as TLTRO III, would be adjusted from Nov. 23 and banks would be offered voluntary early repayment dates.



“In order to align the remuneration of minimum reserves held by credit institutions with the Eurosystem more closely with money market conditions, the Governing Council decided to set the remuneration of minimum reserves at the ECB’s deposit facility rate.”



This will see the cost of lending for banks rise significantly under the scheme.



Further details on the new conditions for European banks will be published at 2:45 p.m. London time.



The ECB did not shed any light on when it plans to start reducing its balance sheet, however, in a process known as quantitative tightening — something market participants had been watching out for.



The euro weakened against the U.S. dollar in the wake of the announcements from the ECB. The common currency briefly fell below parity before recovering slightly. European government bond yields also fell following the ECB’s decision.



<h2 class="wp-block-heading" id="h-more-rates-hikes-ahead"><a></a>More rates hikes ahead</h2>



Thursday’s rate hike takes the ECB’s main benchmark from 0.75% to 1.5%, a level not seen since 2009 before the sovereign debt crisis. It comes after the central bank rose rates by 50 basis points in July and 75 basis points in September.



However, the ECB confirmed that its rating hike cycle is not yet over.



“With this third major policy rate increase in a row, the Governing Council has made substantial progress in withdrawing monetary policy accommodation. The Governing Council took today’s decision, and expects to raise interest rates further, to ensure the timely return of inflation to its 2% medium-term inflation target,” the central bank said.



Several economists have projected another rate increase in December of 50 basis points. The ECB, however, did not indicate the level of future rate rises, saying that they will be data-dependent.



It comes as the ECB is dealing with both record-high inflation and a slowing economy, with many economists predicting a recession in the region before the end of the year. It’s a delicate balance for the central bank, as if it hikes rates aggressively in an effort to deal with inflation, it could cause even more trouble for the wider economy.



“Inflation remains far too high and will stay above the target for an extended period,” the ECB also said Thursday.



In September, inflation in the 19-member bloc came in at 9.9%.

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ECB hikes rates by 75 basis points and scales back support for European banks

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="462" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/10/107140048-1666682634297-gettyimages-1243912449-IIF_MEETING_2022-820x462.jpeg" alt="" class="wp-image-420850" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/10/107140048-1666682634297-gettyimages-1243912449-IIF_MEETING_2022-820x462.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/107140048-1666682634297-gettyimages-1243912449-IIF_MEETING_2022-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/107140048-1666682634297-gettyimages-1243912449-IIF_MEETING_2022-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/107140048-1666682634297-gettyimages-1243912449-IIF_MEETING_2022-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/107140048-1666682634297-gettyimages-1243912449-IIF_MEETING_2022.jpeg 929w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>Christine Lagarde, president of the European Central Bank, is expected to announce another 75 basis points hike. Bloomberg | Bloomberg | Getty Images</figcaption></figure>



While the European Central Bank is largely expected to announce another rate hike Thursday, market players are seemingly more concentrated on two other policy tools as the region edges toward a recession.



The central bank has been contemplating inflation being at record highs but an economy that is slowing, with many economists predicting a recession before the end of the year. If the ECB takes a very aggressive stance in increasing rates to deal with inflation, there are risks that it tips the economy into further trouble.



Amid this context, the ECB is widely seen raising rates by 75 basis points later this week. This would be the second consecutive jumbo hike and the third increase this year.



“The ECB will likely raise its three policy rates by 75 basis points and suggest that it will go further at its next few policy meetings without providing a clear guidance on the size and number of steps to come,” Holger Schmieding, chief economist at Berenberg, said in a note Tuesday.



Given the inflationary pressures — the September inflation rate came in at 10% — analysts are pricing in at least another 50 basis point hike in December. The bank’s main rate is currently at 0.75%.



“A growing consensus seems to be in favour of having the deposit rate at 2% by the end of the year, implying a 50 basis point hike in December, with a reassessment of the economic and inflation outlook in early 2023,” Frederik Ducrozet, head of macroeconomic research at Pictet Wealth Management, said in a note Friday.



<h2 class="wp-block-heading" id="h-two-big-questions"><a></a>Two big questions</h2>



Rates aside, there are two questions on the minds of market players that need answering: When will the ECB start unwinding its balance sheet, in a process known as quantitative tightening, and what will happen to the lending conditions for banks in the near future. The ECB has undertaken years of quantitative easing, where it buys assets like government bonds to simulate demand, following the euro crisis of 2011 and the Covid-19 outbreak in 2020.



“When it comes to QT, boring is beautiful,” Ducrozet said, adding that he expects the process to start in the second quarter of 2023. QT is expected “to be predictable, gradual, and passive, starting with the end of reinvestments under the Asset Purchase Programme (APP) but not actively selling bonds any time soon,” he said.



Camille De Courcel, head of European rates strategy at BNP Paribas, said in a note Monday that the central bank might wait until the December meeting to provide details on QT but that it is likely to start reducing its balance sheet by about 28 billion euros on average per month when it does happen.



But perhaps the biggest uncertainty at this stage is whether lending conditions will change for European banks.



“We think Thursday [the ECB] will unveil a decision on the TLTRO, either its remuneration, or its cost. We think the new measure will only come into effect, in December,” De Courcel said.



The&nbsp;targeted longer-term refinancing operations, or TLTROs, is a tool that provides European banks with attractive borrowing conditions — hopefully giving these institutions more incentives to lend to the real economy.



Because the ECB has been increasing rates faster than the central bank initially expected, European lenders are benefiting from the attractive loan rates via TLTROs while also making more money from the higher interest rates.



“The optics are bad against the backdrop of a historical shock to households’ income, and political pressure cannot be ignored,” Ducrozet said.



The euro traded marginally higher against the U.S. dollar on Wednesday at $0.997. The weakness of the common currency has been a concern for the central bank though it repeatedly states that it does not target the exchange rate.

107140048-1666682634297-gettyimages-1243912449-IIF_MEETING_2022

Markets look for answers from the European Central Bank as it preps for a jumbo rate hike

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/10/107140063-1666687021932-gettyimages-1434808195-dji_fly_20221019_133740_379_1666206198793_photo_5bb18535-38b-820x461.jpeg" alt="" class="wp-image-420794" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/10/107140063-1666687021932-gettyimages-1434808195-dji_fly_20221019_133740_379_1666206198793_photo_5bb18535-38b-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/107140063-1666687021932-gettyimages-1434808195-dji_fly_20221019_133740_379_1666206198793_photo_5bb18535-38b-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/107140063-1666687021932-gettyimages-1434808195-dji_fly_20221019_133740_379_1666206198793_photo_5bb18535-38b-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/107140063-1666687021932-gettyimages-1434808195-dji_fly_20221019_133740_379_1666206198793_photo_5bb18535-38b-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/107140063-1666687021932-gettyimages-1434808195-dji_fly_20221019_133740_379_1666206198793_photo_5bb18535-38b-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/107140063-1666687021932-gettyimages-1434808195-dji_fly_20221019_133740_379_1666206198793_photo_5bb18535-38b.jpeg 1600w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>An aerial of the Strategic Petroleum Reserve storage at the Bryan Mound site seen on October 19, 2022 in Freeport, Texas. The main casualties who will suffer the brunt of high energy prices is neither the United States nor Europe — but emerging and developing nations, said the head of International Energy Agency (IEA) Fatih Birol. Brandon Bell | Getty Images News | Getty Images</figcaption></figure>



International Energy Agency Executive Director Fatih Birol warned emerging and developing countries are most vulnerable to soaring energy prices.



“It is not the U.S. who will suffer the most [from] the high energy prices,” Birol told CNBC on Tuesday.



Birol said those who will be hit hardest include oil-importing nations in Africa, Asia and Latin America because of higher import prices and their weaker currencies.



In May, the International Monetary Fund revised down its growth projection forecasts for oil-importing nations, with higher energy prices expected to add to a litany of economic challenges already plaguing these countries.



“Higher commodity prices add to the challenges stemming from elevated inflation and debt, tightening global financial conditions, uneven vaccination progress, and underlying fragilities and conflict in some countries,” the IMF said in their report.



Oil-importing Middle East and North African nations include Djibouti, Sudan, Morocco and Pakistan, amongst others.



Europe is struggling with a gas shortage as Russia slashes supplies, forcing many countries into an energy crisis in the lead-up to winter. The U.K.’s National Grid has warned of possible power cuts.



<h2 class="wp-block-heading" id="h-first-truly-global-energy-crisis"><a></a>‘First truly global energy crisis’</h2>



“We are in the middle of the first truly global energy crisis,” Birol said. “Our world has never ever witnessed an energy crisis with this depth and complexity.”



He added that oil markets will continue to see volatility for as long as Russia’s war in Ukraine persists.



OPEC+ agreed to impose deep output cuts at the start of the month, seeking to spur a recovery in crude prices despite calls from the U.S. to pump more to help the global economy.



Birol called the decision “unprecedented,” and likened the energy alliance’s move to “scoring an own goal.”



The result of inflated prices would be an economy “flirting with a recession,” which he cautioned will lead to an environment that is neither good for buyers nor sellers.



<h2 class="wp-block-heading"><a></a>LNG prices</h2>



Birol also said he expected the world to “continue to see high LNG prices,” citing China’s rebounding economy and Europe’s need to import more energy.



According to Birol, LNG prices in the Asia region are five times higher than the last five years on average, and next year will see more challenges.



“Europe wants to buy LNG, China is coming back as a major LNG importer, and there is very little new LNG capacity coming into [the] market,” he attributed as reasons.



Soaring energy prices plaguing global markets could offer much-needed impetus to nudge governments to invest toward moving away from dirty energy.



“We shouldn’t forget that this crisis is giving impetus to many governments around the world to put huge amounts of money [into] clean energy transitions,” Birol said.



He cited the recently enacted Inflation Reduction Act. The White House says the climate investment will reduce costs related to rising temperatures, minimize property damage from sea level rise and other disasters and reduce health impacts such as premature death.

107140063-1666687021932-gettyimages-1434808195-dji_fly_20221019_133740_379_1666206198793_photo_5bb18535-38b

IEA says developing nations are the No. 1 casualty of the energy crisis

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/10/107139689-1666630531316-gettyimages-1436153686-_02a2912_266444c0-848d-4d90-bdf0-71a37e261b66-820x547.jpeg" alt="" class="wp-image-420770" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/10/107139689-1666630531316-gettyimages-1436153686-_02a2912_266444c0-848d-4d90-bdf0-71a37e261b66-820x547.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/107139689-1666630531316-gettyimages-1436153686-_02a2912_266444c0-848d-4d90-bdf0-71a37e261b66-300x200.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/107139689-1666630531316-gettyimages-1436153686-_02a2912_266444c0-848d-4d90-bdf0-71a37e261b66-135x90.jpeg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/107139689-1666630531316-gettyimages-1436153686-_02a2912_266444c0-848d-4d90-bdf0-71a37e261b66-768x512.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/107139689-1666630531316-gettyimages-1436153686-_02a2912_266444c0-848d-4d90-bdf0-71a37e261b66-1536x1024.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/107139689-1666630531316-gettyimages-1436153686-_02a2912_266444c0-848d-4d90-bdf0-71a37e261b66-scaled.jpeg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>Rishi Sunak has been named as the U.K.’s new prime minister and the country’s first leader of color. Jeff J Mitchell | Getty Images News | Getty Images</figcaption></figure>



Britain’s new Prime Minister Rishi Sunak is set to assume office Tuesday and, with it, one of the most daunting political in-trays in modern British history as he attempts to steer the country through an existing cost-of-living crisis, political and social disjuncture, and a looming recession.



The former finance minister was named leader of the Conservative Party — and therefore the country’s next prime minister — on Monday, after his sole competitor, Penny Mordaunt, pulled out of the leadership race moments before the nominations deadline.



The 42-year-old will be officially installed in the role Tuesday morning by King Charles III, whom he will meet at Buckingham Palace after outgoing Prime Minister Liz Truss formally tenders her resignation to the monarch.



Sunak’s officiation is momentous not least in that it marks Downing Street’s first prime minister of color and the U.K.‘s youngest leader of modern times. It is also King Charles’ first swearing in of a new government, coming just seven weeks after his late mother, Queen Elizabeth II, appointed Truss, who resigned 44 days later.



But also because it comes at a time of profound political and economic crisis for the country, with the challenges in Sunak’s in-tray from day one spanning economic instability, soaring inflation, stretched public finances, industrial unrest and party politics.



<h2 class="wp-block-heading" id="h-the-economy-in-focus"><a></a>The economy in focus</h2>



Sunak has so far given little away about his plans once in office, ascending to the top job virtually in silence following a fast-tracked leadership race over the weekend.



However, as a former finance minister who steered Britain through the Covid-19 pandemic, recovering the U.K.’s embattled economy and the country’s status among the investment community is likely to be a top priority.



In a brief speech Monday, Sunak said he was determined to overcome the “profound economic challenge” facing the country and pledged to bring about “stability and unity.”



It is expected that Sunak will retain the current Finance Minister Jeremy Hunt, who is credited with calming markets following the Truss government’s cataclysmic mini-budget, and who is due to set out the country’s revised fiscal strategy Monday.



Economists said that could go some way in reasserting the U.K.’s economic stability, but added that investors will be closely watching the forthcoming budget to see exactly how the pair plan to fill a gaping £40 billion ($45 billion) in the public finances.



“If the fiscal rules are too loose and/or the policies announced to fill the fiscal hole are considered unachievable, this won’t rebuild credibility with investors,” Ruth Gregory, senior U.K. economist at Capital Economics, wrote in a research note Monday.



<h2 class="wp-block-heading"><a></a>Soaring inflation and industrial unrest</h2>



Still, while Sunak is seen as having safer fiscal hands than his predecessor, investors have warned that any relief rally in financial markets may be short-lived, as the new government has a long way to go in resolving the country’s wider economic ills.



The U.K. is the only G-7 economy not to have re-attained its pre-pandemic GDP level by the second quarter of 2022. Indeed, the economy shrank by 0.3% in August, according to the Office for National Statistics, with some ratings agencies predicting the U.K. is already in a full-year recession.



It comes as the U.K. faces a labor crunch and continued industrial unrest, with widespread strikes among postal workers, rail workers and public barristers having led to months of disruption.



Meanwhile, U.K. inflation returned to a 40-year high of 10.1% in September, and energy prices continue to push higher following Russia’s war in Ukraine, with some energy providers warning of possible blackouts this winter.



“The U.K. still faces a storm of economic problems,” Nigel Green, CEO, deVere Group, said in a note Monday. “There’s the brewing deep and painful recession, soaring energy prices, inflation running at more than 10%, labor gaps, ongoing supply chain dramas, and the Bank of England intent on hiking interest rates.”



<h2 class="wp-block-heading"><a></a>Uniting a divided Conservative Party</h2>



Sunak’s task as prime minister is further complicated by deep-rooted divisions within the ruling Conservative Party.



Despite winning significant backing from Tory members of parliament, Sunak is considered a divisive figure within the party, and was largely blamed for the demise of former Prime Minister Boris Johnson, after he quit as his finance minister.



Sunak’s success will therefore closely depend on his ability to galvanize his party and unite them under his new economic and political vision.



Closely watched over the coming days will be Sunak’s appointment of his cabinet, which will provide him an opportunity to overhaul the top ranks of the party and appoint a broad church of ministers from across Tory factions.



The U.K.’s Foreign Secretary James Cleverly told Sky News Tuesday that Sunak’s government should feature the best ministers available — rather than focusing on those who are loyal — as Truss was criticized for doing.



“We have got to have the first 15 on the pitch. I know that Rishi understands that,” Cleverly said.

107139689-1666630531316-gettyimages-1436153686-_02a2912_266444c0-848d-4d90-bdf0-71a37e261b66

UK’s Rishi Sunak inherits in-tray of anarchy as he takes over as PM of country in crisis

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="462" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/10/107139447-1666611117035-gettyimages-1244174478-hauk8820-820x462.jpeg" alt="" class="wp-image-420754" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/10/107139447-1666611117035-gettyimages-1244174478-hauk8820-820x462.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/107139447-1666611117035-gettyimages-1244174478-hauk8820-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/107139447-1666611117035-gettyimages-1244174478-hauk8820-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/107139447-1666611117035-gettyimages-1244174478-hauk8820-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/107139447-1666611117035-gettyimages-1244174478-hauk8820.jpeg 929w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>Rishi Sunak has been named as the U.K.’s new prime minister, after beating competitor Penny Mordaunt in the country’s fast-tracked leadership race. Hollie Adams | Getty Images News | Getty Images</figcaption></figure>



LONDON — Rishi Sunak will be named the U.K.‘s new prime minister, following a fast-tracked Conservative Party leadership race initiated to fill the void left by Liz Truss’ resignation.



Sunak — who will be the country’s first leader of color — won the role of Conservative Party leader after his sole competitor, Penny Mordaunt, dropped out of the race moments before votes from members of parliament (MPs) were due to be announced Monday afternoon.



It follows the withdrawal of former Prime Minister Boris Johnson from the leadership race Sunday.



Sunak does not automatically become prime minister on Monday, as ritual dictates that the outgoing prime minister, in this case Liz Truss, first has to tender their resignation to King Charles. The king will then appoint Sunak in the coming days.



The 42-year-old takes over just seven weeks after placing second to Truss, who stepped down Thursday, bringing to a swift close her 44 days in office — the shortest tenure of any U.K. prime minister.



<h2 class="wp-block-heading" id="h-a-steady-pair-of-fiscal-hands"><a></a>A steady pair of fiscal hands</h2>



The former finance minister steps into the role as the country grapples with a worsening economic picture following the chaotic fallout from Truss’ September mini-budget.



<a href="https://www.cnbc.com/2022/09/27/3-charts-show-the-uks-market-meltdown.html">Stock markets were roiled</a>, sterling plunged and the Bank of England was forced to intervene with an emergency bond-buying operation after Truss and then-Finance Minister Kwasi Kwarteng announced a raft of unfunded tax cuts seen to disproportionately benefit the wealthy, even as the country faces a worsening cost-of-living crisis. 



Sunak, who is credited with steering the U.K. economy through the height of the Covid-19 pandemic, is broadly seen as a safe pair of fiscal hands. Indeed, after being berated by Truss during the race as a voice of Treasury orthodoxy, his critique of the PM’s “unfunded tax cuts” appears to have been vindicated.



Sterling rose to $1.1326 against the dollar shortly after the announcement of Sunak’s win.



<h2 class="wp-block-heading" id="h-a-uniting-force"><a></a>A uniting force?</h2>



As prime minister, Sunak is expected to keep in place the U.K.’s newly-installed Finance Minister Jeremy Hunt, signaling some continuity following a turbulent few months for the U.K. government.



However, some have questioned his ability to reunite the splintered Conservative Party, with many MPs considering him culpable for the downfall of Boris Johnson, who was ousted from office in scandal three months ago.



Johnson, who pulled out of the leadership race Sunday, said in a statement that he had attempted to form a unity ticket with both Sunak and Mordaunt for the sake of the “national interest,” but both had resisted his offer.



Meantime, Sunak — an Oxford educated former investment banker — has been criticized as unrelatable, particularly following controversy over his wife’s tax status, with some questioning his ability to lead the country through its cost-of-living crisis.

107139447-1666611117035-gettyimages-1244174478-hauk8820

Rishi Sunak to be Britain’s new prime minister as rival Penny Mordaunt drops out of race

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/10/107137974-1666270005710-gettyimages-1244099225-ln1_3797-820x547.jpeg" alt="" class="wp-image-420655" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/10/107137974-1666270005710-gettyimages-1244099225-ln1_3797-820x547.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/107137974-1666270005710-gettyimages-1244099225-ln1_3797-300x200.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/107137974-1666270005710-gettyimages-1244099225-ln1_3797-135x90.jpeg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/107137974-1666270005710-gettyimages-1244099225-ln1_3797-768x512.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/107137974-1666270005710-gettyimages-1244099225-ln1_3797-1536x1024.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/107137974-1666270005710-gettyimages-1244099225-ln1_3797-scaled.jpeg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>Prime Minister Liz Truss announces her resignation at 10 Downing Street on October 20, 2022 in London, England. Leon Neal | Getty Images</figcaption></figure>



LONDON — U.K. Prime Minister Liz Truss resigned Thursday following a failed tax-cutting budget that rocked financial markets and which led to a revolt within her own Conservative Party.



Truss said in a statement outside Downing Street: “We set out a vision for a low-tax, high-growth economy that would take advantage of Brexit.”



“I recognize though, given the situation, I cannot deliver the mandate on which I was elected by the Conservative Party. I have therefore spoken to His Majesty the King to announce that I am resigning as leader of the Conservative Party.”



Her resignation follows a meeting with Graham Brady, the Conservative politician that is in charge of leadership votes and reshuffles. Brady chairs the 1922 Committee — the group of Conservative MPs without ministerial positions who can submit letters of no confidence in the prime minister.



Just before the meeting, a Downing Street spokesperson told reporters Truss wanted to stay in office.



During the hour the meeting lasted, the number of MPs publicly calling for Truss to step down reached 17. The number who have written letters to Brady expressing no confidence in the prime minister was reported to be over 100 by Thursday.



Truss said outside Downing Street that she and Brady had agreed the party would complete a leadership election within the next week.



The pound was up 0.4% on the day against the dollar shortly after the announcement, trading at $1.1273, briefly touching a session high. It remains at the level it was on Sept. 22, before Truss’ market-moving budget. The yields on 10-year and five-year gilts (U.K. sovereign bonds) we both down by around 5 basis points after Truss’ brief speech.



Opposition parties Labour, the Scottish National Party and the Liberal Democrats called for an immediate general election on Thursday afternoon. Labour leader Keir Starmer said: “The Conservative Party has shown it no longer has a mandate to govern.”



<h2 class="wp-block-heading" id="h-controversial-mini-budget"><a></a>Controversial ‘mini budget’</h2>



Truss was appointed prime minister on Sept. 6, just two days before Queen Elizabeth II passed away after 70 years on the throne.



On Sept. 23, Truss’ finance minister, Kwasi Kwarteng, announced a so-called “mini-budget” which began a turbulent period for U.K. bond markets which balked at the debt-funded tax cuts he put forward. Most of the policies were reversed three weeks later by the second finance minister, Jeremy Hunt.



Truss beat Rishi Sunak to become leader of the Conservative Party following the resignation of Boris Johnson on July 7. Sunak is now one of the favorites to replace Truss, along with Hunt, another leadership contender Penny Mordaunt, Defense Minister Ben Wallace and former Prime Minister Boris Johnson.



The resignation leaves the status of the Conservatives’ expected budget update on Oct. 31 uncertain, but Truss said the leadership handover would “ensure we remain on a path to deliver our fiscal plans.”

107137974-1666270005710-gettyimages-1244099225-ln1_3797

UK Prime Minister Liz Truss resigns after failed budget and market turmoil

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/10/106871832-1619028366472-gettyimages-1231759152-RAFAPRESS_16032021-7782-820x461.jpeg" alt="" class="wp-image-420615" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/10/106871832-1619028366472-gettyimages-1231759152-RAFAPRESS_16032021-7782-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/106871832-1619028366472-gettyimages-1231759152-RAFAPRESS_16032021-7782-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/106871832-1619028366472-gettyimages-1231759152-RAFAPRESS_16032021-7782-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/106871832-1619028366472-gettyimages-1231759152-RAFAPRESS_16032021-7782-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/106871832-1619028366472-gettyimages-1231759152-RAFAPRESS_16032021-7782-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/106871832-1619028366472-gettyimages-1231759152-RAFAPRESS_16032021-7782.jpeg 1600w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>In this photo illustration the Netflix logo in the App Store seen displayed on a smartphone screen. Rafael Henrique | SOPA Images | LightRocket | Getty Images</figcaption></figure>



Netflix&nbsp;shares skyrocketed more than 14% after the bell Tuesday as the company posted better-than-expected results on the top and bottom lines. The streamer also reported the addition of 2.41 million net global subscribers, more than doubling the adds the company had projected a quarter ago.



Additionally, Netflix will begin to crack down on password sharing next year, opting to allow people who have been borrowing accounts to create their own. The company will also allow people sharing their accounts to create sub-accounts to pay for friends or family to use theirs.



Here are the results:



<ul class="wp-block-list"><li>EPS:&nbsp;$3.10 vs.&nbsp;$2.13 per share, according to Refinitiv.</li><li>Revenue:&nbsp;$7.93 billion vs. $7.837 billion, according to Refinitiv survey.</li><li>Expected global paid net subscribers:&nbsp;Addition of 2.41 million subscribers vs. an addition of 1.09 million subscribers, according to StreetAccount estimates.</li></ul>



The majority of Netflix’s net subscriber growth during the quarter came from the Asia-Pacific region, which accounted for 1.43 million subscribers. The U.S.-Canada region had the smallest growth of Netflix’s regions, contributing just 100,000 net subscribers.



“We’re still not growing as fast as we’d like,” Spencer Neumann, Netflix’s chief financial officer, said during the company’s earnings call. “We are building momentum, we are pleased with our progress, but we know we still have a lot more work to do.”



Starting next quarter, Netflix will no longer provide guidance for its paid memberships but will continue to report those numbers during its quarterly earnings release.



Netflix forecast it would add 4.5 million subscribers during its fiscal first quarter and said it expects revenue of $7.8 billion,&nbsp;largely due to currency pressures overseas.



The company touted shows and movies such as “Stranger Things” season four, “The Gray Man” and “Purple Hearts” as hits that helped move the needle during the third quarter.



It also teased the addition of its new lower-priced ad-supported plan, which launches in 12 countries in November.



The streamer said it was “very optimistic” about its new advertising business. While it doesn’t expect the new tier will add a material contribution to its fourth-quarter results, it foresees membership growing gradually over time. Its current forecast for subscriber growth is based on its upcoming content slate and the typical seasonality that comes during the last three months of the year.



“After a challenging first half, we believe we’re on a path to reaccelerate growth,” the company said in a statement Tuesday. “The key is pleasing members. It’s why we’ve always focused on winning the competition for viewing every day. When our series and movies excite our members, they tell their friends, and then more people watch, join and stay with us.”

106871832-1619028366472-gettyimages-1231759152-RAFAPRESS_16032021-7782

Netflix adds more than 2.4 million subscribers, reveals details about password-sharing crackdown

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="546" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/10/107084717-16570507572022-07-05t191321z_273521157_rc2v5v9hednt_rtrmadp_0_britain-politics-1-820x546.jpeg" alt="" class="wp-image-420611" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/10/107084717-16570507572022-07-05t191321z_273521157_rc2v5v9hednt_rtrmadp_0_britain-politics-1-820x546.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/107084717-16570507572022-07-05t191321z_273521157_rc2v5v9hednt_rtrmadp_0_britain-politics-1-300x200.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/107084717-16570507572022-07-05t191321z_273521157_rc2v5v9hednt_rtrmadp_0_britain-politics-1-135x90.jpeg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/107084717-16570507572022-07-05t191321z_273521157_rc2v5v9hednt_rtrmadp_0_britain-politics-1-768x512.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/107084717-16570507572022-07-05t191321z_273521157_rc2v5v9hednt_rtrmadp_0_britain-politics-1-1536x1023.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/107084717-16570507572022-07-05t191321z_273521157_rc2v5v9hednt_rtrmadp_0_britain-politics-1-scaled.jpeg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>Photo: via CNBC</figcaption></figure>



LONDON — The consumer price index rose 10.1% in September, according to estimates published Wednesday by the Office for National Statistics, just exceeding a consensus forecast among economists polled by Reuters.



Reuters estimated an increase of 10% for September. The figure for September matches the 40-year high British inflation reached in July.



The rate rose in the year to September 2022 as the country’s cost-of-living crisis continues to hammer households and businesses ahead of a tough winter. Inflation unexpectedly dipped to 9.9% in August, down from 10.1% in July, on the back of a fuel price decline.



Increasing food, transport and energy prices were the biggest contributing factors to inflation, the ONS said. Food was up 14.6% year-on-year, transport was up 10.9% compared to last year, while the price of furniture and household goods rose 10.8%.



Sterling fell against the dollar following the news, trading at $1.1289, down from $1.1330.



The inflation data will also impact the Bank of England’s approach for the near term, just as the Bank plans to sell off some of its government bonds, known as gilts, from Nov. 1.



Britain’s Finance Minister Jeremy Hunt said in a statement that “help for the most vulnerable” will be a priority as the U.K. weathers high inflation rates, along with “delivering wider economic stability and driving long-term growth that will help everyone.”



September’s inflation rate highlights the severity of the U.K.’s inflation crisis, and comes as the country weathers a period of economic volatility.



On Monday the new British Finance Minister Jeremy Hunt reversed the majority of the tax cuts introduced by his predecessor, Kwasi Kwarteng, on Sept. 23, and Prime Minister Liz Truss apologized for “mistakes” that had caused severe market turbulence.



Questions are now being raised over how long Truss will remain in office.

107084717-16570507572022-07-05t191321z_273521157_rc2v5v9hednt_rtrmadp_0_britain-politics-1

UK inflation moves back up to 40-year high as Brits battle cost-of-living crisis

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/10/GettyImages-1243769107-820x547.jpg" alt="" class="wp-image-420565" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/10/GettyImages-1243769107-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/GettyImages-1243769107-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/GettyImages-1243769107-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/GettyImages-1243769107-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/GettyImages-1243769107-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/GettyImages-1243769107-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>PRAGUE, CZECH REPUBLIC &#8211; OCTOBER 06: British Prime Minister Liz Truss makes a press statement after a meeting of the European Political Community at Prague Castle on October 6, 2022 in Prague, Czech Republic. Leaders from around 44 countries are gathering on Thursday to launch a &#8220;European Political Community&#8221; aimed at boosting security and economic prosperity across the continent, with Russia the one major European power not invited. (Photo by Alastair Grant &#8211; Pool/Getty Images)</figcaption></figure>



LONDON — U.K. Prime Minister Liz Truss is facing calls to resign from within her own Conservative Party just six weeks after entering Downing Street.



Truss and her former Finance Minister Kwasi Kwarteng announced a fiscal package – a so-called “mini-budget” – on Sept. 23. The measures triggered market turmoil, from a plunging pound to pension panic, and a rare public rebuke by the International Monetary Fund.



Piece by piece, the plans have been tweaked and trashed – including reversing plans to scrap an increase in corporation tax, axing plans to abolish the top income tax bracket, and shortening the energy guarantee, designed to subsidize consumer and business energy bills, from two years to just six months.



The latest plans were announced Monday by Jeremy Hunt, just three days into his tenure as finance minister. He’s the fourth person to fill the position since July.



Truss sacked Hunt’s predecessor on Friday, and now lawmakers from across the political spectrum are calling for her to follow him out the door.



Elected members of Truss’ own party are openly calling for her to quit, while up to 100 members of the party are believed to have submitted letters of no confidence in the prime minister, according to reports by the i newspaper.



Angela Richardson, Conservative MP for Guildford, said it was “no longer tenable” for Truss to remain as prime minister, speaking on Times Radio on Monday, while Jamie Wallis, Conservative MP for Bridgend, wrote to the prime minister telling her to resign.



“I ask you to stand down as Prime Minister as I believe you no longer hold the confidence of the country or the parliamentary party,” Wallis’ letter said. “It is the right thing to do to ensure the stability, security and prosperity of the people to whom we owe everything.”



Leader of the opposition Labour Party, Keir Starmer said via Twitter on Saturday, “The Tories no longer have a mandate from the British people.”



Labour has also called for Truss to face scrutiny from lawmakers after she took only four questions from reporters at a news conference on Friday.



“Liz Truss must at least take [questions] from MPs representing the families whose livelihoods she’s putting at risk,” Starmer said.



Polling from Opinium Research for the Trades Union Congress shows Labour is set for a landslide victory at the next election, according to The Guardian.



It isn’t just current members of parliament who are already calling time on Truss’ leadership.



Former Conservative Finance Minister George Osborne said the “most likely outcome is that she falls before Christmas,” speaking on “The Andrew Neil Show” on Channel 4 on Sunday.



<h3 class="wp-block-heading" id="h-further-instability-lies-ahead">Further instability lies ahead</h3>



Truss’ policies – and their reversals – have ricocheted through the finance world, leaving banks questioning the prime minister’s future.



“It is not easy to see how Truss – whose personal mandate is now in tatters – can continue as PM for long,” analysts at Berenberg Bank said.



“We would not be surprised if Conservative MPs pressure Truss to resign in [the] coming days. With more than two years to go until a general election needs to be held (January 2024), the Conservative Party may decide its best shot to stay in power is to quickly move on with a new leader,” analysts at Berenberg said.



Citi went further and questioned whether Truss’ party was capable of navigating and surviving the current economic crisis.



“The fundamental question here is whether any Conservative leader can offer credible economic direction. We are increasingly unsure,” an analysis note from the bank said.



“The implication is PM Truss now faces a squeeze between her Parliamentary party on the one hand and markets on the other … We believe further market instability likely lies ahead,” it said.



The Cabinet Office did not immediately respond to a request for comment.

European Political Community (EPC) Holds Inaugural Meeting

UK Prime Minister Liz Truss faces serious pressure to resign after failed budget

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/10/BH5KCS7NGJON7HXAYREJOLN3UA-820x547.jpg" alt="" class="wp-image-420549" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/10/BH5KCS7NGJON7HXAYREJOLN3UA-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/BH5KCS7NGJON7HXAYREJOLN3UA-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/BH5KCS7NGJON7HXAYREJOLN3UA-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/BH5KCS7NGJON7HXAYREJOLN3UA-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/BH5KCS7NGJON7HXAYREJOLN3UA-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/BH5KCS7NGJON7HXAYREJOLN3UA.jpg 1920w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>FILE PHOTO &#8211; Organization of the Petroleum Exporting Countries (OPEC) Secretary-General Haitham al-Ghais speaks during a meeting for the 62nd anniversary of the OPEC, at the Miraflores Palace, in Caracas, Venezuela September 14, 2022. REUTERS/Leonardo Fernandez Viloria</figcaption></figure>



Oct 16 (Reuters)&nbsp;&#8211;&nbsp;OPEC Secretary General Haitham al-Ghais said on Sunday that&nbsp;the group, alongside other producers that form the OPEC+ alliance,&nbsp;took purely technical decisions and that oil output cuts were a pre-emptive measure.



Speaking from Algeria, Ghais also said a slew of statements&nbsp;from producer nations in&nbsp;support of the Oct. 5 decision to cut oil output by 2 million barrels per day (bpd) were a measure of its effectiveness.



&#8220;We welcome these statements and they are proof that the decision was correct,&#8221; he told reporters.



Asked about whether there would be a revision of the decision should market conditions change in the first six months of next year, Ghais said that OPEC+ decisions were always subject to revision.



&#8220;The OPEC+ agreements always have flexibility &#8230; the ministers are always ready to take a plane and come to Vienna.&#8221;



(Reporting by Nayera Abdallah, Ahmed Tolba, and Yasmin Hussin; editing by John Stonestreet)

BH5KCS7NGJON7HXAYREJOLN3UA

OPEC Sec-Gen says output cuts were pre-emptive

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="384" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/10/GettyImages-56969436-820x384.jpg" alt="" class="wp-image-420545" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/10/GettyImages-56969436-820x384.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/GettyImages-56969436-300x140.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/GettyImages-56969436-160x75.jpg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/GettyImages-56969436-768x359.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/GettyImages-56969436-1536x719.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/GettyImages-56969436-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>BEIJING, CHINA &#8211; MARCH 1: (CHINA OUT) An armed police officer walks below red flags flying over Tiananmen Square March 1, 2005 in Beijing, China. The National Committee of the Chinese People&#8217;s Political Consultative Conference (CPPCC), China&#8217;s top political advisory body, is due to hold its fourth session on March 3, and the fourth session of the 10th National People&#8217;s Congress (NPC) will open on March 5 in Beijing. (Photo by China Photos/Getty Images)</figcaption></figure>



BEIJING — Chinese President Xi Jinping affirmed Sunday the country’s recent shift away from rapid growth and greater focus on national self-sufficiency, especially in technology.



Xi was speaking at the opening ceremony of the ruling Communist Party of China’s 20th National Congress, held once every five years. His same speech in 2017 had begun with much discussion of China’s economic growth.



In contrast, Xi on Sunday began his remarks with greater emphasis on China’s “national rejuvenation” and opposition to Taiwan independence.



Xi briefly mentioned in that opening section how the country’s Covid policy has achieved “positive results” in coordination with economic development. He did not state whether the policy would end or continue.



China’s Covid controls helped the country quickly return to growth in 2020. But the controversial “zero-Covid” policy has become increasingly stringent this year, prompting investment banks to repeatedly slash growth estimates for China.



Looking ahead, Xi emphasized the country needed a solid technological foundation in order to achieve its modernization goals. Some areas he mentioned included boosting the quality of China’s manufactured products, the country’s capabilities in space transportation and digital development.



“Without solid material and technological foundations we cannot hope to build a great modern socialist country,” Xi said in Chinese, according to an official English translation.



Since the party’s 19th National Congress, the U.S. has increased its pressure on China. The Biden administration has called China a strategic competitor and this month announced new export controls on semiconductors — in an effort to maintain a U.S. edge in tech over China.



Xi did not mention specific countries in his nearly two-hour-long speech.



However, he dedicated one section to stating how the country would emphasize education for developing its own talent in science, and accelerate the launch of national projects with “strategic” and “long-term importance.” He did not provide further details.



He also did not leave out growth plans altogether. Xi said the country would aim to boost productivity, make its supply chains more resilient and expand overall economic output.



<h2 class="wp-block-heading" id="h-high-quality-development"><a></a>‘High-quality development’</h2>



The speech in general laid out a framework for Xi’s near-term plan for China, which he said is to “basically realize socialist modernization” between the years 2020 and 2035.



He cast prior success — in building the world’s second-largest economy and becoming a “major destination for global investment” — as achievements already in the books.



The Chinese Communist Party has already announced 100-year development goals — to “build a moderately prosperous society in all respects” by 2021 and “build a modern socialist country that is prosperous, strong, democratic, culturally advanced and harmonious” by 2049.



Xi’s list of “essential requirements” for Chinese modernization began with upholding the leadership of the Communist Party of China, followed by “high-quality development.”



The list included achieving common prosperity — moderate wealth for all rather than just a few — and “harmony between humanity and nature.”



China’s Xi previously announced plans to reach peak carbon emissions by 2030, and carbon neutrality in 2060.



Analysts have attributed China’s renewed emphasis on common prosperity last year to a crackdown on internet tech companies and after-school education businesses. Those measures, on top of China’s Covid controls, have made foreign investors increasingly cautious about the potential growth opportunities in the country.



On Sunday, Xi spoke of promoting a “healthy” online environment. He said the country would encourage getting rich through hard work and expand its middle class. He indicated China would standardize an unspecified mechanism for wealth accumulation.



He did not specifically address China’s ongoing troubles in real estate, but repeated prior statements about speeding up measures to encourage both house purchases and rentals.



Xi warned of “dangerous storms” on the journey ahead, and called for commitment to the party’s leadership, “reform and opening up” and other principles.



After leading the Chinese Communist Party and the country over the past decade, Xi is widely expected to further consolidate his power at the party’s 20th National Congress. Next weekend, the names of the new core team around Xi are due to be announced.

International

U.N. chief urges focus on ambition, trust at Egypt climate summit

Bank of England raises its benchmark rate by 75 basis points, its biggest hike in 33 years

Fed approves 0.75-point hike to take rates to highest since 2008 and hints at change in policy ahead

The Fed is expected to raise interest rates by three-quarters of a point and then signal it could slow the pace

China’s economy could rebound soon, but longer-term growth will be ‘deeply challenging’

Asia would be the biggest loser if the global economy splits up, IMF warns

ECB hikes rates by 75 basis points and scales back support for European banks

Markets look for answers from the European Central Bank as it preps for a jumbo rate hike

IEA says developing nations are the No. 1 casualty of the energy crisis

UK’s Rishi Sunak inherits in-tray of anarchy as he takes over as PM of country in crisis

Rishi Sunak to be Britain’s new prime minister as rival Penny Mordaunt drops out of race

UK Prime Minister Liz Truss resigns after failed budget and market turmoil

Netflix adds more than 2.4 million subscribers, reveals details about password-sharing crackdown

UK inflation moves back up to 40-year high as Brits battle cost-of-living crisis

UK Prime Minister Liz Truss faces serious pressure to resign after failed budget

OPEC Sec-Gen says output cuts were pre-emptive

China’s Xi downplays need for rapid growth, proclaims Covid achievements

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International

U.N. chief urges focus on ambition, trust at Egypt climate summit

Bank of England raises its benchmark rate by 75 basis points, its biggest hike in 33 years

Fed approves 0.75-point hike to take rates to highest since 2008 and hints at change in policy ahead

The Fed is expected to raise interest rates by three-quarters of a point and then signal it could slow the pace

China’s economy could rebound soon, but longer-term growth will be ‘deeply challenging’

Asia would be the biggest loser if the global economy splits up, IMF warns

ECB hikes rates by 75 basis points and scales back support for European banks

Markets look for answers from the European Central Bank as it preps for a jumbo rate hike

IEA says developing nations are the No. 1 casualty of the energy crisis

UK’s Rishi Sunak inherits in-tray of anarchy as he takes over as PM of country in crisis

Rishi Sunak to be Britain’s new prime minister as rival Penny Mordaunt drops out of race

UK Prime Minister Liz Truss resigns after failed budget and market turmoil

Netflix adds more than 2.4 million subscribers, reveals details about password-sharing crackdown

UK inflation moves back up to 40-year high as Brits battle cost-of-living crisis

UK Prime Minister Liz Truss faces serious pressure to resign after failed budget

OPEC Sec-Gen says output cuts were pre-emptive

China’s Xi downplays need for rapid growth, proclaims Covid achievements

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