<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/07/PKJQ7JMDLFNENCLG7LH25JBXNY-1-820x547.jpg" alt="" class="wp-image-426016" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/07/PKJQ7JMDLFNENCLG7LH25JBXNY-1-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/07/PKJQ7JMDLFNENCLG7LH25JBXNY-1-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/07/PKJQ7JMDLFNENCLG7LH25JBXNY-1-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2023/07/PKJQ7JMDLFNENCLG7LH25JBXNY-1-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/07/PKJQ7JMDLFNENCLG7LH25JBXNY-1-1536x1025.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2023/07/PKJQ7JMDLFNENCLG7LH25JBXNY-1-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">A labourer dehusks rice before loading it in bags at a processing unit in the town of Fanaye, on the outskirts of Saint Louis, Senegal September 13, 2022. REUTERS/Zohra Bensemra</figcaption></figure>



SINGAPORE, May 2 (Reuters)&nbsp;&#8211;&nbsp;Global rice supplies have stabilised after last year&#8217;s rally, although the market remains vulnerable to risks from dry weather caused by the El Nino, a senior executive at commodity merchant Louis Dreyfus Co (LDC) said.



Rice prices in key Asian export hubs&nbsp;RI-THBKN5-P1,&nbsp;RI-VNBKN5-P1&nbsp;have eased in recent weeks after climbing last year to their highest&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL4N3AB12M&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">since 2008</a>&nbsp;following an export ban by India, the world&#8217;s biggest shipper.



&#8220;It does seem like we went through a very tight situation. You had the export ban in India and Indonesia came to buy a very large volume of rice,&#8221; Rubens Marques, LDC&#8217;s chief executive for South and Southeast Asia, said in an interview.



&#8220;The combination of these two factors, I think, was too much for the market to handle, which ended up pushing prices up. It does seem like the supply and prices have stabilised.&#8221;



India&#8217;s July export ban ended a decade of price stability for the world&#8217;s most-widely consumed staple and heightened food inflation pressure.



Marques said rice supplies remain vulnerable to adverse weather.



&#8220;We cannot deny that climate change has had an impact and may still have an impact in terms of having this El Nino and having drier than expected weather,&#8221; he said.



The&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL2N3GY40S&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">El Nino weather phenomenon</a>&nbsp;is a warming of the Pacific Ocean waters along the equator off the coast of South America. The pattern typically causes hot,&nbsp;dry weather in Asia, impacting vast swathes of rice growing regions.



The market is focusing in the coming months on production from irrigated crops.



&#8220;We need to keep an eye on the levels of reservoirs in some of the key producing countries. In May, June, we should know a bit more about what is going to happen with the irrigated crops,&#8221; he said.



LDC, among the biggest rice merchants, supplies buyers in Asia, Africa and the Middle East.



WEATHER RISK



The unpredictability of weather patterns fuelled by climate change is leading to further supply disruption.



&#8220;I think the biggest thing about El Nino, and it&#8217;s not talked enough about, is the unpredictability of the weather events, he said.



&#8220;The weather events have always been there, but it&#8217;s now how unpredictable it has become and how difficult it has become for the trade to basically solve those imbalances,&#8221; he said.



Last year&#8217;s price rally led to lower rice demand from some countries.



&#8220;You have to keep in mind that a lot of the rice in India ends up in Africa, which is a very price-sensitive market,&#8221; he said. &#8220;And on the way up, I think the market has done its job of rationing demand.&#8221;



India&#8217;s export prices fell to their lowest in over three months last week on subdued demand and ample supplies, while Thailand&#8217;s prices remained largely flat.&nbsp;RIC/AS



For the wheat market, the coming months are crucial for northern hemisphere crops, Marques said.



Benchmark prices&nbsp;Wv1&nbsp;climbed nearly 8% in April, following dryness in parts of Russia and the United States.



&#8220;I don&#8217;t know how much weather premium is already priced in,&#8221; he said. &#8220;There&#8217;s upside potential if you see less than expected rains in the northern hemisphere.&#8221;



Chicago wheat futures edged higher on Thursday as traders assessed whether rainfall in U.S. and Russian crop areas was enough to alleviate dryness that threatens yields.&nbsp;GRA/



(Reporting by Naveen Thukral and Tony Munroe; Editing by Christian Schmollinger)

PKJQ7JMDLFNENCLG7LH25JBXNY-1

Global rice market stable but weather risk remains, Louis Dreyfus exec says

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="486" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/05/Carbon-credit-standards-approval-extended-to-98-of-market-820x486.jpg" alt="" class="wp-image-482229" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/05/Carbon-credit-standards-approval-extended-to-98-of-market-820x486.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/05/Carbon-credit-standards-approval-extended-to-98-of-market-300x178.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/05/Carbon-credit-standards-approval-extended-to-98-of-market-152x90.jpg 152w, https://cms.cnbcafrica.com/wp-content/uploads/2024/05/Carbon-credit-standards-approval-extended-to-98-of-market-768x455.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/05/Carbon-credit-standards-approval-extended-to-98-of-market-1536x911.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/05/Carbon-credit-standards-approval-extended-to-98-of-market-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">FILE PHOTO: The sun shines above high tension power lines in an industrial area of west Sydney July 12, 2011. REUTERS/Daniel Munoz</figcaption></figure>



LONDON, May 2 (Reuters)&nbsp;&#8211;&nbsp;Five of the world&#8217;s largest carbon credit programmes have now been given initial approval by a body tasked with raising standards in the market for carbon offsets, where some of the biggest buyers include Microsoft, Salesforce and Amazon.



Integrity Council for Voluntary Carbon Markets (ICVCM) has added Verra and Architecture for REDD+ Transactions (ART) to its list which meet its Core-Carbon Principles rule book.



Allowing companies to buy credits from projects that lock carbon away, such as mangrove restoration, and use them to offset their emissions is seen as an important way to help developing countries protect the environment.



But growth has been held back by challenges including concerns over the origination, credibility and efficacy of certain credits, and the claims made about buying them.



ICVCM, which is backed by Bezos Earth Fund and Children&#8217;s Investment Fund Foundation, is working to address these.



Pedro Barata, co-chair of the expert panel for ICVCM told Reuters that its standards make a compelling case that companies can invest in &#8220;high quality&#8221; carbon credits, without needing to worry about accusations of so-called greenwashing.



Adding Verra and ART to ICVCM&#8217;s approved list, which includes ACR, CAR and Gold Standard, means its governance and transparency standards now cover programmes which have a 98% share of the market, based on carbon credits retired in 2023.



It marks the first step in a process that will see Core Carbon Principle-labelled credits issued in the market and comes as part of efforts to scale-up the voluntary market for buying and selling carbon offsets by setting rules for what high quality credits and appropriate offsetting activities look like.



ICVCM&#8217;s next step is its ongoing assessment of the different methodologies carbon crediting programmes use to produce credits which range from afforestation to cooking stoves.



It is working through 100 such methodologies and expects to announce its first decisions in June.



(Reporting by Virginia Furness; Editing by Alexander Smith)

The sun shines above high tension power lines in an industrial area of west Sydney

Carbon credit standards approval extended to 98% of market

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/05/OECD-upgrades-global-growth-outlook-as-U.S.-outperforms-820x547.jpg" alt="" class="wp-image-482163" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/05/OECD-upgrades-global-growth-outlook-as-U.S.-outperforms-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/05/OECD-upgrades-global-growth-outlook-as-U.S.-outperforms-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/05/OECD-upgrades-global-growth-outlook-as-U.S.-outperforms-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2024/05/OECD-upgrades-global-growth-outlook-as-U.S.-outperforms-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/05/OECD-upgrades-global-growth-outlook-as-U.S.-outperforms-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/05/OECD-upgrades-global-growth-outlook-as-U.S.-outperforms-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">File photo: People cross the intersection of SW 8th Steet and Brickell Ave. at the Brickell neighborhood, known as the financial district, in Miami, Florida, U.S., February 23, 2023. REUTERS/Marco Bello/File photo</figcaption></figure>



PARIS, May 2 (Reuters)&nbsp;&#8211;&nbsp;The global economy is growing faster than expected only a few months ago thanks to resilient U.S. activity while inflation is converging more quickly than expected with central banks&#8217; targets, the OECD said on Thursday, upgrading its outlook.



The global economy would maintain the 3.1% growth rate seen last year and pick up marginally to 3.2% next year, the Organisation for Economic Cooperation and Development said, upgrading forecasts dating from February for growth of 2.9% this year and 3% in 2025.



A faster than expected fall in inflation set the stage for major central banks to begin rate cuts in the second half of the year while also fuelling gains in consumers&#8217; incomes, the OECD said in its latest Economic Outlook.



However, the speed of recoveries diverged widely, the OECD warned, saying lingering sluggishness in Europe and Japan was being offset by the United States, whose growth forecast was hiked to 2.6% this year from a previous estimate of 2.1%.



Next year U.S. growth was expected to cool to a rate of 1.8%, up slightly from 1.7% in February.



Boosted by fiscal stimulus, China&#8217;s economy was also expected to grow faster than expected with its growth now forecast at 4.9% in 2024 and 4.5% in 2025, up from 4.7% and 4.2% respectively in February.



While weakness in Germany would continue to weigh on the broader euro zone, the bloc&#8217;s growth was projected to pick up from 0.7% this year to 1.5% next year as lower inflation boosts households&#8217; purchasing power and paves the way for rate cuts. The OECD had previously forecast euro zone growth of 0.6% this year and 1.3% in 2025.



Britain&#8217;s outlook was one of the few to be downgraded with the OECD now forecasting only 0.4% this year compared with 0.7% previously. As interest rates start coming lower from the third quarter of this year, UK growth was seen picking up to 1% in 2025, compared with 1.2% expected in February.



Meanwhile, in Japan, income gains, easy monetary policy and temporary tax cuts would help its growth rate to accelerate from 0.5% in 2024 to 1.1% in 2025, compared with forecasts of 1% for both years previously, the OECD said.



(Reporting by Leigh Thomas; editing by Philippa Fletcher)

People cross the intersection of SW 8th Steet and Brickell Ave. at the Brickell neighborhood, known as the financial district, in Miami

OECD upgrades global growth outlook as U.S. outperforms

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="462" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/04/107383266-1709738325082-gettyimages-2055746202-AFP_34KV84R-820x462.jpeg" alt="" class="wp-image-479878" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/04/107383266-1709738325082-gettyimages-2055746202-AFP_34KV84R-820x462.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/107383266-1709738325082-gettyimages-2055746202-AFP_34KV84R-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/107383266-1709738325082-gettyimages-2055746202-AFP_34KV84R-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/107383266-1709738325082-gettyimages-2055746202-AFP_34KV84R-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/107383266-1709738325082-gettyimages-2055746202-AFP_34KV84R.jpeg 929w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">US Federal Reserve Board Chairman Jerome Powell arrives to testify at a House Financial Services Committee hearing on the “Federal Reserve’s Semi-Annual Monetary Policy Report,” on Capitol Hill in Washington, DC, March 6, 2024.  Mandel Ngan | Afp | Getty Images</figcaption></figure>



With the economy humming along and the stock market, despite some recent twists and turns, hanging in there pretty well, it’s a tough case to sell that higher interest rates are having a substantially negative impact on the economy.



So what if policymakers just decide to keep rates where they are for even longer, and go through all of 2024 without cutting?



It’s a question that, despite the current conditions, makes Wall Street shudder and Main Street queasy as well.



“When rates start climbing higher, there has to be an adjustment,” said Quincy Krosby, chief global strategist at LPL Financial. “The calculus has changed. So the question is, are we going to have issues if rates remain higher for longer?”



The higher-for-longer stance was not what investors were expecting at the beginning of 2024, but it’s what they have to deal with now as inflation has proven stickier than expected, hovering around 3% compared with the Federal Reserve’s 2% target.



Recent statements by Fed Chair Jerome Powell and other policymakers have cemented the notion that rate cuts aren’t coming in the next several months. In fact, there even has been talk about the potential for an additional hike or two ahead if inflation doesn’t ease further.



That leaves big questions over when exactly monetary policy easing will come, and what the central bank’s position to remain on hold will do to both financial markets and the broader economy.



Krosby said some of those answers will come soon as the current earnings season heats up. Corporate officers will provide key details beyond sales and profits, including the impact that interest rates are having on profit margins and consumer behavior.



“If there’s any sense that companies have to start cutting back costs and that leads to labor market trouble, this is the path of a potential problem with rates this high,” Krosby said.



But financial markets, despite a recent 5.5% sell-off for the S&amp;P 500, have largely held up amid the higher-rate landscape. The broad market, large-cap index is still up 6.3% year to date in the face of a Fed on hold, and 23% above the late October 2023 low.



<h2 class="wp-block-heading" id="h-higher-rates-can-be-a-good-sign"><a></a>Higher rates can be a good sign</h2>



History tells differing stories about the consequences of a hawkish Fed, both for markets and the economy.



Higher rates are generally a good thing so long as they’re associated with growth. The last period when that wasn’t true was when then-Fed Chair Paul Volcker strangled inflation with aggressive hikes that ultimately and purposely tipped the economy into recession.



There is little precedent for the Fed to cut rates in robust growth periods such as the present, with gross domestic product expected to accelerate at a 2.4% annualized pace in the first quarter of 2024, which would mark the seventh consecutive quarter of growth better than 2%. Preliminary first-quarter GDP numbers are due to be reported Thursday.



For the past several decades, higher rates have not been linked to recessions.



On the contrary, Fed chairs have often been faulted for keeping rates too low for too long, leading to the dot-com bubble and subprime market implosions that triggered two of the three recessions this century. In the other one, the Fed’s benchmark funds rate was at just 1% when the Covid-induced downturn occurred.



In fact, there are arguments that too much is made of Fed policy and its broader impact on the $27.4 trillion U.S. economy.



“I don’t think that active monetary policy really moves the economy nearly as much as the Federal Reserve thinks it does,” said David Kelly, chief global strategist at J.P. Morgan Asset Management.



Kelly points out that the Fed, in the 11-year run between the financial crisis and the Covid pandemic, tried to bring inflation up to 2% using monetary policy and mostly failed. Over the past year, the pullback in the inflation rate has coincided with tighter monetary policy, but Kelly doubts the Fed had much to do with it.



Other economists have made a similar case, namely that the main issue that monetary policy influences — demand — has remained robust, while the supply issue that largely operates outside the reach of interest rates has been the principle driver behind decelerating inflation.



Where rates do matter, Kelly said, is in financial markets, which in turn can affect economic conditions.



“Rates too high or too low distort financial markets. That ultimately undermines the productive capacity of the economy in the long run and can lead to bubbles, which destabilizes the economy,” he said.



“It’s not that I think they’ve set rates at the wrong level for the economy,” he added. “I do think the rates are too high for financial markets, and they ought to try to get back to normal levels — not low levels, normal levels — and keep them there.”



<h2 class="wp-block-heading"><a></a>Higher-for-longer the likely path</h2>



As a matter of policy, Kelly said that would translate into three quarter-percentage point rate cuts this year and next, taking the fed funds rate down to a range of 3.75%-4%. That’s about in line with the 3.9% rate at the end of 2025 that Federal Open Market Committee members penciled in last month as part of their “dot-plot” projections.



Futures market pricing implies a fed funds rate of 4.32% by December 2025, indicating a higher rate trajectory.



While Kelly is advocating for “a gradual normalization of policy,” he does think the economy and markets can withstand a permanently higher level of rates.



In fact, he expects the Fed’s current projection of a “neutral” rate at 2.6% is unrealistic, an idea that is gaining traction on Wall Street. Goldman Sachs, for instance, recently has opined that the neutral rate — neither stimulative nor restrictive — could be as high as 3.5%. Cleveland Fed President Loretta Mester also recently said it’s possible that the long-run neutral rate is higher.



That leaves expectations for Fed policy tilting toward cutting rates somewhat but not going back to the near-zero rates that prevailed in the years after the financial crisis.



In fact, over the long run, the fed funds rate going back to 1954 has averaged 4.6%, even given the extended seven-year run of near-zero rates after the 2008 crisis until 2015.



<h2 class="wp-block-heading"><a></a>Government spending issues</h2>



One thing that has changed dramatically, though, over the decades has been the state of public finances.



The $34.6 trillion national debt has exploded since Covid hit in March 2020, rising by nearly 50%. The federal government is on track to run a $2 trillion budget deficit in fiscal 2024, with net interest payments thanks to those higher interest rates on pace to surpass $800 billion.



The deficit as a share of GDP in 2023 was 6.2%; by comparison, the European Union allows its members only 3%.



The fiscal largesse has juiced the economy enough to make the Fed’s higher rates less noticeable, a condition that could change in the days ahead if benchmark rates hold high, said Troy Ludtka, senior U.S. economist at SMBC Nikko Securities America.



“One of the reasons why we haven’t noticed this monetary tightening is simply a reflection of the fact that the U.S. government is running its most irresponsible fiscal policy in a generation,” Ludtka said. “We’re running massive deficits into a full-employment economy, and that’s really keeping things afloat.”



However, the higher rates have begun to take their toll on consumers, even if sales remain solid.



Credit card delinquency rates climbed to 3.1% at the end of 2023, the highest level in 12 years, according to Fed data. Ludtka said the higher rates are likely to result in a “retrenchment” for consumers and ultimately a “cliff effect” where the Fed ultimately will have to concede and lower rates.



“So, I don’t think they should be cutting anytime in the immediate future. But at some point that’s going to have to happen, because these interest rates are simply crushing particularly low-income-earning Americans,” he said. “That is a big portion of the population.”

107383266-1709738325082-gettyimages-2055746202-AFP_34KV84R

Why the Fed keeping rates higher for longer may not be such a bad thing

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/04/107390308-17109608742024-03-20t184840z_2039781085_rc2up6aegbf4_rtrmadp_0_usa-economy-fed-820x461.jpeg" alt="" class="wp-image-477391" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/04/107390308-17109608742024-03-20t184840z_2039781085_rc2up6aegbf4_rtrmadp_0_usa-economy-fed-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/107390308-17109608742024-03-20t184840z_2039781085_rc2up6aegbf4_rtrmadp_0_usa-economy-fed-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/107390308-17109608742024-03-20t184840z_2039781085_rc2up6aegbf4_rtrmadp_0_usa-economy-fed-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/107390308-17109608742024-03-20t184840z_2039781085_rc2up6aegbf4_rtrmadp_0_usa-economy-fed-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/107390308-17109608742024-03-20t184840z_2039781085_rc2up6aegbf4_rtrmadp_0_usa-economy-fed-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/107390308-17109608742024-03-20t184840z_2039781085_rc2up6aegbf4_rtrmadp_0_usa-economy-fed.jpeg 1600w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Photo: via CNBC</figcaption></figure>



Federal Reserve Chair Jerome Powell said Tuesday that the U.S. economy, while otherwise strong, has not seen inflation come back to the central bank’s goal, pointing to the further unlikelihood that interest rate cuts are in the offing anytime soon.



Speaking to a policy forum focused on U.S.-Canada economic relations, Powell said that while inflation continues to make its way lower, it hasn’t moved quickly enough, and the current state of policy should remain intact.



“More recent data shows solid growth and continued strength in the labor market, but also a lack of further progress so far this year on returning to our 2% inflation goal,” the Fed chief said during a panel talk.



Echoing recent statements by central bank officials, Powell indicated the current level of policy likely will stay in place until inflation gets closer to target.



Since July 2023, the Fed has kept its benchmark interest rate in a target range between 5.25%-5.5%, the highest in 23 years. That was the result of 11 consecutive rate hikes that began in March 2022.



“The recent data have clearly not given us greater confidence, and instead indicate that it’s likely to take longer than expected to achieve that confidence,” he said. “That said, we think policy is well positioned to handle the risks that we face.”



Powell added that until inflation shows more progress, “We can maintain the current level of restriction for as long as needed.”



The comments follow inflation data through the first three months of 2024 that has been higher than expected. A consumer price index reading for March, released last week, showed inflation running at a 3.5% annual rate — well off the peak around 9% in mid-2022 but drifting higher since October 2023.



Treasury yields rose as Powell spoke. The benchmark 2-year note, which is especially sensitive to Fed rate moves, briefly topped 5%, while the benchmark 10-year yield rose 3 basis points. The S&amp;P 500 wavered after Powell’s remarks, briefly turning negative on the day before recovering.



Powell noted the Fed’s preferred inflation gauge, the personal consumption expenditures price index, showed core inflation at 2.8% in February and has been little changed over the past few months.



“We’ve said at the [Federal Open Market Committee] that we’ll need greater confidence that inflation is moving sustainably towards 2% before [it will be] appropriate to ease policy,” he said. “The recent data have clearly not given us greater confidence and instead indicate that it’s likely to take longer than expected to achieve that confidence.”



Financial markets have had to reset their expectations for rate cuts this year. At the start of 2024, traders in the fed funds futures market were pricing in six or seven cuts this year, starting in March. As the data has progressed, the expectations have shifted to one or two reductions, assuming quarter percentage point moves, and not starting until September.



In their most recent update, FOMC officials in March indicated they see three cuts this year. However, several policymakers in recent days have stressed the data-dependent nature of policy and have not committed to set level of reductions.



Correction: Powell’s comments follow inflation data through the first three months of 2024 that has been higher than expected. An earlier version misstated the year.

107390308-17109608742024-03-20t184840z_2039781085_rc2up6aegbf4_rtrmadp_0_usa-economy-fed

Fed Chair Powell says there has been a ‘lack of further progress’ this year on inflation

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="462" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/04/107352556-1703848030465-gettyimages-1423009563-china-820x462.jpeg" alt="" class="wp-image-475494" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/04/107352556-1703848030465-gettyimages-1423009563-china-820x462.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/107352556-1703848030465-gettyimages-1423009563-china-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/107352556-1703848030465-gettyimages-1423009563-china-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/107352556-1703848030465-gettyimages-1423009563-china-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/107352556-1703848030465-gettyimages-1423009563-china.jpeg 929w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Flag of China on dark blue background Da-kuk | E+ | Getty Images</figcaption></figure>



China will remain the largest growth engine for the world economy in spite of its slowdown, the Asian Development Bank said.



“China is obviously going to still be important for some time to come. They still account for nearly half of GDP in Asia Pacific,” ADB’s chief economist Albert Park said in a press conference for the bank’s Asian Development Outlook report.&nbsp;



“Although growth is moderating, and we are expecting it to continue moderating in the coming years… it’s likely to contribute the most growth of any economy in the world to global growth,” said Park.



ADB forecasts China to post annual GDP growth of 4.8% in 2024, lower than the government’s target of “around 5%.” China’s economy expanded 5.2% in 2023, matching the official target of around 5%.



Even with slower growth, ADB data estimated China will account for 46% of growth in developing Asia in 2024-2025.



China currently accounts for 18% and 48% of global and Asian GDP, respectively, based on purchasing power parities exchange rates, a metric used by the ADB, World Bank and International Monetary Fund.



<h2 class="wp-block-heading" id="h-what-about-india"><a></a>What about India?</h2>



India’s stellar economic trajectory has led many to tout the country’s role as a technology and manufacturing powerhouse and an attractive alternative to China. The South Asian nation’s economy recently expanded at its fastest pace in six quarters, surpassing expectations with 8.4% growth in the October to December quarter of the current financial year 2023-24.



“India’s importance to growth in the region is increasing,” Park told CNBC via email. ADB expects the country’s growth to be the highest in the region, at 7% in 2024 and 7.2% in 2025. 



While India’s economy is undoubtedly a “bright spot,” it is still smaller than China’s, said Park. On the PPP exchange rate metric, the economist noted China’s economy is still about two and a half times that of India.&nbsp;



“So on that benchmark, it will take a long time, I think, for India to really drive global growth,” he added.



Additionally, growth in advanced economies is expected to slow this year, with ADB forecasting U.S. GDP growth to dip to 1.9% from last year’s 2.5%, and Japan’s to grow 0.6% compared to 1.9% in 2023.



The bank in its report also said it expects developing Asia’s growth this year to be slightly stronger than its December projections, as healthy domestic demand offsets the slowdown in China.&nbsp;&nbsp;



In spite of rising energy prices, inflation is also expected to moderate in Asia-Pacific from 3.3% in 2023 to 3.2% this year.

107352556-1703848030465-gettyimages-1423009563-china

China will remain the world’s No. 1 growth driver, says the Asian Development Bank

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/04/SMJADHBEX5KLZIUNYIQ6KAI6HA-820x547.jpg" alt="" class="wp-image-475259" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/04/SMJADHBEX5KLZIUNYIQ6KAI6HA-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/SMJADHBEX5KLZIUNYIQ6KAI6HA-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/SMJADHBEX5KLZIUNYIQ6KAI6HA-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/SMJADHBEX5KLZIUNYIQ6KAI6HA-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/SMJADHBEX5KLZIUNYIQ6KAI6HA-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/SMJADHBEX5KLZIUNYIQ6KAI6HA-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">FILE PHOTO: Produce is seen at El Progreso Market in the Mount Pleasant neighborhood of Washington, D.C., U.S., August 19, 2022. REUTERS/Sarah Silbiger/File Photo</figcaption></figure>



The consumer price index accelerated at a faster than expected pace in March, pushing inflation higher and likely dashing hopes that Federal Reserve will be able to cut interest rates anytime soon.



The CPI, a broad measure of goods and services costs across the economy, rose 0.4% for the month, putting the 12-month inflation rate at 3.5%, or 0.3 percentage point higher than in February, the Labor Department’s Bureau of Labor Statistics reported Wednesday. Economists surveyed by Dow Jones had been looking for a 0.3% gain and a 3.4% year-over-year level.



Excluding volatile food and energy components, core CPI also accelerated 0.4% on a monthly basis while rising 3.8% from a year ago, compared to respective estimates for 0.3% and 3.7%.



Stock market futures slumped following the report while Treasury yields spiked higher.



Shelter and energy costs drove the increase on the all-items index.



Energy rose 1.1% after increasing 2.3% in February, while shelter costs, which make up about one-third of the weighting in the CPI, were higher by 0.4% on the month and up 5.7% from a year ago. Expectations for shelter-related costs to decelerate through the year have been central to the Fed’s thesis that inflation will cool enough to allow for interest rate cuts.



Food prices increased just 0.1% on the month and were up 2.2% on a year-over-year basis. There were some big gains within the food category, however.



The measure for meat, fish, poultry and eggs climbed 0.9%, pushed by a 4.6% jump in egg prices. Butter fell 5% and cereal and bakery products declined by 0.9%. Food away from home increased 0.3%.



Elsewhere, used vehicle prices declined 1.1% and medical care services prices rose 0.6%.



The report comes with markets on edge and Fed officials expressing caution about the near-term direction for monetary policy. Central bank policymakers have repeatedly called for patience on cutting rates, saying they have not seen enough evidence that inflation is on a solid path back to their 2% annual goal. The March report likely confirmed worries that inflation is stickier than expected.



Markets had expected the Fed to start cutting interest rates in June with three reductions in total expected this year, but that shifted dramatically following the release. Traders in the fed funds futures market pushed expectations for the first cut out to September, according to CME Group calculations.



″“There’s not much you can point to that this is going to result in a shift away from the hawkish bent” from Fed officials, said Liz Ann Sonders, chief investment strategist at Charles Schwab. “June to me is definitely off the table.”



The Fed also expects services inflation to ease through the year, but that has shown to be stubborn as well. Excluding energy, the services index increased 0.5% in March and was at a 5.4% annual rate, inconsistent with the Fed’s target.



″This marks the third consecutive strong reading and means that the stalled disinflationary narrative can no longer be called a blip,” said Seema Shah, chief global strategist at Principal Asset Management. “In fact, even if inflation were to cool next month to a more comfortable reading, there is likely sufficient caution within the Fed now to mean that a July cut may also be a stretch, by which point the US election will begin to intrude with Fed decision making.”



Later Wednesday, the Fed will release minutes from its March meeting, providing more insight into where officials stand on monetary policy.



Multiple Fed officials in recent days have expressed skepticism about lowering rates. Atlanta Fed President Raphael Bostic told CNBC that he expects just one cut this year, likely not coming until the fourth quarter. Governor Michelle Bowman said an increase may even be necessary if the data do not cooperate.

FILE PHOTO: Grocery store in Washington

U.S. consumer prices rose 3.5% from a year ago in March, more than expected

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="462" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/04/107139885-1666645552719-abc1-820x462.jpg" alt="" class="wp-image-475230" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/04/107139885-1666645552719-abc1-820x462.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/107139885-1666645552719-abc1-300x169.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/107139885-1666645552719-abc1-160x90.jpg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/107139885-1666645552719-abc1-768x432.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/107139885-1666645552719-abc1.jpg 929w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Shoppers are seen in a Kroger supermarket on October 14, 2022, in Atlanta, Georgia.  Elijah Nouvelage | AFP | Getty Images</figcaption></figure>



A closely watched Labor Department report due Wednesday is expected to show that not much progress is being made in the battle to bring down inflation.



If so, that would be bad news for consumers, market participants and Federal Reserve officials, who are hoping price increases slow enough so that they can start gradually cutting interest rates later this year.



The consumer price index, which measures costs for a wide-ranging basket of goods and services across the $27.4 trillion U.S. economy, is expected to register increases of 0.3% both for the all-items measure as well as the core yardstick that excludes volatile food and energy.



On a 12-month basis that would put the inflation rates at 3.4% and 3.7%, respectively, a 0.2 percentage point increase in the headline rate from February, just a 0.1 percentage point decrease for the core rate, and both still a far cry from the central bank’s 2% target.



“We’re not headed there fast enough or convincing enough, and I think that’s what this report is going to show,” said Dan North, senior economist at Allianz Trade North America.



The report will be released at 8:30 a.m. ET.



<h2 class="wp-block-heading" id="h-progress-but-not-enough"><a></a>Progress, but not enough</h2>



North said he expects Fed officials to view the report pretty much the same way, backing up comments they’ve been making for weeks that they need more evidence that inflation is convincingly on its way back to 2% before rate cuts can happen.



“Moving convincingly toward 2% doesn’t just mean hitting 2% for one month. It means hitting 2% or less for months and months in a row,” North said. “We’re a long way from that, and that’s probably what’s going to show tomorrow as well.”



To be sure, inflation has come down dramatically from its peak above 9% in June 2022. The Fed enacted 11 interest rate hikes form March 2022 to July 2023 totaling 5.25 percentage points for its benchmark overnight borrowing rate known as the federal funds rate.



But progress has been slow in the past several months. In fact, headline CPI has barely budged since the central bank stopped hiking, though core, which policymakers consider a better barometer of longer-term trends, has fallen about a percentage point.



While the Fed watches the CPI and other indicators, it focuses most on the Commerce Department’s personal consumption expenditures index, sometimes referred to as the PCE deflator. That showed headline inflation running at 2.5% and the core rate at 2.8% in February.



For their part, markets have grown nervous about the state of inflation and how it will affect rate policy. After scoring big gains to start the year, stocks have backed off over the past week or so, which have seen sharp swings as investors tried to make sense of the conflicting signals.



Earlier this year, traders in the fed funds futures market were pricing in the likelihood that the central bank would start reducing rates in March and continue for as many as seven cuts before the end of 2024. The latest pricing indicates that the cuts won’t start until at least June and not total more than three, assuming quarter-percentage point increments, according to the CME Group’s FedWatch calculations.



“I don’t see a whole lot here that is going to move things magically the way they want to go,” North said.



<h2 class="wp-block-heading"><a></a>What to watch</h2>



There will be a few key areas to watch in Wednesday’s report.



Beyond the headline numbers, trends in items such as shelter, airfares and vehicle prices will be important. Those areas have been bellwethers during the current economic cycle, and moves either way could suggest longer-term trends.



Economists at Goldman Sachs expect outright declines across air travel-related items as well as vehicle sticker prices, and see smaller shelter cost increases, which make up about one-third of the CPI weighting. A New York Fed survey released Monday, however, showed a sharp uptick in expectations for rental costs over the next year, which is bad news for policymakers who frequently have cited decelerating housing costs as the cornerstone to their easing inflation thesis.



Similarly, the National Federation of Independent Business survey for March, released Tuesday, showed confidence among small businesses at its lowest level in more than 11 years, with owners citing inflation as their top concern.



“Inflation is cumulative, and that’s why prices still feel high,” North said. “People still can’t believe how high prices are.”



Gas prices also could play an important role in the CPI release after rising 3.8% in February. Though the gasoline index is relatively unchanged over the past two years, it’s still up more than 70% from April 2020 when the brief Covid-driven recession ended. Food is up about 23% during the same period.

107139885-1666645552719-abc1

A crucial report Wednesday is expected to show little progress against inflation

<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>



The U.S. Federal Reserve is determined not to reduce interest rates too soon — and some economists say recent data has pushed a summer cut completely off the table.



Friday’s jobs report reiterated the seemingly unwavering strength of the U.S. labor market and suggested further need for Fed caution. All eyes will now be on Wednesday’s consumer price index, after February’s annual inflation rate of 3.2% came in slightly higher than expected.



It comes as a growing number of market participants have raised the possibility of no rate cuts at all this year, including Minneapolis Fed President Neel Kashkari who said last week that no reductions were a possible scenario if inflation continued to move sideways.



George Lagarias, chief economist at&nbsp;Mazars, told CNBC on Monday that rate cuts in the summer were now looking much less likely.



“Personally, I wouldn’t be surprised if we saw less rate cuts and pushed more towards the end of the year,” he told “Squawk Box Europe” on Monday.



“This is a strong economy. Make no mistake, it is backed by debt and somewhat by overburdened credit cards, but it is a strong economy. So the Fed will struggle to find the case to cut rates soon.”



Market pricing reflects the ongoing uncertainty, with the probability of a rate cut now under 50% for both June and July, according to the CME’s FedWatch tool — significantly lower than at the start of the month.



“The Fed has been punishing itself ever since 2021 when ‘team transitory’ ostensibly got it wrong. &#8230; What they feel is that they can’t get it wrong again, which means that they’re more likely to err on the side of caution,” Lagarias added.



Despite this, he said it remains “very likely” that there will be rate cuts this year.



“They do have some room to cut, but they don’t want to get it wrong. They do not want to be the Fed that cut rates as inflation kept beating expectations. So they want to see more data toward the right direction and they are willing to wait,” Lagarias added.



<h2 class="wp-block-heading" id="h-no-rate-cuts"><a></a>No rate cuts?</h2>



Speculation that there could be no interest rate reductions this year has been growing, although economists remain divided.



Torsten Slok, chief economist at Apollo Global Management, said last month that he doesn’t expect any cuts as the U.S. economy is “simply not slowing down,” and top U.S. asset manager Vanguard has no rate reductions as its base case for the year.



Whereas former Federal Reserve Vice Chairman Roger Ferguson told CNBC last week he sees a 10%-15% chance of no cuts this year.



Other analysts and economists are still backing the Fed’s own signaling in March that it expects three quarter-percentage point cuts this year.



Based on current growth and inflation forecasts, Goldman Sachs Chief Economist Jan Hatzius told CNBC on Friday he would “expect some rate cuts based on what Chair Powell and other Fed officials have said.”



“The timing of that of course is going to depend on near-term data, on the reaction function from the Fed but under our forecast I would be quite surprised if we didn’t get rate cuts this year. Quite surprised.”

107384081-1709831185690-gettyimages-2058827167-powell_banking_402_030724

‘They can’t get it wrong again’: Economists are increasingly uncertain about Fed rate cuts this year

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="521" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/ODEFW2LJCVLEDLUNAWURA43T54-820x521.jpg" alt="" class="wp-image-470831" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/ODEFW2LJCVLEDLUNAWURA43T54-820x521.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/ODEFW2LJCVLEDLUNAWURA43T54-300x191.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/ODEFW2LJCVLEDLUNAWURA43T54-142x90.jpg 142w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/ODEFW2LJCVLEDLUNAWURA43T54-768x488.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/ODEFW2LJCVLEDLUNAWURA43T54-1536x976.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/ODEFW2LJCVLEDLUNAWURA43T54-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">A man rides a scooter past a Hyundai automobile showroom in Mumbai, India, February 9, 2022. REUTERS/Francis Mascarenhas/File Photo</figcaption></figure>



SYDNEY, March 28 (Reuters)&nbsp;&#8211;&nbsp;India&#8217;s bulging pipeline of large block trades and listings such as the $3 billion IPO of Hyundai Motor&#8217;s&nbsp;005380.KS&nbsp;unit will draw more funds to a market whose share of global equity capital market deals hit a&nbsp;quarterly record&nbsp;this year, bankers said.



A paucity of deals elsewhere in Asia will add to the impetus for capital flows into India, they added.



Higher global interest rates, geopolitical tensions, as well as China&#8217;s economic slowdown and its move to restrict initial public offerings (IPOs) to support its secondary markets, have led to a slump in equity dealmaking across Asia.



India, on the other hand, has emerged as the second busiest market in the world for equity capital market (ECM) deals after the United States.



Indian companies raised $2.3 billion in the first quarter of 2024 in IPOs, according to LSEG data, up more than 12 times the $166.5 million raised in the same period last year, the data showed.



Total ECM deals rose 139%, making it the most active market across Asia Pacific, including Japan, where activity was down 46.8%, and accounted for 10.05% of the global total in the first three months, a record high for any quarter.



&#8220;The pipeline and activity level has never been as big or as busy. We are seeing many more billion dollar-plus transactions, it&#8217;s unbelievable,&#8221; said Rahul Saraf, Citigroup&#8217;s&nbsp;C.N&nbsp;India head of investment banking.



&#8220;India is really coming of age in the size, scale and quality of issuers.&#8221;



The National Stock Exchange, the country&#8217;s largest bourse, was the third most active listing venue globally in the first quarter, behind the New York Stock Exchange and Nasdaq.



&#8220;If you look at global liquidity, where would a large family office or global fund like to put money in the current environment? It’s most likely between the US, India and Japan,&#8221; said Saraf.



Among the large deals in the pipeline, the listing of South Korean automaker Hyundai Motor&#8217;s India unit is on track to be the country&#8217;s largest ever IPO as it aims to raise up to $3 billion in 2024 in a deal that would value the car marker at up to $30 billion.



Budget supermarket chain Vishal Mega Mart is also planning a $1 billion IPO that would value the company at up to $5 billion.



&#8220;In terms of upcoming deals &#8230; the size of the deals is getting larger and more companies are lining up for listing later in the year, once elections are out of the way,&#8221; said Sumeet Singh, Aequitas Research director who publishes on Smartkarma.



India&#8217;s general elections will be held over almost seven weeks from April 19.



Citigroup C.N heads the league table for Indian ECM activity, according to LSEG, ahead of Bank of America BAC.N and ICICI Bank ICBK.NS.



(Reporting by Scott Murdoch in Sydney; Editing by Sumeet Chatterjee and Muralikumar Anantharaman)

A man rides a scooter past a Hyundai automobile showroom in Mumbai

India sizzles in global equity capital markets amid deals drought in Asia

<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/ZFWHVCKG3JIMLGJDNTBUQE2GWY-820x547.jpg" alt="" class="wp-image-470802" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/ZFWHVCKG3JIMLGJDNTBUQE2GWY-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/ZFWHVCKG3JIMLGJDNTBUQE2GWY-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/ZFWHVCKG3JIMLGJDNTBUQE2GWY-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/ZFWHVCKG3JIMLGJDNTBUQE2GWY-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/ZFWHVCKG3JIMLGJDNTBUQE2GWY-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/ZFWHVCKG3JIMLGJDNTBUQE2GWY-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">FILE PHOTO: One hundred dollar notes are seen in this photo illustration at a bank in Seoul January 9, 2013. REUTERS/Lee Jae-Won</figcaption></figure>



TOKYO/LONDON, March 28 (Reuters)&nbsp;&#8211;&nbsp;The dollar gained on the euro and pound on Thursday after a U.S. Federal Reserve policy maker said he wasn&#8217;t in a hurry to cut rates, while traders braced for key economic data and hesitated to move on the yen on fears of Japanese intervention.



The Japanese currency was steady at 151.42 per dollar having traded just shy of the 152 mark at its lowest since 1990 on Wednesday before Japan&#8217;s top monetary officials suggested they were ready to intervene to prevent further declines.



The euro&nbsp;EUR=EBS&nbsp;was last down 0.33% at $1.0792 its lowest in five weeks, and the pound&nbsp;GBP=D3&nbsp;was down 0.25% at $1.2609. That left the dollar index up 0.16% at 104.6, its highest since mid-February.&nbsp;=USD



Speaking during late U.S. trading hours on Wednesday, Fed Governor Christopher Waller said recent disappointing inflation data affirms the case for the U.S. central bank holding off on cutting its short-term interest rate target.



Market expectations for the first rate cut to occur at the Fed&#8217;s June meeting have eased somewhat. Current pricing has it at a 60% chance, compared to 67% around this time last week, according to the CME FedWatch tool.



&#8220;Waller is one of the more important Fed policy makers and, while I don&#8217;t see this being a big move, the remarks have put some momentum into the market which has been stuck in very tight trading ranges,&#8221; said Lee Hardman, senior currency strategist at MUFG.



Traders now await U.S. core PCE inflation figures due on Friday, as well as an appearance by Fed Chair Jerome Powell.



<h2 class="wp-block-heading" id="h-intervention-watch">INTERVENTION WATCH</h2>



Should the inflation data surprise on the upside and support the dollar, its most dramatic impact could be on the yen. Market participants say there is a dense thicket of options restricting moves in dollar/yen around the 152 level, and so a break through could trigger more significant moves.



While there may be some trading to defend a move toward 152 yen per dollar for now, Friday&#8217;s U.S. inflation data posed a significant risk, said Takeshi Ishida, a currency strategist at Resona Holdings.



&#8220;Once dollar/yen touches 152, I think there will probably be a sharp move upward, and that&#8217;s when intervention could take place.&#8221;



Japanese authorities held a meeting on Wednesday on the currency&#8217;s weakness and ramped up their verbal warnings, putting the market on the lookout for any signs that words are being backed up with action.



Japan intervened in the currency market three times in 2022, selling the dollar to buy yen, first in September and again in October as the yen slid towards a 32-year low of 152 to the dollar.



A summary of opinions at the Bank of Japan&#8217;s March meeting released on Thursday gave the currency little support, showing many policymakers saw the need to go slow in phasing out ultra-loose monetary policy.



The Easter holiday in many markets is also complicating matters.



&#8220;That works in Japan&#8217;s favour as it keeps another layer of uncertainty as liquidity tends to be thin, and so investors might be nervous holding yen shorts going into the holiday period,&#8221; said MUFG&#8217;s Hardman.



Meanwhile, China&#8217;s central bank set the yuan fixing at the widest gap against Reuters&#8217; estimate in nearly five months, as authorities step up efforts to prevent sharp declines in the currency. The yuan slumped to a four-month low last Friday.&nbsp;CNY/



The onshore yuan was mostly flat at 7.2277 per dollar,&nbsp;CNY=CFXS&nbsp;while offshore it was at 7.2591 per dollar, also little changed.&nbsp;CNH=D3



The Swiss franc remained under pressure, and the dollar rose 0.24% to 0.9059 francs, trading just shy of a four month high hit the day before.&nbsp;CHF=EBS



The Aussie fell 0.6% to $0.6495 AUD=D3. As well as being hurt by Waller&#8217;s remarks, data from Australia showed consumers continued to struggle as retail sales edged up 0.3% in February, missing forecasts. AUD/



(Reporting by Brigid Riley; Editing by Lincoln Feast and Sonali Paul)

FILE PHOTO: Photo illustration of one hundred dollar notes in Seoul

Dollar gains as inflation data looms; yen on intervention watch

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="728" height="475" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/NSP6U5TEJZNNDEK7AKO67HPJYM.jpg" alt="" class="wp-image-470796" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/NSP6U5TEJZNNDEK7AKO67HPJYM.jpg 728w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/NSP6U5TEJZNNDEK7AKO67HPJYM-300x196.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/NSP6U5TEJZNNDEK7AKO67HPJYM-138x90.jpg 138w" sizes="auto, (max-width: 728px) 100vw, 728px" /><figcaption class="wp-element-caption">FILE PHOTO: People walk over London Bridge with at a view of Tower Bridge in the City of London financial district, in London, Britain, October 25, 2023. REUTERS/ Susannah Ireland/File Photo</figcaption></figure>



LONDON, March 28 (Reuters)&nbsp;&#8211;&nbsp;Britain&#8217;s economy entered a shallow recession last year,&nbsp;official figures confirmed on Thursday,&nbsp;leaving Prime Minister Rishi Sunak with a challenge to reassure voters that the economy is safe with him before an election expected later this year.



Gross domestic product shrank by 0.1% in the third quarter and by 0.3% in the fourth, unchanged from preliminary estimates, the Office for National Statistics&nbsp;(ONS)&nbsp;said on Thursday.



The figures will be disappointing for Sunak,&nbsp;who has been accused by the opposition Labour Party &#8211; far ahead in opinion polls &#8211; of overseeing &#8220;Rishi&#8217;s recession&#8221;.



&#8220;The weak starting point for GDP this year means calendar-year growth in 2024 is likely to be limited to less than 1%,&#8221; said Martin Beck, chief economic advisor at EY ITEM Club.&#8221;



&#8220;However, an acceleration in momentum this year remains on the cards.&#8221;



Britain&#8217;s economy has shown signs of starting 2024 on a stronger footing,&nbsp;with&nbsp;monthly GDP growth of&nbsp;0.2% in January,&nbsp;and unofficial surveys suggesting growth continued in February and March.



Tax cuts announced by finance minister Jeremy Hunt and expectations of interest rate cuts are likely to help the economy in 2024.



However,&nbsp;Britain remains one of the&nbsp;slowestcountries&nbsp;to recover from the effects of the COVID-19 pandemic. At the end of last year, its economy was&nbsp;just 1% bigger than&nbsp;in&nbsp;late 2019, with only Germany faring worse&nbsp;among Group of Seven nations.



The economy grew just 0.1%&nbsp;in all of 2023, its weakest performance since 2009,&nbsp;excluding the&nbsp;peak-pandemic year of 2020.



GDP per person, which has not grown since early 2022, fell by 0.6% in the fourth quarter and 0.7% across 2023.



Sterling&nbsp;GBP=was little changed against the dollar and the euro&nbsp;EURGBP=after the data release.



<h2 class="wp-block-heading" id="h-uk-recovery-begins-slowly">UK RECOVERY BEGINS SLOWLY</h2>



The&nbsp;Bank of England (BoE)&nbsp;has said inflation is moving towards the point where it can start cutting rates. It&nbsp;expects the economy to grow by just 0.25% this year although official budget forecasters expect a 0.8% expansion.



BoE policymaker Jonathan Haskel said in an interview reported in Thursday&#8217;s Financial Times that rate cuts were &#8220;a long way off&#8221;, despite dropping his advocacy of a rise at last week&#8217;s meeting.



Thursday&#8217;s&nbsp;figures from the ONS&nbsp;also showed&nbsp;0.7%&nbsp;growth in households&#8217; real disposable income, flat&nbsp;in the previous quarter.



Thomas Pugh, an economist at consulting firm RSM, said the increase could prompt consumers to increase their spending and support the economy.



&#8220;Consumer confidence has been improving gradually over the last year &#8230; as the impact of rising real wages filters through into people’s pockets, even though consumers remain cautious overall,&#8221; Pugh said.



Britain&#8217;s current account deficit totalled 21.18 billion pounds ($26.70 billion) in the fourth quarter, slightly narrower than a forecast of 21.4 billion pounds shortfall in a Reuters poll of economists, and equivalent to 3.1% of GDP, up from 2.7% in the third quarter.



The underlying current account deficit, which strips out volatile trade in precious metals, expanded to 3.9% of GDP.



($1 = 0.7933 pounds)



(Reporting by Suban Abdulla; Editing by William Schomberg and Kevin Liffey)

FILE PHOTO: Unemployment rate unchanged but signs point to cooling jobs market

UK economy went into recession last year, data confirms

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/5OKBEVP6EFKETLPBJ6VKFBFY4U-1-820x547.jpg" alt="" class="wp-image-470116" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/5OKBEVP6EFKETLPBJ6VKFBFY4U-1-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/5OKBEVP6EFKETLPBJ6VKFBFY4U-1-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/5OKBEVP6EFKETLPBJ6VKFBFY4U-1-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/5OKBEVP6EFKETLPBJ6VKFBFY4U-1-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/5OKBEVP6EFKETLPBJ6VKFBFY4U-1-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/5OKBEVP6EFKETLPBJ6VKFBFY4U-1-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">FILE PHOTO: A sign of the New Development Bank (NDB) of BRICS countries is pictured at its headquarters in Shanghai, China, May 30, 2023. REUTERS/Aly Song</figcaption></figure>



BOAO, China, March 26 (Reuters)&nbsp;&#8211;&nbsp;The New Development Bank (NDB), set up by the BRICS group of emerging economies, aims to make about $5 billion in loans this year, its vice president, Zhou Qiangwu, said on Tuesday.



&#8220;During the epidemic, our business has been somewhat affected, and now everything is going back on track,&#8221; Zhou told Reuters on the sidelines of the annual Boao Forum.



Zhou did not elaborate on how the bank may have been off track, but said China and India have received slightly more investment from the bank than other members.



Headquartered in Shanghai, the NDB was set up in 2015 by Brazil, Russia, India, China and South Africa, collectively known as the BRICS countries.



Zhou also said he expected China&#8217;s economy to grow about 5% this year, in line with the government&#8217;s target.



(Reporting by Kevin Yao. Editing by Gerry Doyle)

FILE PHOTO: A sign of the New Development Bank (NDB) is pictured at its headquarters in Shanghai

BRICS development bank aims to make $5 bln in loans in 2024

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="462" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107383365-1709744654471-gettyimages-2063429669-_s2_1499_zbm0kcgb-820x462.jpeg" alt="" class="wp-image-468257" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107383365-1709744654471-gettyimages-2063429669-_s2_1499_zbm0kcgb-820x462.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107383365-1709744654471-gettyimages-2063429669-_s2_1499_zbm0kcgb-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107383365-1709744654471-gettyimages-2063429669-_s2_1499_zbm0kcgb-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107383365-1709744654471-gettyimages-2063429669-_s2_1499_zbm0kcgb-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107383365-1709744654471-gettyimages-2063429669-_s2_1499_zbm0kcgb.jpeg 929w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Federal Reserve Bank Chairman Jerome Powell testifies before the House Financial Services Committee in the Rayburn House Office Building on Capitol Hill on March 06, 2024 in Washington, DC.  Chip Somodevilla | Getty Images</figcaption></figure>



The Federal Reserve has a lot to do at its meeting this week, but ultimately may not end up doing a whole lot in terms of changing the outlook for monetary policy.



In addition to releasing its rate decision after the meeting wraps up Wednesday, the central bank will update its economic projections as well as its unofficial forecast for the direction of interest rates over the next several years.



As expectations have swung sharply this year for where the Fed is headed, this week’s two-day session of the Federal Open Market Committee will draw careful scrutiny for any clues about the direction of interest rates.



Yet the general feeling is that policymakers will stick to their recent messaging, which has emphasized a patient, data-driven approach with no hurry to cut rates until there’s greater visibility on inflation.



“They’ll make it clear that they’re obviously not ready to cut rates. They need a few more data points to feel confident that inflation is heading back to target,” said Mark Zandi, chief economist at Moody’s Analytics. “I expect them to reaffirm three rate cuts this year, so that would suggest the first rate cut would be in June.”



Markets have had to adjust to the Fed’s approach on the fly, scaling back both the timing and frequency of expected cuts this year. Earlier this year, traders in the fed funds futures market were anticipating the rate-cutting campaign to kick off in March and continue until the FOMC had cut the equivalent of six or seven times in increments of quarter percentage points.



Now, the market has pushed out the timing until at least June, with only three cuts anticipated from the current target range of 5.25%-5.5% for the Fed’s benchmark overnight borrowing rate.



The swing in expectations will make how the central bank delivers its message this week all the more important. Here’s a quick look at what to expect:



<h2 class="wp-block-heading" id="h-the-dot-plot"><a></a>The ‘dot plot’</h2>



Though the quarterly plot of individual members’ expectations is pretty arcane, this meeting likely will be all about the dots. Specifically, investors will look at how the 19 FOMC members, both voters and nonvoters, will indicate their expectations for rates through the end of the year and out to 2026 and beyond.



When the matrix was last updated in December, the dots pointed to three cuts in 2024, four in 2025, three more in 2026, and then two more at some point to take the long-range federal funds rate down to around 2.5%, which the Fed considers “neutral” — neither promoting nor restricting growth.



Doing the math, it would only take two FOMC members to get more hawkish to reduce the rate cuts this year to two. That, however, is not the general expectation.



“It only takes two individual dots moving higher to raise the 2024 median. Three dots are enough to push the long-run dot 25bp higher,” Citigroup economist Andrew Hollenhorst said in a client note. “But the combination of inconclusive activity data and slowing year-on-year core inflation should be just enough to keep dots in place and [Fed Chair Jerome] Powell still guiding that the committee is on track to gain ‘greater confidence’ to cut policy rates this year.”



<h2 class="wp-block-heading"><a></a>The rate call for March</h2>



More immediately, the FOMC will conduct a largely academic vote on what to do with rates now.



Simply put, there is zero chance the committee votes to cut rates at this week. The statement from the last meeting all but ruled out an imminent move, and public statements from virtually every Fed speaker since then have also ruled out a decrease.



What this statement could indicate is perhaps a thawing in the outlook and an adjustment of the bar that the data will need to clear to justify future cuts.



“We still expect the Fed to cut interest rates in June, although we don’t expect officials to provide a strong steer either for or against” following the March meeting, wrote Paul Ashworth, chief North America economist at Capital Economics.



<h2 class="wp-block-heading"><a></a>The economic outlook</h2>



Along with the “dot plot,” the Fed will release its quarterly update on the economy, specifically for gross domestic product, inflation and the unemployment rate. Collectively, the estimates are known as the Summary of Economic Projections, or SEP.



Again, there’s not a lot of expectations that the Fed will change its outlook from December, which reflected cuts for inflation and an upgrade for GDP. For this meeting, the focus will fall squarely on inflation and how that affects the expectations for rates.



“While inflation has hit a bump in the road, the activity data suggest the economy is not overheating,” Bank of America economist Michael Gapen wrote. “We think the Fed will still forecast three cuts this year, but it is a very close call.”



Most economists think the Fed could raise its GDP forecast again, though not dramatically, while possibly tweaking the inflation outlook a touch higher.



<h2 class="wp-block-heading"><a></a>Big picture</h2>



On a broader scale, markets likely will be looking for the Fed to follow the recent plotline of fewer cuts this year — but still cuts. There also will be some anticipation over what policymakers say about its balance sheet reduction. Powell has indicated the issue will be discussed at this meeting, and some details could emerge of when and how the Fed will slow and ultimately halt the reduction in its bond holdings.



It won’t be just Wall Street watching, either.



Though not official policy, most central banks around the world take their cues from the Fed. When the U.S. central bank says it is moving cautiously because it fears inflation could spike again if it eases too soon, its global counterparts take notice.



With worries escalating over growth in some parts of the globe, central bankers also want some type of go signal. Higher interest rates tend to put upward pressure on currencies and raise prices for goods and services.



“The rest of the world is waiting for the Fed,” said Zandi, the Moody’s economist. “They would prefer not to have their currencies fall in value and put further upward pressure on inflation. So they would really, really like the Fed to start leading the way.”

107383365-1709744654471-gettyimages-2063429669-_s2_1499_zbm0kcgb

Here’s everything to expect from the Federal Reserve’s policy meeting Wednesday

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="510" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107389251-1710843088447-gettyimages-901988866-AFP_VS5GN-820x510.jpeg" alt="" class="wp-image-467993" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107389251-1710843088447-gettyimages-901988866-AFP_VS5GN-820x510.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107389251-1710843088447-gettyimages-901988866-AFP_VS5GN-300x186.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107389251-1710843088447-gettyimages-901988866-AFP_VS5GN-145x90.jpeg 145w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107389251-1710843088447-gettyimages-901988866-AFP_VS5GN-768x477.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107389251-1710843088447-gettyimages-901988866-AFP_VS5GN-1536x954.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107389251-1710843088447-gettyimages-901988866-AFP_VS5GN-scaled.jpeg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">A man walks past a poster that informs customers that bitcoin can be used in this shop in Tokyo on January 06, 2018.  Toru Yamanaka | Afp | Getty Images</figcaption></figure>



Japan’s government pension fund on Tuesday said it is requesting information on “illiquidity assets” such as bitcoin, as part of research into potential new investments.



The Government Pension Investment Fund (GPIF) of Japan, the world’s largest pension fund by assets under management on several different rankings, said it is looking for “basic information” on illiquid assets other than those in which it already invests.



GPIF said it currently puts funds in domestic and foreign bonds and stocks, real estate, infrastructure and private equity. It is now looking for information about other assets such as forests, farmland, gold and bitcoin and how these might be incorporated into the portfolio of pension funds.



There is no indication that GPIF will invest in bitcoin or other cryptocurrencies.



GPIF’s statement comes days after bitcoin hit an all-time high and after the world’s largest cryptocurrency has rallied more than 130% over the last year.



That rally is in part thanks to the launch of bitcoin exchange-traded funds in the U.S. this year, which has attracted billions of dollars of inflows.



Pension funds have been very cautious about stepping into cryptocurrency investments due to the latter’s volatile nature. Some have nevertheless dipped their toes, with South Korea’s pension fund — the National Pension Service — buying shares of Coinbase last year.



In Japan, the government in February proposed a law that would, if passed, allow investment funds to hold digital assets like cryptocurrencies.

107389251-1710843088447-gettyimages-901988866-AFP_VS5GN

World’s largest pension fund explores bitcoin as an investment

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107386016-1710228393384-gettyimages-1434261548-banderajaponyyen9-820x547.jpeg" alt="" class="wp-image-467930" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107386016-1710228393384-gettyimages-1434261548-banderajaponyyen9-820x547.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107386016-1710228393384-gettyimages-1434261548-banderajaponyyen9-300x200.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107386016-1710228393384-gettyimages-1434261548-banderajaponyyen9-135x90.jpeg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107386016-1710228393384-gettyimages-1434261548-banderajaponyyen9-768x512.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107386016-1710228393384-gettyimages-1434261548-banderajaponyyen9-1536x1024.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107386016-1710228393384-gettyimages-1434261548-banderajaponyyen9-scaled.jpeg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">An editorial montage of the Japan flag and Japanese yen cash bank notes Javier Ghersi | Moment | Getty Images</figcaption></figure>



Japan’s central bank raised interest rates on Tuesday for the first time since 2007, ending the world’s only negative rates regime and other unconventional policy easing measures enacted over the course of the last few decades to combat deflation.



These changes mark a historic shift and represent the sharpest pull back in one of the most aggressive monetary easing exercises in the world, which was aimed at reflating prices in the Japanese economy. The BOJ’s actions also precede the U.S. Federal Reserve’s interest rate decision later this week.



“The likelihood of inflation stably achieving our target has been heightening &#8230; the likelihood reached a certain threshold that resulted in today’s decision,” BOJ Governor Kazuo Ueda said at a press conference after the central bank’s decision, according to a translation provided by Reuters.



The Bank of Japan though cautioned it’s not about to embark on aggressive rate hikes, saying that it “anticipates that accommodative financial conditions will be maintained for the time being,” given the fragile growth in the world’s fourth-largest economy.



“If the likelihood heightens further and trend inflation accelerates a bit more, that will lead to a further increase in short-term rates,” Ueda said. He added though there is still “some distance for inflation expectations to reach 2%.”



The BOJ raised its short-term interest rates to around 0% to 0.1% from -0.1% at the end of its two-day March policy meeting. Japan’s negative rates regime had been in place since 2016.



It also abolished its radical yield curve control policy for Japanese sovereign bonds, which the central bank has employed to target longer-term interest rates by buying and selling bonds as necessary.



The central bank though will continue purchasing government bonds worth “broadly the same amount” as before — currently about 6 trillion yen per month.



It would resort to “nimble responses” in the form of increased JGB purchases and fixed-rate purchases of JGBs, among other things, if there is a rapid rise in long-term interest rates.



Scaling back its asset purchases and quantitative easing, the BOJ said it would stop buying exchange-traded funds and Japan real estate investment trusts (J-REITS). It also pledged to slowly reduce its purchases of commercial paper and corporate bonds, with the aim of stopping this practice in about a year.



“As for the future, we will at some point eye shrinking our balance sheet given we’ve ended our extraordinary monetary easing. But we can’t specify now when that will happen,” Ueda told reporters.



He described the BOJ’s JGB and ETF holdings as “remnants of the extraordinary monetary easing scheme,” while deferring questions on the impact of the central banks’ unorthodox policies until an ongoing review is completed.



<h2 class="wp-block-heading" id="h-yen-weakens-yields-slip"><a></a>Yen weakens, yields slip</h2>



The yen weakened sharply to beyond 150 to the dollar — a level that’s previously prompted intervention from Japanese authorities.



Yields on the 10-year Japanese government bonds slipped, while the Nikkei stock index ended slightly up in a volatile session after the rate decision and ahead of a public holiday in Japan.



“As always, I won’t comment on short-term currency moves,” Ueda said at the press conference. “But if currency moves have a big impact on our economic and price forecasts, we will stand ready to take an appropriate monetary policy response.”



Financial markets had repositioned over the past week as local Japanese news reports and preliminary wage negotiation results fanned speculation that the BOJ could normalize rates a month earlier, ahead of its April meeting.



Ongoing “shunto” spring wage negotiations between Japan Inc and its unionized workers have so far yielded a weighted average 3.7% spike in base pay, Rengo, Japan’s largest federation of trade unions said Friday in its first provisional update.



This is even more robust than last year’s gains, which were the steepest spike in three decades.



<h2 class="wp-block-heading"><a></a>Inflation target</h2>



The BOJ had barely budged from its&nbsp;ultra-loose monetary policy&nbsp;posture despite “core core inflation” — which excludes food and energy prices — exceeding its 2% target for more than a year, as policymakers viewed price increases were largely imported.



BOJ Governor Kazuo Ueda had repeatedly said the outcome of this year’s annual “shunto” wage negotiations would be key to sustainable price increases. The Bank of Japan expects higher salaries to lead to a virtuous spiral with domestic demand fueling inflation.



“Services prices have continued to increase moderately, partly due to the moderate wage increases seen thus far,” the BOJ said in a statement.



“As these recent data and anecdotal information have gradually shown that the virtuous cycle between wages and prices has become more solid, the Bank judged it came in sight that the prices stability target would be achieved in a sustainable and stable manner toward the end of the projection period of the January 2024 outlook report,” it added.



<h2 class="wp-block-heading"><a></a>Uncertain outlook</h2>



With inflation slowing and an economy that barely averted a technical recession toward the end of last year, Ueda flagged some possible headwinds.



“There are numerous risks surrounding the global economy such as the chance of a negative market shock. There’s also the risk that consumption may not recover as much as expected,” he said.



High inflation has crimped domestic demand and private consumption. Private consumption fell 0.3% in the fourth quarter from the previous one — more than the provisional estimates of a 0.2% decline.



“If our price forecast clearly overshoots or, even if our median forecast is unchanged, we see a clear increase in upside risk to the price outlook, that will likely lead to a policy change,” Ueda said.



Investors and market watchers may have to wait for the BOJ to update its economic forecast at its April meeting, where the central bank is expected to release its 2026 forecast.



“Japan’s expectation of inflation, when looking at a timespan of 5 to 10 years, is likely somewhere around 1-1.5% &#8230; At present, real interest rate is likely deeply in negative territory. Unless the neutral, real rate of interest is very deeply in negative territory, we can say&nbsp;Japan’s monetary condition is accommodative,” he said.

107386016-1710228393384-gettyimages-1434261548-banderajaponyyen9

Bank of Japan ends the world’s only negative rates regime in a historic move, abandons yield curve control

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107388760-1710772295032-gettyimages-2087312988-CERAWEEK_2024-820x547.jpeg" alt="" class="wp-image-467884" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107388760-1710772295032-gettyimages-2087312988-CERAWEEK_2024-820x547.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107388760-1710772295032-gettyimages-2087312988-CERAWEEK_2024-300x200.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107388760-1710772295032-gettyimages-2087312988-CERAWEEK_2024-135x90.jpeg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107388760-1710772295032-gettyimages-2087312988-CERAWEEK_2024-768x512.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107388760-1710772295032-gettyimages-2087312988-CERAWEEK_2024-1536x1024.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107388760-1710772295032-gettyimages-2087312988-CERAWEEK_2024-scaled.jpeg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Amin Nasser, CEO of Saudi Aramco, speaks at the 2024 CERAWeek by S&amp;P Global conference in Houston, Texas, on March 18, 2024. F. Carter Smith | Bloomberg | Getty Images</figcaption></figure>



HOUSTON — Saudi Aramco CEO Amin Nasser said Monday that the energy transition is failing and policymakers should abandon the “fantasy” of phasing out oil and gas, as demand for fossil fuels is expected to continue to grow in the coming years.



“In the real world, the current transition strategy is visibly failing on most fronts as it collides with five hard realities,” Nasser said during a panel interview at the CERAWeek by S&amp;P Global energy conference in Houston, Texas.



“A transition strategy reset is urgently needed and my proposal is this: We should abandon the fantasy of phasing out oil and gas and instead invest in them adequately reflecting realistic demand assumptions,” the CEO said to applause from the audience.



The Paris-based International Energy Agency forecast last year that peak oil, gas and coal demand would come in 2030. Nasser said demand is unlikely to peak anytime soon, let alone by that year. Nasser suggested that the IEA is focusing on demand in the U.S. and Europe and needs to focus on the developing world as well.



Nasser said alternative energy sources have been unable to displace hydrocarbons at scale, despite the world investing more than $9.5 trillion over the past two decades. Wind and solar currently supply less than 4% of the world’s energy, while total electric vehicle penetration is less than 3%, he said.



Meanwhile, the share of hydrocarbons in the global energy mix has barely fallen in the 21st century from 83% to 80%, Nasser said. Global demand has increased by 100 million barrels of oil equivalent per day during the same period and will reach an all-time high this year, the CEO said.



Gas has grown 70% since the start of the century, Nasser said. The transition from coal to gas is responsible for two-thirds of the reductions in carbon emissions in the U.S., he said.



“This is hardly the future picture some have been painting,” Nasser said. “Even they are starting to acknowledge the importance of oil and gas security.”



Developing nations in the global south, meanwhile, will drive oil and gas demand as prosperity rises in those nations, which represent more than 85% of the world’s population, the CEO said. These nations receive less than 5% of the investment targeting renewable energy, he said.



Nasser said the world should focus more on reducing emissions from oil and gas in addition to renewables. The CEO said efficiency improvements alone over the past 15 years have reduced global energy demand by almost 90 million barrels per day oil equivalent. Wind and solar, meanwhile, have substituted only 15 million barrels over the same period, he said.



“We should phase in new energy sources and technologies when they are genuinely ready, economically competitive and with the right infrastructure,” Nasser said.

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OECD upgrades global growth outlook as U.S. outperforms

Why the Fed keeping rates higher for longer may not be such a bad thing

Fed Chair Powell says there has been a ‘lack of further progress’ this year on inflation

China will remain the world’s No. 1 growth driver, says the Asian Development Bank

U.S. consumer prices rose 3.5% from a year ago in March, more than expected

A crucial report Wednesday is expected to show little progress against inflation

‘They can’t get it wrong again’: Economists are increasingly uncertain about Fed rate cuts this year

India sizzles in global equity capital markets amid deals drought in Asia

Dollar gains as inflation data looms; yen on intervention watch

UK economy went into recession last year, data confirms

BRICS development bank aims to make $5 bln in loans in 2024

Here’s everything to expect from the Federal Reserve’s policy meeting Wednesday

World’s largest pension fund explores bitcoin as an investment

Bank of Japan ends the world’s only negative rates regime in a historic move, abandons yield curve control

Saudi Aramco CEO says energy transition is failing, world should abandon ‘fantasy’ of phasing out oil

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