Economy
ECB President Lagarde emphasizes caution in policy action amid Euro area stagnation
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EUROPE – European Central Bank President Christine Lagarde, in recent remarks, highlighted the Euro area’s economic challenges and the central bank’s cautious stance on monetary policy. Speaking to the European Parliament’s Economic and Monetary Affairs Committee today, Lagarde reported a drop in October’s inflation to 2.9%. She noted this decrease is partly due to base effects, with domestic inflation remaining high due to persistent domestic pressures.
Lagarde underscored the need for careful evaluation before further monetary policy actions are taken. At a Frankfurt Bundesbank event earlier today, she confirmed that interest rates would remain unchanged as the ECB focuses on curbing inflation to meet its target of 2%. This decision follows a slight economic downturn of 0.1% in Q3, which has not dampened the ECB’s confidence. Lagarde pointed to robust consumer spending and a continued dip in inflation since October’s two-year low as factors likely to avert a recession.
Despite a contraction in GDP, declining manufacturing output, and a weakening services sector indicating economic stagnation, Lagarde is optimistic about the future. She anticipates temporary increases in headline inflation, followed by a downward trend amidst significant medium-term uncertainty. With job growth expected to slow by the end of the year, the ECB President believes that easing inflationary pressures will lead to improved household incomes and stronger demand for Euro area exports, setting the stage for economic recovery over the coming years.
Lagarde also spoke of the ECB’s commitment to price stability and the effectiveness of monetary policy transmission. She urged caution against premature claims of economic success and stressed the influence of strong wage pressures and other inflationary elements on the current economic landscape.
Looking ahead, the ECB is planning to decarbonize corporate assets post-2024, aligning with broader economic and environmental objectives. These plans come as projections indicate a downtrend in inflation, although the future holds considerable uncertainties. The ECB remains steadfast in its approach to setting policy rates based on comprehensive, data-driven assessments of inflation dynamics.
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© Reuters. Russian Central Bank Governor Elvira Nabiullina attends a news conference in Moscow, Russia June 14, 2019. REUTERS/Shamil Zhumatov/File Photo
MOSCOW (Reuters) – Russia’s central bank will need two to three months to make sure that inflation is steadily declining before taking any decision on interest rate cuts, the bank’s governor Elvira Nabiullina told RBC media on Sunday.
The central bank raised its key interest rate by 100 basis points to 16% earlier in December, hiking for the fifth consecutive meeting in response to stubborn inflation, and suggested that its tightening cycle was nearly over.
Nabiullina said it was not yet clear when exactly the regulator would start cutting rates, however.
“We really need to make sure that inflation is steadily decreasing, that these are not one-off factors that can affect the rate of price growth in a particular month,” she said.
Nabiullina said the bank was taking into account a wide range of indicators but primarily those that “characterize the stability of inflation”.
“This will take two or three months or more – it depends on how much the wide range of indicators that characterize sustainable inflation declines,” she said.
The bank will next convene to set its benchmark rate on Feb. 16.
The governor also said the bank should have started monetary policy tightening earlier than in July, when it embarked on the rate-hiking cycle.
© Reuters. FILE PHOTO: Workers walk past an under-construction area with completed office towers in the background, in Shenzhen’s Qianhai new district, Guangdong province, China August 25, 2023. REUTERS/David Kirton/File Photo
SHANGHAI (Reuters) – China’s top planning body said on Saturday it had identified a second batch of public investment projects, including flood control and disaster relief programmes, under a bond issuance and investment plan announced in October to boost the economy.
With the latest tranche, China has now earmarked more than 800 billion yuan of its 1 trillion yuan ($140 billion) in additional government bond issuance in the fourth quarter, as it focuses on fiscal steps to shore up the flagging economy.
The National Development and Reform Commission (NDRC) said in a statement on Saturday it had identified 9,600 projects with planned investment of more than 560 billion yuan.
China’s economy, the world’s second largest, is struggling to regain its footing post-COVID-19 as policymakers grapple with tepid consumer demand, weak exports, falling foreign investment and a deepening real estate crisis.
The 1 trillion yuan in additional bond issuance will widen China’s 2023 budget deficit ratio to around 3.8 percent from 3 percent, the state-run Xinhua news agency has said.
“Construction of the projects will improve China’s flood control system, emergency response mechanism and disaster relief capabilities, and better protect people’s lives and property, so it is very significant,” the NDRC said.
The agency said it will coordinate with other government bodies to make sure that funds are allocated speedily for investment and that high standards of quality are maintained in project construction.
($1 = 7.1315 renminbi)
© Reuters. Russian Central Bank Governor Elvira Nabiullina attends a news conference in Moscow, Russia June 14, 2019. REUTERS/Shamil Zhumatov/File Photo
MOSCOW (Reuters) – Russia’s central bank will need two to three months to make sure that inflation is steadily declining before taking any decision on interest rate cuts, the bank’s governor Elvira Nabiullina told RBC media on Sunday.
The central bank raised its key interest rate by 100 basis points to 16% earlier in December, hiking for the fifth consecutive meeting in response to stubborn inflation, and suggested that its tightening cycle was nearly over.
Nabiullina said it was not yet clear when exactly the regulator would start cutting rates, however.
“We really need to make sure that inflation is steadily decreasing, that these are not one-off factors that can affect the rate of price growth in a particular month,” she said.
Nabiullina said the bank was taking into account a wide range of indicators but primarily those that “characterize the stability of inflation”.
“This will take two or three months or more – it depends on how much the wide range of indicators that characterize sustainable inflation declines,” she said.
The bank will next convene to set its benchmark rate on Feb. 16.
The governor also said the bank should have started monetary policy tightening earlier than in July, when it embarked on the rate-hiking cycle.
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