Economy

Details of a potential U.S. government debt deal are emerging

Published

2 years ago

May 26, 2023

Negotiations between the White House and the Republican Party, which holds a majority in both houses of the U.S. Congress, are progressing towards an agreement on the national debt ceiling and federal government spending limitations for two years.

In recent days, the two sides have narrowed their differences in talks, but the agreed-upon details are still tentative, and a final decision has not been reached yet, according to Bloomberg. One key outstanding issue is the amount of spending limits, on which the White House and Republicans have not yet reached an agreement. The Biden administration has advocated for a 3% increase in defense spending in 2024.

Republicans have secured an agreement to expedite permits for pipelines and other fossil energy projects. The agreement also includes provisions to modernize the U.S. electric grid by incorporating renewable energy sources, as reported by Bloomberg. Additionally, Republicans have agreed to reduce the proposed budget increase for the U.S. Internal Revenue Service by $10 billion, lowering it from the original $80 billion.

Initially, Republicans suggested raising the national debt ceiling until March 2024 in exchange for 10 years of spending limits. However, they are now discussing a two-year period for spending cuts. While there are still differences to be resolved, both parties are aware of their areas of disagreement, and work will continue until a final agreement is reached, according to House Speaker Kevin McCarthy.

Reports of progress in the negotiations have led to a slight rise in U.S. Treasury yields. Stock markets in Japan and South Korea experienced mostly positive movement, while the main indexes in Australia remained relatively stable. Goldman Sachs analysts Jan Hatzius and Alec Phillips noted that the likelihood of reaching a deal is now at its highest point ever in the negotiations. If a deal is reached promptly, a vote in the House of Representatives is expected to take place on Tuesday, May 30, allowing the document to reach the president before the June 1 deadline set by the U.S. Treasury Department.

Earlier we reported that the head of Rockefeller International criticizes China’s economic recovery as a farce.

Economy

Russian central bank says it needs months to make sure CPI falling before rate cuts -RBC

Published

11 months ago

December 26, 2023

Russian central bank says it needs months to make sure CPI falling before rate cuts -RBC

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.

Economy

China identifies second set of projects in $140 billion spending plan

Published

11 months ago

December 25, 2023

China identifies second set of projects in $140 billion spending plan

© 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)

Economy

Russian central bank says it needs months to make sure CPI falling before rate cuts -RBC

Published

11 months ago

December 25, 2023

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.