Economy

Home working may be helping Brazil’s inflation ease – central bank study

Published

5 months ago

November 25, 2023

Home working may be helping Brazil's inflation ease - central bank study

BRASILIA (Reuters) – Home working in Brazil may be relieving wage pressure in an otherwise buoyant labor market, a study signed by top central bank officials and released by the Bank for International Settlements (BIS) showed on Friday.

Economic policy director Diogo Guillen and analyst Sergio Leao noted that wages were lagging pandemic levels despite a rebound in employment, with the real wages of college-educated workers seeing the most substantial decrease.

This suggests that “working from home amenities may be playing a role in releasing wage pressure during the post-pandemic recovery,” they wrote.

Brazil’s unemployment rate dipped to 7.7% in the three months to end-September, the lowest since the three months to end-February 2015.

Despite the heated job market, annual inflation resumed its downward trajectory in October, falling to 4.82%, with economists expecting the consumer price index to end the year within the central bank’s target range.

After analyzing a series of data, Guillen and Leao concluded that before the pandemic, a larger proportion of college-educated workers in the workforce was associated with an increase in real wages, but the effect has since reversed.

“One possible explanation…is that more educated workers, who have a greater chance of working remotely, have accepted lower nominal wage growth in exchange for the amenity value of increased job flexibility,” they said.

In the minutes of its most recent monetary policy meeting – where interest rates were cut by 50 basis points for a third consecutive time to 12.25% – the central bank’s rate-setting committee, of which Guillen is a part, noted that there was no evidence of high wage pressure in labor negotiations despite the falling unemployment rate.

The central bank said it would continue to monitor earnings dynamics to better assess the degree of slack in the labor market and its potential impact on services inflation, an important variable for its policy decisions.

Economy

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

Published

4 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

4 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

4 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.