Tag: rate

U.S. inflation rate flat at 3.7% in September, suggesting long road back to 2% target

Measures of U.S. inflation in September showed that the pace of price increases is still grinding lower, though at a slow and uneven pace.

Prices in the United States increased 0.4 per cent from August to September, a slowdown from the previous month. Thursday’s report from the Labour Department also showed that annual consumer inflation in September was unchanged from a 3.7 per cent rise in August.

And underlying inflation declined a bit: So-called core prices, which exclude volatile food and energy costs, climbed 4.1 per cent in September from 12 months earlier, down from a 4.3 per cent year-over-year pace in August. That is the smallest increase in the core measure in two years.

Still, on a month-to-month basis, prices are still rising faster than is consistent with the Fed’s 2 per cent target. Core prices increased 0.3 per cent in September, the same as the previous month.

Economists and Fed officials have long cautioned that inflation would likely ease in a bumpy and uneven way, though it is still expected to keep slowing into 2024. Thursday’s inflation data follows several speeches this week by Fed officials suggesting that they are inclined to leave their benchmark interest rate unchanged at their next meeting Oct. 31- Nov. 1.

Longer-term interest rates have spiked since the Fed’s policymakers last raised their key rate in July. Those higher long-term bond rates have led to more expensive mortgages, auto loans and business borrowing, a trend that could help cool inflation pressures without further Fed rate hikes.

Several factors have combined to force up longer-term rates. They include the belated acceptance by financial markets of the likelihood that the economy will remain on firm footing and avoid a recession.

WATCH | Global economy may tip into recession this year, IMF warns:

One-third of world

Bank of Canada raises its key interest rate to 5%

The Bank of Canada raised its benchmark interest rate by 25 basis points on Wednesday, marking the first time since April 2001 that the figure hit five per cent.

The move was expected by economists after Statistics Canada released its June labour force survey last week showing that Canada added 60,000 jobs last month — further contributing to an overheated economy.

Some of the country’s biggest lenders, including the Royal Bank of Canada, CIBC, Bank of Montreal and TD Bank, have already announced that they will match their increase effective Thursday to align with that of the central bank’s.

Following the announcement, experts diverged on whether Canadians could expect another increase after the summer. Trading in investments known as swaps — which bet on future central bank moves — imply there is a better than 75 per cent chance of another small hike at the bank’s next meeting on Sept. 6.

The effects of interest rate hikes can sometimes take a year or a year-and-a-half to play out in the economy.

“There’s an element of patience, and I think that’s why as well you see [the bank] being as noncommittal as they were today, with respect to whether they will be performing more hikes,” Desjardins chief economist Jimmy Jean told CBC News in an interview.

“They’re trying their best to communicate something to Canadians that can provide them with some sense of clarity. But the problem is that they don’t have that clarity themselves.”

Could be mid-2025 before bank hits inflation target

Wednesday’s rate hike marks the 10th by the central bank since March 2022. It hit pause on those hikes in January for a few months to determine whether the economy had sufficiently cooled, then resumed its campaign in June.

“Global inflation is easing, with lower energy prices and

Biden won a global tax rate. Now Americans wonder if it was a good deal.

When President Biden led the way almost two years ago in brokering a worldwide deal to set a minimum corporate tax rate, it looked like a triumph abroad. Now, as the world comes closer to actually collecting the taxes the United States advocated, it’s starting to seem like chaos here at home.

American companies may face dizzyingly complex tax bills from countries around the world, while Republicans in Congress fight against the plan that their own country championed.

“This is a lose-lose deal negotiated by the Biden administration,” Sen. Mike Crapo (Idaho), the top Republican on the tax-focused Finance Committee, said in a recent statement. “The Biden administration handed each foreign country a model vacuum to suck away tens of billions from our tax base.”

The deal, which 130 countries signed on to in 2021, included a pledge to set corporate tax rates at no less than 15 percent, closing loopholes that let multinational companies move their operations to different nations in search of low tax rates.

Biden, world leaders endorse deal for global minimum tax

Japan, South Korea, the European Union and other major economies have followed the pledge, adopting or preparing to adopt legislation that raises their tax rates. But in the United States, Congress hasn’t made any real moves to adjust tax law to make sure no U.S. company pays less than 15 percent as required by the deal.

The U.S. corporate tax rate is 21 percent, well above the 15 percent minimum. But without additional laws, some companies can find ways to reduce their tax burden below what’s allowed under the terms of the agreement.

Congress’s inaction along with the structure of the agreement itself could bring many consequences: The largest American companies might find their already complicated tax returns will

Scale of rate hike is shock therapy for UK’s inflation problem | Business News


The Bank of England was always going to increase its Bank rate this month. But every economist had expected only a quarter percentage point increase.

There was good reason for this.

Although inflation data had been higher than expected this week, the bank had been slowing down the rate at which it was lifting borrowing costs. So too had its counterpart central banks around the world, most notably the Federal Reserve in the US and the European Central Bank.

Typically a quarter percentage point increase is considered a “normal” increase. And while some investors had begun to bet on a bigger rate increase this month, most people expected another normal increase.

Well, the bank’s monetary policy committee (MPC) has surprised them with a bigger increase.

It’s a sign, if any were needed, of just how worried it is about inflation, which looks like it is becoming dangerously sticky.

The stickier it gets, the harder inflation is to bring down, hence why the bank is taking this more radical step.

It is a form of shock therapy that it hopes will send out a clear message: when it comes to inflation-fighting, it’s not messing around.

The problem is that some will depict it as a form of panic.

The bank has been roundly criticised for failing to forecast the sharp increase in inflation in the last couple of years. It has been criticised for being too slow to respond. Now it is responding far more quickly, but some will argue that this is a problem of its own making.

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What’s keeping inflation so high?

And an increase like this will have a bearing on households. For as economic tools go, interest rates are a particularly blunt instrument.


Canada’s economy grew by more than expected in first quarter, upping odds of rate hike next week

The Canadian economy grew at an annualized rate of 3.1 per cent in the first quarter of 2023, Statistics Canada reported Wednesday.

The latest data shows growth beat out the federal agency’s own forecast of 2.5 per cent for the quarter. A preliminary estimate suggests the economy grew by 0.2 per cent in April, after remaining flat in March.

The ongoing resilience in the economy will likely spur discussions of a potential rate hike, as the Bank of Canada is expected to make its next interest rate announcement next week.

The relatively strong GDP showing had investors increasing the odds of a rate hike when the central bank meets next week. Prior to the GDP numbers, trading in investments known as swaps was implying a litle over a one-in-four chance of a hike. 

Now, those odds are better than one-in-three.

Statscan says growth in exports and household spending helped spur growth in the first quarter. On the other side of the ledger, slower inventory accumulations as well as declines in household investment and business investment in machinery and equipment weighed on growth.

Tuan Nguyen, an economist with consulting firm RSM Canada, says the GDP numbers “blew past expectations.”

“After a slow final quarter of last year, the Canadian consumers and businesses came out strong in the first quarter, defying rising recession concerns that most market participants have been talking about,” Nguyen said. “There is no doubt that the data pointed to a hot economy, explaining why underlying inflation has remained elevated.”

Stubbornly high inflation

The Canadian economy has managed to continue outperforming expectations, despite the Bank of Canada hoping high interest rates would cause a more profound pullback by consumers and businesses.

The household spending figures show spending up on both goods and services in the first three months of

Highlights: Delhi records 509 new Covid cases; positivity rate rises to 27%

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    President Murmu presents Padma awards for 2023 at Rashtrapati Bhavan

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    Zelenskyy visits Poland to thank ally and meet Ukrainians

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  • Brexit has value Uk £29bn in small business expenditure, claims BoE rate setter

    Brexit has wiped out £29bn in enterprise expense and exacerbated the slowdown in Uk productiveness, in accordance to a Lender of England curiosity price setter.

    Jonathan Haskel, an exterior member of the Bank’s Monetary Policy Committee, reported the absence of enterprise expense progress considering the fact that the 2016 referendum was equal to 1.3 for each cent of Uk gross domestic product or service, or about £1,000 per residence.

    He additional that penalty would in all probability increase to about 2.8 per cent of GDP at the conclusion of the BoE’s forecast period in 2026.

    Haskel’s remarks comply with a pledge past thirty day period by Uk primary minister Rishi Sunak to “grow the economy”, in component by having benefit of put up-Brexit freedoms.

    Organization financial commitment is very important to productiveness advancement for the reason that it can improve the worth of workers’ output, which in transform allows wages to rise.

    But in an interview with economics web-site The Overshoot, Haskel said capital paying out experienced “flattened out” right after the referendum, as an alternative of climbing as it “did in additional or significantly less every single other country”.

    Line chart of Business investment index, real value rebased, Q2 2016=100 showing UK business investment growth has largely stalled

    He included that component of the UK’s modern productivity slowdown “really goes back to Brexit”, with the place in last place between G7 members for expenditure progress because 2016.

    The Business for National Data previous 7 days revised up the real value of organization expenditure around the past yr compared with earlier estimates, noting development of 4.8 for each cent in between the third and the fourth quarter of 2022.

    As a result, enterprise financial commitment is now back to pre-coronavirus pandemic levels and the amount attained at the time of the Brexit referendum. But it stays well down below the level it would have been at had financial commitment