Lawmakers Look to Wean Chile Off Its Capital Markets Stalwart
Created in 1967 to prevent rampant inflation choking off long-term lending, the Unidad de Fomento, or UF, accounts for nearly all mortgages and most long-term corporate borrowing. But its use has also spread to rental contracts, health and car insurance and school fees.
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Yahoo
an hour ago
- Yahoo
ECB Hits Pause--But This Data Could Jolt Markets Soon
Eurozone consumers are dialing back their inflation fears. The European Central Bank's June survey showed 12-month inflation expectations easing to 2.6%, down from 2.8% in Maylanding back at January levels, before trade tensions flared up. Longer-term views were unmoved, with 3-year and 5-year projections holding at 2.4% and 2.1%, respectively. It's the kind of data that gives the ECB room to pause without raising eyebrows. That's exactly what happened last week. After eight rate cuts in twelve months, the ECB hit the brakes. President Christine Lagarde signaled the central bank is in wait-and-see mode. Inflation is hovering near target, and the economy isn't veering off course. Meanwhile, spending expectations edged down to 3.2% from 3.5%, and income growth held steady at 1%. Mortgage rate expectations dipped slightly to 4.3%, while home price outlooks nudged down to 3.1%. There was one more optimistic twist: labor market sentiment. Consumers now expect the unemployment rate to drop to 10.3% in a year's timea modest but meaningful shift. For investors, especially those watching rate-sensitive names like Tesla (NASDAQ:TSLA), the broader message is clear: the ECB isn't rushing into its next move. That pause could give equities some breathing room, especially in sectors that thrive when rates stabilize. This article first appeared on GuruFocus.
Yahoo
an hour ago
- Yahoo
Euro zone inflation holds at ECB target, supporting case for steady rates
By Balazs Koranyi FRANKFURT (Reuters) -Euro zone inflation held steady at the ECB's 2% target in July, confirming the bank's benign view on prices and strengthening the case for policymakers to keep interest rates on hold for some time after rapidly cutting borrowing costs. The ECB halved its key rate to 2% in the year to June and predicted that inflation would hover near its target over the medium term, reducing the need for further action, even if the outlook was unusually uncertain given trade tensions with the U.S. and geopolitical volatility. At 2%, inflation was a touch above expectations in a Reuters poll of economists but such a small miss is unlikely to concern policymakers, who are more focused on underlying trends, particularly in services. Underlying or core inflation, which excludes volatile items like food and fuel, was also steady at 2.3%, as a small slowdown in services price growth to 3.1% from 3.3% was offset by a pick-up in goods inflation, data from Eurostat showed on Friday. "The latest trade developments and the avoidance of a full-blown trade conflict have alleviated pressure on the ECB to continue cutting rates to support eurozone growth," ING economist Carsten Brzeski said. "Add to this the latest weakening of the euro as well as meagre but positive GDP growth in the second quarter and the bar for yet another rate cut this year has clearly risen." Financial markets see less than a 50% chance of another rate cut this year, indicating that the bar for policy easing has increased since the EU struck a tentative trade deal with the U.S. While the agreed 15% tariffs will be negative for growth and reduce price pressures, much of this has been priced into assets and the end of uncertainty will offset some of the negatives. Extra budget spending from Germany, the bloc's biggest economy, is also likely to compensate for some of the drag from trade, suggesting that the euro zone's timid recovery will continue next year, driven mostly by domestic consumption. Some policymakers, however, fear that trade barriers could be a bigger drag on prices than currently predicted and the ECB could undershoot its target in the coming years, much like it did during the pre-pandemic decade. Indeed, the bank's own projections put inflation below 2.0% through 2026 before a rebound, and the bank has repeatedly warned that rising trade barriers could force China to start dumping surplus export goods on the rest of the world, lowering prices. But economists said there was no evidence for such a trend now. "Country-level data so far suggest no sign of Chinese goods dumping," Nomura said in a note. "No Chinese goods dumping is consistent with volumes trade data we have to May that suggest U.S. tariffs have not meaningfully affected European exports to the U.S. or Chinese exports to Europe." Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Bloomberg
an hour ago
- Bloomberg
Euro-Zone Inflation Holds at 2%, Backing ECB Caution on Rates
Euro-area inflation held at the European Central Bank's target, supporting the case for officials who say there's no rush to keep lowering interest rates. Consumer prices rose an annual 2% in July, the same pace as in the previous month, Eurostat said Friday. Economists polled by Bloomberg had expected a slowdown to 1.9%.
