Latest news with #GlobalFinancialCrisis
Business Times
36 minutes ago
- Business
- Business Times
ECB cuts rates as bets build on a summer pause
[FRANKFURT] The European Central Bank cut interest rates as expected on Thursday (Jun 5) and kept all options on the table for its next meetings even as the case grows for a summer pause in its year-long easing cycle. The ECB has now lowered borrowing costs eight times, or by 2 percentage points since last June, seeking to prop up a eurozone economy that was struggling even before erratic US economic and trade policies dealt it further blows. With inflation now safely in line with its 2 per cent target and the cut well-flagged, the focus has shifted to the ECB's message about the path ahead, especially since at 2 per cent, rates are now in the 'neutral' range where they neither stimulate nor slow growth. The central bank for the 20 countries that share the euro offered few hints in its statement, however, sticking to its mantra that decisions would be taken meeting-by-meeting and based on incoming data. 'The Governing Council is not pre-committing to a particular rate path,' the ECB said. 'Interest rate decisions will be based on its assessment of the inflation outlook in light of the incoming economic and financial data, the dynamics of underlying inflation and the strength of monetary policy transmission.' ECB president Christine Lagarde's 1245 GMT news conference may offer more clues about the months ahead, with the bank's most aggressive easing cycle since the 2008/2009 Global Financial Crisis expected to start winding down. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Investors are already pricing in a pause in July, and some conservative policymakers have advocated a break to give the ECB a chance to reassess how exceptional uncertainty and policy upheaval both at home and abroad will shift the outlook. While ECB board member and chief hawk Isabel Schnabel has made explicit calls for a pause, others have been more cautious and Lagarde is likely to stick to language that leaves the ECB's options open, as the outlook is prone to sudden changes. The case for a pause rests on the premise that the short- and medium-term prospects for the currency bloc differ greatly and may require different policy responses. Inflation could dip in the short term – possibly even below the ECB's target – but increased government spending and higher trade barriers may add to price pressures later. The added complication is that monetary policy impacts the economy with a 12-to-18 month lag, so support approved now could be giving help to a bloc that no longer needs it. Investors still see at least one more rate cut later this year, however, and a small chance of another move later on, especially if US President Donald Trump's trade war intensifies. Divergent outlook Acknowledging near-term weakness, the ECB cut its inflation projection for next year. Trump's tariffs are already damaging activity and will have a lasting impact even if an amicable resolution is found, given the hit to confidence and investment. 'A further escalation of trade tensions over the coming months would result in growth and inflation being below the baseline projections,' the ECB said. 'By contrast, if trade tensions were resolved with a benign outcome, growth and, to a lesser extent, inflation would be higher than in the baseline projections.' This sluggish growth, along with lower energy costs and a strong euro, will curb price pressures. Indeed, most economists think inflation could fall below the ECB's 2 per cent target next year, triggering memories of the pre-pandemic decade when price growth persistently undershot 2 per cent, even if projections show it back at target in 2027. Further ahead, the outlook changes significantly. The European Union is likely to retaliate against any permanent US tariffs, raising the cost of international trade. Firms could meanwhile relocate some activity to avoid trade barriers but changes to corporate value chains are also likely to raise costs. Higher European defence spending, particularly by Germany, and the cost of the green transition could add to inflation while a shrinking workforce due to an ageing population will keep wage pressures elevated. REUTERS
West Australian
a day ago
- Business
- West Australian
ASIC vs Westpac: RAMS Financial Group sued by regulator over home loan misconduct
The financial regulator will take mortgage company RAMS, a wholly-owned subsidiary of Westpac, to court for 'systemic misconduct' in arranging home loans, including doctoring payslips and expenses. The Australian Securities and Investment Commission (ASIC) alleges RAMS breached its obligations as a lender, failing to perform proper oversight of franchisees from June 2019 and April 2023, resulting in 'widespread misconduct'. ASIC alleges RAMS' franchisees submitted false pay slips from non-existent employers and altered customers' liabilities and expenses to enable them to meet loan serviceability requirements. In another example, a RAMS franchise employee was found to be involved in manufacturing a fake contract of sale for a home. 'This is a systemic organisational governance failure by RAMS, who did not adequately supervise its franchise network,' ASIC Deputy Chair Sarah Court said. 'RAMS allowed years of unlawful conduct to occur across its franchises, creating the opportunity for loans to be provided to customers who otherwise may not have qualified for those loans, and thereby increasing commissions earned by RAMS franchisees.' RAMS, founded 33 years ago, became one of the most prominent non-bank lenders and was instrumental in shaking up the banks' stranglehold on the mortgage market. The company was purchased by Westpac in 2008, when it hit financial pressure during the Global Financial Crisis. Westpac had tried to offload the company but the investigation by ASIC, launched in May 2024, scuppered those plans. In August 2024, Westpac closed the RAMS business, including shutting down all franchisee offices, absorbing the $31.8 billion mortgage book. RAMS has admitted liability for contravening the Credit Act, and completed a remediation program. Westpac said it would work cooperatively with ASIC to resolve the proceedings and 'expects existing provisions should be sufficient to meet the financial outcome of the proceedings, subject to court approval.' ASIC is seeking 'pecuniary penalties', with the first hearing yet to be scheduled.
NZ Herald
2 days ago
- Business
- NZ Herald
Kiwi businesses say Trump's tariffs more impactful than Covid, Global Financial Crisis
Kiwi businesses say US President Donald Trump's tariffs will have a more severe global impact than Covid-19 and the Global Financial Crisis, according to ASB's latest Business Survey.
Scoop
2 days ago
- Business
- Scoop
ASB Business Survey: The Impact Of Trump's Tariffs, According To Kiwi Businesses
Research released today by ASB, supported by Talbot Mills Research, shows Kiwi businesses see US tariffs as more impactful than Covid-19 or the Global Financial Crisis. More than 300 business leaders, including CEOs and founders, contributed to the study, giving their insights on President Trump's recently announced trade policies. Two-thirds (67%) of businesses are concerned about the impact of proposed US tariffs in the next 12 months, with nearly 80% of exporters concerned Kiwi business leaders believe Trump's tariffs will have a more severe global impact than Covid-19 and the GFC Meat, dairy and wine are seen as the most vulnerable within Food and Fibre sector, while businesses predict wool and seafood would fare better Nearly one-quarter (24%) of Kiwi businesses see at least some opportunity in the tariffs More than one-third (39%) of respondents listed support of banks as critical to navigating the current environment Tariffs: a threat and an opportunity for Kiwi businesses ASB's Executive General Manager Business Banking Rebecca James says: 'We're seeing sustained market volatility with the ever-changing political decisions around tariffs, which naturally creates a heightened sense of uncertainty for businesses. It's clear businesses view any proposed US tariffs as troubling, but it's pleasing that nearly a quarter of respondents see opportunity in tariffs too. New Zealand has a reputation on the world stage for ingenuity and a can-do attitude, and we want businesses to know there are things they can do to future-proof and manage risks in turbulent times.' President Trump first announced tariffs in April as part of the 'America First' trade policy, aimed at protecting US industries and addressing the trade deficit. The tariffs are set at 10% for most countries, including New Zealand, with China a notable outlier where a larger tariff has been applied to Chinese origin goods. Additional proposed tariffs higher than the 10% baseline were paused for a 90-day period and will be reviewed in July. Businesses are split on how long potential disruption could last. A slight majority (51%) of Kiwi businesses are optimistic that the economy will recover quickly, while 38% predict a prolonged economic downturn for the country and the remainder were unsure. Taking action key to growth 14% of those surveyed view US tariffs purely as an opportunity, while 10% see them as both a potential risk and an opportunity. Ten percent of businesses and 14% of exporters have already taken action to reduce the negative impacts of tariffs including raising prices, shifting markets or cutting costs. Just under one-third (30%) believe they can make up losses through new customers or cost savings; 25% from operational efficiencies, and 22% from other revenue streams. 22% are unsure, with uncertainty highest among small businesses. 'The current market volatility and geopolitical tension may be our 'new normal', but we've been in positions of global uncertainty before and the research shows Kiwi businesses are already thinking about actions they can take to make their business more resilient and generate returns.' Ms James encourages businesses to stay connected to industry partners, trade advocacy groups and their banks to share knowledge and ideas when it comes to growth and scale. 'Business customers are relying on us more than ever to navigate the current environment, and we're seeing this through an increase in trade finance and a rise in currency hedging enquiries. Our advice is to start exploring options now. We're seeing customers adapting their business strategy in all sorts of ways, so solutions for your business might look like assessing AI to improve workflow, adjusting your supply chain, selling down stock before new inventory orders, building new trade relationships or exploring untapped markets.' Businesses shifting their focus to closer to home More than three-quarters of Kiwi exporters expect the cost of doing business with the US to increase by 10% or more in the next year. Concern is higher among exporters (78%) and increases with business size, with worry growing to 88% among 100+ staff businesses). The potential impacts of tariffs which were of the most concern to businesses include slowing economic growth (39%), increased operating costs (32%) and supply chain disruptions (28%). Nearly one-quarter of businesses are worried about consumer backlash due to price inflation (24%), along with 23% who see a China-US Trade war as unsettling for business. Some of the most explored markets by businesses are China (51%), Australia (37%), European Union (28%) and Southeast Asia (25%). 'The research shows a pendulum swing when it comes to trading partners, with businesses redirecting their attention to our close neighbours. Location seems to be king, with our customers prioritising relationships much closer to home,' says Ms James. 'We're also seeing exporters maintaining high standards and doubling down on premium products to give us an edge on the global stage, even where it costs more for consumers.' The role of banks as a critical support function Businesses see Government lobbying as the most critical tool in helping to reduce the impact of tariffs, with banks the next most important. More than one-third (39%) of respondents listed support of banks as critical, specifically working capital support (31%), risk advice (26%) and trade finance (24%). 'ASB has provided $4.6 billion dollars to Kiwi businesses over the past five years including considerable support to companies looking to expand and navigate opportunities abroad. We have seen increased use of trade finance products, aided by trade credit insurance, enabling businesses to sustainably leverage balance sheets while derisking payment default. We encourage companies doing business overseas to speak with their banker and engage with a trade specialist to ensure your business is in the strongest position," says Ms James. ASB Bank Helping you get one step ahead. In 1847, ASB opened as the Auckland Savings Bank with the pledge: 'to serve the community; to grow and to help Kiwis grow'. And that is very much what ASB is about today. ASB is a leading provider of integrated financial services in New Zealand including retail, business and rural banking, funds management and insurance. ASB strives to consistently provide its customers with outstanding service and innovative financial solutions. They're dedicated to providing simple financial products that allow their customers to bank with them how and when they want. We all have our own ways to measure progress, and our own stories about the things that matter to us. Whatever way you choose to measure progress, and whatever your goals, ASB is there to help you get one step ahead. Contact ASB Bank
West Australian
2 days ago
- Business
- West Australian
Australian economy: OECD warns sluggish business investment has slowed growth
Australia has been among the worst hit developed nations by a global slowdown in business investment that will damage growth, international experts at the OECD say. The national economy will grow a sluggish 1.8 per cent this year, according to the Organisation for Economic Co-operation and Development's latest analysis. A modest 2.2 per cent was expected in 2026. Unemployment and inflation were tipped to stay under control, the report forecast. But Australia has plenty of hard work to do fixing the housing shortage, chasing net zero and grappling with an ageing population. America's trade war will slow growth across the world and the OECD called on countries to rev up business investment to boost living standards long term. That means investors and companies pumping cash into new equipment, major projects, research, and technology to level up their businesses. AMP last week estimated business investment as a share of Australia's economy had fallen to half the boom-time level of 2012. Lobbyists the Australian Industry Group seized on the numbers arguing they were the 'canary in the coal mine' for Australia's competitiveness. Tuesday's report by the Paris-based OECD — led by former WA senator and Australian finance minister Mathias Cormann — will add weight to business concerns. But the international institute's research shows the problem is global, with investment lagging historical trends across advanced countries. The result had been slower income growth for workers, the OECD said. Australia's problem was among the biggest in the world, however, with business investment about 30 per cent below the trend rate prior to the Global Financial Crisis. It was the third biggest gap among 17 developed countries assessed. The OECD chalked up the problem to high levels of uncertainty, sluggish demand and structural changes as economies go digital. Investment into housing has taken a battering, too. State and Federal Governments would need to ease zoning rules and move to 'reverse the long-standing decline in housing affordability', the report said. Yet the most immediate threat was US President Donald Trump's trade war — considered by the OECD to be a major risk to workers and businesses everywhere. 'We have seen a significant increase in trade barriers as well as in economic and trade policy uncertainty,' OECD chief economist Álvaro Pereira said. 'This sharp rise in uncertainty has negatively impacted business and consumer confidence and is set to hold back trade and investment.' He said global growth projections had been downgraded to 2.9 per cent for 2025 and 2026. 'Weakened economic prospects will be felt around the world, with almost no exception.' The report said Australia's outlook hinges on China, rather than through direct trade barriers into the US. It came as major banks downgraded forecasts for March quarter economic growth, ahead of data to be released on Wednesday. ANZ expects the national economy expanded 0.2 per cent in the first three months of the year. Commonwealth Bank was just slightly more optimistic with a forecast of 0.3 per cent. Minutes from the Reserve Bank's May meeting, released on Tuesday, showed Governor Michele Bullock's board hopes to take the 'path of least regret' through trade instability. The RBA has twice cut interest rates this year although the minutes also showed the board was reluctant to move too fast, too soon.
