Latest news with #ratecuts
Reuters
3 days ago
- Business
- Reuters
ECB's Panetta: reduced room for more rate cuts but must be flexible
ROME, May 30 (Reuters) - The European Central Bank has reduced room for further rate cuts but should maintain a pragmatic, flexible approach and make future decisions on a case-by-case basis, governing council member Fabio Panetta said on Friday. ECB policymakers are scheduled to meet on June 5, with financial markets expecting it to lower its key deposit rate to 2% from 2.25%. That would mark the bank's eighth cut in an easing cycle that which began in June last year and has seen the deposit rate come down from 4% to the current 2.25%, reflecting diminishing price pressures and concerns about weak economic growth. "The room for further rate cuts has naturally diminished," Panetta, the governor of the Bank of Italy, said in a keynote speech in Rome. "However, the economic outlook remains weak, and trade tensions could lead to a deterioration," he added. "It will be essential to maintain a pragmatic and flexible approach, considering liquidity conditions and the signals coming from financial and credit markets." Presenting the Bank of Italy's annual report, Panetta said the outcome of trade negotiations between the euro zone and the United States remained uncertain but the tensions were in any case bound to have a "significant impact" on the economy.
News.com.au
5 days ago
- Business
- News.com.au
Inflation read sours back-to-back rate cuts
Hopes of back-to-back rate cuts slid on Wednesday after inflation data came in higher than the previous month, despite April usually being a month for price hikes. The Australian Bureau of Statistics' April inflation print shows the all-important trimmed mean inflation, which the Reserve Bank uses to measure Australia's inflation rate, came in hotter than expected. CPI excluding volatile items and holiday travel measure rose 2.8 per cent in the 12 months to April, compared to a 2.6 per cent rise in the 12 months to March. Australia's overall CPI indicator – including volatile items - came in at 2.4 per cent, but again was higher than market forecasts of 2.3 per cent year-on-year. The largest contributor was food and non-alcoholic beverages, housing and recreation and culture, during the busy Easter and Anzac Day weekends. NAB senior economist Taylor Nugent says travel is expected to be a key support in April as it is usually a seasonally strong month for the category, and the month includes Easter and ANZAC long weekends. Elsewhere, health insurance premium increases are measured in April and were a little higher than a year ago, while fuel prices fell in the month, and there may be some additional unwind of Queensland electricity subsidies, according to Mr Nugent.
Reuters
22-05-2025
- Business
- Reuters
Fed's Waller sees path to rate cuts later this year, Fox Business reports
NEW YORK, May 22 (Reuters) - U.S. Federal Reserve Governor Christopher Waller said on Thursday he still sees a path to rate cuts later this year, in comments that observed market pricing levels show investors are worried current Republican budget plans are not doing enough to deal with the deficit. Waller, who was interviewed on Fox Business's television channel, said the key to the outlook depends on where the Trump administration's tariff policy settles out. If those tariffs hit the lower end of the range relative to some of the more draconian levels seen as the start of President Donald Trump's global trade war, then the outlook appears solid. 'If we can get the tariffs down close to the 10% and then that's all sealed, done and delivered somewhere by July, then we're in good shape for the second half of the year, and then we're in a good position to kind of move with rate cuts through the second half of the year,' Waller said. The policymaker did not say how or when he expects the Fed to lower what is now a federal funds target rate range set between 4.25% and 4.5%. Financial markets are looking toward a modest amount of rate cutting later in the year, even as Fed officials and many in the private sector acknowledge huge uncertainty around the outlook tied to trade policy. Many of the more aggressive aspects of the tariff policy are suspended pending the success of trade deals, so there remains little clarity on how things will shake out. Economists generally believe tariffs of the sort favored by the president will drive up inflation while lowering growth and employment. Trump's retreat on tariffs thus far has caused forecasters to lower what had been high odds the economy would fall into recession. Waller, in his interview, also took on a Republican tax plan that appears likely to add significant amounts of borrowing to already massive deficits. Financial markets have wobbled as Republicans have moved forward on the legislation, as government bond yields have been rising. Higher borrowing costs add restraint to economic activity and could affect how the Fed thinks about future monetary policy choices. 'The markets are watching the fiscal policy' now being considered 'and they have some concerns about whether it's going to be reducing the deficit. I mean, we ran $2 trillion deficits the last few years. This is just not sustainable,' Waller said. 'Markets are looking for a little more fiscal discipline, they're concerned,' Waller said. As the version of the bill passed on Thursday by the House also needs to go through the Senate, Waller noted markets might demand a premium to buy government debt until it's clear government spending will moderate. Waller noted there's a general level of concern right now over U.S. assets. 'There does seem to be, you know, a risk-off on American assets across the board, not just government debt, but everything,' Waller said. 'And whether that continues in the future or not, I don't know.' Waller said that if the economy gets back 'on a good path' and inflation 'stays down,' then 'you might see a resurgent demand for American assets.' Waller also said in the interview that he continues to believe that standard economics reckons any tariff-related inflation will be a one-time shot that Fed policymakers can look through. He said a 10% tariff regime should have only a modest impact on real-world price increases and noted that he has seen nothing so far to suggest the tariffs would create persistent upward pressure on prices.
News.com.au
21-05-2025
- Business
- News.com.au
NAB predicts three more rate cuts this year from the Reserve Bank
NAB Chief Economist Sally Auld predicts there could be another three more rate cuts this year after the Reserve Bank finished its second rate cut on Tuesday. 'I think the narrative for the bank is really about trying to work out what the appropriate stance of policy is, given some quite significant shifts in the global backdrop,' Ms Auld told Sky News Business Editor Ross Greenwood. 'A cash rate a little bit above four per cent was continuing to exert a headwind on the broader economy. 'The bank is now clearly far more comfortable with the inflation outlook and also a little bit disappointed by the performance of the consumer so far this year, I think that made the decision that a restrictive policy stance was no longer the right one. 'At Nab … we think they're probably going to choose that middle path and actually anchor towards a neutral policy setting.'
ABC News
20-05-2025
- Business
- ABC News
Rising economic risks opens the door to rate cuts, says Barrenjoey chief economist
Barrenjoey Capital Partners chief economist Jo Masters says the balance of risks have shifted to the downside and that is opening the door to rate cuts.
