2025-05-29 16:57

BRASILIA, May 29 (Reuters) - Brazil's Credit Guarantee Fund (FGC) should hold accounting reserves equivalent to 1% of eligible deposits but is currently at 0.35%, the fund's head Daniel Lima said on Thursday. Discussions on necessary adjustments will take place in the coming months, Lima stressed. Sign up here. Speaking at an event hosted by payment industry group Abipag, Lima also noted that the FGC's liquidity indicator stands at around 2.3% of eligible deposits, compared to a target range of 2.3% to 2.7%. The FGC is a private nonprofit entity created to manage protection mechanisms for clients of financial institutions in the event of bank resolution. The fund has drawn renewed attention following the high-profile acquisition of lender Banco Master by BRB (BSLI3.SA) , opens new tab, a deal currently being analyzed by the central bank. The transaction has sparked scrutiny as it involves two similarly sized banks, with Master having grown rapidly in recent years through an aggressive funding model based on high-yield debt distributed via investment platforms. Lima noted that addressing potential contagion risks from mid-sized banks requires more timely access to information from each institution. The central bank said earlier this year that it would carry out a scheduled review of the FGC next year as part of its regular four-year cycle on the matter. Debt securities issued by banks are insured by the FGC up to a limit of 250,000 reais ($44,028) per financial institution. https://www.reuters.com/world/americas/brazil-discuss-adjustments-credit-guarantee-fund-reserves-fall-short-target-2025-05-29/

2025-05-29 16:51

MEXICO CITY, May 29 (Reuters) - All of the Bank of Mexico's five governing board members agreed in the monetary authority's most recent rate decision that the period had been marked by high uncertainty due to trade policy announcements worldwide, minutes published on Thursday showed. "Some activity indicators surprised to the downside partly due to the effects of trade uncertainty at the global level," said the Mexican central bank. Sign up here. Most board members also noted that changes in trade policy have added significant uncertainty to the global economic outlook. Adding to global concerns, a U.S. trade court on Wednesday blocked most of U.S. President Donald Trump's tariffs, arguing he had overstepped his authority in imposing across-the-board duties on imports from U.S. trading partners. Banxico, as the central bank is known, slashed its growth forecast for Mexico's economy this year to 0.1%, from its previous estimate of 0.6%, citing sluggish domestic activity and uncertainty related to U.S. trade policy, according to its quarterly report published on Wednesday. Trump's tariff announcements since he took office in January have shaken markets and added to global uncertainty. This month, the U.S. and China agreed to a temporary truce to scale back tariffs, while Trump also postponed 50% duties on the EU until July 9. Inflation in Mexico rose more than expected in the first half of May, reaching 4.22%, above the central bank's target range of 2% to 4%. Still, most board members expect headline inflation to return to the target range by the third quarter of 2026. The majority also said risks to economic activity remain tilted to the downside, while one member warned that this could push inflation higher than anticipated, which could lead to an upward revision to the forecast. https://www.reuters.com/world/americas/bank-mexicos-rate-decision-marked-by-trade-policy-pressures-minutes-show-2025-05-29/

2025-05-29 16:09

May 29 (Reuters) - Chicago Federal Reserve Bank President Austan Goolsbee on Thursday said he believes that if big tariffs could be avoided, either through trade deals or otherwise, the U.S. central bank could likely cut interest rates given the underlying strength of the economy and the direction of inflation. Comparing the economic effect of tariffs to a layer of fat atop an otherwise healthy set of abdominal muscles, "you've got to get all of what's on top of there off before you can see it," Goolsbee said at the 2025 Mackinac Policy Conference. "And I feel a little bit like that on the economy. You know, if we could just get this off of there, there's a sixpack underneath." Sign up here. Goolsbee did not comment directly on a ruling Wednesday by a U.S. trade court that blocked many of the tariffs put on by the Trump administration that have threatened to push up inflation and slow economic growth, including the "Liberation Day" levies from April 2. Before that date, Goolsbee said, the labor market was stable and inflation was heading towards the Fed's 2% goal, conditions that would allow the Fed to bring the policy rate down from its current 4.25%-4.5% range and toward its long-term settling point. Based on the most recent Fed policymaker projection, that long-term neutral rate is around 3%. For now, though, uncertainty over tariffs is causing businesses to have a "pencils down" moment as they wait for clarity on trade policy, Goolsbee said. The Fed finds itself in a similar situation, with policymakers particularly worried about the possibility of tariffs disrupting downward progress on inflation and pushing up the unemployment rate. https://www.reuters.com/business/feds-goolsbee-if-tariffs-are-avoided-policy-rate-can-come-down-2025-05-29/

2025-05-29 14:43

WASHINGTON, May 29 (Reuters) - U.S. corporate profits fell sharply in the first quarter and could continue to be squeezed this year by higher costs from tariffs that are threatening to undercut the economic expansion. Profits from current production with inventory valuation and capital consumption adjustments dropped $118.1 billion last quarter, the Commerce Department's Bureau of Economic Analysis (BEA) said on Thursday. Profits surged $204.7 billion in the October-December quarter. Sign up here. President Donald Trump's sweeping import duties have cast a shadow over the economy, knocking business and consumer sentiment as well as unleashing unprecedented volatility on financial markets. A U.S. trade court on Wednesday blocked most of Trump's tariffs from going into effect in a sweeping ruling that the president overstepped his authority. Economists said the ruling, while it offered some relief, had added another layer of uncertainty over the economy. The increasingly uncertain environment was echoed in minutes of the Federal Reserve's May 6-7 meeting published on Wednesday, which noted "participants judged that downside risks to employment and economic activity and upside risks to inflation had risen, primarily reflecting the potential effects of tariff increases." Companies ranging from airlines, retailers to motor vehicle manufacturers have either withdrawn or refrained from giving financial guidance for 2025, citing the uncertainty caused by the on-again and off-again nature of some duties. Businesses front-loaded imports and households engaged in pre-emptive buying of goods last quarter to avoid higher costs, making it difficult to get a clear picture of the economy. The deluge of imports sent gross domestic product declining at an upwardly revised 0.2% annualized rate in the January-March quarter, the BEA said in its second estimate of GDP. The economy was initially estimated to have contracted at a 0.3% pace. It grew at a 2.4% rate in the fourth quarter. When measured from the income side, the economy also contracted at a 0.2% rate in the first quarter. Gross domestic income (GDI) expanded at a 5.2% pace in the October-December quarter. The average of GDP and GDI, also referred to as gross domestic output and considered a better measure of economic activity, declined at a 0.2% rate. Gross domestic output grew at a 3.8% pace in the fourth quarter. https://www.reuters.com/world/us/us-corporate-profits-decrease-sharply-first-quarter-2025-05-29/

2025-05-29 12:58

BRASILIA, May 29 (Reuters) - Brazilian bank lending accelerated in April despite tight borrowing costs, central bank data showed on Thursday, highlighting the resilience of economic activity even after aggressive monetary tightening. Outstanding credit rose 0.7% from the previous month to 6.6 trillion reais ($1.16 trillion). Sign up here. On a 12-month basis, credit growth picked up to 11.5% from 11.1% in March, driven by a 12.4% increase in household loans. Corporate lending rose 10.2%, faster than the previous month. The expansion came despite a sharp interest rate hiking cycle led by the central bank to cool economic activity and tame inflation. Since September, policymakers have raised the benchmark Selic rate by 425 basis points to 14.75%, its highest level in nearly two decades. On Thursday, the central bank said following its financial stability committee meeting that it had observed mild signs of a slowdown in credit between January and March, both in the banking system and capital markets. Still, it noted that credit growth remains historically high, reflecting economic resilience despite tighter financial conditions. In April, the default rate on non-earmarked loans to businesses and consumers rose to 4.8% from 4.5% in March, while the average spread in the segment jumped to 31.3 percentage points from 29.4 points the month before. ($1 = 5.6870 reais) https://www.reuters.com/world/americas/brazils-bank-lending-picks-up-april-despite-tight-borrowing-costs-2025-05-29/

2025-05-29 12:34

May 29 (Reuters) - Syria has signed a memorandum of understanding with a consortium of international companies led by Qatar's UCC Holding to develop major power generation projects with a foreign investment valued at about $7 billion, UCC said in a statement on Thursday. The agreement involves building four combined-cycle gas turbine power plants with a total capacity of 4,000 megawatts, plus a 1,000 MW solar power plant in southern Syria. Sign up here. Construction is expected to begin after final agreements and financial close, and is targeted to finish within three years for the gas plants and less than two years for the solar plant. After 14 years of war, Syria’s electricity sector has been suffering from severe damage to its grid and power stations, aging infrastructure, and persistent fuel shortages, generating only 1.6 gigawatts of electricity today, down from 9.5 GW before 2011. https://www.reuters.com/business/energy/syria-signs-7-billion-power-deal-with-qatars-ucc-holding-led-consortium-2025-05-29/