2025-02-21 17:48

Retail revenues were boosted by a sales tax break in December Sales increased across all nine subsectors, Statscan said Flash estimate shows January's sales could be down 0.4% Money markets increase bets of a pause in rate cut on March 12 OTTAWA, Feb 21 (Reuters) - Canada's retail sales in December grew by a robust 2.5% on a monthly basis, beating analysts' expectations, as a sales tax holiday bumped up spending on food and beverages and people also bought cars and vehicle parts, data showed on Friday. Retail sales in December are usually higher due to the holiday season. Economists said the government's sales tax break, which kicked off in mid-December and ended February 15, also boosted revenues. Analysts polled by Reuters had forecast retail sales would rise by 1.6% on a month-on-month basis and by 1.8% excluding automotive and parts sales. Retail sales jumped by 2.5% even after sales of automotive parts and at dealerships were excluded, Statistics Canada said. Retail sales are considered an early indicator of gross domestic product growth and contribute almost 40% to total consumer spending, which was primarily responsible for keeping Canada's economy growing in the third quarter. The Bank of Canada has cut its key policy rate more aggressively than other major central banks. Since June, it has slashed rates by a cumulative 200 basis points to 3% to boost the economy as inflation eased consistently. "Even if the momentum (of retail sales) fades into the new year, these figures add to the argument for the Bank of Canada to pause at next month's meeting," Shelly Kaushik, senior economist at BMO Capital Markets, wrote in a note. Currency swap markets now see a more than 68% chance of no rate cut on March 12, although economists have said expectations for the trajectory of interest rates could change if U.S. President Donald Trump slaps a 25% tariff on Canadian imports in March. January's retail numbers, collected from a survey of half of the respondents normally polled for monthly data, showed that sales likely dropped by 0.4%, a flash estimate by Statistics Canada said. December's growth in sales, with revenues picking up across all nine subsectors, came on the back of flat sales in November. In volume terms, sales increased 2.5% in December. Canada's fourth quarter GDP numbers will be published on February 28 and expectations are that the economy grew by an annualized 1.7%. Retail sales were up 2.4% in the fourth quarter of 2024, marking a second consecutive quarterly increase, the statistics agency said. Sales at food and beverage retailers, the second biggest contributor to the sales figure with a fifth of the share, increased by 3.5%. This sector was also the biggest beneficiary of the sales tax holiday. Sales at motor vehicle and parts dealers, the biggest contributor to retail sales, grew by 1.9%. Total retail sales clocked in at C$69.59 billion ($49.05 billion). ($1 = 1.4189 Canadian dollars) Sign up here. https://www.reuters.com/markets/canada-december-retail-sales-up-25-beating-market-expectations-2025-02-21/

2025-02-21 17:31

By Promit Mukherjee and David Ljunggren OTTAWA, Feb 21 (Reuters) - he Bank of Canada's 2% inflation target should be maintained in a review set for 2026, Governor Tiff Macklem said on Friday, saying central bank needed to focus on risks such as the imposition of U.S. tariffs. The bank and the finance ministry jointly review the target every five years and formally announce a decision. Macklem's remarks marked the first time a governor has said what the target should be before the consultations have even started. "In my view, now is not the time to question the anchor that has proven so effective in achieving price stability," Macklem said during a speech in Mississauga, Ontario. The bank's mandate under the current monetary policy framework is to keep inflation at the mid-point of a 1% to 3% target range. The 2026 review of the monetary policy framework will produce an agreement on the bank's priorities. "With trade conflict on our doorstep, we need to focus our resources on the most pressing and important issues for our framework review," said Macklem. He reiterated that if U.S. President Donald Trump went ahead with a threat to slap tariffs on all imports from Canada, the economic effect would be severe. "We may eventually regain our current rate of growth, but the level of output would be permanently lower," Macklem said, referring to the bank's latest economic modeling. He contined: "It's more than a shock — it's a structural change." He said the bank would consider whether it needed what he called a richer playbook for monetary policy, how inflation could be measured better, and the interaction of monetary policy with housing. Macklem said U.S. tariffs and subsequent retaliation from Canada could almost wipe out any domestic growth in 2025 and 2026 and cause a one-time spike in inflation. "What monetary policy can - and must do - is ensure that higher prices do not become ongoing inflation," he said. "Simply put, monetary policy needs to ensure the increase in inflation is temporary." ((Reuters Ottawa bureau)) Keywords: CANADA CENBANK/ Sign up here. https://www.reuters.com/world/americas/bank-canada-head-wants-review-leave-2-inflation-target-unchanged-2025-02-21/

2025-02-21 17:07

NEW DELHI, Feb 21 (Reuters) - India's financial crime fighting agency has fined British broadcaster BBC 314,510 pounds ($397,980) for alleged foreign exchange violations in the South Asian nation, three government sources told Reuters. The agency, India's Enforcement Directorate (ED), opened an investigation into the BBC in April 2023 under the Foreign Exchange Management Act, two months after tax authorities searched the broadcaster's offices in Delhi and Mumbai. The ED conducts investigations into suspected contraventions of India's Foreign Exchange Management Act and can "adjudicate and impose penalties" on those found guilty, according to its website. The BBC, which launched a new company for Indian language services in December 2023, was issued a show-cause notice earlier that year for failing to reduce foreign ownership in the company to the permitted limit of 26%, the sources said. As a result, the broadcaster has been fined 314,510 pounds, along with a fine for every day since October 15, 2021 for violations. Additionally, three directors of the company have each been fined 104,836 pounds for their roles in overseeing operations during the period of contravention, the sources added. The BBC said it had not received a so-called adjudication order yet. "We will carefully review any order when it is received and consider next steps as appropriate," the BBC said in a statement. The tax raids in February 2023 followed the release of a BBC documentary about Prime Minister Narendra Modi's leadership of the state of Gujarat during riots in 2002. At least 1,000 people were killed in the riots, most of them Muslims. The Indian government had in 2023 dismissed the documentary as "propaganda", blocked its airing and also barred sharing of any clips via social media in the country. Modi has denied accusations that he did not do enough to stop the riots, and was exonerated in 2012 following an inquiry overseen by the Supreme Court. ($1 = 0.7903 pounds) Sign up here. https://www.reuters.com/world/india/india-fines-bbc-alleged-foreign-exchange-violations-sources-say-2025-02-21/

2025-02-21 16:20

BRASILIA, Feb 21 (Reuters) - Brazil's central bank is convinced that monetary policy is more restrictive than normal given its guidance for an upcoming interest rate hike, and will adjust it as needed going forward, its monetary policy director, Nilton David, said on Friday. After beginning a tightening cycle in September, the central bank of Latin America's largest economy has raised its benchmark Selic rate by 275 basis points to 13.25%, and signaled late last month that it would hike it again by 100 basis points in March. "Whether it is sufficient or not, we will find out and adjust accordingly," David said at an event hosted by Bradesco BBI, adding that potential moves at the meeting in May are not currently under discussion. David stressed that policymakers will not cut borrowing costs based on perceptions of slowing economic activity, but rather on a clear assessment of what is driving inflation. He warned that the coming months will be challenging, as annual inflation readings are set to rise. "Inflation will get worse before it gets better," he said, acknowledging that market inflation expectations - currently well above the central bank's official 3% target - are unlikely to improve quickly. With the Brazilian real having gained more than 8% against the U.S. dollar since the start of the year, following a drop of more than 20% in 2024, David said the central bank cannot assume it will resolve its problems with just a few weeks of exchange rate adjustments. He also pointed out that the central bank has no attachment to any specific exchange rate level or target. David said economic activity is expected to cool down and that current monetary policy will move in that direction, but acknowledged that some economists perceive that, in response, incentives may be provided to boost the economy, counteracting the central bank's efforts. However, he emphasized that the central bank cannot raise interest rates based on hypothetical outcomes. "It doesn't seem like the most appropriate policy when you're already at restrictive interest rates," David said, echoing recent comments by central bank chief Gabriel Galipolo, who said policymakers could not act preemptively on an issue that has yet to materialize. Sign up here. https://www.reuters.com/world/americas/brazils-central-bank-director-says-rates-will-be-adjusted-needed-after-march-2025-02-21/

2025-02-21 14:53

Feb 21 (Reuters) - Mexico's economy shrank in the fourth quarter for the first time in more than three years, official data showed on Friday, as the central bank expects at best lackluster growth this year and economists see stiff risks ahead including trade tensions. Statistics agency INEGI said that gross domestic product (GDP) contracted 0.6% in the October-to-December period when compared to the previous quarter, matching market expectations in a Reuters poll. The data, marking the first drop on a sequential basis since the third quarter of 2021, confirmed preliminary data from INEGI last month that underscored ongoing challenges faced by Latin America's second-largest economy. In annualized terms, Mexico's economy expanded 0.5% in the fourth quarter compared to a year earlier. Growth for the full year reached 1.2%, the worst annual result since 2020, when the economy was heavily hit by the COVID-19 pandemic. But on a quarter-on-quarter basis, fourth-quarter GDP was dragged down by an 8.5% decline in the economy's primary sector, which includes farming, fishing and mining. Secondary or manufacturing activities were down 1.5%, though services grew 0.2%. "These figures confirm that growth slowed in Q4 due to several headwinds, including tight financial conditions, heightened external risks, domestic uncertainty and bad weather," said Andres Abadia of Pantheon Macroeconomics. Slowing economic activity, coupled with cooling inflation, is seen helping drive borrowing costs lower in Mexico, where the benchmark interest rate stands at 9.50%. On Thursday, the central bank signaled it might continue cutting the rate at future meetings and could "consider adjusting it in similar magnitudes" to its most recent 50-basis-point reduction. "The key threat remains the risk of a tariff war," said Abadia, referring to threats from U.S. President Donald Trump to slap across-the-board duties on Mexican goods. The United States is by far Mexico's top trade partner. Separate INEGI data released on Thursday also showed that economic activity in the country was down 1% in December on a monthly basis, with weak service sector results adding to growth concerns. "The decline in the services sector in December increases the likelihood that Mexico is in a recession," said Grupo Financiero BASE economist Gabriela Siller. The Bank of Mexico expects growth this year to slow to 0.6%. It halved its forecast this week and even sees a possibility it could slide into recession, contracting by as much as 0.2%. Sign up here. https://www.reuters.com/world/americas/mexico-economy-contracts-06-fourth-quarter-trade-tensions-loom-2025-02-21/

2025-02-21 14:27

Feb 21 (Reuters) - Canadian retail sales grew by 2.5% in December from November at C$69.59 billion ($49.05 billion), led by increased sales at food and beverage retailers, as well as motor vehicle and parts dealers, Statistics Canada said on Friday. Sales were likely down 0.4% in January, the agency said in a flash estimate. In December, sales were up in all nine subsectors. In volume terms, retail sales increased 2.5%. (Percent changes) Dec Dec Nov(rev) Nov(prev) mo/mo yr/yr mo/mo mo/mo Total +2.5 +3.9 +0.2 0.0 Excluding autos/parts +2.7 +2.6 -0.7 -0.7 NOTE: All figures are seasonally adjusted. Analysts surveyed by Reuters forecast December retail sales to be up 1.6% on the month, and to be up 1.8% excluding autos. ($1=$1.4189 Canadian) Keywords: CANADA ECONOMY/RETAIL Sign up here. https://www.reuters.com/markets/canada-december-retail-sales-up-25-food-autos-seen-down-04-january-2025-02-21/