2025-02-06 16:49

MEXICO CITY, Feb 6 (Reuters) - Mexico's annual inflation rate likely slid to its lowest level in four years in January, a Reuters poll of analysts predicted on Thursday, boosting bets the central bank will continue to lower borrowing costs. The median forecast from 14 analysts estimated that the annual headline rate likely dropped to 3.61% in the first month of the year, which would mark its third consecutive month of cooling inflation and its lowest level since early 2021. (MXCPIA=ECI) , opens new tab Core inflation, which strips out especially volatile food and energy prices, likely ticked up to 3.70% in January, according to the poll, compared to 3.65% in the previous month. (MXCPIC=ECI) , opens new tab In December, Mexico's central bank announced its fifth interest rate cut last year with a 25-basis-point reduction to the key lending rate, taking it to 10.00%. At the time, the bank's board noted that further and larger cuts could be considered in the future. The bank's next rate decision will be released later on Thursday. A separate Reuters poll of economists showed a consensus expecting a 50-basis-point cut. Monthly inflation in January likely edged up 0.31% compared to prices in December, according to the Reuters poll, while the monthly core rate was seen up by 0.45%. (MXCPIF=ECI) , opens new tab, (MXCPIH=ECI) , opens new tab Mexico's official statistics institute INEGI will release January's consumer price data on Friday. Sign up here. https://www.reuters.com/world/americas/mexico-headline-inflation-likely-fell-again-january-2025-02-06/

2025-02-06 16:21

Pound drops 1% as BoE cuts, slashes growth outlook BoE sharply raises inflation forecasts Investors worry about potential "stagflation" Feb 6 (Reuters) - Investors grappled with a gloomy set of Bank of England forecasts on Thursday that complicate the outlook for UK assets, with sterling set for its biggest one-day fall in four weeks even as bond yields held broadly steady. The BoE lowered rates to 4.5% and halved its growth forecast for this year to 0.75%. But it said inflation would rise "quite sharply" to peak at 3.7% this year, well above a previous estimate. "With growth under threat and inflation remaining higher than hoped, that provides a combination that is likely to see the word 'stagflation' being bandied around," said Premier Miton Investors CIO Neil Birrell. BoE Governor Andrew Bailey rejected the idea that Britain was experiencing a period of "stagflation", a term coined to describe a combination of high inflation and weak economic growth, saying underlying inflation remained on a downward path. Yet the reaction in financial markets hinted at concerns about a more sombre picture. Sterling was already on the back foot and extended falls to trade about 0.8% lower at $1.241. It was heading for its largest daily fall since January 10 and was down from Wednesday's four-week high. Investors added to rate-cut bets and expect roughly 66 bps of further easing this year, from around 60 bps before the decision. That backdrop could support a bond market that took a beating in early January amid a global selloff and concerns about government plans to ramp up borrowing to spend more on public services and investment. Two-year bond yields , which are sensitive to rate expectations, briefly fell to their lowest since October even as U.S. and European yields held broadly steady. But 10 and 30-year yields ticked higher as prices slipped, pushing up longer-term government borrowing costs , . MANN ALIVE Investors homed in on the fact that two members of the rate-setting Monetary Policy Committee (MPC) called for a deeper 50 bps cut, one of whom - Catherine Mann - had previously voted to hold rates steady. Britain's economy has barely grown since mid-2024. Business and consumer sentiment fell after Labour's October budget while the risk of a global trade war has risen. "The weaker than expected data coming out of the UK since the last BoE meeting has clearly encouraged them (policymakers) to be more aggressive," said Paul Jackson, global head of asset allocation research at Invesco. Nick Rees, head of macro research at Monex Europe, said currency markets had over-interpreted Mann's vote. "The move in gilts or the lack of it is probably the right read, FX markets have over-interpreted it in a bit of a knee jerk reaction that I would expect to reverse," he added. The BoE's meeting minutes said one policymaker described as supporting an "activist" approach still expected monetary policy would need to stay restrictive for some time. London's FTSE 100 (.FTSE) , opens new tab rose to a record high and was last up 1.5%, also boosted by strong earnings reports. The FTSE tends to rise when the pound falls as many of its constituents are exporters. British homebuilding stocks (.FTNMX402020) , opens new tab, which benefit from lower rates, rose to their highest level in over 12 weeks. Invesco's Jackson said he remained positive on UK equities and government bonds after the decision. TRADE SECRETS Speaking days after U.S. President Donald Trump threatened Mexico and Canada with 25% tariffs, the BoE said higher global trade levies were likely to cause slower growth, although it could not officially incorporate them into forecasts. Luke Bartholomew, deputy chief economist at fund manager abrdn, said worries about tariffs may have informed Mann's decision to call for deeper rate cuts. "They can't formally forecast the trade war effects but the spectre is hanging over the growth forecasts as well," he said. "The decision is driven by more than just the changes to the baseline forecast." Global trade tensions have so far done little to dent UK stocks, but sterling has swung along with other currencies as investors try to gauge the risks to trade. The move lower in UK borrowing costs - the third reduction since August, when rates stood at 5.25% - contrasts with the United States where the Federal Reserve is keeping borrowing costs on hold. The European Central Bank is cutting rates, however, as euro zone growth falters. Sign up here. https://www.reuters.com/world/uk/pound-slides-stagflation-puts-boe-deeper-cutting-path-2025-02-06/

2025-02-06 15:23

TORONTO, Feb 6 (Reuters) - Canadian economic activity contracted for the first time in five months in January as employment grew at a slower pace and prices heated up, Ivey Purchasing Managers Index (PMI) data showed on Thursday. The seasonally adjusted index fell to 47.1 from 54.7 in December, moving below the 50 threshold for the first time since August. A reading below 50 indicates a decrease in activity. The Ivey PMI measures the month to month variation in economic activity as indicated by a panel of purchasing managers from across Canada. The gauge of employment fell to an adjusted 52.9 from 55.3 in December, while the prices index was at 64.4, its highest level since December 2023. The unadjusted PMI rose to 46.2 from 44.3. Sign up here. https://www.reuters.com/world/americas/canadas-ivey-pmi-shows-activity-decreasing-january-2025-02-06/

2025-02-06 12:53

Feb 6 (Reuters) - BP (BP.L) , opens new tab on Thursday said BP Europa SE will seek potential buyers for its German refinery assets. BP in March 2024 announced its plans to reduce the crude processing capacity of the country's Gelsenkirchen oil refinery by around one-third from 2025 due to a weaker demand outlook. Other global players in January offered little optimism in a near-term improvement in refinery profits after they were hit hard by a downturn in the margins for producing fuel. The oil giant intends to start the marketing process of Ruhr Oel GmbH – BP Gelsenkirchen and associated refinery assets immediately with sales agreements targeted for 2025. The Gelsenkirchen refinery, built in 1935, includes two plants and a petrochemical site, and has a processing capacity of around 12 million tonnes of crude oil per year. Sign up here. https://www.reuters.com/business/energy/bp-seek-buyers-german-refinery-assets-2025-02-06/

2025-02-06 12:53

Feb 6 (Reuters) - U.S. electric and gas utility CMS Energy (CMS.N) , opens new tab reported a drop in its fourth-quarter profit on Thursday, hurt by higher operating expenses. U.S. natural gas futures rose 44.5% in 2024, resulting in higher operating costs for utilities like CMS Energy. Total operating expenses for the fourth quarter rose to $1.56 billion from $1.54 billion in the year-ago period, the company said. Additionally, higher for longer interest rates can push up borrowing costs for utilities, which typically incur major capital expenditures. The company's interest charges were at $180 million in the quarter, 4.7% higher than a year earlier. Its revenue rose 2% from a year earlier to $1.99 billion in the quarter ended December 31, but missed analysts' average estimate of $2.22 billion, according to LSEG data. CMS Energy raised its 2025 forecast for adjusted earnings to between $3.54 and $3.60 per share, versus $3.52 to $3.58 previously. Analysts had estimated them at $3.59 per share. The utility firm also increased its annual dividend by 11 cents to $2.17 per share. The Jackson, Michigan-based firm said net income available to common stockholders fell to $262 million or 87 cents per share in the fourth quarter, from $306 million or $1.05 per share in the same period last year. Sign up here. https://www.reuters.com/business/energy/cms-energy-posts-lower-quarterly-profit-higher-operating-costs-2025-02-06/

2025-02-06 12:52

LONDON, Feb 6 (Reuters) - The Bank of England cut interest rates by a quarter of a percentage point on Thursday, judging a sharp upward revision to its inflation forecasts for this year will prove temporary. The cut to 4.5% was in line with economists' expectations in a Reuters poll, but two officials called for a bigger rate cut against a backdrop of weaker growth. Sterling fell to $1.2370, from $1.2425 just before the decision and was down 1% on the day. It also weakened against the euro to last trade around 83.74 pence compared 83.40 pence earlier. UK government bond yields fell, with two-year yields last down 3.4 basis points (bps) at 4.108% versus 4.13% just before the rate decision . London's blue-chip FTSE (.FTSE) , opens new tab and the mid-cap FTSE 250 stock index accelerated their gains and were last up around 1.5% each (.FTMC) , opens new tab Money markets now price in around 67 bps of further BoE easing by year-end. COMMENTS: PHILIP SHAW, CHIEF ECONOMIST - UK, INVESTEC: "Fairly plainly, it is a dovish set of minutes overall and although Catherine Mann’s decision to back a 50-bp cut was a surprise, she has warned for a while that she is a supporter of monetary policy activism. It was also interesting to see that some in the 25-bp camp were of the view that the weakness of the economy could reflect poor productivity growth and might not imply a greater degree of spare capacity in the economy. The divergent views on the committee may make it more difficult to chart the course of interest rates over the remainder of 2025, but for now we stand by our view that there will be three further 25bp cuts to 3.75% by the end of this year." KENNETH BROUX, HEAD OF CORPORATE RESEARCH FX AND RATES, SOCIETE GENERALE: "It's not helpful for the pound. Firstly, bank staff expected that GDP had fallen by 0.1% in 2024 Q4 and projected that it would rise by 0.1% in 2025 Q1, and secondly there was substantial upside news to the near-term outlook for headline CPI inflation, which is now expected to rise quite sharply in the near term, to 3.7% in 2025 Q3. "Also, (Catherine) Mann, supposedly the hawk on the MPC voted for a 50 bps cut." YAEL SELFIN, CHIEF ECONOMIST, KPMG: "The Bank of England revised up its inflation outlook, due to near term increases in energy prices, but downgraded its growth forecast for this year on the back of recent weak activity. "The tone in the minutes signals a clear easing bias for all MPC (Monetary Policy Committee) members and leaves the door open for further interest rate cuts this year. Nonetheless, domestic uncertainty remains with the upcoming tax rises and the increase in the National Living Wage. "The Bank will assess the second-round effects of these policy changes, and whether they lead to a rebound in domestic price pressures. This will likely mean the pace of cuts will be gradual, and overall, we expect only two further cuts, leaving base rates at 4% by the end of 2025." NEIL BIRRELL, CIO, PREMIER MITON INVESTORS: "The Bank of England cut its base rate to give the economy a boost that is much needed. The fact that two members voted for a 0.5% cut is telling, clearly showing concern over the parlous state of economic growth, which is not something the government will appreciate. With growth under threat and inflation remaining higher than hoped, that provides a combination that is likely to see the word “stagflation” being banded around." JEREMY BATSTONE-CARR, EUROPEAN STRATEGIST, RAYMOND JAMES: "Ebbing inflationary pressures and persistent economic weakness underlie today's decision... While hard-pressed consumers and businesses will welcome lower rates, the decision comes in response to a sluggish economy – the same which made the Bank of England cut its Q4 GDP growth forecast to zero at its December meeting. "The combination of weak economic activity and decelerating service sector prices will impart downward pressure on inflation. In contrast, wage growth strength hints at supply-related issues which may take longer to resolve. Given that today's monetary policy adjustment will have a lagged effect on the economy, time will tell how further rate decisions might play out this year." ZARA NOKES, GLOBAL MARKET ANALYST, JPMORGAN ASSET MANAGEMENT: "With December’s softer-than-expected inflation print having fuelled market expectations for a cut, the Bank of England likely felt it had no other choice today. The distribution of votes showed high conviction in the call, yet this approach is not without risks. "While economic activity is clearly slowing, inflation pressures are not. Inflation expectations have picked up as a result of higher energy prices, strong wage growth and businesses signalling that they intend to charge higher prices in response to October’s tax hike. "The growth outlook might also not be as bad as business surveys suggest, with the large increase to public services spending announced in the Autumn Budget likely to provide a tailwind to growth this year, offsetting some of the private sector weakness. Against this backdrop, the Bank must be resolute in its commitment to bring inflation back to target. "Rate cuts might be popular in the short term but, ultimately, there will be a higher price to pay further down the line if inflation is not stamped out now." ZSOLT KOHALMI, DEPUTY CEO & GLOBAL HEAD OF REAL ESTATE, PICTET ALTERNATIVE ADVISORS: "Interest rates are crucial to the real estate recovery story. UK rates are currently between the U.S., which are higher, and continental Europe, which are lower. "For a recovery in the UK real estate market to really take place, though, UK rates need to come down significantly and be closer to the European rate curve outlook, rather than the U.S. For now, this is far from certain, but would be a bonus for investors in UK real estate." MICHAEL FIELD, CHIEF EUROPEAN STRATEGIST, MORNING STAR: "With plentiful equity market opportunities for investors in the UK, we believe further interest rate cuts over the course of 2025 will lighten the load for consumers and businesses alike. This should create a more supportive economic backdrop for commerce generally." Sign up here. https://www.reuters.com/world/uk/view-bank-england-cut-rates-again-sterling-falls-2025-02-06/