2025-01-23 18:31

DAVOS, Switzerland, Jan 23 (Reuters) - Nigeria needs to double economic growth within the next year or two from an annualized rate of 3.5% in the third quarter to lift its population out of poverty, its finance minister told Reuters on Thursday at the World Economic Forum's annual meeting. Finance Minister and Coordinating Minister for the Economy Wale Edun said Nigeria was on the path to growth after a year of tough economic reforms that sent inflation soaring, but should open the door for more investment. Edun said he had been meeting in Davos this week with business leaders in the areas of consumer goods, food and beverages, financial services and infrastructure to promote investments, he said in a Thursday interview. "It's a steady trickle now. What we want is a stream and at the end of the day a flood of investment," he said. Nigeria has been trying to encourage private investment rather than rely on borrowing to create jobs, as the government searches for a solution to sluggish growth, double-digit inflation and a heavy debt burden. President Bola Tinubu has vowed to expand the economy by at least 6% a year, create jobs and unify the exchange rate, while also tackling rampant insecurity. Tinubu scrapped a popular but costly petrol subsidy and lifted foreign exchange trading restrictions. That contributed to consumer inflation, but Edun expressed confidence that Nigerians would soon be past their cost of living crisis. Central Bank Governor Olayemi Cardoso on Thursday said he expected the economy to expand by 4.17% this year, driven by ongoing reforms and stabilising inflation. Sign up here. https://www.reuters.com/world/africa/nigeria-needs-double-economic-growth-within-year-or-two-finance-minister-says-2025-01-23/

2025-01-23 17:53

Jan 23 (Reuters) - U.S. President Donald Trump on Thursday said he will demand Saudi Arabia and OPEC bring down the cost of oil and will ask Riyadh to increase a planned U.S. investment package to $1 trillion from an initial reported $600 billion. His remarks come one day after Trump and Saudi Arabian Crown Prince Mohammed bin Salman discussed what the White House called the kingdom's "international economic ambitions" as well as trade issues. Earlier on Thursday, the Saudi State news agency said the kingdom wants to put $600 billion into expanded investment and trade with the U.S. over the next four years. "But I'll be asking the Crown Prince, who's a fantastic guy, to round it out to around $1 trillion," Trump told the World Economic Forum in Davos, Switzerland. "I think they'll do that because we've been very good to them." He also called on the Gulf nation to cut oil prices, saying that could help end Russia's war in Ukraine. "If the price came down, the Russia-Ukraine war would end immediately. Right now, the price is high enough that that war will continue - you got to bring down the oil price," Trump said, speaking remotely by video link. "They should have done it long ago. They're very responsible, actually, to a certain extent, for what's taking place," Trump added. The Saudi government communications office did not immediately return a request for comment on Trump's remarks at the forum. Sign up here. https://www.reuters.com/business/energy/trump-calls-1-trillion-saudi-investment-lower-oil-prices-2025-01-23/

2025-01-23 17:04

BOJ raises short-term policy rate 25 bps to 0.5% from 0.25% Board raises price forecasts, flags brightening wage outlook No change to BOJ's guidance pledging to keep raising rates BOJ sees price risks skewed to upside, says markets stable Governor Ueda to brief media at 0630 GMT TOKYO, Jan 24 (Reuters) - The Bank of Japan raised interest rates on Friday to their highest since the 2008 global financial crisis and revised up its inflation forecasts, underscoring its confidence that rising wages will keep inflation stable around its 2% target. The decision marks its first rate hike since July last year and comes days after the inauguration of U.S. President Donald Trump, who is likely to keep global policymakers vigilant ahead of potential repercussions from threatened higher tariffs. BOJ Governor Kazuo Ueda told a news conference that the weak yen continued to put upward pressure on import prices, while wage hikes were becoming more embedded and broad-based among companies. "We have not preset idea," he said on the timing of the next rate hike, saying the BOJ will make a decision on a meeting-to-meeting basis by looking at data available at the time. At its two-day meeting concluding on Friday, the BOJ raised its short-term policy rate from 0.25% to 0.5% - a level Japan has not seen in 17 years. It was made in a 8-1 vote with board member Toyoaki Nakamura dissenting. The widely expected move underscores the central bank's resolve to steadily push up interest rates to around 1% - a level analysts see as neither cooling nor overheating Japan's economy. It also marks another step Japan is taking away from the deflation and stagnant economic growth that dogged the country for decades. "The likelihood of achieving the BOJ's outlook has been rising," with many firms saying they will continue to raise wages steadily in this year's annual wage negotiations, the central bank said in a statement announcing the decision. "Underlying inflation is heightening towards the BOJ's 2% target," the central bank said, adding that financial markets remain stable as a whole. The BOJ made no change to its guidance on future policy, saying that it will continue to raise interest rates if its economic and price forecasts are realized. But it removed a phrase stressing the need to scrutinise risks surrounding overseas economies and markets, underscoring its conviction that solid U.S. growth will underpin Japan's economy - at least for now. The BOJ revised up its inflation forecasts and said risks to the price outlook were skewed to the upside, signaling its focus on the growing case for more rate hikes. "Their logic remains the same. They are still far away from neutral, so it's natural to make an adjustment," said Naka Matsuzawa, chief macro strategist at Nomura Securities in Tokyo. "Unless the BOJ either changes the logic of rate hikes, or even raises the neutral point, which they have been mulling - about 1% - there's not going to much room for the market to price in further hikes in the future." The BOJ's path is bound with uncertainty, however, with trade uncertainties and Trump calling for further rate cuts by the U.S. Federal Reserve and similar action from central banks around the world. The yen rose around 0.5% to 155.32 per dollar after the BOJ's decision and inflation upgrades, while the two-year Japanese government bond (JGB) yield rose to 0.705%, the highest since October 2008. In its quarterly outlook report, the board raised its price forecasts to project core inflation moving at or above its 2% target for three straight years. It also said risks to the inflation outlook were skewed to the upside amid intensifying labour shortages, rising prices of rice and the boost to import costs from a weak yen. "With regards to this year's annual wage negotiations, there have been many views expressed by firms that they will continue to raise wages steadily," the report said. The head of Japan's union umbrella group told Reuters on Friday that Japanese annual pay increases must exceed the 5.1% secured last year as real wages continue to fall. The board now projects core consumer inflation to hit 2.4% in fiscal 2025 before slowing to 2.0% in 2026. In the previous projection made in October, it expected inflation to hit 1.9% in both fiscal 2025 and 2026. It made no change to its forecasts that Japan's economy will grow 1.1% in fiscal 2025 and 1.0% in 2026. While the U.S. economy has been solid and financial markets stable as a whole, the BOJ must be vigilant to uncertainties surrounding U.S. policy conduct, the report said. "The hike may have been expected but in what feels like the first time in a very long time, there were no major downgrades to their economic outlook," said Matt Simpson, senior market analyst at City Index in Brisbane. "This keeps the door open to another 25bps hike by the year-end, and rates to sit at a whopping 0.75%." Japan's core consumer inflation accelerated to 3.0% in December, the fastest annual pace in 16 months, data showed earlier on Friday, in a sign rising fuel and food prices continue to push up living costs for households. After taking the helm in April 2023, Ueda dismantled his predecessor's radical stimulus programme in March last year, and pushed up short-term interest rates to 0.25% in July. BOJ policymakers have repeatedly said the central bank will keep raising rates, if Japan makes progress in achieving a cycle in which rising inflation boosts wages and lifts consumption - thereby allowing firms to continue passing on higher costs. Sign up here. https://www.reuters.com/markets/asia/boj-likely-raise-rates-highest-17-years-signal-more-hikes-2025-01-23/

2025-01-23 17:02

Vanguard says progress on lowering inflation will stall in 2025 Trump's trade policies could threaten growth too, Vanguard says PIMCO anticipates modestly higher inflation, lower growth BlackRock bearish on long-term US government bonds NEW YORK, Jan 23 (Reuters) - Giant U.S. asset managers overseeing well over $20 trillion are anticipating continued price pressures because of President Donald Trump's immigration and trade policies, a scenario that will likely keep threatening the bond market this year. Vanguard, the world's second-largest asset manager, which manages over $10 trillion, said in a first-quarter fixed income outlook report seen by Reuters that it expects "progress on inflation to stall," with core measures of price pressures stuck above the Federal Reserve's 2% target and above 2.5% for most of 2025. Trade and immigration policies implemented by Trump's Republican administration could complicate the picture further, it said in a report written by its active fixed income team, led by Sara Devereux, the global head of fixed income group. "While our base-case outlook is positive, we emphasize that the uncertainty created by the incoming administration creates a broader range of potential outcomes for growth, inflation, and monetary policy, both domestically and abroad," it said. Investors are waiting for more announcements from the new administration about policies on tariffs, immigration and tax cuts. Trump, who began a second term in the White House on Monday, vowed this week to hit the European Union with tariffs and said his administration was discussing a 10% punitive duty on Chinese imports - lower than the 60% he promised during his 2024 presidential campaign. He also said he was thinking of imposing 25% tariffs on imports from Canada and Mexico on Feb. 1. The impact of Trump's policies on inflation and growth will depend on their scope and sequencing, said Libby Cantrill, PIMCO's head of public policy, and Allison Boxer, an economist at the bond-focused investment firm, which manages $2 trillion in assets. But in a scenario where tariffs increase and budget deficits widen due to expected tax cuts, growth could decelerate this year while inflation rises. "In our baseline outlook, we expect modestly higher core inflation of around 20 to 40 basis points in the U.S. in 2025," they wrote in a note on Thursday. "The negative growth effects would likely be of a similar size." Vanguard also warned about the possibly negative-growth impact of tariffs, depending on their size and distribution. "Geopolitical retaliation could increase business uncertainty and further constrain growth," it added. RISING YIELDS U.S. government bond yields, which rise when prices decline, have surged over the past few months, partly in anticipation of pro-growth policies under a Trump administration which could also reignite price pressures, complicating the Fed's efforts to bring inflation down to its target. Benchmark 10-year yields declined marginally after Trump's inauguration on Monday, as his tariff talk was less aggressive than feared. Yields were last at 4.65%, down from more than a one-year high of 4.8% last week but still about 100 basis points higher from September, when the Fed started easing rates. BlackRock, the world's largest asset manager with $11.6 trillion in assets, expects yields will keep rising due to a combination of higher inflation and rising government debt levels. It is bearish on long-term government bonds, expecting 10-year yields will keep rising above 5%. "We have never before seen today's combination of sticky inflation, higher policy rates and high and rising debt levels," the BlackRock Investment Institute, the asset manager's research arm, said in a note this week. "This combination represents a fragile equilibrium supporting investor demand for long-term bonds," it said. Sign up here. https://www.reuters.com/markets/rates-bonds/trump-policies-likely-raise-bond-markets-inflation-fears-top-money-managers-say-2025-01-23/

2025-01-23 14:26

Jan 23 (Reuters) - Mexico's annual inflation rate slowed to its lowest level in almost four years in the first half of January, official data showed on Thursday, a price level likely to encourage the central bank to keep cutting borrowing costs. In Latin America's second-largest economy, 12-month headline inflation came in at 3.69% in early January, statistics agency INEGI announced, its lowest since February 2021 and within the central bank's 3% target, plus or minus one percentage point. Annual inflation was below both the previous month's 4.44% and the 3.78% forecast by economists polled by Reuters. Slowing consumer price growth was driven by lower non-processed food costs, which helped offset a slightly higher-than-expected reading in the core index, which some consider more reliable as it excludes volatile energy and food prices. In December, the Mexican central bank - known as Banxico - delivered its fifth interest-rate cut that year, taking its key lending rate to 10.00% with a 25-basis-point reduction while citing progress on inflation. At the time, the bank's board noted that further and larger cuts could be considered going forward. But some economists see external pressures and an uptick in core prices complicating any push to accelerate monetary easing. "With the U.S. Federal Reserve set to pause its cutting cycle and uncertainty around tariffs, we think it's more likely that Banxico will deliver another 25bp cut," said Kimberley Sperrfechter, emerging markets economist at Capital Economics. Mexico is bracing for additional price pressures as U.S. President Donald Trump threatens tariffs on its southern neighbor's exports in addition to mass deportations. Core inflation rose 0.28% in early January, while the annualized core rate came in at 3.72%, exceeding market expectations of 3.68% and the previous month's 3.62%. Andres Abadia, chief Latin America economist with Pantheon Macroeconomics, stressed concerns over core prices and other factors now facing the central bank. "Deteriorating external and domestic political conditions, which have pressured the Mexican peso, could constrain policymakers' flexibility if these trends persist," he said. Banxico is scheduled to announce its next rate decision on Feb. 6. Sign up here. https://www.reuters.com/world/americas/mexico-annual-inflation-hits-lowest-level-nearly-four-years-2025-01-23/

2025-01-23 14:16

Jan 23 (Reuters) - Canadian retail sales were unchanged in November from October at C$67.57 billion ($46.99 billion), as higher sales at motor vehicle and parts dealers were offset by lower sales at food and beverage retailers, Statistics Canada said on Thursday. Sales likely rose 1.6% in December, the agency said in a flash estimate. In November, sales were down in six of nine subsectors, representing 56.7% of retail trade. In volume terms, retail sales fell 0.4%. (Percent changes) Nov Nov Oct(rev) Oct(prev) mo/mo yr/yr mo/mo mo/mo Total 0.0 +1.6 +0.6 +0.6 Excluding autos/parts -0.7 0.0 -0.1 +0.1 NOTE: All figures are seasonally adjusted. ($1=$1.4379 Canadian) Keywords: CANADA ECONOMY/RETAIL Sign up here. https://www.reuters.com/world/americas/canada-november-retail-sales-flat-seen-up-16-december-2025-01-23/