2024-10-23 18:59

Lagarde says bank needs to be cautious and data-driven Traders expect faster pace of interest rate cuts Policymakers worry about undershooting inflation target WASHINGTON, Oct 23 (Reuters) - The European Central Bank will need to be cautious when deciding on further interest rate reductions and take its cue from incoming data, ECB President Christine Lagarde said on Wednesday. Traders have ramped up bets on faster and potentially bigger rate cuts from the ECB after a host of policymakers warned about the risk of undershooting the central bank's 2% inflation target - a remarkable change in tone after a two-year campaign to rein in prices. Lagarde did not directly comment on the path for rates, but she appeared to pour some cold water on market speculation. "We need to be cautious because data will come up and will indicate to us what is the state of the economy, what is the state of inflation, of underlying inflation," she told an event in Washington. "And there will be a judgmental aspect to our decisions, but we will indeed have to be cautious in doing so." Speaking at a separate event in Washington, where policymakers are gathered for the IMF/World Bank annual meetings, the ECB's chief economist, Philip Lane, said he still expected a recovery in the euro zone's economy even though "recent data raised some questions." The ECB cut its key interest rate by 25 basis points to 3.25% last week - its third cut this year. Policymakers are now debating how far interest rates may need to fall and how to signal their plans to investors. Portuguese central banker Mario Centeno suggested rates could be cut by a larger 50 basis points at the bank's next meeting, on Dec 12. "We need to look at the incoming data, the trend in the data that we have been observing, and certainly 50 basis points can be on the table because we continue to be data dependent and the data we are getting points in that direction," he told CNBC. Even Dutch central bank Governor Klaas Knot, in the past an outspoken hawk, said the ECB could "continue to cut rates until (they) reached neutral territory," which economists put at around 2.0-2.5%. Neutral interest rates mean that they neither stimulate nor restrict economic growth. But Italian central banker Fabio Panetta said the ECB may need to cut interest rates beyond that, to a level low enough to stimulate the economy. "I wouldn't take for granted, given the pace of the disinflation and the weakness of the real economy, that we have to stop at the neutral rate, and we cannot exclude that we will go below neutral," he told an International Monetary Fund event. Markets have fully priced in a 25 basis point cut on Dec 12 and some chance of a 50 basis point move. The rate is seen falling to 2.0% by June. Sign up here. https://www.reuters.com/markets/europe/ecbs-lagarde-we-need-be-cautious-cutting-rates-2024-10-23/

2024-10-23 18:07

SAO PAULO, Oct 23 (Reuters) - Brazilian street artist Mundano's latest work incorporates ash from forest fires and mud from flooding in Brazil to create a giant mural pleading for a stop to deforestation. The mural was inaugurated on Wednesday on the side of an 11-floor building in the center of Latin America's largest city, adding a colorful and pointed message to Sao Paulo's rich collection of graffiti. The 48-meter (157-ft) by 30-meter (98-ft) work depicts tree stumps of a burnt-down forest and the face of an Indigenous woman holding a sign in English that reads: "Stop the Destruction." The mural was painted with colors made with the ash from forest fires in Brazil, including the Amazon, where swathes of rainforest have been destroyed by recent blazes in the worst drought on record. Mundano told Reuters he also used mud from massive flooding in southern Brazil earlier this year. The woman depicted in the mural is Indigenous leader Alessandra Korap Munduruku, who led a successful campaign to stop multinational mining companies prospecting on her tribe's ancestral lands in the Amazon, for which she won the Goldman Environmental Prize in 2023. Mundano said his mural is intended as a protest against businesses that have pushed the agricultural frontier into the Amazon rainforest with large-scale soy plantations and cattle ranching for beef, which have made Brazil one of the world's top food exporters. The mural specifically targets U.S. grain trader Cargill Inc, temporarily painting the names of Cargill family members on the mural. Mundano said he wanted the Cargill family who owns the company to keep its word that it would remove deforestation from its supply chain. Cargill did not immediately reply to requests for comment. It has pledged to eliminate deforestation from its supply chain of key row crops in Brazil by 2025 and from its South American soy supply chain by 2030. Along with ash and mud, Mundano used clay from Indigenous reservations that have struggled to get their land rights recognized, often in conflicts with farmers. The mural also features paint made from urucum, a red tropical fruit used as body paint by Amazon tribes. "This is perhaps the largest mural ever made with natural pigments," said Mundano as he mixed paints for the work. "The names we are writing here are of billionaires who still live in a model based on the destruction of ecosystem biomes and contribute to the climate emergency," he said. The mural is a collaboration with the conservation nonprofit Stand.earth, who funded the project. Sign up here. https://www.reuters.com/world/americas/giant-mural-sao-paulo-uses-ash-wildfires-highlight-deforestation-2024-10-23/

2024-10-23 18:01

NEW DELHI, Oct 23 (Reuters) - Living in a pollution-free environment is a fundamental right, India's Supreme Court said on Wednesday as it urged authorities to address deteriorating air quality in the north of the country. India's capital Delhi recorded a "very poor" air quality index of 364 on Wednesday, according to the Central Pollution Control Board, which considers readings below 50 to be good. Swiss group IQAir rated Delhi the world's most polluted city in its live rankings. The city battles toxic air every winter and authorities say much of the smoke comes from farmers illegally burning paddy stubble to clear their fields in the neighbouring breadbasket states of Punjab and Haryana. The Supreme Court pulled up the governments of both states for taking "selective action" against stubble burning, saying penal provisions were not being properly implemented. "These are not the matters only of implementing the existing laws, these are the matters of blatant violation of fundamental rights...the governments will have to address...how they are going to protect the right of citizens to live with dignity," the court said. It directed Prime Minister Narendra Modi's federal government to look into a proposal submitted by Punjab seeking extra funds to provide tractors and diesel to farmers with land holdings of "less than 10 acres". Delhi is enveloped by a hazy, toxic blanket as temperatures drop each year and cold, heavy air traps vehicle emissions, construction dust, and smoke. The top court has taken up the matter on several previous occasions but experts say its directives have not been properly implemented on the ground. Recognising this, the court on Wednesday directed the federal government and the governments of Delhi, Punjab, Haryana, Uttar Pradesh and the western state of Rajasthan to submit compliance reports. Lives of citizens in several parts of South Asia are disrupted by air pollution every winter and a study has found that toxic air can cut life expectancy by more than five years. In Pakistan's most populous province of Punjab, authorities have changed school timings and suspended outdoor activities because of pollution. IQAir rated provincial capital Lahore the world's second most polluted city on Wednesday. "All these steps are being taken to protect children from smog," said Marriyam Aurangzeb, a senior minister in Pakistan's Punjab. Sign up here. https://www.reuters.com/world/india/pollution-free-environment-fundamental-right-indias-top-court-says-2024-10-23/

2024-10-23 17:33

Canadian dollar weakens 0.2% against the greenback Touches its weakest since Aug. 5 at 1.3862 BoC cuts its policy rate by 50 basis points 10-year yield increases half a basis point TORONTO, Oct 23 (Reuters) - The Canadian dollar weakened to an 11-week low against its U.S. counterpart on Wednesday as the Bank of Canada cut interest rates by an unusually large amount and the greenback added to its recent broad-based gains. The loonie was trading 0.2% lower at 1.3840 to the U.S. dollar, or 72.25 U.S. cents, after touching its weakest intraday level since Aug. 5 at 1.3862. "The Canadian dollar is suffering from two things," said Marc Chandler, chief market strategist at Bannockburn Global Forex LLC. "One is a strong U.S. dollar and the second thing is among the most aggressive central banks in the world." The BoC reduced its benchmark rate by 50 basis points to 3.75% as expected and hailed signs Canada has returned to a low-inflation era. It was the first cut of that size in 15 years outside of the pandemic era and increased the amount of easing since June to 125 basis points. "I think the Bank of Canada delivered a dovish cut," Chandler said, adding that BoC Governor Tiff Macklem made clear that if the economy evolves as the bank thinks then further easing is coming. Investors are betting that the policy rate will be lowered below the top of the 2.25%-3.25% range that the BoC sees as the neutral setting as soon as January. The U.S. dollar notched its 16th gain in 18 sessions against a basket of major currencies after a run of positive economic data that has dampened expectations about the pace of Federal Reserve rate cuts. The price of oil, one of Canada's major exports, fell 1.7% to $70.51 a barrel after data showed U.S. crude inventories rose more than expected. The Canadian 10-year yield was up half a basis point at 3.240% as U.S. Treasury yields extended their recent move higher. Sign up here. https://www.reuters.com/markets/currencies/canadian-dollar-hits-11-week-low-aggressive-bank-canada-2024-10-23/

2024-10-23 16:26

WASHINGTON, Oct 23 (Reuters) - Brazil's Finance Minister Fernando Haddad said on Wednesday that a "remedy" to ensure the sustainability of the country's fiscal framework will be discussed with President Luiz Inacio Lula da Silva upon Haddad's return from Washington. Speaking to reporters in Washington, where he is attending IMF/World Bank and G20 meetings, Haddad said he is more concerned about the international scenario, amid the volatility caused by the U.S. elections affecting markets, than the domestic situation. He emphasized the positive momentum of Brazil's economy. Asked about the high level of future interest rates, Haddad recalled that last year there was also a period of stress reflected in the yield curve, which later eased. "These things tend to go like this. There’s a cloud of uncertainty, you explain yourself, make decisions, move forward with the agenda, and that cloud dissipates, bringing things back to normal," he said. "We have a challenge to meet, and I'm quite calm about it. I'm more concerned about the international outlook than the domestic one at this moment." Haddad said his ministry is working to strengthen the fiscal framework adopted last year by Lula's administration, which sets a maximum cap for spending growth tied to primary budget outcome targets. The market has raised concerns about the sustainability of the framework due to the rapid growth of mandatory spending, such as pensions and certain social programs, which limits space for other expenditures within the cap, casting doubt on the framework's long-term viability. Haddad said there is an overreaction in the assessment that the government is neglecting public finances. "All early-year projections for the primary deficit were much worse than what is actually going to happen, much worse, and this is not being recognized," he said, stressing that the government will deliver a deficit within the official target band this year. The official goal is to eliminate the primary shortfall, with a tolerance margin of 0.25% of GDP, meaning the government could run a primary deficit of up to 29 billion reais. Sign up here. https://www.reuters.com/world/americas/brazils-haddad-says-measures-fiscal-rules-sustainability-be-discussed-with-lula-2024-10-23/

2024-10-23 15:55

JOHANNESBURG, Oct 23 (Reuters) - The South African rand slumped on Wednesday against a strong dollar on bets that the Federal Reserve won't rush to cut interest rates and as investors were uncertain about the outcome of next month's U.S. election. At 1515 GMT, the rand traded at 17.8450 against the U.S. currency , down about 1.8% on Tuesday's closing level. The dollar last traded about 0.3% firmer against a basket of currencies. "For the most part, the rand's weakness today has coincided with the dollar's intraday appreciation... (It) appears that it is playing catch-up to the broader dollar advance in recent sessions," said Danny Greeff, co-head of Africa at ETM Analytics. Greeff added that uncertainty around the U.S. election on Nov. 5 and markets adjusting for a shallower Fed rate-cut cycle were the main market movers. The risk-sensitive rand is highly sensitive to shifts in the outlook for U.S. monetary policy. On the domestic front, data showed South Africa's inflation dropped sharply in September (ZACPIY=ECI) , opens new tab, hitting its lowest level in more than three years and bolstering expectations for another local rate cut next month. On the Johannesburg Stock Exchange, the blue-chip Top-40 index (.JTOPI) , opens new tab closed down about 0.3%. South Africa's benchmark 2030 government bond also dropped sharply, with the yield rising 18 basis points to 9.505%. Sign up here. https://www.reuters.com/markets/currencies/south-african-rand-slumps-markets-focus-fed-rate-path-us-election-2024-10-23/