2025-09-03 15:57

OTTAWA, Sept 3 (Reuters) - Canada's Prime Minister Mark Carney said on Wednesday that the upcoming federal budget would focus on both austerity and investments, adding that current government spending was unsustainable. Canada has been dealing with economic uncertainty since the start of the year, so the primary focus of the budget will be to cut operational spending and trigger investments into major projects, Carney told reporters in Toronto. Sign up here. "It's a budget of austerity and investment at the same time and that's possible if you have discipline," he said. Canada's main budget, which is usually unveiled in the parliament in April, was delayed due to federal elections and will be presented in October. During his election campaign, Carney had promised to balance the operating budget over the next three years. But with increasing defense spending, lower revenues from tariffs, the scrapping of a digital services tax and several other tax relief measures, economists say the government looks unlikely to reach that goal. Carney said federal spending had been growing at more than 7% a year on average over the last decade. "That's twice the rate of growth of the economy on average. It's not a sustainable situation," he said. "So we need to rein in spending. We need to find efficiencies." Finance Minister Francois-Philippe Champagne said in July that he had asked all ministries to find ways to cut 7.5% from program spending for the 2026-27 fiscal year, followed by 10% in the next year and 15% in the year after that. https://www.reuters.com/world/americas/canadas-budget-will-focus-austerity-investment-says-pm-carney-2025-09-03/

2025-09-03 15:49

OTTAWA, Sept 3 (Reuters) - Canadian Prime Minister Mark Carney said on Wednesday that he had a lengthy and productive conversation with U.S. President Donald Trump on Monday, covering trade issues and other topics. His comments are another recent indication that bilateral tensions might be lessening. Sign up here. The two sides have been locked in a trade war since early this year, when Trump imposed tariffs on some imports from Canada and Ottawa responded with its own countermeasures. "I last spoke to the president on Monday evening. We spoke at length on a wide range of issues, including on trade, but geopolitical, other issues. ... It was a good conversation," Carney told reporters in Toronto ahead of a cabinet meeting. Canada said last month that it would remove , opens new tabmany retaliatory import tariffs on U.S. goods and intensify talks, a move that prompted praise from Trump. But Ottawa made clear it would maintain its tariffs on imports of U.S. steel, aluminum and autos, which it described as strategic sectors. Carney also said a senior team of Canadian officials was in Washington for the latest round of talks on trade, while making clear progress would not be quick. "Don't expect immediate white smoke on one of these strategic sectors, but that's the type of conversation that we're having, and we'll continue to have," he said. https://www.reuters.com/business/autos-transportation/canadian-pm-says-he-spoke-trump-monday-had-good-conversation-2025-09-03/

2025-09-03 15:10

BoE's Bailey says markets have understood his rate message Rate futures do not fully price in rate cut until April 2026 BoE's Taylor say he would like to see 4-5 rate cuts a year BoE's Lombardelli and Greene cautious about further cuts Bailey says higher 30-year gilt yield has little impact LONDON, Sept 3 (Reuters) - Bank of England Governor Andrew Bailey said markets had understood his message that BoE interest rates would continue to move "downwards gradually over time" but that there was now less certainty about the speed of cuts. "There is now considerably more doubt about exactly when and how quickly we can make those further steps," Bailey told a hearing of the House of Commons' Treasury Committee, echoing the message he gave at a press conference after August's rate cut. Sign up here. "That's the message I wanted to get across. Now, I think actually, judging by what's happened, certainly to market pricing since then, I think that message has been understood." Bailey also said he was "very concerned" about political pressure being put on the U.S. Federal Reserve. Last month the Monetary Policy Committee voted by the narrowest of margins - 5 to 4 - to cut Bank Rate to 4% from 4.25% after an unprecedented two rounds of voting, its fifth quarter-point rate cut since starting to reduce borrowing costs in August 2024. Financial markets currently see only a one in three chance of another rate cut by the end of the year and do not fully price in a next quarter-point rate cut until April 2026, according to LSEG data. A Reuters poll of economists last month still showed a median expectation for a further rate cut before the end of this year and another one in the first quarter of 2026. Since then, inflation has picked up to 3.8% - nearly double its target and the highest in the Group of Seven advanced economies - and the BoE expects it to reach 4% in September and not return to target until the second quarter of 2027. SPLIT COMMITTEE Speaking alongside Bailey at the parliamentary hearing were Deputy Governor Clare Lombardelli and external MPC member Megan Greene - who voted against cutting rates last month - and MPC member Alan Taylor who initially voted for a half-point cut before switching to support a quarter-point reduction. Taylor said his preference would be to see rates cut at a pace of four or five cuts a year as he thought incoming wage deals were in line with inflation returning to its 2% target and did not see warning signs from what he viewed as a modest rise in household inflation expectations. By contrast, Lombardelli and Greene said they were concerned by the rise in expectations and did not think interest rates were still at a level that placed significant downward pressure on inflation. "I am not predicting that we are already at neutral, but nor am I confident that if we reduce restrictiveness much further we will still be sufficiently restrictive to return inflation to target sustainably," Lombardelli said in a written report to the committee at the start of the hearing. Earlier on Wednesday, British 30-year gilt yields rose to their highest since 1998 at 5.75%. Bailey said it was "important not to over-focus" on this as the government no longer raised significant finance from debt of this maturity and that he viewed the move as reflecting a global trend rather than UK-specific problems. https://www.reuters.com/world/uk/boes-bailey-says-markets-have-grasped-message-less-certain-rate-cuts-2025-09-03/

2025-09-03 15:09

WASHINGTON, Sept 3 (Reuters) - The U.S. Federal Reserve announced Wednesday it would host an Oct. 21 conference on payments innovation. The conference will explore emerging topics like stablecoin use cases, the intersection of artificial intelligence and payments, and the tokenization of financial products and services, the central bank said. Sign up here. https://www.reuters.com/sustainability/boards-policy-regulation/fed-announces-october-conference-payments-innovation-2025-09-03/

2025-09-03 13:56

LONDON, Sept 3 (Reuters) - Bank of England Governor Andrew Bailey said on Wednesday he was "very concerned" about threats to the U.S. Federal Reserve's independence, describing it as a "very serious" issue. Bailey was appearing before parliament's Treasury Committee when he was asked for his views on the pressure being applied by U.S. President Donald Trump on the Fed to cut interest rates. Sign up here. Trump has publicly discussed firing Fed Chair Jerome Powell and in a sharp escalation last month, he also attempted to fire Fed Governor Lisa Cook, setting off a critical legal test over the Fed's ability to function without political interference. "This is a very serious situation, I am very concerned," Bailey told the committee. "The Federal Reserve ... has built up a very strong reputation for independence and for its decision making." Bailey said he took any threats to central bank independence "very seriously" and that trading that independence against other government decisions would be a "very dangerous road to go down". "I think monetary stability and financial stability ... underpin the foundations of policy," Bailey said. "If we do those things, we enable you then to go off and take decisions in the areas that, appropriately, governments and parliament should take," he said, addressing lawmakers on the committee. https://www.reuters.com/business/finance/boes-bailey-very-concerned-about-threats-us-fed-independence-2025-09-03/

2025-09-03 13:36

LONDON, Sept 3 (Reuters) - Bank of England policymaker Alan Taylor said on Wednesday the British economy was getting closer to a "soft landing", but that monetary policy would need to be carefully assessed in the coming months as it was at a "fragile" moment. "Despite being buffeted by new shocks, we are getting closer to that soft landing (for the UK economy) now, but we are also in a fragile moment, and monetary policy will need to be carefully calibrated in the coming months to keep us on track," Taylor said in his annual report to parliament's Treasury Select Committee. Sign up here. Last month the Monetary Policy Committee voted by a 5-4 margin to cut Bank Rate to 4% from 4.25% after an unprecedented two rounds of voting. Taylor initially called for a bigger cut to 3.75% before changing his vote to ensure a majority for a cut to 4%. "My main concern has been to get inflation sustainably back to the 2% target, maintaining monetary policy restrictiveness as long as necessary but no longer, whilst being alert to two dangers," he said in the annual report. "The greater danger is that we get behind the curve, stay too tight in the short-term ... and thus ... end up in with the opposite problem: inflation actually undershooting the target and economic activity weak or in recession." https://www.reuters.com/world/uk/boes-taylor-says-uk-economy-getting-closer-soft-landing-2025-09-03/