2024-06-27 18:47

ISTANBUL, June 27 (Reuters) - Turkish Finance Minister Mehmet Simsek will speak at the Financial Action Task Force meeting in Singapore, Turkish state media said on Thursday, ahead of a decision by the international crime watchdog on whether to remove Turkey from a "grey list". Removing Turkey from this "grey list" of countries and territories that require increased scrutiny would be a boost to the country's economic turnaround plan, after the FATF task force downgraded Turkey's status in 2021 over concerns about money laundering and terrorist financing. Turkish officials have said that they expect Turkey to be removed from the grey list, having said that any other decision would be politically motivated. Turkey's state-owned Anadolu news agency on Thursday cited Treasury sources as saying that Simsek planned to attend the FATF meeting and make a speech, as well as hold talks with investors and Singapore's prime minister and president during the two-day visit. A Turkish Treasury source had previously told Reuters that Simsek would attend the FATF meeting. Ankara brought in many regulations including a crypto asset bill in line with the FATF's request, and there's no reason for the task force to keep Turkey in the "grey list," Vice President Cevdet Yilmaz said on Thursday. "In recent months, a technical delegation from the FATF visited Turkey, we know that their report about Turkey's (progress) was positive. So technically, there's no problem for Turkey," Yilmaz said in an interview with private CNN Turk television. "We expect a positive outcome. We deem any other decision as politically motivated." In a statement in February, the FATF said that Turkey "has substantially completed its action plan" and warranted an on-site assessment. A delegation from the FATF visited Turkey last month to evaluate Turkey's actions to prevent money laundering and illegal financing. Sign up here. https://www.reuters.com/world/middle-east/turkeys-simsek-speak-fatf-watchdog-meeting-singapore-state-media-says-2024-06-27/

2024-06-27 15:35

JOHANNESBURG, June 27 (Reuters) - The South African rand fell sharply on Thursday after media reports of a major disagreement between the pro-business Democratic Alliance (DA) party and President Cyril Ramaphosa over cabinet posts. At 1527 GMT, the rand traded at 18.48 against the dollar , 1.7% weaker than its previous close. The DA agreed to join Ramaphosa's African National Congress (ANC) in a government of national unity after the ANC lost its parliamentary majority in an election last month. The DA is expected to get cabinet positions in return for supporting Ramaphosa's re-election as president. But the News24 website and the Business Day newspaper reported that Ramaphosa had backtracked on an offer to give the DA the trade, industry and competition ministry. News24 said the DA's leadership had decided to tell Ramaphosa that if he did not stick to the agreement struck this week then "the deal is off" between the two parties. Both parties did not immediately respond to Reuters calls seeking comment. Business Day said Ramaphosa retracted the offer of the ministry position after top ANC officials argued at a meeting on Wednesday that it would result in the DA "pushing back levers of economic redress". The DA supports loosening labour laws and replacing one of the ANC's key policies to boost the participation of Black South Africans in the economy. Financial markets are on edge over the composition of the cabinet, as it will give an indication of whether the ANC intends to share power meaningfully with parties including the DA. "Further delays to the cabinet announcement will only cause jitters to multiply and feed the impression that the GNU (government of national unity) is stumbling at the first hurdle," Louw Nel, senior political analyst at Oxford Economics, said. The Johannesburg Stock Exchange's Top-40 index (.JTOPI) New Tab, opens new tab closed down 0.4%. The benchmark 2030 government bond slumped, as the yield rose 30 basis points to 10.125%. Sign up here. https://www.reuters.com/markets/south-african-rand-drops-news-report-discord-over-cabinet-posts-2024-06-27/

2024-06-27 14:39

MUMBAI, June 27 (Reuters) - The Bank of England is likely to cut interest rates soon, "probably in August", as long as inflation and wage data align with the Monetary Policy Committee's (MPC) May forecasts, a former MPC member said on Thursday. "They have clearly signalled they are willing to cut soon if data are okay," Michael Saunders, an MPC member at the Bank of England (BoE) between 2016 and 2022, told the Reuters Global Markets Forum New Tab, opens new tab (GMF). "If so, I would expect the rest of the internal (members of the BoE MPC) to move as a bloc to vote for a cut," Saunders said, adding that the central bank had done enough to prepare markets. The MPC is made up of nine members, five from within the BoE and four from outside the central bank. The BoE kept its bank rate unchanged at a 16-year high of 5.25% last week, ahead of a July 4 national election, with some policymakers saying their decision not to cut rates was "finely balanced". Saunders, a senior adviser at Oxford Economics, expected markets to be relieved with a large Labour party win in the election, saying: "Markets and investors will not be sorry to see the Conservative government end." He said Labour - far ahead in opinion polls - would likely lay out tough spending plans for the next few years in its autumn budget, but did not expect major tax hikes to be included other than "modest measures", such as on private school fees. "Then, provided the economy is okay, they will gradually add to their public spending plans in subsequent years, while staying well within the fiscal rules," he said. Saunders did not see a potential Labour victory impacting the BoE's monetary policy path. He sees the BoE cutting rates seven times in increments of 25 basis points (bps) by the end of 2025, putting the main interest rate "close" to his neutral rate of 3.5%. "I expect two to three cuts this year, the rest next year - again, depends a bit on the monthly data," he said. Market expectations for rate cuts have reduced significantly over the course of this year, with now barely two 25 bp reductions priced in for 2024. (Join GMF, a chat room hosted on LSEG Messenger, for live interviews: https://lseg.group/3TN7SHH New Tab, opens new tab) (This story has been corrected to fix the cash rate to BOE's bank rate, in paragraphs 4 and 9) Sign up here. https://www.reuters.com/business/finance/bank-england-likely-cut-rates-august-former-mpc-member-says-2024-06-27/

2024-06-27 13:43

ZURICH, June 27 (Reuters) - New rules to regulate Switzerland's outsized banking sector and how to manage a huge balance sheet which risks massive losses top the list of challenges facing next Swiss National Bank chief Martin Schlegel, economists say. Schlegel will take over as chairman of the central bank at the end of September, replacing Thomas Jordan who is stepping down early after 12 years at the helm. The 47-year-old, who started his career as Jordan's intern at the SNB 20 years ago, will first have to step out of the long shadow of his mentor and carve his own identity. "Thomas Jordan will be a hard act to follow – he is a first-rate economist who kept inflation under control in difficult times," said Stefan Gerlach, chief economist at EFG Bank and a former deputy governor of the Bank of Ireland. Another economist, who asked not to be named, said Schlegel would have to step up from being a tactician - he is currently in charge of implementing the SNB's monetary policy - to overseeing its larger aims and direction. "Schlegel will now have to make the big strategic monetary policy decisions," the economist added. "That is a completely different ball game." At a news conference following his appointment on Wednesday Schlegel emphasized continuity, stressing his commitment to the SNB's mandate of price stability. Although that goal, which means keeping inflation at 0-2%, has been achieved, the central bank under Jordan has not been without critics. A major concern is its balance sheet - nearly 860 billion Swiss francs ($958.86 billion), held mainly in bonds and shares. It has been unable to make a payout to the Swiss government or cantons for two years, while currency swings and valuation losses caused a record 132 billion franc loss in 2022. The SNB also paid out 7.4 billion francs to commercial banks last year after interest rates turned positive. "How do you continue policy with that massive balance sheet and how do you reduce it? Do you even want to reduce it at all?" said Sarah Lein, a professor at the University of Basel and former SNB economist. "A central bank cannot go bankrupt because it can always print money, but big losses could have a negative effect on the SNB's credibility – the most important asset for a central bank." Although making a profit is not part of the SNB's mandate, big losses can lead to political pressure when Switzerland's cantons and central government don't get the money they were expecting. Some economists have advocated hiving off part of the balance sheet into a sovereign wealth fund to reduce the risks. FINANCIAL STABILITY Supporting Swiss financial stability is another key SNB role - a task that has become more pressing after the takeover of Credit Suisse by UBS (UBSG.S) New Tab, opens new tab last year. As well as creating a banking giant with a balance sheet twice the size of the Swiss economy, there is no longer the option of another Swiss bank coming to the rescue should the enlarged UBS get into trouble. "If UBS has a problem, so does the SNB and so does Switzerland," said Adriel Jost, an economist at the Institute for Swiss Economic Policy. "Ultimately, the issue of banking regulation is crucial and the SNB has every incentive to play a big role in the discussions with the government and financial regulator." Schlegel - an SNB "lifer" - may also have to address criticism that the central bank has been too insular and conservative in its communications and thinking. "The approach of the SNB needs to change – it's a pretty closed operation," said Charles Wyplosz, from the Graduate Institute in Geneva. It has also come under fire for not doing enough to tackle carbon emissions of companies it invests in. Schlegel told reporters on Wednesday that climate change was important, although analysts don't expect the SNB to change its investment strategy soon. Basel University's Lein does not expect a big shift in SNB monetary policy under Schlegel, with price stability and preventing big changes in the value of the franc - either upwards or downwards - remaining the priority. "The main focus of monetary policy has been successful, so there's no need to change," she said. Schlegel gave little away on Wednesday, saying only: "I believe that in the next few months and years you will have enough opportunities to get to know me." ($1 = 0.8969 Swiss francs) Sign up here. https://www.reuters.com/business/finance/bank-regulation-balance-sheet-top-new-snb-chiefs-in-tray-2024-06-27/

2024-06-27 12:15

FRANKFURT, June 27 (Reuters) - Germany's BAVC chemical industry association on Thursday agreed with union IGBCE on staggered wage hikes that will give workers 6.85% higher pay over 20 months. As part of the deal, the 585,000 workers covered by the agreement will receive an additional day off per year, the union and the employers' association said in separate statements. Large employers in the sector include BASF (BASFn.DE) New Tab, opens new tab, Evonik (EVKn.DE) New Tab, opens new tab and Bayer , as well as major foreign producers such as Dow (DOW.N) New Tab, opens new tab and LyondellBasell (LYB.N) New Tab, opens new tab Germany's collective bargaining rounds are seen as an indicator of wage growth in the euro area. The European Central Bank said this month it would closely watch wages after cutting interest rates for the first time since 2019. Larger metalworkers' union IG Metall this month advised members to demand a 7% raise over 12 months for 3.9 million workers, well above the current inflation rate. Sign up here. https://www.reuters.com/markets/commodities/german-chemical-sector-employers-union-agree-685-pay-hike-over-20-months-2024-06-27/

2024-06-27 12:08

CHICAGO, June 27 (Reuters) - The price of a July Fourth cookout will be 5% higher in 2024 than the previous year, according to a survey from the U.S. Farm Bureau released this week. The farmer and rancher organization said an Independence Day cookout for 10 people will cost an average of $71.22 this year versus $67.73 in 2023. The overall U.S. consumer price index has been trending lower in recent months, but many Americans remain worried about inflation in an election year. The Farm Bureau survey showed the retail price for 2 pounds (0.91 kg) of ground beef increasing by 11% to $12.77, although chicken prices fell 4% from last year at $7.83 for 2 pounds. Americans typically celebrate the midsummer Independence Day holiday with parades, fireworks and cookouts featuring hamburgers, steaks, hot dogs, chicken, corn on the cob and other foods. The Farm Bureau's survey is not the only one indicating the annual holiday meal is getting more expensive. A report by international bank Rabobank said on Wednesday that the average cost of a cookout for 10 people would top $99, up from $97 last year, with beverages and beef the most expensive items. Still, the overall increase of food prices in the United States in 2024 is expected to be about 2%, down from an average of 3% annually, Andrew Stevens, an economics professor at the University of Wisconsin-Madison, told Reuters. "Yes, food prices are increasing, but they're not increasing as much as they have in recent years, and they're even a little below the long-run average," Stevens said. U.S. consumer prices were unchanged in May. Americans have cited the impact of inflation on the economy as one of their top concerns heading into the election, and a Tuesday poll indicated that 43% think former President Donald Trump would have a better approach for the economy, compared with 37% for President Joe Biden. The cost of the Fourth of July meal had decreased in 2023 from 2022, according to the Farm Bureau survey. Sign up here. https://www.reuters.com/markets/us/us-july-fourth-cookout-costs-up-by-5-this-year-survey-shows-2024-06-27/