Tag Archives: APOLL

Fed to deliver two 25-basis-point hikes in Q1, followed by long pause

BENGALURU, Jan 20 (Reuters) – The U.S. Federal Reserve will end its tightening cycle after a 25-basis-point hike at each of its next two policy meetings and then likely hold interest rates steady for at least the rest of the year, according to most economists in a Reuters poll.

Fed officials broadly agree the U.S. central bank should slow the pace of tightening to assess the impact of the rate hikes. The Fed raised its benchmark overnight interest rate by 425 basis points last year, with the bulk of the tightening coming in 75- and 50-basis-point moves.

As inflation continues to decline, more than 80% of forecasters in the latest Reuters poll, 68 of 83, predicted the Fed would downshift to a 25-basis-point hike at its Jan. 31-Feb 1 meeting. If realized, that would take the policy rate – the federal funds rate – to the 4.50%-4.75% range.

The remaining 15 see a 50-basis-point hike coming in two weeks, but only one of those was from a U.S. primary dealer bank that deals directly with the Fed.

The fed funds rate was expected to peak at 4.75%-5.00% in March, according to 61 of 90 economists. That matched interest rate futures pricing, but was 25 basis points lower than the median point for 2023 in the “dot plot” projections issued by Fed policymakers at the end of the Dec. 13-14 meeting.

“U.S. inflation shows price pressures are easing, yet in an environment of a strong jobs market, the Federal Reserve will be wary of calling the top in interest rates,” noted James Knightley, chief international economist at ING.

The expected terminal rate would be more than double the peak of the last tightening cycle and the highest since mid-2007, just before the global financial crisis. There was no clear consensus on where the Fed’s policy rate would be at the end of 2023, but around two-thirds of respondents had a forecast for 4.75%-5.00% or higher.

The interest rate view in the survey was slightly behind the Fed’s recent projections, but the poll medians for growth, inflation and unemployment were largely in line.

Inflation was predicted to drop further, but remain above the Fed’s 2% target for years to come, leaving a relatively slim chance of rate cuts anytime soon.

In response to an additional question, more than 60% of respondents, 55 of 89, said the Fed was more likely to hold rates steady for at least the rest of the year than cut. That view lined up with the survey’s median projection for the first cut to come in early 2024.

However, a significant minority, 34, said rate cuts this year were more likely than not, with 16 citing a plunge in inflation as the biggest reason. Twelve said a deeper economic downturn and four said a sharp rise in unemployment.

“The Fed has prioritized inflation over employment, therefore only a sharp decline in core inflation can convince the FOMC (Federal Open Market Committee) to cut rates this year,” said Philip Marey, senior U.S. strategist at Rabobank.

“While the peak in inflation is behind us, the underlying trend remains persistent … we do not think inflation will be close to 2% before the end of the year.”

Reuters Poll- U.S. Federal Reserve outlook

In the meantime, the Fed is more likely to help push the economy into a recession than not. The poll showed a nearly 60% probability of a U.S. recession within two years.

While that was down from the previous poll, several contributors had not assigned recession probabilities to their forecasts as a slump was now their base case, albeit a short and shallow one as predicted in several previous Reuters surveys.

The world’s biggest economy was expected to grow at a mere 0.5% this year before rebounding to 1.3% growth in 2024, still below its long-term average of around 2%.

With mass layoffs underway, especially in financial and technology companies, the unemployment rate was expected to rise to average 4.3% next year, from the current 3.5%, and then climb again to 4.8% next year.

While still historically low compared to previous recessions, the forecasts were about 1 percentage point higher than a year ago.

(For other stories from the Reuters global economic poll:)

Reporting by Prerana Bhat; Polling by Milounee Purohit; Editing by Ross Finley and Paul Simao

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Xi says COVID control is entering new phase as cases surge after reopening

  • China overcame unprecedented difficulties in COVID battle: Xi
  • Still a time of struggle for controlling COVID: Xi
  • In Wuhan, surge in new cases shows signs of easing
  • Shanghai has 10 million infections, health official says
  • End of zero-COVID curbs prompts global concern

WUHAN/BEIJING, Dec 31 (Reuters) – Chinese President Xi Jinping called on Saturday for more effort and unity as the country enters a “new phase” in its approach to combating the pandemic, in his first comments to the public on COVID-19 since his government changed course three weeks ago and relaxed its rigorous policy of lockdowns and mass testing.

China’s abrupt switch earlier this month from the “zero-COVID” policy that it had maintained for nearly three years has led to infections sweeping across the country unchecked. It has also caused a further drop in economic activity and international concern, with Britain and France becoming the latest countries to impose curbs on travellers from China.

The switch by China followed unprecedented protests over the policy championed by Xi, marking the strongest show of public defiance in his decade-old presidency and coinciding with grim growth figures for the country’s $17 trillion economy.

In a televised speech to mark the New Year, Xi said China had overcome unprecedented difficulties and challenges in the battle against COVID, and that its policies were “optimised” when the situation and time so required.

“Since the outbreak of the epidemic … the majority of cadres and masses, especially medical personnel, grassroots workers braved hardships and courageously persevered,” Xi said.

“At present, the epidemic prevention and control is entering a new phase, it is still a time of struggle, everyone is persevering and working hard, and the dawn is ahead. Let’s work harder, persistence means victory, and unity means victory.”

New Year’s Eve prompted reflection online and by residents of Wuhan, the epicentre of the COVID outbreak nearly three years ago, about the zero-COVID policy and the impact of its reversal.

People in the central city of Wuhan expressed hope that normal life would return in 2023 despite a surge in cases since pandemic curbs were lifted.

Wuhan resident Chen Mei, 45, said she hoped her teenage daughter would see no further disruptions to her schooling.

“When she can’t go to the school and can only have classes online it’s definitely not an effective way of learning,” she said.

VIDEO REMOVED

Across the country, many people voiced similar hopes on social media, while others were critical.

Thousands of users on China’s Twitter-like Weibo criticised the removal of a video made by local outlet Netease News that collated real-life stories from 2022 that had captivated the Chinese public.

Many of the stories included in the video, which by Saturday could not be seen or shared on domestic social media platforms, highlighted the difficulties ordinary Chinese faced as a result of the previously strict COVID policy.

Weibo and Netease did not immediately reply to a request for comment.

One Weibo hashtag about the video garnered almost 4 million hits before it disappeared from platforms at about noon on Saturday. Social media users created new hashtags to keep the comments pouring in.

“What a perverse world, you can only sing the praises of the fake but you cannot show real life,” one user wrote, attaching a screenshot of a blank page that is displayed when searching for the hashtags.

The disappearance of the videos and hashtags, seen by many as an act of censorship, suggests the Chinese government still sees the narrative surrounding its handling of the disease as a politically sensitive issue.

HOSPITALS OVERWHELMED

The wave of new infections has overwhelmed hospitals and funeral homes across the country, with lines of hearses outside crematoriums fuelling public concern.

China, a country of 1.4 billion people, reported one new COVID death for Friday, the same as the day before – numbers that do not match the experience of other countries after they reopened.

UK-based health data firm Airfinity said on Thursday that about 9,000 people in China were probably dying each day from COVID. Cumulative deaths in China since Dec. 1 have likely reached 100,000, with infections totalling 18.6 million, it said.

Zhang Wenhong, director of the National Centre for Infectious Diseases, told the People’s Daily in an interview published on Saturday that Shanghai had reached a peak of infections on Dec. 22, saying there were currently about 10 million cases.

He said those numbers indicated that some 50,000 people in the city of 25 million would need to be hospitalized in the next few weeks.

At the central hospital of Wuhan, where former COVID whistleblower Li Wenliang worked and later died of the virus in early 2020, patient numbers were down on Saturday compared with the rush of the past few weeks, a worker outside the hospital’s fever clinic told Reuters.

“This wave is almost over,” said the worker, who was wearing a hazmat suit.

A pharmacist whose store is next to the hospital said most people in the city had now been infected and recovered.

“It is mainly old people who are getting sick with it now,” he said.

In the first indication of the toll on China’s giant manufacturing sector from the change in COVID policy, data on Saturday showed factory activity shrank for the third straight month in December and at the sharpest pace in nearly three years.

Reporting by Martin Quinn Pollard, Tingshu Wang and Xiaoyu Yin in Wuhan, Eduardo Baptista in Beijing; Writing by Sumeet Chatterjee
Editing by Helen Popper and Frances Kerry

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U.S. heading into shallow recession, no respite from rate hikes yet: Reuters poll

BENGALURU, Dec 9 (Reuters) – The U.S. economy is heading into a short and shallow recession over the coming year, according to economists polled by Reuters who unanimously expected the U.S. Federal Reserve to go for a smaller 50 basis point interest rate hike on Dec. 14.

The Fed has another half-point at least to go with rates early in the new year with inflation still running well above the Fed’s 2% target even though economists put a steady 60% probability on a recession taking place in 2023.

After raising the federal funds rate 75 basis points at each of the previous four meetings, all 84 economists polled Dec. 2-8 expected the central bank to go for a slightly softer half a percentage point to 4.25%-4.50% this time.

While the central bank is attempting only to deliver some pain and not a full-fledged downturn, economists, who tend to be slow as a group in forecasting recessions, raised the probability of one in two years to 70% from 63% previously.

That suggests investors and stock markets may have gotten ahead of themselves with optimism over the past month that the world’s largest economy may skirt a recession entirely. That is already showing up in safe-haven flows to the U.S. dollar.

“Unless inflation recedes quickly, the U.S. economy still appears headed for some trouble, though possibly a little later than expected. The relative good news is that the downturn should be tempered by extra savings,” said Sal Guatieri, senior economist at BMO Capital Markets.

“But this assumes the economy’s durability doesn’t compel the Fed to slam the brakes even harder, in which case a delayed downturn might only flag a deeper one.”

Although the fed funds rate is expected to peak at 4.75%-5.00% early next year in line with interest rate futures, one-third of economists, 24 of 72, expected it to go higher.

There are already clear signs the economy is slowing, particularly in the U.S. housing market, often the first to react to tightening financial conditions, and the epicenter of the 2007-08 recession.

Existing home sales (USEHS=ECI) have fallen for nine months in a row. And house prices, already in retreat, were expected to drop 12% peak-to-trough and nearly 6% next year, a separate Reuters poll showed.

Around 60% of economists, 27 of 45, who provided quarterly gross domestic product (GDP) forecasts, predicted a contraction for two straight quarters or more at some point in 2023.

A large majority of economists, 35 of 48, said any recession would be short and shallow. Eight said long and shallow, while four said there won’t be any recession. One said short and deep.

The world’s largest economy was forecast to grow just 0.3% next year, and expand at annual rates well below its long-term average of around 2% until 2024.

Over 75% of economists, 29 of 38, who answered a separate question said the risk to their GDP forecasts was skewed to the downside.

But with inflation expected to stay above the Fed’s target at least until 2026 and the labor market remaining strong, the bigger risk was rates would peak higher and later than expected.

“With core inflation likely remaining stubbornly high, we now anticipate the current tightening process to continue through Q2 2023,” said Jan Groen, chief U.S. macro strategist at TD Securities, who expected the fed funds rate to peak at 5.25%-5.50% in May.

“There remains a risk of an even higher terminal rate given the high and sticky rates of core inflation and still strong labor market conditions,” he added.

The U.S. unemployment rate (USUNR=ECI), which so far has stayed low, was expected to climb from the current 3.7% to 4.9% by early 2024. If realized, that would still be well below the levels seen in previous recessions.

(For other stories from the Reuters global economic poll:)

Reporting by Indradip Ghosh; Polling by Sujith Pai and Swathi Nair; Editing by Ross Finley and Chizu Nomiyama

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Bolsonaro-Lula presidential race down to the wire in Brazil, polls show

BRASILIA, Oct 29 (Reuters) – Brazil’s heated presidential race has tightened ahead of a Sunday vote, several opinion surveys showed on Saturday, with right-wing President Jair Bolsonaro eroding a slight advantage for leftist challenger Luiz Inacio Lula da Silva in most polls.

Surveys by pollsters Datafolha and Quaest both showed Lula with 52% of valid votes against 48% for Bolsonaro, down from a 6 percentage-point lead three days prior, putting the incumbent in striking distance of a come-from-behind victory.

A survey by pollster MDA showed Lula’s edge slipping to just 2 percentage points, equal to the margin of error for the poll commissioned by transport sector lobby CNT.

Most polls still suggest Lula is the slight favorite to come back for a third term, capping a remarkable political rebound after his jailing on graft convictions that were overturned. But Bolsonaro outperformed opinion polls in the first-round vote on Oct. 2, and many analysts say the election could go either way.

The final opinion surveys by pollsters IPEC and AtlasIntel, however, showed Lula holding a stable and slightly larger lead.

IPEC showed the leftist ahead by 54% to 46% of valid votes, excluding undecided voters and those planning to spoil their ballots. AtlasIntel, among the most accurate pollsters in the first round, showed Lula’s lead holding at 7 percentage points.

Bolsonaro wrapped up his campaign in the key state of Minas Gerais, leading a motorbike rally with supporters. Lula walked with thousands of backers on one of Sao Paulo’s main avenues after telling foreign reporters his rival was not fit to govern.

The deeply polarizing figures also attacked each other’s character and record in their final televised debate on Friday night. Bolsonaro opened the debate by denying reports he might unpeg the minimum wage from inflation, announcing instead he would raise it to 1,400 reais ($260) a month if re-elected, a move that is not in his government’s 2023 budget.

With their campaigns focusing on swaying crucial undecided votes, analysts said the president gained little ground in the debate to win a race that polls had shown roughly stable since Lula led the first-round voting by 5 percentage points.

That result was better for Bolsonaro than most polls had shown, giving him a boost of momentum to start the month, but the past two weeks of the campaign have presented headwinds.

A week ago, one of Bolsonaro’s allies opened fire on federal police officers coming to arrest him.

On Sunday, one of his closest associates, Congresswoman Carla Zambelli, chased a Lula supporter into a Sao Paulo restaurant at gun point after a political argument in the street, videos on social media showed. Zambelli told reporters she knowingly defied an electoral law that bans the carrying of firearms 24 hours before an election.

In their first head-to-head debate this month, Lula blasted Bolsonaro’s handling of a pandemic in which nearly 700,000 Brazilians have died, while Bolsonaro focused on the graft scandals that tarnished the reputation of Lula’s Workers Party.

On Friday night, both candidates returned repeatedly to Lula’s two terms as president from 2003 to 2010, when high commodity prices helped to boost the economy and combat poverty. Lula vowed to revive those boom times, while Bolsonaro suggested current social programs are more effective.

Reporting by Ricardo Brito and Anthony Boadle in Brasilia, Gabriel Stargardter in Rio de Janeiro and Brian Ellsworth in Sao Paulo; Editing by Brad Haynes, Chris Reese and Daniel Wallis

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Costa Rica elects maverick Chaves as president in break with establishment

SAN JOSE, April 3 (Reuters) – Anti-establishment economist Rodrigo Chaves clinched Costa Rica’s presidency on Sunday, upending decades of political consensus in the Central American country that is grappling with growing social discontent and mounting national debt.

Chaves, a veteran former official of the World Bank, was projected to win about 52.9% of the vote in the run-off ballot, a preliminary tally by the electoral tribunal showed, based on returns from some 97% of polling stations.

Rival candidate and former Costa Rican president Jose Maria Figueres was seen securing about 47.1%.

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Speaking to supporters in San Jose, the capital, the 60-year-old Chaves said he accepted his victory with humility, and urged Figueres to help him move the country forward.

“I humbly beg Jose Maria and his party to work together to make possible what Don Jose Maria himself called the Costa Rican miracle,” he said, referring to Figueres’ father, Jose Figueres Ferrer, who served as president three times.

“Let’s put aside pettiness and vanity. Tonight we will begin together to serve our country,” added Chaves, who is set to assume office on May 8.

Figueres quickly conceded defeat after results came in.

“I congratulate Rodrigo Chaves, and I wish him the best,” he told supporters.

Caravans of cars sporting the flag of Chaves’ Social Democratic Progress Party (PPSD) crowded the streets of downtown San Jose in celebration.

Polls had shown Chaves to be a slight favorite heading into the election after he unexpectedly finished runner-up to Figueres in an indecisive first round of voting in February.

Chaves, who briefly served as finance minister for outgoing President Carlos Alvarado, ran as a maverick. He has vowed to shake up the political elite, even pledging to use referendums to bypass Congress to bring change. read more

“If the people go out to vote, this is going to be a sweep, a tsunami,” Chaves said after casting his ballot on Sunday.

Figueres campaigned on his experience and family political legacy in Costa Rica, a tourist destination and bastion of environmentalism long regarded as one of the most stable democracies in Latin America.

On Twitter, Alvarado said he had called to congratulate Chaves and pledged an orderly handover of power.

Turnout was 57.3%, the electoral tribunal said, less than the 60% who cast ballots in the first round.

Going into Sunday’s vote, some voters said they were lukewarm on both candidates, whose political careers have been tainted by accusations of wrongdoing.

Chaves faced accusations of sexual harassment during his World Bank tenure, which he denied. Figueres resigned as executive director of the World Economic Forum in 2004 amid accusations that he had influenced state contracts with Alcatel, a telecoms company. That case was never tried in court.

David Diaz, 33, said he was not enthused by Chaves or Figueres. He left home early to vote by 7 a.m. in the rural town of Tacacori, about 30 km (19 miles) from San Jose.

“I see very little movement, there is a lot of apathy,” said Diaz, a mechanic at a medical device factory.

Chaves faces the challenges of reviving an economy battered by the COVID-19 pandemic, and alleviating the poverty in which about 23% of a population of 5.1 million live.

Growing income disparity makes Costa Rica one of the world’s most unequal countries, with unemployment of almost 15%. read more

In January 2021, the country agreed to $1.78 billion in financial assistance from the International Monetary Fund.

In return, the government vowed to adopt a raft of fiscal changes and austerity measures, but lawmakers have only passed a law to make savings on public sector workers’ benefits.

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Reporting by Diego Ore and Alvaro Murillo, writing by Cassandra Garrison; Editing by Clarence Fernandez

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SPD’s Scholz wins third TV debate as German election draws close

  • Germans go to polls on Sept. 26
  • Contenders clash on issue of minimum wage
  • Latest poll puts SPD at 26%, CDU/CSU at 21%

FRANKFURT/BERLIN, Sept 19 (Reuters) – Social Democrat Olaf Scholz brushed off a last-gasp attack from his conservative rival in a televised election debate on Sunday, cementing his position as front runner to succeed Chancellor Angela Merkel after Germans go to the polls in a week.

The debate, the last of three ahead of Germany’s national election slated for Sept. 26, comes as pressure on the conservative Christian Democratic Union party candidate Armin Laschet intensified to close a gap in polls which have consistently put him behind SPD’s Scholz.

Scholz, who serves as finance minister, used the issue of social inequality to lash out at his main opponent, reiterating that as chancellor he would push through a minimum wage of 12 euros ($14.08) per hour, something the CDU opposes.

“Mr Laschet, that may be the difference between you and me. I’m not doing that because there is an election campaign right now. I have made this demand for years,” Scholz said.

“To me it’s about the dignity of citizens. That is, however, what perhaps distinguishes us on this issue.”

A snap poll shortly after the event, which also included Annalena Baerbock of the Greens and featured issues ranging from climate change to digitalisation and security, declared Scholz as winner, giving him a clean sweep in the series of debates.

Earlier, an INSA poll for Bild am Sonntag had put the SPD at 26% support, stable from a week ago, while the conservative bloc of Merkel’s centre-right Christian Democratic Union and its Bavarian sister party, the Christian Social Union, added half a percentage point to come in at 21%.

The gap has been even wider in polls measuring the popularity of the individual chancellor candidates, indicating the uphill struggle Laschet is facing against Scholz ahead of the election.

Laschet has been under fire since he was caught on camera laughing during a visit in the summer to a flood-stricken town.

FRAGMENTED PICTURE

Current polls, which show a highly fragmented picture as voters increasingly flock to smaller parties, leave room for several coalition scenarios, giving the liberal Free Democrats a potential king-maker role in upcoming coalition talks. read more

FDP party chief Christian Lindner on Sunday rebuffed demands by the CDU to rule out a so-called traffic light coalition with the SPD and the Greens. “We will not take orders from this (CDU),” he said at a party event.

Meantime, Scholz on Sunday expressed his preference for a coalition with the Greens, which current polls put at 15%.

Merkel’s chief of staff had earlier called on all parties to agree quickly on who should succeed her after the election and avoid the kind of protracted coalition talks that followed the last vote four years ago.

The likelihood of long coalition talks after the vote means Merkel will not be leaving office any time soon. She remains chancellor until a majority of Bundestag lawmakers elect a successor, who is then sworn in. read more

“My wish is for a swift government formation,” Helge Braun told Reuters, adding that even though the current government would continue to govern during looming coalition talks there were certain limitations over the scope of leadership.

“So I warn against losing time due to a very long government formation. One can certainly ask for the parties to swiftly express their preferences after the election over what their favoured coalitions are – so that one does not endlessly lose time in discussions.”

There are no formal restrictions on Merkel’s powers until a successor is chosen, but she is a consensus seeker and previous chancellors have not taken radical decisions during this time.

Following Germany’s last general election in 2017, it took a record six months before the new government was sworn in.

($1 = 0.8525 euros)

Additional reporting by Andreas Rinke and Alexander Ratz; Editing by David Clarke, Nick Macfie and Diane Craft

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