<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="462" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/04/107352556-1703848030465-gettyimages-1423009563-china-820x462.jpeg" alt="" class="wp-image-475494" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/04/107352556-1703848030465-gettyimages-1423009563-china-820x462.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/107352556-1703848030465-gettyimages-1423009563-china-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/107352556-1703848030465-gettyimages-1423009563-china-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/107352556-1703848030465-gettyimages-1423009563-china-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/107352556-1703848030465-gettyimages-1423009563-china.jpeg 929w" sizes="(max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Flag of China on dark blue background Da-kuk | E+ | Getty Images</figcaption></figure>



China will remain the largest growth engine for the world economy in spite of its slowdown, the Asian Development Bank said.



“China is obviously going to still be important for some time to come. They still account for nearly half of GDP in Asia Pacific,” ADB’s chief economist Albert Park said in a press conference for the bank’s Asian Development Outlook report.&nbsp;



“Although growth is moderating, and we are expecting it to continue moderating in the coming years… it’s likely to contribute the most growth of any economy in the world to global growth,” said Park.



ADB forecasts China to post annual GDP growth of 4.8% in 2024, lower than the government’s target of “around 5%.” China’s economy expanded 5.2% in 2023, matching the official target of around 5%.



Even with slower growth, ADB data estimated China will account for 46% of growth in developing Asia in 2024-2025.



China currently accounts for 18% and 48% of global and Asian GDP, respectively, based on purchasing power parities exchange rates, a metric used by the ADB, World Bank and International Monetary Fund.



<h2 class="wp-block-heading" id="h-what-about-india"><a></a>What about India?</h2>



India’s stellar economic trajectory has led many to tout the country’s role as a technology and manufacturing powerhouse and an attractive alternative to China. The South Asian nation’s economy recently expanded at its fastest pace in six quarters, surpassing expectations with 8.4% growth in the October to December quarter of the current financial year 2023-24.



“India’s importance to growth in the region is increasing,” Park told CNBC via email. ADB expects the country’s growth to be the highest in the region, at 7% in 2024 and 7.2% in 2025. 



While India’s economy is undoubtedly a “bright spot,” it is still smaller than China’s, said Park. On the PPP exchange rate metric, the economist noted China’s economy is still about two and a half times that of India.&nbsp;



“So on that benchmark, it will take a long time, I think, for India to really drive global growth,” he added.



Additionally, growth in advanced economies is expected to slow this year, with ADB forecasting U.S. GDP growth to dip to 1.9% from last year’s 2.5%, and Japan’s to grow 0.6% compared to 1.9% in 2023.



The bank in its report also said it expects developing Asia’s growth this year to be slightly stronger than its December projections, as healthy domestic demand offsets the slowdown in China.&nbsp;&nbsp;



In spite of rising energy prices, inflation is also expected to moderate in Asia-Pacific from 3.3% in 2023 to 3.2% this year.

107352556-1703848030465-gettyimages-1423009563-china

China will remain the world’s No. 1 growth driver, says the Asian Development Bank

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/04/SMJADHBEX5KLZIUNYIQ6KAI6HA-820x547.jpg" alt="" class="wp-image-475259" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/04/SMJADHBEX5KLZIUNYIQ6KAI6HA-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/SMJADHBEX5KLZIUNYIQ6KAI6HA-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/SMJADHBEX5KLZIUNYIQ6KAI6HA-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/SMJADHBEX5KLZIUNYIQ6KAI6HA-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/SMJADHBEX5KLZIUNYIQ6KAI6HA-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/SMJADHBEX5KLZIUNYIQ6KAI6HA-scaled.jpg 2048w" sizes="(max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">FILE PHOTO: Produce is seen at El Progreso Market in the Mount Pleasant neighborhood of Washington, D.C., U.S., August 19, 2022. REUTERS/Sarah Silbiger/File Photo</figcaption></figure>



The consumer price index accelerated at a faster than expected pace in March, pushing inflation higher and likely dashing hopes that Federal Reserve will be able to cut interest rates anytime soon.



The CPI, a broad measure of goods and services costs across the economy, rose 0.4% for the month, putting the 12-month inflation rate at 3.5%, or 0.3 percentage point higher than in February, the Labor Department’s Bureau of Labor Statistics reported Wednesday. Economists surveyed by Dow Jones had been looking for a 0.3% gain and a 3.4% year-over-year level.



Excluding volatile food and energy components, core CPI also accelerated 0.4% on a monthly basis while rising 3.8% from a year ago, compared to respective estimates for 0.3% and 3.7%.



Stock market futures slumped following the report while Treasury yields spiked higher.



Shelter and energy costs drove the increase on the all-items index.



Energy rose 1.1% after increasing 2.3% in February, while shelter costs, which make up about one-third of the weighting in the CPI, were higher by 0.4% on the month and up 5.7% from a year ago. Expectations for shelter-related costs to decelerate through the year have been central to the Fed’s thesis that inflation will cool enough to allow for interest rate cuts.



Food prices increased just 0.1% on the month and were up 2.2% on a year-over-year basis. There were some big gains within the food category, however.



The measure for meat, fish, poultry and eggs climbed 0.9%, pushed by a 4.6% jump in egg prices. Butter fell 5% and cereal and bakery products declined by 0.9%. Food away from home increased 0.3%.



Elsewhere, used vehicle prices declined 1.1% and medical care services prices rose 0.6%.



The report comes with markets on edge and Fed officials expressing caution about the near-term direction for monetary policy. Central bank policymakers have repeatedly called for patience on cutting rates, saying they have not seen enough evidence that inflation is on a solid path back to their 2% annual goal. The March report likely confirmed worries that inflation is stickier than expected.



Markets had expected the Fed to start cutting interest rates in June with three reductions in total expected this year, but that shifted dramatically following the release. Traders in the fed funds futures market pushed expectations for the first cut out to September, according to CME Group calculations.



″“There’s not much you can point to that this is going to result in a shift away from the hawkish bent” from Fed officials, said Liz Ann Sonders, chief investment strategist at Charles Schwab. “June to me is definitely off the table.”



The Fed also expects services inflation to ease through the year, but that has shown to be stubborn as well. Excluding energy, the services index increased 0.5% in March and was at a 5.4% annual rate, inconsistent with the Fed’s target.



″This marks the third consecutive strong reading and means that the stalled disinflationary narrative can no longer be called a blip,” said Seema Shah, chief global strategist at Principal Asset Management. “In fact, even if inflation were to cool next month to a more comfortable reading, there is likely sufficient caution within the Fed now to mean that a July cut may also be a stretch, by which point the US election will begin to intrude with Fed decision making.”



Later Wednesday, the Fed will release minutes from its March meeting, providing more insight into where officials stand on monetary policy.



Multiple Fed officials in recent days have expressed skepticism about lowering rates. Atlanta Fed President Raphael Bostic told CNBC that he expects just one cut this year, likely not coming until the fourth quarter. Governor Michelle Bowman said an increase may even be necessary if the data do not cooperate.

FILE PHOTO: Grocery store in Washington

U.S. consumer prices rose 3.5% from a year ago in March, more than expected

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="462" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/04/107139885-1666645552719-abc1-820x462.jpg" alt="" class="wp-image-475230" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/04/107139885-1666645552719-abc1-820x462.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/107139885-1666645552719-abc1-300x169.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/107139885-1666645552719-abc1-160x90.jpg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/107139885-1666645552719-abc1-768x432.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/107139885-1666645552719-abc1.jpg 929w" sizes="(max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Shoppers are seen in a Kroger supermarket on October 14, 2022, in Atlanta, Georgia.  Elijah Nouvelage | AFP | Getty Images</figcaption></figure>



A closely watched Labor Department report due Wednesday is expected to show that not much progress is being made in the battle to bring down inflation.



If so, that would be bad news for consumers, market participants and Federal Reserve officials, who are hoping price increases slow enough so that they can start gradually cutting interest rates later this year.



The consumer price index, which measures costs for a wide-ranging basket of goods and services across the $27.4 trillion U.S. economy, is expected to register increases of 0.3% both for the all-items measure as well as the core yardstick that excludes volatile food and energy.



On a 12-month basis that would put the inflation rates at 3.4% and 3.7%, respectively, a 0.2 percentage point increase in the headline rate from February, just a 0.1 percentage point decrease for the core rate, and both still a far cry from the central bank’s 2% target.



“We’re not headed there fast enough or convincing enough, and I think that’s what this report is going to show,” said Dan North, senior economist at Allianz Trade North America.



The report will be released at 8:30 a.m. ET.



<h2 class="wp-block-heading" id="h-progress-but-not-enough"><a></a>Progress, but not enough</h2>



North said he expects Fed officials to view the report pretty much the same way, backing up comments they’ve been making for weeks that they need more evidence that inflation is convincingly on its way back to 2% before rate cuts can happen.



“Moving convincingly toward 2% doesn’t just mean hitting 2% for one month. It means hitting 2% or less for months and months in a row,” North said. “We’re a long way from that, and that’s probably what’s going to show tomorrow as well.”



To be sure, inflation has come down dramatically from its peak above 9% in June 2022. The Fed enacted 11 interest rate hikes form March 2022 to July 2023 totaling 5.25 percentage points for its benchmark overnight borrowing rate known as the federal funds rate.



But progress has been slow in the past several months. In fact, headline CPI has barely budged since the central bank stopped hiking, though core, which policymakers consider a better barometer of longer-term trends, has fallen about a percentage point.



While the Fed watches the CPI and other indicators, it focuses most on the Commerce Department’s personal consumption expenditures index, sometimes referred to as the PCE deflator. That showed headline inflation running at 2.5% and the core rate at 2.8% in February.



For their part, markets have grown nervous about the state of inflation and how it will affect rate policy. After scoring big gains to start the year, stocks have backed off over the past week or so, which have seen sharp swings as investors tried to make sense of the conflicting signals.



Earlier this year, traders in the fed funds futures market were pricing in the likelihood that the central bank would start reducing rates in March and continue for as many as seven cuts before the end of 2024. The latest pricing indicates that the cuts won’t start until at least June and not total more than three, assuming quarter-percentage point increments, according to the CME Group’s FedWatch calculations.



“I don’t see a whole lot here that is going to move things magically the way they want to go,” North said.



<h2 class="wp-block-heading"><a></a>What to watch</h2>



There will be a few key areas to watch in Wednesday’s report.



Beyond the headline numbers, trends in items such as shelter, airfares and vehicle prices will be important. Those areas have been bellwethers during the current economic cycle, and moves either way could suggest longer-term trends.



Economists at Goldman Sachs expect outright declines across air travel-related items as well as vehicle sticker prices, and see smaller shelter cost increases, which make up about one-third of the CPI weighting. A New York Fed survey released Monday, however, showed a sharp uptick in expectations for rental costs over the next year, which is bad news for policymakers who frequently have cited decelerating housing costs as the cornerstone to their easing inflation thesis.



Similarly, the National Federation of Independent Business survey for March, released Tuesday, showed confidence among small businesses at its lowest level in more than 11 years, with owners citing inflation as their top concern.



“Inflation is cumulative, and that’s why prices still feel high,” North said. “People still can’t believe how high prices are.”



Gas prices also could play an important role in the CPI release after rising 3.8% in February. Though the gasoline index is relatively unchanged over the past two years, it’s still up more than 70% from April 2020 when the brief Covid-driven recession ended. Food is up about 23% during the same period.

107139885-1666645552719-abc1

A crucial report Wednesday is expected to show little progress against inflation

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107384081-1709831185690-gettyimages-2058827167-powell_banking_402_030724-820x461.jpeg" alt="" class="wp-image-463959" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107384081-1709831185690-gettyimages-2058827167-powell_banking_402_030724-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107384081-1709831185690-gettyimages-2058827167-powell_banking_402_030724-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107384081-1709831185690-gettyimages-2058827167-powell_banking_402_030724-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107384081-1709831185690-gettyimages-2058827167-powell_banking_402_030724-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107384081-1709831185690-gettyimages-2058827167-powell_banking_402_030724-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107384081-1709831185690-gettyimages-2058827167-powell_banking_402_030724.jpeg 1600w" sizes="(max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Federal Reserve Chairman Jerome Powell testifies during the Senate Banking, Housing and Urban Affairs Committee hearing titled “The Semiannual Monetary Policy Report to the Congress,” in Dirksen Building on Thursday, March 7, 2024.
Tom Williams | Cq-roll Call, Inc. | Getty Images</figcaption></figure>



The U.S. Federal Reserve is determined not to reduce interest rates too soon — and some economists say recent data has pushed a summer cut completely off the table.



Friday’s jobs report reiterated the seemingly unwavering strength of the U.S. labor market and suggested further need for Fed caution. All eyes will now be on Wednesday’s consumer price index, after February’s annual inflation rate of 3.2% came in slightly higher than expected.



It comes as a growing number of market participants have raised the possibility of no rate cuts at all this year, including Minneapolis Fed President Neel Kashkari who said last week that no reductions were a possible scenario if inflation continued to move sideways.



George Lagarias, chief economist at&nbsp;Mazars, told CNBC on Monday that rate cuts in the summer were now looking much less likely.



“Personally, I wouldn’t be surprised if we saw less rate cuts and pushed more towards the end of the year,” he told “Squawk Box Europe” on Monday.



“This is a strong economy. Make no mistake, it is backed by debt and somewhat by overburdened credit cards, but it is a strong economy. So the Fed will struggle to find the case to cut rates soon.”



Market pricing reflects the ongoing uncertainty, with the probability of a rate cut now under 50% for both June and July, according to the CME’s FedWatch tool — significantly lower than at the start of the month.



“The Fed has been punishing itself ever since 2021 when ‘team transitory’ ostensibly got it wrong. &#8230; What they feel is that they can’t get it wrong again, which means that they’re more likely to err on the side of caution,” Lagarias added.



Despite this, he said it remains “very likely” that there will be rate cuts this year.



“They do have some room to cut, but they don’t want to get it wrong. They do not want to be the Fed that cut rates as inflation kept beating expectations. So they want to see more data toward the right direction and they are willing to wait,” Lagarias added.



<h2 class="wp-block-heading" id="h-no-rate-cuts"><a></a>No rate cuts?</h2>



Speculation that there could be no interest rate reductions this year has been growing, although economists remain divided.



Torsten Slok, chief economist at Apollo Global Management, said last month that he doesn’t expect any cuts as the U.S. economy is “simply not slowing down,” and top U.S. asset manager Vanguard has no rate reductions as its base case for the year.



Whereas former Federal Reserve Vice Chairman Roger Ferguson told CNBC last week he sees a 10%-15% chance of no cuts this year.



Other analysts and economists are still backing the Fed’s own signaling in March that it expects three quarter-percentage point cuts this year.



Based on current growth and inflation forecasts, Goldman Sachs Chief Economist Jan Hatzius told CNBC on Friday he would “expect some rate cuts based on what Chair Powell and other Fed officials have said.”



“The timing of that of course is going to depend on near-term data, on the reaction function from the Fed but under our forecast I would be quite surprised if we didn’t get rate cuts this year. Quite surprised.”

107384081-1709831185690-gettyimages-2058827167-powell_banking_402_030724

‘They can’t get it wrong again’: Economists are increasingly uncertain about Fed rate cuts this year

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="521" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/ODEFW2LJCVLEDLUNAWURA43T54-820x521.jpg" alt="" class="wp-image-470831" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/ODEFW2LJCVLEDLUNAWURA43T54-820x521.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/ODEFW2LJCVLEDLUNAWURA43T54-300x191.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/ODEFW2LJCVLEDLUNAWURA43T54-142x90.jpg 142w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/ODEFW2LJCVLEDLUNAWURA43T54-768x488.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/ODEFW2LJCVLEDLUNAWURA43T54-1536x976.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/ODEFW2LJCVLEDLUNAWURA43T54-scaled.jpg 2048w" sizes="(max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">A man rides a scooter past a Hyundai automobile showroom in Mumbai, India, February 9, 2022. REUTERS/Francis Mascarenhas/File Photo</figcaption></figure>



SYDNEY, March 28 (Reuters)&nbsp;&#8211;&nbsp;India&#8217;s bulging pipeline of large block trades and listings such as the $3 billion IPO of Hyundai Motor&#8217;s&nbsp;005380.KS&nbsp;unit will draw more funds to a market whose share of global equity capital market deals hit a&nbsp;quarterly record&nbsp;this year, bankers said.



A paucity of deals elsewhere in Asia will add to the impetus for capital flows into India, they added.



Higher global interest rates, geopolitical tensions, as well as China&#8217;s economic slowdown and its move to restrict initial public offerings (IPOs) to support its secondary markets, have led to a slump in equity dealmaking across Asia.



India, on the other hand, has emerged as the second busiest market in the world for equity capital market (ECM) deals after the United States.



Indian companies raised $2.3 billion in the first quarter of 2024 in IPOs, according to LSEG data, up more than 12 times the $166.5 million raised in the same period last year, the data showed.



Total ECM deals rose 139%, making it the most active market across Asia Pacific, including Japan, where activity was down 46.8%, and accounted for 10.05% of the global total in the first three months, a record high for any quarter.



&#8220;The pipeline and activity level has never been as big or as busy. We are seeing many more billion dollar-plus transactions, it&#8217;s unbelievable,&#8221; said Rahul Saraf, Citigroup&#8217;s&nbsp;C.N&nbsp;India head of investment banking.



&#8220;India is really coming of age in the size, scale and quality of issuers.&#8221;



The National Stock Exchange, the country&#8217;s largest bourse, was the third most active listing venue globally in the first quarter, behind the New York Stock Exchange and Nasdaq.



&#8220;If you look at global liquidity, where would a large family office or global fund like to put money in the current environment? It’s most likely between the US, India and Japan,&#8221; said Saraf.



Among the large deals in the pipeline, the listing of South Korean automaker Hyundai Motor&#8217;s India unit is on track to be the country&#8217;s largest ever IPO as it aims to raise up to $3 billion in 2024 in a deal that would value the car marker at up to $30 billion.



Budget supermarket chain Vishal Mega Mart is also planning a $1 billion IPO that would value the company at up to $5 billion.



&#8220;In terms of upcoming deals &#8230; the size of the deals is getting larger and more companies are lining up for listing later in the year, once elections are out of the way,&#8221; said Sumeet Singh, Aequitas Research director who publishes on Smartkarma.



India&#8217;s general elections will be held over almost seven weeks from April 19.



Citigroup C.N heads the league table for Indian ECM activity, according to LSEG, ahead of Bank of America BAC.N and ICICI Bank ICBK.NS.



(Reporting by Scott Murdoch in Sydney; Editing by Sumeet Chatterjee and Muralikumar Anantharaman)

A man rides a scooter past a Hyundai automobile showroom in Mumbai

India sizzles in global equity capital markets amid deals drought in Asia

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/ZFWHVCKG3JIMLGJDNTBUQE2GWY-820x547.jpg" alt="" class="wp-image-470802" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/ZFWHVCKG3JIMLGJDNTBUQE2GWY-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/ZFWHVCKG3JIMLGJDNTBUQE2GWY-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/ZFWHVCKG3JIMLGJDNTBUQE2GWY-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/ZFWHVCKG3JIMLGJDNTBUQE2GWY-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/ZFWHVCKG3JIMLGJDNTBUQE2GWY-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/ZFWHVCKG3JIMLGJDNTBUQE2GWY-scaled.jpg 2048w" sizes="(max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">FILE PHOTO: One hundred dollar notes are seen in this photo illustration at a bank in Seoul January 9, 2013. REUTERS/Lee Jae-Won</figcaption></figure>



TOKYO/LONDON, March 28 (Reuters)&nbsp;&#8211;&nbsp;The dollar gained on the euro and pound on Thursday after a U.S. Federal Reserve policy maker said he wasn&#8217;t in a hurry to cut rates, while traders braced for key economic data and hesitated to move on the yen on fears of Japanese intervention.



The Japanese currency was steady at 151.42 per dollar having traded just shy of the 152 mark at its lowest since 1990 on Wednesday before Japan&#8217;s top monetary officials suggested they were ready to intervene to prevent further declines.



The euro&nbsp;EUR=EBS&nbsp;was last down 0.33% at $1.0792 its lowest in five weeks, and the pound&nbsp;GBP=D3&nbsp;was down 0.25% at $1.2609. That left the dollar index up 0.16% at 104.6, its highest since mid-February.&nbsp;=USD



Speaking during late U.S. trading hours on Wednesday, Fed Governor Christopher Waller said recent disappointing inflation data affirms the case for the U.S. central bank holding off on cutting its short-term interest rate target.



Market expectations for the first rate cut to occur at the Fed&#8217;s June meeting have eased somewhat. Current pricing has it at a 60% chance, compared to 67% around this time last week, according to the CME FedWatch tool.



&#8220;Waller is one of the more important Fed policy makers and, while I don&#8217;t see this being a big move, the remarks have put some momentum into the market which has been stuck in very tight trading ranges,&#8221; said Lee Hardman, senior currency strategist at MUFG.



Traders now await U.S. core PCE inflation figures due on Friday, as well as an appearance by Fed Chair Jerome Powell.



<h2 class="wp-block-heading" id="h-intervention-watch">INTERVENTION WATCH</h2>



Should the inflation data surprise on the upside and support the dollar, its most dramatic impact could be on the yen. Market participants say there is a dense thicket of options restricting moves in dollar/yen around the 152 level, and so a break through could trigger more significant moves.



While there may be some trading to defend a move toward 152 yen per dollar for now, Friday&#8217;s U.S. inflation data posed a significant risk, said Takeshi Ishida, a currency strategist at Resona Holdings.



&#8220;Once dollar/yen touches 152, I think there will probably be a sharp move upward, and that&#8217;s when intervention could take place.&#8221;



Japanese authorities held a meeting on Wednesday on the currency&#8217;s weakness and ramped up their verbal warnings, putting the market on the lookout for any signs that words are being backed up with action.



Japan intervened in the currency market three times in 2022, selling the dollar to buy yen, first in September and again in October as the yen slid towards a 32-year low of 152 to the dollar.



A summary of opinions at the Bank of Japan&#8217;s March meeting released on Thursday gave the currency little support, showing many policymakers saw the need to go slow in phasing out ultra-loose monetary policy.



The Easter holiday in many markets is also complicating matters.



&#8220;That works in Japan&#8217;s favour as it keeps another layer of uncertainty as liquidity tends to be thin, and so investors might be nervous holding yen shorts going into the holiday period,&#8221; said MUFG&#8217;s Hardman.



Meanwhile, China&#8217;s central bank set the yuan fixing at the widest gap against Reuters&#8217; estimate in nearly five months, as authorities step up efforts to prevent sharp declines in the currency. The yuan slumped to a four-month low last Friday.&nbsp;CNY/



The onshore yuan was mostly flat at 7.2277 per dollar,&nbsp;CNY=CFXS&nbsp;while offshore it was at 7.2591 per dollar, also little changed.&nbsp;CNH=D3



The Swiss franc remained under pressure, and the dollar rose 0.24% to 0.9059 francs, trading just shy of a four month high hit the day before.&nbsp;CHF=EBS



The Aussie fell 0.6% to $0.6495 AUD=D3. As well as being hurt by Waller&#8217;s remarks, data from Australia showed consumers continued to struggle as retail sales edged up 0.3% in February, missing forecasts. AUD/



(Reporting by Brigid Riley; Editing by Lincoln Feast and Sonali Paul)

FILE PHOTO: Photo illustration of one hundred dollar notes in Seoul

Dollar gains as inflation data looms; yen on intervention watch

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="728" height="475" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/NSP6U5TEJZNNDEK7AKO67HPJYM.jpg" alt="" class="wp-image-470796" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/NSP6U5TEJZNNDEK7AKO67HPJYM.jpg 728w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/NSP6U5TEJZNNDEK7AKO67HPJYM-300x196.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/NSP6U5TEJZNNDEK7AKO67HPJYM-138x90.jpg 138w" sizes="(max-width: 728px) 100vw, 728px" /><figcaption class="wp-element-caption">FILE PHOTO: People walk over London Bridge with at a view of Tower Bridge in the City of London financial district, in London, Britain, October 25, 2023. REUTERS/ Susannah Ireland/File Photo</figcaption></figure>



LONDON, March 28 (Reuters)&nbsp;&#8211;&nbsp;Britain&#8217;s economy entered a shallow recession last year,&nbsp;official figures confirmed on Thursday,&nbsp;leaving Prime Minister Rishi Sunak with a challenge to reassure voters that the economy is safe with him before an election expected later this year.



Gross domestic product shrank by 0.1% in the third quarter and by 0.3% in the fourth, unchanged from preliminary estimates, the Office for National Statistics&nbsp;(ONS)&nbsp;said on Thursday.



The figures will be disappointing for Sunak,&nbsp;who has been accused by the opposition Labour Party &#8211; far ahead in opinion polls &#8211; of overseeing &#8220;Rishi&#8217;s recession&#8221;.



&#8220;The weak starting point for GDP this year means calendar-year growth in 2024 is likely to be limited to less than 1%,&#8221; said Martin Beck, chief economic advisor at EY ITEM Club.&#8221;



&#8220;However, an acceleration in momentum this year remains on the cards.&#8221;



Britain&#8217;s economy has shown signs of starting 2024 on a stronger footing,&nbsp;with&nbsp;monthly GDP growth of&nbsp;0.2% in January,&nbsp;and unofficial surveys suggesting growth continued in February and March.



Tax cuts announced by finance minister Jeremy Hunt and expectations of interest rate cuts are likely to help the economy in 2024.



However,&nbsp;Britain remains one of the&nbsp;slowestcountries&nbsp;to recover from the effects of the COVID-19 pandemic. At the end of last year, its economy was&nbsp;just 1% bigger than&nbsp;in&nbsp;late 2019, with only Germany faring worse&nbsp;among Group of Seven nations.



The economy grew just 0.1%&nbsp;in all of 2023, its weakest performance since 2009,&nbsp;excluding the&nbsp;peak-pandemic year of 2020.



GDP per person, which has not grown since early 2022, fell by 0.6% in the fourth quarter and 0.7% across 2023.



Sterling&nbsp;GBP=was little changed against the dollar and the euro&nbsp;EURGBP=after the data release.



<h2 class="wp-block-heading" id="h-uk-recovery-begins-slowly">UK RECOVERY BEGINS SLOWLY</h2>



The&nbsp;Bank of England (BoE)&nbsp;has said inflation is moving towards the point where it can start cutting rates. It&nbsp;expects the economy to grow by just 0.25% this year although official budget forecasters expect a 0.8% expansion.



BoE policymaker Jonathan Haskel said in an interview reported in Thursday&#8217;s Financial Times that rate cuts were &#8220;a long way off&#8221;, despite dropping his advocacy of a rise at last week&#8217;s meeting.



Thursday&#8217;s&nbsp;figures from the ONS&nbsp;also showed&nbsp;0.7%&nbsp;growth in households&#8217; real disposable income, flat&nbsp;in the previous quarter.



Thomas Pugh, an economist at consulting firm RSM, said the increase could prompt consumers to increase their spending and support the economy.



&#8220;Consumer confidence has been improving gradually over the last year &#8230; as the impact of rising real wages filters through into people’s pockets, even though consumers remain cautious overall,&#8221; Pugh said.



Britain&#8217;s current account deficit totalled 21.18 billion pounds ($26.70 billion) in the fourth quarter, slightly narrower than a forecast of 21.4 billion pounds shortfall in a Reuters poll of economists, and equivalent to 3.1% of GDP, up from 2.7% in the third quarter.



The underlying current account deficit, which strips out volatile trade in precious metals, expanded to 3.9% of GDP.



($1 = 0.7933 pounds)



(Reporting by Suban Abdulla; Editing by William Schomberg and Kevin Liffey)

FILE PHOTO: Unemployment rate unchanged but signs point to cooling jobs market

UK economy went into recession last year, data confirms

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/5OKBEVP6EFKETLPBJ6VKFBFY4U-1-820x547.jpg" alt="" class="wp-image-470116" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/5OKBEVP6EFKETLPBJ6VKFBFY4U-1-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/5OKBEVP6EFKETLPBJ6VKFBFY4U-1-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/5OKBEVP6EFKETLPBJ6VKFBFY4U-1-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/5OKBEVP6EFKETLPBJ6VKFBFY4U-1-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/5OKBEVP6EFKETLPBJ6VKFBFY4U-1-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/5OKBEVP6EFKETLPBJ6VKFBFY4U-1-scaled.jpg 2048w" sizes="(max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">FILE PHOTO: A sign of the New Development Bank (NDB) of BRICS countries is pictured at its headquarters in Shanghai, China, May 30, 2023. REUTERS/Aly Song</figcaption></figure>



BOAO, China, March 26 (Reuters)&nbsp;&#8211;&nbsp;The New Development Bank (NDB), set up by the BRICS group of emerging economies, aims to make about $5 billion in loans this year, its vice president, Zhou Qiangwu, said on Tuesday.



&#8220;During the epidemic, our business has been somewhat affected, and now everything is going back on track,&#8221; Zhou told Reuters on the sidelines of the annual Boao Forum.



Zhou did not elaborate on how the bank may have been off track, but said China and India have received slightly more investment from the bank than other members.



Headquartered in Shanghai, the NDB was set up in 2015 by Brazil, Russia, India, China and South Africa, collectively known as the BRICS countries.



Zhou also said he expected China&#8217;s economy to grow about 5% this year, in line with the government&#8217;s target.



(Reporting by Kevin Yao. Editing by Gerry Doyle)

FILE PHOTO: A sign of the New Development Bank (NDB) is pictured at its headquarters in Shanghai

BRICS development bank aims to make $5 bln in loans in 2024

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="462" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107383365-1709744654471-gettyimages-2063429669-_s2_1499_zbm0kcgb-820x462.jpeg" alt="" class="wp-image-468257" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107383365-1709744654471-gettyimages-2063429669-_s2_1499_zbm0kcgb-820x462.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107383365-1709744654471-gettyimages-2063429669-_s2_1499_zbm0kcgb-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107383365-1709744654471-gettyimages-2063429669-_s2_1499_zbm0kcgb-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107383365-1709744654471-gettyimages-2063429669-_s2_1499_zbm0kcgb-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107383365-1709744654471-gettyimages-2063429669-_s2_1499_zbm0kcgb.jpeg 929w" sizes="(max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Federal Reserve Bank Chairman Jerome Powell testifies before the House Financial Services Committee in the Rayburn House Office Building on Capitol Hill on March 06, 2024 in Washington, DC.  Chip Somodevilla | Getty Images</figcaption></figure>



The Federal Reserve has a lot to do at its meeting this week, but ultimately may not end up doing a whole lot in terms of changing the outlook for monetary policy.



In addition to releasing its rate decision after the meeting wraps up Wednesday, the central bank will update its economic projections as well as its unofficial forecast for the direction of interest rates over the next several years.



As expectations have swung sharply this year for where the Fed is headed, this week’s two-day session of the Federal Open Market Committee will draw careful scrutiny for any clues about the direction of interest rates.



Yet the general feeling is that policymakers will stick to their recent messaging, which has emphasized a patient, data-driven approach with no hurry to cut rates until there’s greater visibility on inflation.



“They’ll make it clear that they’re obviously not ready to cut rates. They need a few more data points to feel confident that inflation is heading back to target,” said Mark Zandi, chief economist at Moody’s Analytics. “I expect them to reaffirm three rate cuts this year, so that would suggest the first rate cut would be in June.”



Markets have had to adjust to the Fed’s approach on the fly, scaling back both the timing and frequency of expected cuts this year. Earlier this year, traders in the fed funds futures market were anticipating the rate-cutting campaign to kick off in March and continue until the FOMC had cut the equivalent of six or seven times in increments of quarter percentage points.



Now, the market has pushed out the timing until at least June, with only three cuts anticipated from the current target range of 5.25%-5.5% for the Fed’s benchmark overnight borrowing rate.



The swing in expectations will make how the central bank delivers its message this week all the more important. Here’s a quick look at what to expect:



<h2 class="wp-block-heading" id="h-the-dot-plot"><a></a>The ‘dot plot’</h2>



Though the quarterly plot of individual members’ expectations is pretty arcane, this meeting likely will be all about the dots. Specifically, investors will look at how the 19 FOMC members, both voters and nonvoters, will indicate their expectations for rates through the end of the year and out to 2026 and beyond.



When the matrix was last updated in December, the dots pointed to three cuts in 2024, four in 2025, three more in 2026, and then two more at some point to take the long-range federal funds rate down to around 2.5%, which the Fed considers “neutral” — neither promoting nor restricting growth.



Doing the math, it would only take two FOMC members to get more hawkish to reduce the rate cuts this year to two. That, however, is not the general expectation.



“It only takes two individual dots moving higher to raise the 2024 median. Three dots are enough to push the long-run dot 25bp higher,” Citigroup economist Andrew Hollenhorst said in a client note. “But the combination of inconclusive activity data and slowing year-on-year core inflation should be just enough to keep dots in place and [Fed Chair Jerome] Powell still guiding that the committee is on track to gain ‘greater confidence’ to cut policy rates this year.”



<h2 class="wp-block-heading"><a></a>The rate call for March</h2>



More immediately, the FOMC will conduct a largely academic vote on what to do with rates now.



Simply put, there is zero chance the committee votes to cut rates at this week. The statement from the last meeting all but ruled out an imminent move, and public statements from virtually every Fed speaker since then have also ruled out a decrease.



What this statement could indicate is perhaps a thawing in the outlook and an adjustment of the bar that the data will need to clear to justify future cuts.



“We still expect the Fed to cut interest rates in June, although we don’t expect officials to provide a strong steer either for or against” following the March meeting, wrote Paul Ashworth, chief North America economist at Capital Economics.



<h2 class="wp-block-heading"><a></a>The economic outlook</h2>



Along with the “dot plot,” the Fed will release its quarterly update on the economy, specifically for gross domestic product, inflation and the unemployment rate. Collectively, the estimates are known as the Summary of Economic Projections, or SEP.



Again, there’s not a lot of expectations that the Fed will change its outlook from December, which reflected cuts for inflation and an upgrade for GDP. For this meeting, the focus will fall squarely on inflation and how that affects the expectations for rates.



“While inflation has hit a bump in the road, the activity data suggest the economy is not overheating,” Bank of America economist Michael Gapen wrote. “We think the Fed will still forecast three cuts this year, but it is a very close call.”



Most economists think the Fed could raise its GDP forecast again, though not dramatically, while possibly tweaking the inflation outlook a touch higher.



<h2 class="wp-block-heading"><a></a>Big picture</h2>



On a broader scale, markets likely will be looking for the Fed to follow the recent plotline of fewer cuts this year — but still cuts. There also will be some anticipation over what policymakers say about its balance sheet reduction. Powell has indicated the issue will be discussed at this meeting, and some details could emerge of when and how the Fed will slow and ultimately halt the reduction in its bond holdings.



It won’t be just Wall Street watching, either.



Though not official policy, most central banks around the world take their cues from the Fed. When the U.S. central bank says it is moving cautiously because it fears inflation could spike again if it eases too soon, its global counterparts take notice.



With worries escalating over growth in some parts of the globe, central bankers also want some type of go signal. Higher interest rates tend to put upward pressure on currencies and raise prices for goods and services.



“The rest of the world is waiting for the Fed,” said Zandi, the Moody’s economist. “They would prefer not to have their currencies fall in value and put further upward pressure on inflation. So they would really, really like the Fed to start leading the way.”

107383365-1709744654471-gettyimages-2063429669-_s2_1499_zbm0kcgb

Here’s everything to expect from the Federal Reserve’s policy meeting Wednesday

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="510" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107389251-1710843088447-gettyimages-901988866-AFP_VS5GN-820x510.jpeg" alt="" class="wp-image-467993" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107389251-1710843088447-gettyimages-901988866-AFP_VS5GN-820x510.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107389251-1710843088447-gettyimages-901988866-AFP_VS5GN-300x186.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107389251-1710843088447-gettyimages-901988866-AFP_VS5GN-145x90.jpeg 145w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107389251-1710843088447-gettyimages-901988866-AFP_VS5GN-768x477.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107389251-1710843088447-gettyimages-901988866-AFP_VS5GN-1536x954.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107389251-1710843088447-gettyimages-901988866-AFP_VS5GN-scaled.jpeg 2048w" sizes="(max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">A man walks past a poster that informs customers that bitcoin can be used in this shop in Tokyo on January 06, 2018.  Toru Yamanaka | Afp | Getty Images</figcaption></figure>



Japan’s government pension fund on Tuesday said it is requesting information on “illiquidity assets” such as bitcoin, as part of research into potential new investments.



The Government Pension Investment Fund (GPIF) of Japan, the world’s largest pension fund by assets under management on several different rankings, said it is looking for “basic information” on illiquid assets other than those in which it already invests.



GPIF said it currently puts funds in domestic and foreign bonds and stocks, real estate, infrastructure and private equity. It is now looking for information about other assets such as forests, farmland, gold and bitcoin and how these might be incorporated into the portfolio of pension funds.



There is no indication that GPIF will invest in bitcoin or other cryptocurrencies.



GPIF’s statement comes days after bitcoin hit an all-time high and after the world’s largest cryptocurrency has rallied more than 130% over the last year.



That rally is in part thanks to the launch of bitcoin exchange-traded funds in the U.S. this year, which has attracted billions of dollars of inflows.



Pension funds have been very cautious about stepping into cryptocurrency investments due to the latter’s volatile nature. Some have nevertheless dipped their toes, with South Korea’s pension fund — the National Pension Service — buying shares of Coinbase last year.



In Japan, the government in February proposed a law that would, if passed, allow investment funds to hold digital assets like cryptocurrencies.

107389251-1710843088447-gettyimages-901988866-AFP_VS5GN

World’s largest pension fund explores bitcoin as an investment

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107386016-1710228393384-gettyimages-1434261548-banderajaponyyen9-820x547.jpeg" alt="" class="wp-image-467930" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107386016-1710228393384-gettyimages-1434261548-banderajaponyyen9-820x547.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107386016-1710228393384-gettyimages-1434261548-banderajaponyyen9-300x200.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107386016-1710228393384-gettyimages-1434261548-banderajaponyyen9-135x90.jpeg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107386016-1710228393384-gettyimages-1434261548-banderajaponyyen9-768x512.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107386016-1710228393384-gettyimages-1434261548-banderajaponyyen9-1536x1024.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107386016-1710228393384-gettyimages-1434261548-banderajaponyyen9-scaled.jpeg 2048w" sizes="(max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">An editorial montage of the Japan flag and Japanese yen cash bank notes Javier Ghersi | Moment | Getty Images</figcaption></figure>



Japan’s central bank raised interest rates on Tuesday for the first time since 2007, ending the world’s only negative rates regime and other unconventional policy easing measures enacted over the course of the last few decades to combat deflation.



These changes mark a historic shift and represent the sharpest pull back in one of the most aggressive monetary easing exercises in the world, which was aimed at reflating prices in the Japanese economy. The BOJ’s actions also precede the U.S. Federal Reserve’s interest rate decision later this week.



“The likelihood of inflation stably achieving our target has been heightening &#8230; the likelihood reached a certain threshold that resulted in today’s decision,” BOJ Governor Kazuo Ueda said at a press conference after the central bank’s decision, according to a translation provided by Reuters.



The Bank of Japan though cautioned it’s not about to embark on aggressive rate hikes, saying that it “anticipates that accommodative financial conditions will be maintained for the time being,” given the fragile growth in the world’s fourth-largest economy.



“If the likelihood heightens further and trend inflation accelerates a bit more, that will lead to a further increase in short-term rates,” Ueda said. He added though there is still “some distance for inflation expectations to reach 2%.”



The BOJ raised its short-term interest rates to around 0% to 0.1% from -0.1% at the end of its two-day March policy meeting. Japan’s negative rates regime had been in place since 2016.



It also abolished its radical yield curve control policy for Japanese sovereign bonds, which the central bank has employed to target longer-term interest rates by buying and selling bonds as necessary.



The central bank though will continue purchasing government bonds worth “broadly the same amount” as before — currently about 6 trillion yen per month.



It would resort to “nimble responses” in the form of increased JGB purchases and fixed-rate purchases of JGBs, among other things, if there is a rapid rise in long-term interest rates.



Scaling back its asset purchases and quantitative easing, the BOJ said it would stop buying exchange-traded funds and Japan real estate investment trusts (J-REITS). It also pledged to slowly reduce its purchases of commercial paper and corporate bonds, with the aim of stopping this practice in about a year.



“As for the future, we will at some point eye shrinking our balance sheet given we’ve ended our extraordinary monetary easing. But we can’t specify now when that will happen,” Ueda told reporters.



He described the BOJ’s JGB and ETF holdings as “remnants of the extraordinary monetary easing scheme,” while deferring questions on the impact of the central banks’ unorthodox policies until an ongoing review is completed.



<h2 class="wp-block-heading" id="h-yen-weakens-yields-slip"><a></a>Yen weakens, yields slip</h2>



The yen weakened sharply to beyond 150 to the dollar — a level that’s previously prompted intervention from Japanese authorities.



Yields on the 10-year Japanese government bonds slipped, while the Nikkei stock index ended slightly up in a volatile session after the rate decision and ahead of a public holiday in Japan.



“As always, I won’t comment on short-term currency moves,” Ueda said at the press conference. “But if currency moves have a big impact on our economic and price forecasts, we will stand ready to take an appropriate monetary policy response.”



Financial markets had repositioned over the past week as local Japanese news reports and preliminary wage negotiation results fanned speculation that the BOJ could normalize rates a month earlier, ahead of its April meeting.



Ongoing “shunto” spring wage negotiations between Japan Inc and its unionized workers have so far yielded a weighted average 3.7% spike in base pay, Rengo, Japan’s largest federation of trade unions said Friday in its first provisional update.



This is even more robust than last year’s gains, which were the steepest spike in three decades.



<h2 class="wp-block-heading"><a></a>Inflation target</h2>



The BOJ had barely budged from its&nbsp;ultra-loose monetary policy&nbsp;posture despite “core core inflation” — which excludes food and energy prices — exceeding its 2% target for more than a year, as policymakers viewed price increases were largely imported.



BOJ Governor Kazuo Ueda had repeatedly said the outcome of this year’s annual “shunto” wage negotiations would be key to sustainable price increases. The Bank of Japan expects higher salaries to lead to a virtuous spiral with domestic demand fueling inflation.



“Services prices have continued to increase moderately, partly due to the moderate wage increases seen thus far,” the BOJ said in a statement.



“As these recent data and anecdotal information have gradually shown that the virtuous cycle between wages and prices has become more solid, the Bank judged it came in sight that the prices stability target would be achieved in a sustainable and stable manner toward the end of the projection period of the January 2024 outlook report,” it added.



<h2 class="wp-block-heading"><a></a>Uncertain outlook</h2>



With inflation slowing and an economy that barely averted a technical recession toward the end of last year, Ueda flagged some possible headwinds.



“There are numerous risks surrounding the global economy such as the chance of a negative market shock. There’s also the risk that consumption may not recover as much as expected,” he said.



High inflation has crimped domestic demand and private consumption. Private consumption fell 0.3% in the fourth quarter from the previous one — more than the provisional estimates of a 0.2% decline.



“If our price forecast clearly overshoots or, even if our median forecast is unchanged, we see a clear increase in upside risk to the price outlook, that will likely lead to a policy change,” Ueda said.



Investors and market watchers may have to wait for the BOJ to update its economic forecast at its April meeting, where the central bank is expected to release its 2026 forecast.



“Japan’s expectation of inflation, when looking at a timespan of 5 to 10 years, is likely somewhere around 1-1.5% &#8230; At present, real interest rate is likely deeply in negative territory. Unless the neutral, real rate of interest is very deeply in negative territory, we can say&nbsp;Japan’s monetary condition is accommodative,” he said.

107386016-1710228393384-gettyimages-1434261548-banderajaponyyen9

Bank of Japan ends the world’s only negative rates regime in a historic move, abandons yield curve control

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107388760-1710772295032-gettyimages-2087312988-CERAWEEK_2024-820x547.jpeg" alt="" class="wp-image-467884" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107388760-1710772295032-gettyimages-2087312988-CERAWEEK_2024-820x547.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107388760-1710772295032-gettyimages-2087312988-CERAWEEK_2024-300x200.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107388760-1710772295032-gettyimages-2087312988-CERAWEEK_2024-135x90.jpeg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107388760-1710772295032-gettyimages-2087312988-CERAWEEK_2024-768x512.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107388760-1710772295032-gettyimages-2087312988-CERAWEEK_2024-1536x1024.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107388760-1710772295032-gettyimages-2087312988-CERAWEEK_2024-scaled.jpeg 2048w" sizes="(max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Amin Nasser, CEO of Saudi Aramco, speaks at the 2024 CERAWeek by S&amp;P Global conference in Houston, Texas, on March 18, 2024. F. Carter Smith | Bloomberg | Getty Images</figcaption></figure>



HOUSTON — Saudi Aramco CEO Amin Nasser said Monday that the energy transition is failing and policymakers should abandon the “fantasy” of phasing out oil and gas, as demand for fossil fuels is expected to continue to grow in the coming years.



“In the real world, the current transition strategy is visibly failing on most fronts as it collides with five hard realities,” Nasser said during a panel interview at the CERAWeek by S&amp;P Global energy conference in Houston, Texas.



“A transition strategy reset is urgently needed and my proposal is this: We should abandon the fantasy of phasing out oil and gas and instead invest in them adequately reflecting realistic demand assumptions,” the CEO said to applause from the audience.



The Paris-based International Energy Agency forecast last year that peak oil, gas and coal demand would come in 2030. Nasser said demand is unlikely to peak anytime soon, let alone by that year. Nasser suggested that the IEA is focusing on demand in the U.S. and Europe and needs to focus on the developing world as well.



Nasser said alternative energy sources have been unable to displace hydrocarbons at scale, despite the world investing more than $9.5 trillion over the past two decades. Wind and solar currently supply less than 4% of the world’s energy, while total electric vehicle penetration is less than 3%, he said.



Meanwhile, the share of hydrocarbons in the global energy mix has barely fallen in the 21st century from 83% to 80%, Nasser said. Global demand has increased by 100 million barrels of oil equivalent per day during the same period and will reach an all-time high this year, the CEO said.



Gas has grown 70% since the start of the century, Nasser said. The transition from coal to gas is responsible for two-thirds of the reductions in carbon emissions in the U.S., he said.



“This is hardly the future picture some have been painting,” Nasser said. “Even they are starting to acknowledge the importance of oil and gas security.”



Developing nations in the global south, meanwhile, will drive oil and gas demand as prosperity rises in those nations, which represent more than 85% of the world’s population, the CEO said. These nations receive less than 5% of the investment targeting renewable energy, he said.



Nasser said the world should focus more on reducing emissions from oil and gas in addition to renewables. The CEO said efficiency improvements alone over the past 15 years have reduced global energy demand by almost 90 million barrels per day oil equivalent. Wind and solar, meanwhile, have substituted only 15 million barrels over the same period, he said.



“We should phase in new energy sources and technologies when they are genuinely ready, economically competitive and with the right infrastructure,” Nasser said.

107388760-1710772295032-gettyimages-2087312988-CERAWEEK_2024

Saudi Aramco CEO says energy transition is failing, world should abandon ‘fantasy’ of phasing out oil

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107366350-17066268512024-01-30t110014z_2101305001_rc2as5axkmg4_rtrmadp_0_usa-fed-balance-sheet-820x547.jpeg" alt="" class="wp-image-467638" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107366350-17066268512024-01-30t110014z_2101305001_rc2as5axkmg4_rtrmadp_0_usa-fed-balance-sheet-820x547.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107366350-17066268512024-01-30t110014z_2101305001_rc2as5axkmg4_rtrmadp_0_usa-fed-balance-sheet-300x200.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107366350-17066268512024-01-30t110014z_2101305001_rc2as5axkmg4_rtrmadp_0_usa-fed-balance-sheet-135x90.jpeg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107366350-17066268512024-01-30t110014z_2101305001_rc2as5axkmg4_rtrmadp_0_usa-fed-balance-sheet-768x512.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107366350-17066268512024-01-30t110014z_2101305001_rc2as5axkmg4_rtrmadp_0_usa-fed-balance-sheet-1536x1024.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107366350-17066268512024-01-30t110014z_2101305001_rc2as5axkmg4_rtrmadp_0_usa-fed-balance-sheet-scaled.jpeg 2048w" sizes="(max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">An eagle tops the U.S. Federal Reserve building’s facade in Washington, July 31, 2013. REUTERS/Jonathan Ernst/ Jonathan Ernst | Reuters</figcaption></figure>



The Federal Reserve and the European Central Bank look poised to make “major progress” in cutting interest rates this year, according to the central bank of central banks.



Agustín Carstens, general manager of the Bank for International Settlements, told CNBC on Monday that major central banks had so far made “very impressive advances” in lowering inflation and suggested that they could soon shift toward a looser monetary policy stance.



“If everything goes fine, I think that, certainly this year, we will see major progress, especially toward the second part of the year,” Carstens told Annette Weisbach.



BIS serves as a bank and forum for national central banks, and as such has close understanding of their monetary policies. It holds no sway over policymakers’ decision-making.



Carstens warned that the “last mile” on the path of disinflation was likely to prove the trickiest.



“We have done the tightening, but the effect on the rest of the economy is still going. The uncertainty is how much impact will that be,” he said.



“Central bankers have to be very observant about the path of disinflation, and they have to keep going until the job is fully done.”



Investors are closely watching the future course for interest rates, with expectations of a shift toward looser monetary policy already bringing some relief to markets after months of interest rate hikes designed to dampen persistently high inflation.



During its March meeting, the ECB held interest rates steady, but hinted at a June rate cut as it trimmed its annual inflation forecast. ECB chief economist Philip Lane sought to temper those expectations last week, telling CNBC that any decision would depend on the latest economic data.



The Fed and the Bank of England are expected to shine future light on their plans for interest rates during their monetary policy meetings this week.



Higher-than-expected U.S. inflation data released on Thursday prompted some economists to curb predictions for a swathe of 2023 cuts. JP Morgan and Goldman Sachs said they now see the Fed reducing rates three times this year from June onwards.



The BoE is also expected to lower rates starting from June, according to analysts, with Goldman Sachs forecasting as many as five 25 basis point cuts.



The Bank of Japan is meanwhile predicted to lift interest rates on Tuesday, according to a Reuters poll, marking a major turn in its nearly two-decade-long cycle of negative interest rates.

107366350-17066268512024-01-30t110014z_2101305001_rc2as5axkmg4_rtrmadp_0_usa-fed-balance-sheet

Fed and other banks to make ‘major progress’ on rates this year, BIS chief says

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107388104-1710510554127-gettyimages-1967839257-776099513_uae_dicenzo_cloudseeding_17-820x461.jpeg" alt="" class="wp-image-467547" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107388104-1710510554127-gettyimages-1967839257-776099513_uae_dicenzo_cloudseeding_17-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107388104-1710510554127-gettyimages-1967839257-776099513_uae_dicenzo_cloudseeding_17-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107388104-1710510554127-gettyimages-1967839257-776099513_uae_dicenzo_cloudseeding_17-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107388104-1710510554127-gettyimages-1967839257-776099513_uae_dicenzo_cloudseeding_17-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107388104-1710510554127-gettyimages-1967839257-776099513_uae_dicenzo_cloudseeding_17-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107388104-1710510554127-gettyimages-1967839257-776099513_uae_dicenzo_cloudseeding_17.jpeg 1920w" sizes="(max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">A view of the UAE city of Al Ain during a cloud-seeding mission on January 31, 2024 in Al Ain, United Arab Emirates.  Andrea Dicenzo | Getty Images News | Getty Images</figcaption></figure>



Rising global temperatures have added a strain on regions like the Middle East, which is extremely vulnerable to the impacts of climate change.



These nations are now faced with a big problem, how can they solve their water shortage issues?&nbsp;



The United Arab Emirates averages less than 200 millimeters of rainfall a year, in stark contrast to London’s average of 1,051 millimeters and Singapore’s 3,012 millimeters.



In the UAE, temperatures can reach as high as 50 degrees Celsius (122° Fahrenheit) during the Summer, where 80% of the country’s landscape is covered with desert terrain.&nbsp;



Extreme heat could exacerbate water scarcity issues and impose restraints on agricultural productivity in the country.&nbsp;



The United Nations projects that by 2025, 1.8 billion people will face absolute water scarcity across the world. The Middle East stood out as one of the most water-stressed areas with around 83% of the population in the region prone to experiencing high levels of water stress. 



With water scarcity at the core of the region’s challenges, the Gulf state implemented a program aimed at addressing this issue.&nbsp;



<h2 class="wp-block-heading" id="h-introduction-of-cloud-seeding"><a></a>Introduction of cloud seeding</h2>



In the 1990s, the UAE introduced a rain enhancement methodology called cloud seeding. Cloud seeding is the process of increasing the amount of rain produced from the clouds above, which is designed to improve water shortage issues in arid regions around the emirate. 



By the early 2000s, Sheikh Mansour Bin Zayed Al Nahyan, the vice president of the UAE, allocated up to $20 million for research into cloud seeding. The UAE partnered with the National Center for Atmospheric Research in Colorado and NASA to set up the methodology for the cloud seeding program.



The government introduced a task force called The National Center of Meteorology (NCM) in Abu Dhabi where more than 1,000 hours of cloud seeding is performed each year to enhance rainfall.&nbsp;



The NCM has a weather radar network and more than 60 weather stations where it manages seeding operations in the country and closely monitors atmospheric conditions.



<h2 class="wp-block-heading"><a></a>How it works</h2>



Weather forecasters at the center can observe precipitation patterns in clouds and identify suitable clouds to seed, with the aim of increasing the rate of rainfall.



Once they spot the right cloud, they instruct pilots to take to the air with their specialized aircrafts loaded with hygroscopic flares on the plane’s wings. 



Each flare contains about 1 kilogram of salt material components and can take up to three minutes to burn and shoot into the right clouds. After the seeding agent is introduced into the cloud, the droplets increase in size, surpassing the cloud’s capacity to sustain them against gravity, resulting in their release as raindrops.



<h2 class="wp-block-heading"><a></a>Seeding agents</h2>



Skeptics have long argued that governments who have introduced weather modification techniques to their skies are “playing God.”



During a visit to the NCM, General Director Abdulla Al Mandous told CNBC that the technology is “based on scientific background.”



Al Mandous added that Abu Dhabi’s program does not use silver iodide, a common crystal-like material used as a seeding agent in other countries. This material has been widely criticized for potential harmful effects on the environment and the public, however, some cloud seeding studies show there has been no substantial evidence to prove that at current levels it poses any toxic effects. 



The NCM said it does not use any harmful chemicals in its operations. “Our specialized aircrafts only use natural salts, and no harmful chemicals,” the organization told CNBC.



Al Mandous said the center started manufacturing its own seeding agent called nano material, a fine salt coated with titanium oxide, which is more effective than what it uses currently.&nbsp;



“It will give us three times more effective results than the hygroscopic flares,” he said.



The nano material is presently undergoing trials and experimentation in various atmospheres, both in the UAE and the U.S.

107388104-1710510554127-gettyimages-1967839257-776099513_uae_dicenzo_cloudseeding_17

United Arab Emirates is using cloud seeding tech to make it rain

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="462" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107388489-1710720164910-gettyimages-2057346478-AFP_34KV6K8-820x462.jpeg" alt="" class="wp-image-467543" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107388489-1710720164910-gettyimages-2057346478-AFP_34KV6K8-820x462.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107388489-1710720164910-gettyimages-2057346478-AFP_34KV6K8-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107388489-1710720164910-gettyimages-2057346478-AFP_34KV6K8-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107388489-1710720164910-gettyimages-2057346478-AFP_34KV6K8-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107388489-1710720164910-gettyimages-2057346478-AFP_34KV6K8.jpeg 929w" sizes="(max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Around 970 million registered voters are expected to cast their votes for India’s next prime minister. Sajjad Hussain | Afp | Getty Images</figcaption></figure>



India will hold the world’s largest general elections starting April this year with nearly a billion voters set to exercise their franchise.



The seven-stage election process will start from April 19 and last till June 1, 2024, according to the schedule announced by the Election Commission of India. The country has about 970 million registered voters.



India’s Prime Minister Narendra Modi’s Bharatiya Janata Party is projected to win more than the required 272 seats to form a government, according to several opinion polls.



Experts also forecast that the BJP is set to win a third straight term.&nbsp;



“Given the economic growth momentum in the domestic economy created by a Modi-led government and an increased image of India on a global stage, many are confident that Modi will win again,” Kranthi Bathini, equity strategist at WealthMills Securities told CNBC.&nbsp;



Opposition parties have often alleged that electronic voting machines can be “hacked,” benefiting the ruling BJP, a claim refuted by the country’s election body.



In December, Modi’s party was accused by opposition members of orchestrating a power grab after 141 lawmakers were suspended for disrupting parliamentary proceedings.



Chief Election Commissioner Rajiv Kumar appealed to voters in a press conference on Saturday to “maintain decorum when campaigning and refrain from abuses and personal attacks.” 



Since Modi won a second term in the 2019 general election, India has seen the economy strengthen, with Indian equity benchmarks hitting record highs. The Nifty 50 and BSE Sensex have both hit all-time highs this year after the country overtook Hong Kong in December to become the world’s seventh largest stock market.



International Monetary Fund executive director Krishnamurthy Subramanian said earlier in March that India is “easily” the fastest-growing economy and is poised for 8% growth this year.



Warming relations with the U.S. after Modi’s state visit to the White House in June has also boosted India’s appeal as investment destination, with several firms keen to expand their manufacturing presence in the South-Asian nation as they diversify away from China.

107388489-1710720164910-gettyimages-2057346478-AFP_34KV6K8

India to hold the world’s biggest election starting April in over a month-long exercise

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107388485-1710716931527-gettyimages-2079406255-cfoto-realesta240315_npjH7-820x547.jpeg" alt="" class="wp-image-467526" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107388485-1710716931527-gettyimages-2079406255-cfoto-realesta240315_npjH7-820x547.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107388485-1710716931527-gettyimages-2079406255-cfoto-realesta240315_npjH7-300x200.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107388485-1710716931527-gettyimages-2079406255-cfoto-realesta240315_npjH7-135x90.jpeg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107388485-1710716931527-gettyimages-2079406255-cfoto-realesta240315_npjH7-768x512.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107388485-1710716931527-gettyimages-2079406255-cfoto-realesta240315_npjH7-1536x1024.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107388485-1710716931527-gettyimages-2079406255-cfoto-realesta240315_npjH7-scaled.jpeg 2048w" sizes="(max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">High-rise residential and commercial buildings are being constructed near Dongyu Road, Qiantan, in the Pudong New Area of Shanghai, China, on March 15, 2024.  Nurphoto | Nurphoto | Getty Images</figcaption></figure>



BEIJING — &nbsp;China’s economic data for the first two months of the year beat analysts’ expectations across the board on Monday.



Retail sales rose 5.5%, better than the 5.2% increase forecast in a Reuters poll, while industrial production climbed 7%, compared with estimates of 5% growth.



Fixed asset investment rose by 4.2%, more than the 3.2% estimated by analysts.



The unemployment rate in February for cities came in at 5.3%.



Online retail sales of physical goods rose 14.4% from a year earlier during the first two months of the year.



Investment into real estate fell 9% in the first two months of the year from a year ago. Investment in infrastructure rose by 6.3% while those in manufacturing increased by 9.4% during that time.



“We believe China’s sequential growth momentum remained solid in Q1 despite notable divergence across sectors,” Goldman Sachs analysts said in a report Monday following the data release.



“However, to secure the ambitious “around 5%” growth target this year, more policy easing is still necessary, especially on the demand-side (e.g., fiscal, housing and consumption).”



Despite the upbeat results, National Bureau of Statistics Spokesperson Liu Aihua cautioned that domestic demand remains insufficient.



She told reporters that real estate remains in a period of “adjustment,” and that the overall economy is “in a critical period of recovery, transformation and upgrading,” according to a CNBC translation of her comments in Mandarin.



When asked about the unemployment rate for people aged 16 to 24, Liu said the figures would be released a few days after the monthly press conference on economic data.



<h2 class="wp-block-heading" id="h-holiday-boost"><a></a>Holiday boost</h2>



Economic figures for January and February are typically combined in China to smooth out variations from the Lunar New Year, which can fall in either month depending on the calendar year. It is the country’s biggest national holiday, in which factories and businesses remain closed for at least a week.



This year, the number of domestic tourist trips and revenue during the holiday grew compared with last year as well as pre-pandemic figures from 2019. But Nomura’s Chief China Economist Ting Lu pointed out that “average tourism spending per trip was still 9.5% below pre-pandemic levels in 2019.”



Retail sales did not rebound from the pandemic as strongly as many had expected as consumers have grown uncertain about their future income.



“Consumers were buoyed temporarily by festivities-related spending at this start of the year. In the absence of decisive consumption-related stimulus this year, we think it would be difficult to sustain a robust consumer spending pace this year,” Oxford Economics’ Chief Economist Louise Loo said in a report on Monday.



<h2 class="wp-block-heading" id="h-lackluster-demand"><a></a>Lackluster demand</h2>



New loans in February missed expectations and fell from the prior month, “even after adjusting for seasonality,” Goldman Sachs analysts said in a report on Friday.



“The persistent weakness in property transactions and low consumer sentiment may continue to weigh on household borrowing,” the analysts said. “More monetary policy easing is needed.”



People’s Bank of China Governor Pan Gongsheng said earlier this month there was still room to cut the reserve requirement ratio, or the amount of cash banks need to have on hand.



Goldman expects 25 basis point cuts to that ratio in the second quarter of this year, as well as in the fourth quarter.



Real estate, which accounts for a significant part of household assets, has slumped over the last few years after Beijing’s crackdown on developers’ high reliance on debt for growth.



The average property price for 70 major Chinese cities fell by 4.5% in February from January on a seasonally adjusted, annualized basis, according to Goldman Sachs’ analysis using a weighted average of official figures.



That’s steeper than the 3.5% month-on-month drop in property prices in January, Goldman Sachs said.



“Our high frequency tracker suggests that 30-city new home transaction volume declined by 53.2% [year-on-year] in early March after adjusting to the lunar calendar basis,” the analysts said in a report.



<h2 class="wp-block-heading" id="h-focus-on-manufacturing"><a></a>Focus on manufacturing</h2>



Chinese authorities did not reveal significant new support for the massive real estate sector during an annual parliamentary meeting that ended last week.



Instead, Beijing emphasized the country’s focus on developing manufacturing and technological capabilities.



When asked Monday about overcapacity concerns, Liu said that China’s manufacturing capacity utilization rate was 76% in the fourth quarter, a 0.2 percentage point increase from a year earlier.



She described efforts to increase the level of high-end manufacturing a “strategic decision for achieving high-quality development,” while noting that efforts are needed to prevent inefficient and ineffective investments in the sector.



Data earlier this month showed China’s exports for January and February rose by 7.1% in U.S. dollar terms, beating expectations for a 1.9% increase.



Imports climbed by 3.5% during that time, also topping Reuters’ forecast for growth of 1.5%.

107388485-1710716931527-gettyimages-2079406255-cfoto-realesta240315_npjH7

China kicks off the year on strong note as retail, industrial data tops expectations

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107387314-1710403838407-gettyimages-1168663318-UK_LANE-820x547.jpeg" alt="" class="wp-image-466196" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107387314-1710403838407-gettyimages-1168663318-UK_LANE-820x547.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107387314-1710403838407-gettyimages-1168663318-UK_LANE-300x200.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107387314-1710403838407-gettyimages-1168663318-UK_LANE-135x90.jpeg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107387314-1710403838407-gettyimages-1168663318-UK_LANE-768x512.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107387314-1710403838407-gettyimages-1168663318-UK_LANE-1536x1024.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107387314-1710403838407-gettyimages-1168663318-UK_LANE-scaled.jpeg 2048w" sizes="(max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Photo: via CNBC</figcaption></figure>



The European Central Bank must take its time to get interest rate cuts right and will have a clearer picture of inflationary pressures in June, the institution’s chief economist told CNBC.



“A lot of evidence is accumulating, but what’s also fair to say is that the transition from this holding phase, we’ve been on hold since last September since a substantial hiking cycle, we do have to take our time to get that right, from holding to dialing back restrictions,” Philip Lane told CNBC’s Steve Sedgwick on Thursday.



Lane, a Governing Council member, said the euro zone central bank’s March meeting had been an “important milestone” in the accumulation of evidence, and showed the “disinflation process has been ongoing.” During the meeting, the ECB held rates and released updated macroeconomic projections, which lowered its inflation forecast for this year to 2.3% from 2.7%.



Inflation in the 20-nation bloc eased to 2.6% in February.



In line with the ECB’s March messaging, Lane said that more data was required, particularly around wages, and that the Governing Council would “learn a lot by April, a lot more by June” — the dates of its next two meetings.



In a press conference following the March meeting, ECB President Christine Lagarde said market pricing on the timing of rate cuts — which indicate a start in June as of Thursday — “seems to be converging better” with the central bank’s view.



June emerged as a key date in market commentary, as it’s set to mark the first meeting where the ECB can assess spring data on wage negotiations for the year.



Asked about other colleagues on the ECB’s Governing Council who have suggested rate cuts could take place before the summer, Lane said he believed this was a reference to the second quarter, which would include June.



“I think Q2 is a time when we will be far enough into 2024 to see more of the wage dynamic, to see more of the price pressures.”



He stressed that it was important, in his own role, to “avoid trying to provide calendar guidance to the market.”



“Once we are sufficiently confident that we will get back to target in a sustainable manner, in a timely manner, that’s the right time to move to the next phase,” he said.



<h2 class="wp-block-heading" id="h-room-for-profits-to-come-down"><a></a>Room for profits to come down</h2>



Policymakers have repeatedly stressed that many of the causes of the inflationary cycle have subsided, such as the energy price spike and supply chain issues. But they remain concerned about domestic inflationary pressures from corporate profits and wage rises.



Bank of England Governor Andrew Bailey caused controversy in 2022 for suggesting workers should not ask for a pay rise in order to avoid stoking inflation.



Lane said Thursday that, while the ECB’s forecast relied on some moderation in wage growth, it was “important” for people’s inflation-adjusted salaries to improve, and that companies should shoulder lower profits to allow this to happen.



“Wages were not the source of this inflation problem. But in terms of making sure we get back to target, the interplay between wages and profits, our forecast is built on a degree of wage deceleration,” he said.



“It’s important to say, we need to see workers’ real incomes improve, to rebuild, not just this year, [but] the year after. So we allow for higher to normal wage increases.”



Lane added, “But we also need to see, essentially, firms absorbing a fair amount of that in lower profits. Profits were quite high in 2022, there is some room for profits to come down. And that is part of the open questions we have.”

International

China will remain the world’s No. 1 growth driver, says the Asian Development Bank

U.S. consumer prices rose 3.5% from a year ago in March, more than expected

A crucial report Wednesday is expected to show little progress against inflation

‘They can’t get it wrong again’: Economists are increasingly uncertain about Fed rate cuts this year

India sizzles in global equity capital markets amid deals drought in Asia

Dollar gains as inflation data looms; yen on intervention watch

UK economy went into recession last year, data confirms

BRICS development bank aims to make $5 bln in loans in 2024

Here’s everything to expect from the Federal Reserve’s policy meeting Wednesday

World’s largest pension fund explores bitcoin as an investment

Bank of Japan ends the world’s only negative rates regime in a historic move, abandons yield curve control

Saudi Aramco CEO says energy transition is failing, world should abandon ‘fantasy’ of phasing out oil

Fed and other banks to make ‘major progress’ on rates this year, BIS chief says

United Arab Emirates is using cloud seeding tech to make it rain

India to hold the world’s biggest election starting April in over a month-long exercise

China kicks off the year on strong note as retail, industrial data tops expectations

European Central Bank chief economist: Must ‘take our time’ on rate cuts, clearer picture due in June

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International

China will remain the world’s No. 1 growth driver, says the Asian Development Bank

U.S. consumer prices rose 3.5% from a year ago in March, more than expected

A crucial report Wednesday is expected to show little progress against inflation

‘They can’t get it wrong again’: Economists are increasingly uncertain about Fed rate cuts this year

India sizzles in global equity capital markets amid deals drought in Asia

Dollar gains as inflation data looms; yen on intervention watch

UK economy went into recession last year, data confirms

BRICS development bank aims to make $5 bln in loans in 2024

Here’s everything to expect from the Federal Reserve’s policy meeting Wednesday

World’s largest pension fund explores bitcoin as an investment

Bank of Japan ends the world’s only negative rates regime in a historic move, abandons yield curve control

Saudi Aramco CEO says energy transition is failing, world should abandon ‘fantasy’ of phasing out oil

Fed and other banks to make ‘major progress’ on rates this year, BIS chief says

United Arab Emirates is using cloud seeding tech to make it rain

India to hold the world’s biggest election starting April in over a month-long exercise

China kicks off the year on strong note as retail, industrial data tops expectations

European Central Bank chief economist: Must ‘take our time’ on rate cuts, clearer picture due in June

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