• The Bank of England (BoE) will trim the Bank’s Rate to 5% next week, a majority of economists said in a Reuters poll, and with inflation expected to hover around target, it will embark on a slow and steady reduction path with one more cut this year.
• However, markets are only pricing in around a 45% chance of a cut and several economists declined to say whether the first cut would come in August or September.
• Bank Rate has been at a 16-year high of 5.25% since last August. The BoE was one of the first central banks to start raising borrowing costs after the COVID-19 pandemic and, like its peers, is now looking at easing the policy.
• In June, the rate-setting Monetary Policy Committee voted 7-2 to leave Bank Rate on hold, but some members said their thinking was now "finely balanced". An August cut would put the BoE ahead of the U.S. Federal Reserve, which is expected to wait until September, but behind the European Central Bank, which made its first cut in June and although it paused this month, it said September was "wide open".
• Following August's trim, the Bank will pause in September before cutting 25 basis points in November to put Bank Rate at 4.75%, median forecasts showed. It will take another breather in December. However, it will be a similar slow and steady pace next year with 25 basis point cuts in the first and second quarters, 50 in the third, and 25 in the fourth, to put Bank Rate at 3.50% by end-2025
• The path for growth will also be steady - the economy was predicted to expand 0.3% each quarter through to the end of 2025. Across this year, GDP growth will pick up 0.8% before an acceleration to 1.3% next year, a touch faster than expected in June.

(Source: Reuters)

• Growth in euro zone business activity has stalled this month as a tepid expansion in the bloc's dominant services industry failed to offset a deeper downturn among manufacturers, a survey showed on Wednesday.
• Hamburg Commercial Bank’s (HCOB) preliminary composite Purchasing Managers' Index, compiled by S&P Global, dropped to 50.1 this month from June's 50.9, barely above the 50-mark separating growth from contraction and defying expectations in a Reuters poll for an uptick to 51.1.
• "The euro zone's flash July PMIs corroborate the message sent by other leading indicators that the recovery is faltering. If leading indicators continue to underwhelm, this may result in a downgrade to our GDP growth forecasts," said Rory Fennessy at Oxford Economics.
• The bloc's economy will average 0.7% growth this year and 1.4% next, according to a Reuters poll earlier this month. The region's No. 1 economy, Germany, will expand a meagre 0.2% this year and 1.2% in 2025, the poll showed.
• Those German numbers could also be revised down as business activity there unexpectedly contracted this month, dragged down by a steep and dramatic fall in manufacturing output, its PMI indicated.
• Consequently, expectations about the coming year in the euro zone waned again, suggesting business managers do not expect an imminent turnaround. The composite future output index registered a six-month low of 60.0 compared to June's 60.8.
• Of note, the European Central Bank (ECB) is expected to cut its deposit rate twice this year, in September and December, according to a strong majority of economists in the Reuters poll.

 (Source: Reuters)

• Jamaica and the World Bank will collaborate over the next three to four years to implement programs and initiatives across ministries to develop and upskill the country’s human capital. The initiatives, which aim to accelerate Jamaica’s pace of development, will be carried out under the Jamaica-Country Partnership Framework (CPF) from 2024 to 2027.
• Speaking at a recent World Bank country partnership framework event at the AC Marriott in Kingston, Minister of Finance and the Public Service, Dr. the Hon. Nigel Clarke, noted that human capital development is a major pillar of the partnership framework, involving education, health and social protection..
• “Having resolved our macroeconomic issues… what is now essential is that we leverage that to improve people’s lives. We have to ensure that we improve the quality and quantity of the skills available in the Jamaican population to support higher levels of growth that can give the revenue that we require for further investment.” he said.
• Through the partnership, the Government will utilise the World Bank’s technical resources to produce policy improvements at an expedited pace to improve the quality of life and standard of living of Jamaicans.
• Dr. Clarke outlined that through the country partnership framework, the assistance to the Government will be twofold – on the public sector side, where the organisation will be helping with reforming policies, and on the private sector side to help mobilise private capital in structured transactions such as public-private partnerships (PPP) to deliver for the Jamaican people.
• The country partnership framework is a strategic development plan that marks the World Bank’s engagement in Jamaica with key targets and activities. The process begins with a systematic country diagnostic that looks at the challenges and opportunities for achieving the shared goal of reducing poverty and boosting shared prosperity.

 (Source: JIS)

• The Ministry of Agriculture, Fisheries and Mining has allocated $700mn as an immediate response to help farmers recover from the passage of Hurricane Beryl, which impacted the island on July 3.
• Portfolio Minister, Hon. Floyd Green, stated that the initial support funds will be allocated for the purchase of essential items that are urgently required to assist farmers in rebuilding their operations and conducting infrastructure repairs.
• The Minister added that the funds would be disbursed through the Rural Agricultural Development Authority (RADA), Jamaica Agricultural Society (JAS), Agro Investment Corporation (AIC) and Members of Parliament.
• “The allocation includes $210Mn, which will focus on crop recovery. We will allocate $90Mn to our vegetable lines, $40Mn towards our banana and plantain farmers, and $80Mn towards other crops, especially yam, and our coffee farmers,” Mr. Green said.
• “In relation to livestock, we are allocating $60Mn to help them [our small poultry farmers] rebuild their enterprise. We are not only allocating in relation to the provision of livestock; a number of farmers lost their infrastructure. As such, we are allocating $26Mn towards the rebuilding of livestock infrastructure,” he added.
• Mr. Green said an initial sum of $29Mn will be allocated to the fisheries sector, $30Mn will be allocated for fertiliser support, $55Mn for infrastructure support, $20Mn for irrigation, $50Mn for land preparation and clearance, and $70Mn for farm road rehabilitation. He noted that $150Mn will be allocated through Members of Parliament, which will be prorated based on the level of damage in the constituency.

(Source: JIS)

• The Inter-American Development Bank (IDB) and the International Monetary Fund (IMF) said they have agreed to enhance their collaboration to better support the efforts of members in Latin America and the Caribbean (LAC) to foster sustainable and inclusive growth and address the structural challenges of climate change.
• The agencies said that by operating within the scope of each institution's mandate, the IDB and IMF staff will increase their cooperation in two main areas - general coordination and climate finance.
• The two Washington-based financial institutions said that as part of their enhanced general coordination, the IDB and the IMF staff will deepen their cooperation on four topics, namely: surveillance of macro-economic policies; IMF arrangements, in particular, the Resilience and Sustainability Fund (RSF); IDB lending operations, including investment and policy-based loans; and capacity development.  
• The climate finance collaboration will focus on identifying policies to support member countries' climate objectives in the context of the RSF, capacity development to support the implementation of the RSF and building programmatic approaches to mobilise climate finance.
• By strengthening their collaboration in these areas, the IDB and the IMF are seeking to enhance their support for designing economic policies and policy reform programmes in common member countries, as well as mobilise climate finance more effectively. This includes working with country platforms to attract additional funding for climate action.
• In this context, climate finance roundtables recently convened in Barbados, Jamaica, and Costa Rica, brought together authorities, development partners, and private investors. These initiatives helped to explore solutions to the countries' climate finance needs and provided faster and broader access to financing and capacity development.

(Source: Trinidad Express Newspapers)

• Panama's government expects to start deportation flights for migrants who crossed the country's dangerous Darien jungle in two to three months, the country's chief of migration, Roger Mojica, said. The flights will be paid by the United States under a recent agreement that the two countries closed earlier this month.
• "We are establishing the needs, equipment, and requirements that Panama has to face in order to start the program, and we are in conversations with the United States," Mojica said during a conference call. "We estimate we should be able to start the process in two to three months."
• Panama's new president, Jose Raul Mulino, has vowed to curb unlawful immigration and has started to work closely with the U.S. to control passage through the jungle that links Central America to Colombia.
• Panama's Darien Gap, a jungle that bridges Central America with the South American continent, saw a record half a million migrants cross last year seeking security and better economic opportunities abroad. Panamanian authorities estimate that some 213,702 thousand people have crossed the Darien so far this year, many of them children.
• The topic of migration has gained traction ahead of elections in the U.S., a key destination for many migrants, with Republican candidate and former President Donald Trump vowing stronger borders and mass deportations.

 (Source: Reuters)

• The Bank of Canada (BoC) is widely expected to cut its key overnight rate on Wednesday for a second time in as many months after recent data showed a further easing of consumer price inflation, restrained spending, and a lackluster economic outlook.
• The BoC trimmed its policy interest rate by 25 basis points to 4.75% last month after keeping it at its highest in more than two decades for nearly a year. In making its first cut in four years, it became the first Group of Seven central banks to do so since the pandemic.
• Taylor Schleich, rates strategist at the National Bank of Canada, pronounced that “A rate cut is likely to be delivered”. He went on to add that he expects the central bank to reiterate its message that future cuts will be based on incoming data. At the time of the last cut, BoC Governor Tiff Macklem said any future rate reductions would be data-dependent. Financial markets are seeing almost a 93% chance of a rate cut this week, and a total of 75 basis points drop in borrowing costs this year.
• The BoC will announce its monetary policy decision on July 24 at 9:45 a.m. It will also release the quarterly Monetary Policy Report, which will include fresh forecasts regarding 2024 economic growth and inflation. Economists expect them to be lower than previous forecasts.
• "The economy is now operating with visible disinflationary economic slack ... with the Bank likely to again mention mortgage renewals as a drag ahead," Avery Shenfeld Managing Director and Chief Economist of CIBC Capital Markets, wrote in a note. Despite the persistent economic weakness, the BoC would likely refrain from making rate cuts deeper than 25 basis points.
• Canada's economic growth has been positive this year but barely encouraging. Rising unemployment has also highlighted economic constraints and underlying fears of recession. The bulk of the growth has been attributed to an immigration-led rise in population rather than any inherent strength of the economy. In its latest Monetary Policy Report in April, the bank estimated growth in 2024 would come in at 1.5% and 2.2% in 2025.

(Source: Reuters)

• Britain's new finance minister Rachel Reeves said she will consider giving inflation-busting pay increases for almost 2Mn government employees later this month to avoid crippling public sector strikes.
• Two pay review bodies who advise the government gave the recommendation of a 5.5% wage rise for 460,000 teachers and 1.4Mn staff in the state-run National Health Service, according to media reports.
• The estimated cost of pay rises of 5.5% for teachers and certain National Health Service staff could be about 3Bn pounds ($3.88Bn), according to the Institute for Fiscal Studies (IFS).
• If the government wants to approve the pay raises it would need to raise taxes, increase borrowing or cut government spending in other areas, the IFS said.
• Reeves said she would set out her plans for public sector pay deals and announce the date of the next budget before the end of this month.

(Source: Reuters)

• Efficiency in the public sector is being enhanced through the buildout of broadband infrastructure and the enhancement of the eGov Data Centre. Finance Minister, Dr. the Hon. Nigel Clarke, made the declaration as he addressed the recent Caribbean Public Sector Financial Management Conference in Kingston, where he gave an update on gains made under the Public Sector Transformation Programme.
• He noted that information and communications technology (ICT) is a critical pillar in the modernisation of the public sector. “Under the Public Sector Transformation Programme, we now have a dedicated broadband infrastructure that connects over 200 government offices in the greater Kingston Metropolitan area and over 500 more outside of Kingston, which includes schools and police stations and other government establishments,” Minister Clarke said.
• He mentioned that, as part of the ICT aspect of transformation, the Government managed to make a significant investment in the eGov Data Centre. In March, the Minister announced that upgrades were completed to the centre at a cost of $600Mn. “Under the Public Sector Transformation Programme, we are able to massively scale up the storage capacity of the existing data centre and to massively enlarge the cloud infrastructure available to it,” he indicated.
• With the upgrades in the capacity of the facility to deliver, there is now the possibility of consolidating existing data centres across the public service into the eGov Data Centre. These upgrades will provide economies of scale as the government seeks to ensure that the service from the data centre is at the best international standards as far as security and cyber threats are concerned and other service standards.

 (Source: JIS)

• Jamaican banks will no longer apply fees to dormant saving accounts, ending a practice that has been controversial for decades.
• Bank of Jamaica's Deputy Governor, Jide Lewis, has stated that banks have transitioned from manual methods to technological solutions for monitoring dormant accounts. This technology has received BOJ's verification. Moreover, banks have implemented a transaction-monitoring system that enables senior staff to spot and pinpoint employees attempting to access dormant accounts.
• In a session with the Economy and Production Committee of Parliament, Anthony Hylton conveyed his contentment with the latest advancements, noting that a senior banking official had previously advised him of the risks bank employees posed to dormant accounts.
• “My concern leading up to now has been that if members of staff were the ones accessing these accounts, then the responsibility must devolve on the banks to address this situation,” the opposition lawmaker said. However, Lewis said when a bank employee is involved in internal fraud, there are actions that the institution will take in addition to the intervention of the police. He said that banks are also required to report internal fraud to the BOJ.
• Reports indicate that 60% of dormant accounts range from one to seven years of age, with a median duration of 4.8 years. Furthermore, 94% of these accounts contain funds unclaimed for over 15 years. In Jamaica, if money remains unclaimed in a deposit-taking institution for 15 years or longer, it is transferred to the nation's revenue following a one-year publication period in the newspaper and on the Ministry of Finance's website.

 (Source: Caribbean National Weekly