• Federal Reserve Chairman Jerome Powell talked tough on inflation Wednesday, saying at a forum that he expects multiple interest rate increases ahead and possibly at an aggressive pace.
• “We believe there’s more restriction coming,” Powell said during a monetary policy session in Sintra, Portugal. “What’s really driving it is a very strong labour market.” The comments reiterate a position taken by Powell’s fellow policymakers at their June meeting, during which they indicated the likelihood of another half percentage point of increases through the end of 2023.
• Assuming a quarter point per meeting, that would mean two more hikes. Previous comments from Powell pointed to a possibility of the rises coming at alternate meetings, though he said Wednesday that might not be the case depending on how the data comes in.
• “I wouldn’t take, you know, moving at consecutive meetings off the table,” he said during an exchange moderated by CNBC’s Sara Eisen. The question-and-answer session took place at a forum sponsored by the European Central Bank.
• Central to the Fed’s current thinking is the belief that the 10 straight rate hikes haven’t had time to work their way through the economy. Therefore, officials can’t be sure whether the policy meets the “sufficiently restrictive” standard to bring inflation down to the Fed’s 2% target.
• “There’s a significant possibility that there will be a downturn,” Powell said, adding that it’s not “the most likely case, but it’s certainly possible.”
• Asked about banking stresses, Powell said the issues in March that led to the closure of Silicon Valley Bank and two other institutions did weigh into this thinking at the last meeting. Though Powell repeatedly has stressed that he considers the general state of the U.S. banking industry to be solid, he said the Fed needs to be mindful that there could be some issues with credit availability. Recent surveys have shown a general tightening in standards and declining demand for loans.

(Source: CNBC)

• Nearly 2.5 million households in Britain are at a "high risk" of financial vulnerability or other problems and may need support to pay their bills, according to a new study tracking the impact of the cost-of-living crisis. The analysis is based on the number of households that are registered with the Vulnerability Registration Service (VRS) - which notifies companies of financial problems affecting their clients - and extrapolated across the country's population.
• Produced by the VRS and data firm Outra, the study predicted that in addition to the 2.4 million households at "high risk," 6.3 million were at an "elevated" risk of vulnerability, meaning they may need some support to pay their bills. There were an estimated 28 million households in the United Kingdom in 2022.
• Britain is undergoing the biggest squeeze on living standards since records began in the 1950s as wages fail to keep up with soaring inflation, which will intensify as mortgages and rents increase on higher borrowing costs.
• So far, corporate results and official data suggest most consumers have managed to keep up their pace of spending, with savings built up during the COVID pandemic above their 2019 levels and the unemployment rate close to its lowest since 1974.
• However, the extent of inflation's toll on consumers was laid bare in official retail figures last week which showed spending in value terms in May was 17% higher than in February 2020, shortly before the pandemic hit.
• Finance Minister Jeremy Hunt met regulators on Wednesday to discuss what they were doing to prevent profiteering by companies. A new Consumer Duty comes into force on July 31, setting new standards of consumer protections, including for those deemed to be vulnerable.

(Source: Reuters)

• Minister of Finance and the Public Service, Dr. the Hon. Nigel Clarke, says the Government is working to reduce Jamaica’s climatic vulnerability by instituting a “suite of financial instruments that can pay out in the event of a natural disaster”.
• He noted that Jamaica became the first small country globally to independently sponsor a catastrophe bond that provides fiscal resources to respond to catastrophic events.
• This bond is complemented by other products, namely the Inter-American Development Bank (IDB) Credit Contingent Claim, the Caribbean Catastrophe Risk Insurance Facility (CCRIF), and a Natural Disaster Fund for which work is still in progress. The suite will provide the country with some degree of resilience building to the possibility of climate shocks.
• It is also important that the country work towards increasing its resilience to energy commodities, as about US$2 billion worth of energy commodities is imported per year (about 11% of GDP)
• He noted that the dependence on imports can potentially undermine Jamaica’s economy in the event of a price spike and that the Government is working on a transition to renewable energy to reduce structural vulnerability. The government’s objective is to produce about 33% of electricity from renewables by 2033 up from about 11% currently.

(Source: JIS)

• Jamaica's expenditure on imports was valued at US$1,193.4 million for the period January to February 2023, an increase of 12.9% over the same period of 2022. This increase was due mainly to higher imports of “Raw Materials/Intermediate Goods”, “Fuels and Lubricants” and “Consumer Goods” which rose by 3.2%, 20.3% and 13.3% respectively.
• Earnings from total exports for the current review period amounted to US$325.4 million, 54.6% above the comparable 2022 period. This was due primarily to a 133.1% increase in the value of exports of “Crude Materials (excl. Fuels)”. Re-exports also increased during the January to February 2023 review period to US$84.7 million compared to US$32.2 million in 2022.
• Jamaica’s top five (5) import partners for the period were the United States of America (USA), China, Japan, Colombia and Turkey. Expenditure on imports from these countries increased to US$773.6 million, 16.5% above the US$663.9 million recorded in the similar 2022 period. This was due chiefly to higher imports of fuels from the USA.
• The top five destinations for Jamaica’s exports were the USA, Puerto Rico, the Russian Federation, Latvia and the United Kingdom. Exports to these countries increased by 75.3 per cent to US$256.1 million.
• This brings Jamaica's trade deficit for the period to US$868 million, which is US$21.5 million more than what was recorded over the same period last year. The country's deficit in goods and services was 14.0% of total GDP in 2019 and is anticipated to increase to 21.2% of GDP in 2023.

(Sources: STATIN and Fitch Solutions)

• Colombia's Congress approved raising the government's 2023 budget by some 16.9 trillion pesos ($4.1 billion) in overnight votes on Friday, with education and health to receive the biggest boosts to funding.
• Leftist President Gustavo Petro has pledged to fight deep inequality in the Andean country - where about half of the people live in some form of poverty - through sweeping reforms to the healthcare system, pensions, and work rules.
• Congress initially approved a budget bill worth 405.6 trillion pesos - the highest budget in the country's history - last October, but has now voted to increase that by 16.9 trillion pesos, taking the total to 422.5 trillion pesos.
• The additional funds, approved during extra sessions tacked onto the end of the normal legislative period, are mostly earnings from a tax reform pushed through by Petro's government last year, which raised duties on oil and coal.
• Notably, the resources will go toward economic reactivation, via programs which could be executed in the second half, the finance ministry said in a statement. Education will receive 2.2 trillion pesos extra, according to a draft version of the bill, while health will receive a little over 2 trillion pesos and housing some 1.5 trillion.
• Petro's labour reform must be proposed anew when the next legislative session begins on July 20, where the debate will continue on the health and pension reforms, which have received initial approvals in congressional committees.

(Source: Reuters)

• Despite IMF-backed fiscal austerity measures, Fitch Solutions is maintaining its Short-Term Political Risk Index (STPRI) score of 84.6 out of 100 for Barbados.
•  In December 2022, the IMF Executive Board agreed on both an Extended Fund Facility (EFF) and a Resilience and Sustainability Facility (RSF) deal with the former aimed at enhancing the country’s medium-term fiscal trajectory, particularly by reducing the country’s debt-to-GDP ratio. 
• While in theory cutting public spending could lead to public backlash, Fitch does not see a major risk to social stability in Barbados in the near term. The FY2023/24 budget (running from April 1, 2023, to March 31, 2024) has steered away from introducing any new tax measures; on the contrary, the personal tax allowance for pensioners rose by BBD5,000 to BBD45,000.
• Furthermore, the government agreed to implement a 3.0% wage bill increase this fiscal year, following negotiations with unions. These developments suggest that while the government is committed to consolidating its public finances, it is unlikely to do so in sensitive areas that would affect the government’s popularity and induce major discontent.
• The country’s high STPRI score relative to its neighbours’ is mostly driven by low unemployment and peaking inflation, coupled with broad policy continuity and stability.
• Downside risks to Fitch’s view come from the potential for deeper-than-anticipated fiscal austerity measures and a slower-than-expected economic recovery.

(Source: Fitch Solutions)

• The U.S. will enter a downturn in the fourth quarter, followed by a “year of contraction and a European recession in 2024,” according to HSBC Asset Management. In its midyear outlook, the British banking giant’s asset manager said recession warnings are “flashing red” for many economies, while fiscal and monetary policies are out of sync with stock and bond markets.
• Joseph Little, global chief strategist at HSBC Asset Management, said while some parts of the economy have remained resilient thus far, the balance of risks “points to high recession risk now,” with Europe lagging the U.S. but the macro trajectory generally “aligned.” Little also stated that corporate defaults have also been creeping up as well.
• “The coming recession scenario will be more like the early 1990s recession, with our central scenario being a 1-2% drawdown in GDP,” Little added. HSBC expects the recession in Western economies to result in a “difficult, choppy outlook for markets” for two reasons. “First, we have the rapid tightening of financial conditions that’s caused a downturn in the credit cycle. Second, markets do not appear to be pricing a particularly pessimistic view of the world,” he said.
• Little suggested that this recession will not be sufficient to “purge” all inflation pressures from the system, and therefore developed economies face a regime of “somewhat higher inflation and interest rates over time.”
• “As a result, we take a cautious overall view on risk and cyclicality in portfolios. Interest rate exposure is appealing — particularly the Treasury curve — the front end and mid part of the curve,” Little said, adding that the firm sees “some value” in European bonds, too.
• “In credit, we are selective and focus on higher quality credits in investment grade over speculative investment grade credits. We are cautious on developed market stocks.”

(Source: CNBC)

• Canada's annual inflation rate came in at 3.4% for May, its slowest pace in two years, data showed on Tuesday, weakening the case for another hike next month. The annual rate is the slowest since June 2021 and broadly in line with the Bank of Canada's expectation that inflation would cool to around 3% by mid-2023.
• The central bank hiked its overnight rate to a 22-year high of 4.75% earlier in June after a series of surprisingly strong data, including an unexpected uptick in April inflation, which showed that the economy was running hotter than anticipated.
• After the last rate increase, the Bank of Canada said it would be gauging economic data to decide whether to keep raising borrowing costs. "With the labour market also loosening in May, the case for another rate hike in July is not quite as strong as it seemed a few weeks ago," said Stephen Brown, deputy chief North America economist at Capital Economics.

(Source: Reuters)

• The Board of Directors of Stationery & Office Supplies Ltd (SOS) at a special meeting held on June 21st, 2023 moved to recommend to the shareholders of the company at the next AGM to be held on July 25th, 2023, that the existing ordinary shares of the company be subdivided into nine (9) ordinary shares.
• The recommendation is to have a 9-for-1 stock split and accordingly, that the company’s authorized ordinary shares be increased to accommodate the aforementioned stock split.
• If shareholders agree to the split, this would result in the company’s total issued share capital being increased from 250.12 million to 2.25 billion.
• The stock closed at $26.35 on Monday’s trading session and has increased 100.84% since the start of the year.
• The objective of the stock split is to drive up demand and trading of the shares by making them cheaper to acquire. A nine-way split would cut the trading price to the $4 range and make the stock more desirable to investors, especially in retail.

(Sources: JSE & RJR)

• More local fruits and ground provisions will be able to reach international shores, as Jamaica now has export market access to several additional countries. Minister of Agriculture, Fisheries, and Mining, Hon. Floyd Green, said among these is Barbados for pineapples.
• He informed that the country is now allowed to export frozen cake, soursop, sweetsop, breadfruit, plantain, yam, sweet and irish potato to Cayman.
• The Minister was speaking during the recent launch of the 2023 Denbigh Agricultural, Industrial, and Food Show at Hi-Pro Ace Supercentre in St. Catherine.
• Green further advised that they have been working with Trinidad and Tobago where they now can export bananas and have been working with the United States of America (USA), where they are now able to export June plum and soursop. He commended the Plant Quarantine and Produce Inspection team for their role in achieving the feat.
• Noting that these markets are of “high value”, he urged producers must make use of the new opportunities.
• Green maintained that the nation “must be bullish about exports”, pointing out that this is how the country will realize wealth creation in agriculture, and despite being a small country, Jamaica has an immense reach.

(Source: JIS News)