The Bank of Mexico could increase the size of cuts to its benchmark interest rate in future meetings as inflation eases in Latin America's second-largest economy, minutes from the central bank's December monetary policy meeting showed on Thursday, January 9, 2025.
Banxico, as the Mexican central bank is known, lowered its benchmark interest rate by 25 basis points (bps) to 10.00% in a unanimous decision by its five-member governing board last month.
"In view of the progress on disinflation, larger downward adjustments could be considered in some meetings, albeit maintaining a restrictive stance," the minutes said. A breakdown of all the board members' positions showed several of them supporting the discussion of larger rate cuts.
Banxico began a rate-cutting cycle last March amid easing inflation, ultimately delivering five 25bos cuts and bringing the benchmark rate down from the record 11.25% reached in 2023.
At the December meeting, one of the five members pointed to "the undeniable progress in disinflation" as supporting their view that "it is necessary to increase the magnitude of rate cuts in some of the upcoming monetary policy decisions." Another member noted "the importance of communicating that larger adjustments of larger magnitude could be implemented at the next policy meetings."
The minutes showed that while two members called for caution in December, the board highlighted inflation's downward trajectory, even while upwardly revising its year-end inflation forecasts for 2025 at the meeting.
Mexico's annual headline inflation rate fell more than expected in December, reaching 4.21%, official data published earlier on Thursday showed. Banxico targets inflation at 3%, plus or minus one percentage point.
Bahamas Prime Minister, Philip Davis, recently announced the reduction of value-added taxes (VAT) on all food items to 5% from 10% starting on April 1st. He added that with the reduction, the government aims to bring the economy to a stable and secure footing.
PM Davis added that the VAT reductions would provide major relief to the consumers in financial terms. The reduction is set to be levied on all food items in stores, including fresh fruits and vegetables, lunch snacks, baby food and frozen foods. However, it would not apply to prepared foods in the deli.
PM Davis added that the rate reduction will also apply to the importation of all food items and the date of April 1st will allow merchants and food stores to make the adjustments.
Discussing the Bahamas economy from three years ago, Prime Minister Philip Davis said, “it was in shambles, and the finances were in freefall while the hospitals, schools and communities were in deep crisis”. He also emphasised the government’s efforts in pulling the nation back from the fiscal brink.
Furthermore, Philip Davis cited the high cost of living as one of the most stubborn problems of the country and explained that VAT is not the cause of the high price of food but for the ones having the tightest disposable income, reduction of VAT by 50% will surely make a huge difference.
He further reiterated his administration’s commitment to working towards lower the cost of energy, improve the energy infrastructure and provide affordable housing and healthcare.
The union representing 45,000 dock workers on the U.S. East and Gulf Coasts and their employers on Wednesday said they reached a tentative deal on a new six-year contract, averting further strikes that could have snarled supply chains and taken a toll on the U.S. economy.
The International Longshoremen's Association (ILA) and the United States Maritime Alliance (USMX) employer group, in a joint statement, called the agreement a "win-win." The deal includes a resolution in automation, the thorniest issue on the table.
"This agreement protects current ILA jobs and establishes a framework for implementing technologies that will create more jobs while modernising East and Gulf coast ports – making them safer and more efficient and creating the capacity they need to keep our supply chains strong," the groups said.
The National Retail Federation, which represents major customers like Walmart, and Target, said the agreement should bring certainty back to ocean shipping by reducing the risk of disruptions at East and Gulf Coast ports that handle more than half of U.S. container imports.
"The agreement will also pave the way for much-needed modernisation efforts, which are essential for future growth at these ports and the overall resiliency of our nation's supply chain," said Jonathan Gold, NRF's vice president of supply chain and customs policy.
Rachel Reeves is facing her first major test since becoming Britain's finance minister after a jump in the government's borrowing costs this week and a deepening of the pound's losses on Thursday, potentially forcing her to cut future spending.
With investors worrying about high borrowing and a stagnating economy, the Treasury said there was no need for intervention to calm markets, having vowed late on Wednesday to maintain "an iron grip" on the public finances.
Britain's new government launched its plan for more investment in public services and infrastructure to boost economic growth just days before Trump's November 5 election victory, pushing up borrowing costs globally. That shift in markets has made investors more worried about the combination of high borrowing in Britain planned by Reeves and Prime Minister Keir Starmer, and the impact of their higher taxes for business on an economy that is now stagnating.
Analysts at Citi said British bonds were being hit by worries about the extent of the government's borrowing plans, which could keep pressure on inflation and prevent the BoE from cutting interest rates quickly to help the economy. Britain is due to issue nearly 300Bn pounds ($368Bn) of government bonds over the coming financial year.
Some analysts said Britain's departure from the European Union had made it more exposed to swings in financial markets. "Brexit UK is vulnerable as a less core asset in global investor portfolios," Krishna Guha and Marco Casiraghi at Evercore ISI, a consultancy, said in a report. Others said the rise in market interest rates would make it easier for the BoE to cut borrowing costs, potentially easing the pressure on gilt yields and the government's coffers.
Jamaica’s Net International Reserves (NIR) stood at US$5,583.67Mn at the end of December 2024, 3.2% higher than in November 2024, according to the Bank of Jamaica (BOJ). The improvement in the NIR reflects a 2.9% (or US$157.36Mn) increase in total foreign assets, along with a 26.6% decline (or US$17.80Mn) in Foreign Liabilities.
The rise in foreign assets was due to growth in Special Drawings Rights to US$249.21Mn from US$1.43Mn. However, this was slightly tempered by a decline in Securities by 0.6% (or US$12.76Mn), Currency and Deposits (-2.3% or US$77.40Mn) and IMF Reserve Position balance (-0.7% or US$26.71K).
There were no interventions by the BOJ in the foreign exchange market for December, in contrast to November when there were three interventions totalling US$130Mn.
Compared to December 2023, the NIR increased by 17.3% (or $825.44Mn), up from $4,758.24Mn (23.9 weeks of imports).
Jamaica’s December 2024 NIR remains relatively high and equates to 29.4 weeks of goods & services imports (28.5 weeks at the end of December 2024). At this level, the NIR is more than double the international benchmark of 12 weeks of imports.
Innovative Energy Group (IEG), formerly Wigton Windfarm Limited, has signed a Distribution Agreement with Huawei Technologies, setting the stage for a significant impact on the renewable energy sector in Jamaica and the English-speaking Caribbean. This partnership underscores the region’s growing demand for advanced digital power products and solutions.
The two-year renewable agreement grants IEG distribution rights for Huawei’s Tier 1 digital power products, including inverters, battery energy storage systems, power conversion systems, and SCADA/monitoring equipment.
With Jamaica’s renewable energy penetration currently below 20% and a national goal of 50% by 2030, this partnership is poised to play a pivotal role in achieving these ambitious targets.
Over the past two years, IEG’s subsidiary, Innovative Energy Company (IEC), has procured over US$6Mn worth of Huawei’s digital power products. With this agreement, Huawei aims to capture at least 50% of Jamaica's market share, ensuring strong growth and increased adoption of renewable energy technologies.
In addition to providing cutting-edge products, Huawei will support IEG with marketing resources, advanced training, and trade credit facilities, strengthening IEG’s ability to meet market demands.
Guyana's oil exports rose 54% in 2024 to 582,000 barrels per day (bpd), fueled by European refiners' demand for easy-to-process sweet crudes to replace some Middle Eastern grades, according to traders and shipping data from financial firm LSEG (London Stock Exchange Group).
Since it started exporting oil in early 2020, the burgeoning oil nation has emerged as the fifth-largest Latin American crude exporter after Brazil, Mexico, Venezuela and Colombia.
But unlike Latin America's usual offer of heavy sour oil, Guyana's lighter and sweeter crude grades have carved out a rising share in Europe, where most refineries are not as complex as most Latin American and U.S. Gulf Coast plants that turn heavy grades into motor fuels. In 2024, 66% of Guyana's crude exports or some 388,000 bpd went to Europe, compared with 62% the previous year, the shipping data showed.
Of note, Guyana's oil began gaining favour in Europe in the aftermath of Russia's invasion of Ukraine in 2022, which pushed many refiners to avoid sanctioned Russian crude and seek alternative supplies.
Furthermore, last year, attacks in the Red Sea affected oil flows from the Middle East, giving crudes from Guyana and Brazil better chances of finding buyers in Europe, said Homayoun Falakshahi, a senior analyst of crude markets at data analytics platform Kpler.
Producers in Guyana also almost doubled shipments to the United States last year to 23,000 bpd, while exports to Asia increased in smaller magnitude to around 139,000 bpd. Sales to Latin America and the Caribbean were almost unchanged at around 32,000 bpd.
The rise in exports has been possible due to a consortium led by U.S. oil major Exxon Mobil expanding output rapidly through three floating production facilities (Liza 1 and 2, and Payara), with a fourth expected to add about 250,000 bpd of capacity this year.
Panama has insisted that its sovereignty over the Panama Canal is "non-negotiable" after US President-elect Donald Trump refused to rule out military force to seize it.
Trump remarked during a news conference on Tuesday, January 7, 2025, at which he also falsely stated that the Panama Canal was being operated by Chinese soldiers. Panama's Foreign Minister Javier Martínez-Acha responded by saying that "the only hands operating the canal are Panamanian and that is how it is going to stay".
The Panama Canal was managed by the US for decades but under a treaty signed by the late US President Jimmy Carter in 1977, it was handed over to the Panamanians on December 31, 1999.
In his news conference on Tuesday, Trump described President Carter's decision to hand the canal back as "a big mistake". Pressed by journalists on whether he would rule out using military or economic force to acquire the Panama Canal (and also the Arctic Island of Greenland), he said: "No, I can't assure you on either of those two."
Panama's foreign minister denied his country had received any offer from the president-elect. "Trump's opinions today, that he has talked about a certain amount of money, are not true. No kind of offer has been received, let it be clear," Martínez-Acha said. He added that "our canal's sovereignty is not negotiable and is part of our history of struggle and an irreversible conquest".
The number of Americans filing new applications for unemployment benefits fell to an 11-month low last week, pointing to a stable labour market, though a slowdown in hiring has led some laid-off workers to experience long bouts of joblessness. Signs of a steadily cooling labour market could allow the Federal Reserve to keep interest rates unchanged in January against the backdrop of still-high inflation.
The U.S. central bank last month projected a shallower path of rate cuts this year than had been forecast in September when it launched its policy easing cycle. Fed Governor Christopher Waller said on Wednesday that he expected further rate cuts, adding that the pace of the reductions "will depend on how much progress we make on inflation while keeping the labour market from weakening."
Initial claims for state unemployment benefits dropped 10,000 to a seasonally adjusted 201,000 for the week ended Jan. 4, the lowest level since February 2024, the Labor Department said on Wednesday. Economists polled by Reuters had forecast 218,000 claims for the latest week.
Although claims tend to be volatile at the turn of the year, they have bounced around levels associated with low layoffs that are underpinning the labour market and broader economy. The four-week average of claims, which strips out seasonal fluctuations from the data, dropped from 10,250 to 213,000 last week.
Minutes of the Fed's Dec. 17-18 meeting published on Wednesday showed policymakers viewed labour market conditions as "gradually easing," and saw "no signs of rapid deterioration."
U.S. private payrolls growth slowed sharply in December, the ADP National Employment Report showed on Wednesday. Private payrolls rose by 122,000 jobs last month after increasing by an unrevised 146,000 in November. Economists polled by Reuters had forecast private employment rising by 140,000.
The ADP report, jointly developed with the Stanford Digital Economy Lab, was published ahead of Friday's more comprehensive and closely watched employment report for December from the Labour Department's Bureau of Labour Statistics.
There is no correlation between the ADP and BLS employment report. Initial ADP prints have mostly understated private payroll growth this year. A slowdown in job growth is anticipated in December after being boosted in November by fading disruptions from hurricanes and strikes by factory workers at Boeing and another aerospace firm.
Private payrolls likely increased by 135,000 jobs in December after rising 194,000 in November, a Reuters survey showed. With gains anticipated in government employment, nonfarm payrolls are forecast to increase by 160,000 jobs after surging 227,000 in November. The unemployment rate is forecast to be unchanged at 4.2%.
