The European Central Bank looks set to announce a range of stimulus measures Thursday, with markets waiting anxiously for details of a plan that could include both lower interest rates and fresh bond purchases.
Unfortunately, the strategy of lowering borrowing costs for companies and households with increasingly negative interest rates is putting a serious dent in the banking industry’s profitability.
The ECB’s current deposit rate is minus 0.4%, and that has become a charge, according to Deutsche Bank, which tallies the cost at hundreds of millions of euros this year.
President Donald Trump urged the Federal Reserve to lower interest rates to a level typically reserved for recessions or periods of persistently weak growth, suggesting that such a setting could allow the government to refinance Treasury debt at a lower cost.
The Fed should “get our interest rates down to ZERO, or less,” Trump said in an early Wednesday tweet that went beyond his previous attacks and demand for a cut of one percentage point.
“We should then start to refinance our debt. INTEREST COST COULD BE BROUGHT WAY DOWN, while at the same time substantially lengthening the term.”
With Trump polling behind several Democratic candidates in his 2020 re-election campaign and Americans fearing arecession within the next year, the president is seeking to deflect blame for any economic ills.
He has repeatedly blamed the Fed and Chairman Jerome Powell, who goes by Jay, for raising interest rates too steeply in 2018 and constraining the economy as the president pursues a trade war with China.
Barbados continues to make good progress in implementing its ambitious and comprehensive economic reform program, says a team from the International Monetary Fund (IMF) at the conclusion of a four-day visit on September 5th.
The target for the Government’s primary surplus was met with a wide margin, with the Government running a primary surplus of 2.5% of (annual) of GDP in the first quarter of the financial year (FY) 2019/20. This bodes well for achieving the Government’s primary surplus target of 6.0% of GDP for FY2019/20. International reserves were also well over program targets at end of the review period.
Overall, good progress has been made in implementing the end of June and July 2019 structural benchmarks under the Extended Fund Facility Agreement (EFF).
China removed limits for overseas investment in the country’s stocks and bonds, the latest push by authorities to attract more foreign capital.
With almost two-thirds of the current $300 billion allowance on non-Chinese asset purchases untapped, the move may be more about signaling than meeting current demand.
Data released overnight showed the country’s economy remains under pressure, with factory deflation deepening while consumer prices quicken more than expected. In perhaps another sign of how the trade war is hurting China, a state-run paper took aim at Trump adviser Peter Navarro for his hawkish stance on the issue.
After failing to get enough votes to call an election, but succeeding in getting Parliament closed until Oct. 14, British Prime Minister Boris Johnson promised to work to make a new deal with the European Union at the Oct. 17 summit in Brussels.
Despite all the shenanigans in Westminster, data this morning showed that the U.K. economy continues to motor on, with the jobless rate returning to 3.8% while basic pay rose 3.8% in the three months through July.
For the three-month period ended July 2019, Jamaica Broilers Group reported a 12.7% fall-off in net profit. Net profit ended the quarter at $361.01Mn (EPS: 35.81¢) down from $413.38Mn (EPS: 38.58¢) reported for the corresponding period in the prior year.
The contributing factors to the decline in profit were a decline of $263.60Mn (or 87.8%) in finance income; a 60.3% (or $116.18Mn) decline in other income; and a 2.1% (or $9.20Mn) increase in distribution costs.
The stock has risen 14.7% since the start of the calendar year, closing yesterday’s trading session at $33.39. The stock currently trades at a P/E of 14.69x which is below the Main Market Distribution & Manufacturing average of 20.12x.
The Banco Central de la República Dominicana (BCRD) will continue its rate-cutting cycle through end-2019 given below-target inflation in the Dominican Republic and increasing headwinds to global growth.
A more accommodative monetary policy stance by the US Federal Reserve and low global energy prices will allow the BCRD to keep rates low in the coming quarters.
Fitch revised its end-2019 and end-2020 interest rate forecasts to 4.25% and 4.50%, from 5.00% and 5.25% previously, to incorporate the expectation that the BCRD will look to support economic activity amid slowing global growth.
With less than two weeks to go to another hotly anticipated Federal Reserve meeting, today’s speech by Chairman Jerome Powell at 12:30 p.m. will be monitored closely by investors looking for any update on his thinking for the next policy move.
While an interest rate cut is expected at the Sept. 17-18 gathering, policymakers remain split on the need for how much, if any, easing is needed.
Powell’s speech will be the last scheduled public comments by an FOMC member ahead of that decision.
One central bank that’s not waiting around to ease policy is the People’s Bank of China, which this morning cut its reserve ratio by 0.5%.
The move had been flagged earlier this week when the government called for “timely” use of tools including broad and targeted reserve-ratio cuts to support the economy.
With some banks getting an extra 1% reduction, the decision will release 900 billion yuan ($126 billion) in liquidity, according to the monetary authority.
