• Minneapolis Federal Reserve President Neel Kashkari suggests that despite interest rates being at their highest in about 23 years, they are not harming the economy. This situation could provide policymakers with more time before deciding on potential rate cuts.
• He further argues that recent economic developments indicate that the Federal Reserve's policy is not as restrictive on growth as it may seem. The longer-run "neutral" rate, which is neither restrictive nor stimulative, is likely higher than before the Covid-19 pandemic.
• Kashkari notes that what might appear to be a tight monetary policy based on historical trends may not be the case currently. Nominal rates could stay higher for a longer period without adversely affecting the economy.
• The assessment suggests that the current monetary policy stance may not be as tight as previously assumed, giving the Federal Open Market Committee (FOMC) time to assess economic data before considering rate cuts. This has implications for when, how much, and how quickly the Fed should adjust rates.
• Kashkari's comments align with recent statements from Federal Reserve Chair Jerome Powell, who indicated a reluctance to cut rates in the near term. Powell emphasized the positive economic outcomes despite past rate hikes, supporting the idea that the current policy stance may not be overly restrictive.

(Source: CNBC)

• Occidental CEO Vicki Hollub warns that the oil market is heading towards a supply shortage by the end of 2025 due to the world's failure to replace current crude reserves rapidly enough.
• Hollub notes that about 97% of today's oil was discovered in the 20th century, and the world has replaced less than 50% of the crude produced over the last decade, indicating a significant gap in replacing depleted reserves.
• Despite the ongoing conflicts in the Middle East, Hollub points out that the oil market is presently oversupplied, keeping prices down. Countries like the U.S., Brazil, Canada, and Guyana have been pumping record amounts of oil amid a slowing demand in China.
• Hollub acknowledges the current market imbalance as a short-term demand issue, she emphasizes that it will transform into a long-term supply problem in the coming years, with the supply and demand outlook flipping by the end of 2025.
• OPEC predicts global oil demand to grow by 1.8 million barrels per day in 2025, outpacing production growth outside the cartel. This forecast suggests a potential supply deficit unless OPEC adjusts its production cuts. Despite lower prices in 2023, Hollub expects a rebound, with Occidental projecting WTI to average around $80 in 2024.

(Source: CNBC)

• Jamaica is currently experiencing unprecedented levels of investor interest, thanks to a positive economic environment, says Prime Minister, the Most Hon. Andrew Holness.
• During the 19th Jamaica Stock Exchange (JSE) Regional Investment and Capital Markets Conference at The Jamaica Pegasus Hotel in New Kingston, Mr. Holness stated that “global investors, who in the past would have seen Jamaica as too risky, are now taking a serious interest”.
• Contributing factors include ten consecutive quarters of economic growth since the COVID-19 epidemic, a record-low 4.5% unemployment rate, and lower inflation. Notably, unemployment data released after Mr Holness’ speech for October 2023 set a new record low for Jamaica at 4.2%.
• “We are on target to now reduce our debt-to-GDP ratio to 74.0% by the end of March 2024. This is well below pre-pandemic levels and the lowest in 25 years,” Mr. Holness further stated while also citing Jamaica’s credit ratings, which are now at the highest levels they have ever been.
• In September 2023, Standard and Poor’s (S&P) upgraded Jamaica’s rating to BB-. Meanwhile, in November 2023, the Government issued a Jamaican dollar-linked international bond for J$46.6Bn, which is equivalent to US$300Mn, which represents the first time in our history that Jamaica has been able to issue a Jamaican dollar-linked bond in the international capital markets.
• The current economic environment, coupled with the government’s fiscal prudence, has given investors the confidence to invest in Jamaica, which is necessary to boost economic growth.

(Source: JIS)

• More than 14,000 temporary and long-term jobs are expected to be generated from the planned multifaceted resort development in St. Ann by the Spanish hotel chain, the Pinero Group, which owns the Bahia Principe Grand Jamaica.
• Tourism Minister Hon. Edmund Barlett, who met with the Group’s principals in Madrid, Spain, on Wednesday (January 24) to discuss the project, said, “It will mean more economic and social benefits for the country and at the community level”.
• Details of the development were formally presented to Prime Minister, the Most Hon. Andrew Holness, last year. It will provide a mix of hotel rooms and villas, a Professional Golf Association (PGA)-certified,18-hole golf course, a state-of-the-art fisherman’s village, farms, modern employee residences, and educational facilities, among other facilities and amenities.
• Minister Bartlett commended the Pinero Group for their long-standing commitment to Jamaica, noting that the Bahia Principe, located in Discovery Bay, St. Ann, is Jamaica’s largest hotel, with 1,350 rooms. He further highlighted that the Group is always seeking to expand and invest in the communities in which it operates.
• “What we are seeing here is an electric atmosphere, which is pretty much in line with the organisers’ assessment that it reflects the growth experienced in recent months by the national and international tourism industry and lays the foundation for the consolidation of the sector during 2024,” he further noted.

(Source: JIS News)

• The International Monetary Fund (IMF) is projecting that economic growth in Latin America and the Caribbean will decline from an estimated 2.5% in 2023 to 1.9% this year.
• In its outlook for the world economy this year, envisioning resilient growth led by the United States and a slower pace of inflation, the Washington-based financial institution said that the economic growth in the LAC will rise to 2.5% next year 'with a downward revision for 2024 of 0.4 percentage point compared with the October 2023 world economic outlook (WEO) projection'.
• The IMF said that the forecast revision for the region in 2024 reflects negative growth in Argentina in the context of a significant policy adjustment to restore macroeconomic stability.
• Among other major economies in the region, there are upgrades of 0.2 percentage points for Brazil and 0.6 percentage points for Mexico, largely due to carry-over effects from stronger-than-expected domestic demand and higher-than-expected growth in large trading-partner economies in 2023, it added.
• The IMF now expects the global economy to grow by 3.1% this year, unchanged from 2023 but better than the 2.9% it had predicted for 2024 in its previous estimate in October.
• Worldwide, the IMF believes inflation will ease from 6.8% in 2023 to 5.8% in 2024 and 4.4% in 2025.

(Sources: International Monetary Fund & Trinidad Express Newspapers)

• The central near-term risk to Barbados’s political environment remains associated with the government’s fiscal consolidation plans. Barbados’s 36-month IMF-backed programme (the US$189.0Mn Extended Fund Facility (EFF)) is set to expire in December 2025, just under two years from now.
• The deal, largely aimed at correcting fiscal and external imbalances following the COVID-19 pandemic, is likely to prompt the government to keep fiscal policy tight in the upcoming FY2024/25 budget (April 1, 2024, to March 31, 2025).
• The government also appears on track to meet the IMF’s 3.5% of GDP primary surplus target for FY2023/24 while public debt continues to fall.
• These developments are largely in line with the government’s broader medium-term reform programme outlined in the Barbados Economic Recovery and Transformation (BERT) programme running from FY2022/23 to FY2026/27.
• Furthermore, the political environment remains stable thanks to falling inflation, the stability of democratic institutions, and warm ties with major powers. However, crime and drug trafficking are likely to remain a risk to the market’s security environment.

(Source: Fitch Solutions)

• On Thursday, Bank of Canada (BoC) Governor Tiff Macklem said Prime Minister Justin Trudeau should avoid major spending increases in his next federal budget so they do not hinder the central bank's efforts to bring down stubborn inflation.
• "If there are large spending increases, that could start getting in the way of getting inflation back down to target on the timeline we've laid out," Macklem said in testimony to the House of Commons finance committee. Macklem was responding to a question by a lawmaker about the federal government's upcoming budget, which is due to be released in March or April.
• Overall, government spending at federal, provincial, and municipal levels is now increasing about 2.25% annually, which is not helping bring down inflation. However, if spending in the federal budget stimulates demand, it would be "particularly problematic," he said.
• During the pandemic, the country's budget deficit ballooned to historic highs, and the opposition has repeatedly criticized the Trudeau government for fueling inflation with its spending. The BOC has held its key overnight rate at a 22-year high of 5.0% to tame inflation, even as GDP growth has been lacklustre and inflation has remained well above its 2.0% target. Inflation was 3.4% in December.
• The governor said unexpected developments, such as a sudden supply chain blockage, could still force the central bank to raise interest rates again even though now it is more focused on when it should start to lower them.

(Source: Reuters)

• U.S. worker productivity grew faster than expected in the fourth quarter, keeping unit labour costs contained and giving the Federal Reserve another boost in the fight against inflation.
• Labor market momentum is also fading, though gradually, which could further help to curb wage inflation. First-time applications for unemployment benefits rose to a two-month high last week, other data from the Labor Department showed on Thursday. The number of people on unemployment rolls was also the highest in two months.
• The reports followed news on Wednesday that compensation costs rose in the fourth quarter at the slowest pace since 2021.
• The U.S. central bank left interest rates unchanged on Wednesday. Fed Chair Jerome Powell offered a sweeping endorsement of the economy's strength, telling reporters that interest rates had peaked and would move lower in coming months.
• "Inflation is increasingly coming back under control as the economy is more productive, keeping labour costs in check, and the labour market is rebalancing," said Christopher Rupkey, chief economist at FWDBONDS in New York. "This is what Fed officials are looking for to deliver the interest rate cuts the market is clamouring for later on this year."

(Source: Reuters)

• Fosrich Company Limited has advised that its Board of Directors will be meeting on the 6th of February 2024 to consider recommending to its shareholders at an Extraordinary General Meeting, certain resolutions to facilitate an Additional Public Offering of ordinary shares.
• This is the second time Fosrich is entering the market in less than a year, following its August rights issue to fund the second phase of its new 30,000 square foot Fulfilment Centre at 76 Molynes Road.
• The company over the last two years has reaped success through its entry into the manufacturing and distribution of solid PVC pipes and conduits and has announced that it is partnering with Huawei Fusion Solar to deliver battery energy-storage systems.
• While there is no information to state what the proceeds may be used for, we believe that the funds will be used to support the company’s growth initiatives.

(Source: JSE)

• United Oil & Gas has been granted an extension to its licence to explore oil off-shore Jamaica after receiving an official extension to Jan. 31, 2026, from the Jamaican Ministry of Science, Energy, Telecommunications, and Transport (MSETT).
• The Walton-Morant license covers 22,400 square kilometers and could contain over 2.4Bn barrels of fuel resource, according to the company, citing an audit by Gaffney Cline & Associates. This would be more than one-fifth (1/5^th) of Guyana’s oil reserve, which is the 17^th largest in the world.
• During the license extension, United Oil and Gas will undertake additional technical studies, including piston core sampling and seismic reprocessing, to further de-risk the petroleum system and better define the prospects and leads identified on the license. Additionally, United will continue a farm-out process and re-engage with interested parties.
• United holds 100% working interest in Walton-Morant. However, it is seeking a strategic partner to support its planned work programme, including piston core surveying and seismic reprocessing.

 (Source: Oil & Gas Journal)