Many economists and investors debated the possibility of a Federal Reserve interest rate decrease in March.
According to Charles Hepworth, who serves as the investment director for GAM Investments,
The most favored gauge of inflation by the Federal Reserve was recently published for December 2023, indicating the potential for a decrease in interest rates in March.
The expected increase in Core PCE for the month was 0.2%, which was in line with the actual reported amount. This brings the annual PCE inflation rate to 2.9%, which is much closer to the Federal Reserve’s target rate of 2% than it has been in the past three years.
According to Kieran Clancy, a senior economist at Pantheon Macroeconomics, a consulting firm,
The overall trend is that inflation for essential goods is now slightly above zero, while inflation for essential services is decreasing and inflation for rent is also declining. This is behind the private sector’s measurements of rent for new tenants. The Federal Reserve’s predictions for inflation are still too optimistic, as shown in the December summary of economic projections where core PCE inflation is expected to exceed the 2% target until the fourth quarter of 2026. These forecasts will likely be adjusted downwards for the third consecutive quarter in March, providing the opportunity for the Fed to implement the first interest rate cut, either at the March meeting or in May.
The car manufacturing sector in the UK has expressed dissatisfaction with the unsuccessful negotiations with Canada regarding a new trade agreement to replace the previous one made with the EU before Brexit.
The agreement that provided no tariffs for exports to Canada will expire in April. It is unlikely that a new agreement will be reached before then. The British farming lobby is pleased that protections against imports of hormone-fed beef, which is currently prohibited in the UK, will continue.
In other news from the business sector:
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The merger of Vodafone and Three’s British mobile networks will be examined by the UK’s competition regulator.
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Superdry has ended its relationship with its fourth finance leader in five years due to increasing losses at the struggling British clothing company.
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The CEO of the Telegraph has resigned after serving for seven years, as the government plans to conduct a second inquiry into concerns about public interest that were raised by the Barclay family’s complicated agreement to hand over control of the titles to a consortium backed by the UAE.
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According to reports, a court order has resulted in the freezing or restriction of approximately £75 million worth of assets belonging to Michelle Mone and her husband, who is a member of the Conservative party.
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Intel’s stock plummeted following the announcement of lower projected earnings.
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German consumers’ expectations for February took a sharp decline, surprising many and adding to worries about the country’s ongoing recession as a key player in Europe’s economy.
You can keep up with the Guardian’s live updates from various locations worldwide.
In American politics, Mitch McConnell reverses his stance against the Ukraine and border deal, which was previously influenced by Trump.
French farmers are demonstrating in Europe as the government gets ready to unveil new policies.
According to Palestine, the recent ICJ ruling serves as a reminder that no state is exempt from following the law, amidst the ongoing crisis in the Middle East. Meanwhile, Israeli Prime Minister Netanyahu claims that their actions in the conflict are justified as a “just war.”
During our reporting on the conflict between Russia and Ukraine, a former leader of NATO stated that the Ukrainian people are defending our interests and that we must take further action.
Thank you for being a part of our community this week. Coming up next week: February! JJ
Is the Federal Reserve being advised to lower interest rates?
According to Andrew Hunter, who is the deputy chief economist for Capital Economics, a consulting firm,
The data for income and expenditures in December show that the core PCE inflation has been consistently meeting the Fed’s target of 2% for seven months. This reaffirms that there is no further need to reduce inflation, and with the economy still performing well, the Fed has the opportunity to begin lowering interest rates in the near future.
In March, the Federal Reserve lowered interest rates at its meeting.
The Fedwatch tool from CME displays the predictions of market players regarding changes in interest rates as a way to measure expectations. According to the graph below, there is a 49.3% chance of a rate cut during the March meeting, while the probability of the target range for the federal funds rate remaining between 5.25% and 5.5% is 50.7%.
Next week, the Federal Open Markets Committee (FOMC), responsible for setting the Fed’s interest rates, will hold a meeting. However, it is widely believed that the Fed will not make any sudden changes.
Economists and traders are preparing for a significant data point this week: the highly monitored measure of US inflation.
The index used by the Federal Reserve to gauge inflation and inform monetary policy is known as the core personal consumption expenditures (PCE) index. This index can have a significant impact on financial markets if there are any unexpected changes.
In November, the primary PCE inflation decreased to 0.1% from the previous month’s 0.2%. A survey of economists predicts that the annual rate will also drop from 3.2% to 3%.
If inflationary pressure decreases, it is possible that markets will factor in a higher possibility of a rate decrease in March.
According to Bob Savage, the leader of market strategy and insights at BNY Mellon, an investment bank, the fundamental PCE measure is anticipated to decrease to a point that would warrant the Federal Reserve’s easing in March at a rate of 3%, indicating a six-month average annualized rate of 1.9%, which is below their desired level.
The car manufacturing industry in the United Kingdom has expressed concern about the possibility of tariffs being imposed on cars exported to Canada, following the collapse of trade negotiations between the two nations.
The British automotive sector can trade vehicles to Canada without tariffs due to a temporary extension of previous trade agreements from their membership in the EU. However, this tariff-free arrangement is set to expire in April unless a bilateral agreement is reached between the two countries.
Canada purchases a mere 1.3% of car exports from the UK, which amounts to less than 8,000 cars. This makes it a relatively insignificant portion of trade compared to the dominant players, the EU and the US. Despite this, the potential implementation of additional tariffs can have a negative impact on car manufacturers who supply to Canada.
In a statement to Reuters, Mike Hawes, the CEO of the Society of Motor Manufacturers and Traders, expressed his thoughts.
If British auto exports are unable to utilize European Union parts and components in order to evade extra fees, there is a possibility that tariffs, which may also be imposed in addition to taxes on luxury items, could be reinstated.
The UK’s car exports to Canada are significant and the suspension of trade talks between the two countries is especially disappointing. This decision sends a message that Canada may not be open to the UK’s high-quality automotive products.
Next year, a widely anticipated model will be released after much speculation. According to Musk, he is eagerly anticipating the debut of this new model.
This will have a significant impact on both the vehicle’s design and the manufacturing system’s design.
Nevertheless, the attention of investors has been directed towards its profit margins, which have been facing strain due to heightened competition in the electric vehicle industry.
The value of Tesla stocks significantly increased during the COVID-19 pandemic due to a combination of large monetary aid and a rise in demand for eco-friendly technology. However, CEO Elon Musk cautioned in May 2020 that the stock price was too high, but it still reached a value of over $1 trillion in 2021, surpassing the combined worth of most other car companies.
In May 2020, Tesla’s stock was valued below $55, but as of Thursday evening, it had risen to $182.6, resulting in the company being worth $572 billion in market value.
According to reports, a court order has frozen or restrained assets worth approximately £75m belonging to Michelle Mone, a member of the Conservative party, and her spouse.
The duo is under investigation by the National Crime Agency for suspected fraud involving medical equipment. According to the Financial Times, the assets that have been frozen include a townhouse with six bedrooms in central London, a country estate on the Isle of Man, and 15 accounts with Coutts, C Hoare & Co, and Goldman Sachs International.
According to a spokesperson for Mone and Barrowman, the court order was the outcome of a consensual process that involved negotiations with the CPS.
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This enables the broader operations and assets of the Barrowman family to function without limitations or uncertainties.
“Doug and Michelle did not oppose the request and were willing to surrender these assets, allowing them to expedite the process of proving their innocence.”
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In 2017, the CEO of Press Acquisitions, who also oversaw the parent company, has departed from the company without giving a statement, as announced in a statement.
However, in an internal announcement Hugh, who has driven led the Telegraph’s drive to more than 1 million print and digital subscribers, said it was an “honour and privilege” to lead a group of titles that have had “such an impact on society and democracy”.
“The level of interest in owning TMG serves as evidence of this,” stated Hugh. He will be succeeded by Anna Jones, the previous CEO of the UK branch of Cosmopolitan, Men’s Health, and Esquire publishers.
Source: theguardian.com
