Headlines

Euro zone consumers lowered their inflation expectations, a fresh European Central Bank survey showed on Tuesday, a relief for policymakers after an unexpected surge a month earlier, even if underlying price growth is still likely to be stubborn, Reuters reported. The ECB has raised interest rates by a combined 375 basis points over the past year to arrest runaway price growth and it could still take until 2025 for inflation to slow back to its 2% target as rapid wage growth and robust demand for services keep pressure on prices.

The Bank of England has completed its planned sales of corporate bonds originally bought as part of a program to stabilize markets in the wake of the Brexit vote and the emergence of the Covid-19 pandemic, Bloomberg News reported.

IMF First Deputy Managing Director Gita Gopinath has warned of "substantial disruptions in labour markets" stemming from generative artificial intelligence and called on policymakers to quickly craft rules to govern the technology, the Financial Times reported on Monday. "We need governments, we need institutions and we need policymakers to move quickly on all fronts, in terms of regulation, but also in terms of preparing for probably substantial disruptions in labour markets," Gopinath said in an interview to FT.

Japanese Prime Minister Fumio Kishida's government on Tuesday unveiled an action plan on his "new capitalism" programme of driving growth and wealth distribution through wage hikes, signalling his commitment to shift the economy into a higher gear, Reuters reported. Kishida's economic strategy will focus on investment in human resources, science and technology, innovation and start-ups, as well as green and digital transformation, as key driver of growth. The action plan and separate mid-year economic policy framework are expected to be approved by Kishida's cabinet later this month.

A public-private partnership in El Salvador will pump $1 billion into creating one of the world's largest bitcoin mining farms, the group called Volcano Energy announced on Monday, Reuters reported. The project will start with an initial $250 million, backed by "key Bitcoin industry leaders" in collaboration with renewable energy developers, Volcano Energy said in a statement. El Salvador's state "Bitcoin Office" retweeted the news on its Twitter. The presidential office did not immediately respond to a request for comment.

In a rare attempt to bolster China's yuan, a self-regulatory body overseen by the country's central bank has told major state-owned banks to lower dollar deposit interest rates, four people with direct knowledge of the matter said, Reuters reported. This could encourage Chinese firms, especially exporters, to settle foreign exchange receipts in yuan, which has weakened to six-month lows against the dollar. The buoyant U.S. currency and the Federal Reserve's interest rate hikes have prompted many Chinese companies to hoard dollar receipts.

The World Bank on Tuesday raised its 2023 global growth forecast as the U.S. and other major economies have proven more resilient than forecast, but said higher interest rates would cause a larger-than-expected drag next year, Reuters reported. Real global GDP is set to climb 2.1% this year, the World Bank said in its latest Global Economic Prospects report. That's up from a 1.7% forecast issued in January but well below the 2022 growth rate of 3.1%.

China said local government debt is manageable and authorities have enough financial resources to avoid risks from spreading, seeking to allay investor fears of possible defaults, Bloomberg News reported. The official Xinhua News agency published a report Monday responding to recent concerns about local government finances. It quoted an unidentified official from the Ministry of Finance as saying government finances are generally healthy and urged local authorities to tackle their debts.

A European derivatives committee said on Monday that a bankruptcy credit event has not occurred in relation to France's debt-laden Casino (CASP.PA), dashing investor hopes for a payout on credit insurance linked to the retailer, Reuters reported. The EMEA Credit Derivatives Determination Committee (CDDC) met on Friday to discuss the question raised by an investor, it said on its website.

Italy's government has no need to directly invest in Stellantis as the carmaker is doing well, Economy Minister Giancarlo Giorgetti suggested on Monday, echoing similar comments made last week by the group's chairman, Reuters reported. Asked by reporters whether Rome should take a stake in Stellantis to have more say in its management, Giorgetti said the company's CEO Carlos Tavares had demonstrated he can pursue the highest financial results for the group.