Headlines

Egypt surprised most economists by delivering its biggest interest-rate hike in nearly half a decade, an attempt to tackle soaring inflation and restore the allure of its local debt with foreign investors, Bloomberg News reported. The central bank increased the deposit and lending rates by 200 basis points each to 11.25% and 12.25% respectively, the Monetary Policy Committee said Thursday in a statement. Only one economist in a survey of nine correctly predicted the decision, with most forecasting an increase of 100 basis points.

The Group of Seven economic powers support debt relief efforts for Sri Lanka, G7 finance chiefs said on Thursday in a draft communique from a meeting in Germany after the country defaulted on its sovereign debt, Reuters reported. "The G7 stands ready to support the Paris Club’s efforts, in line with its principles, to address the need for a debt treatment for Sri Lanka," the draft statement to be finalised before the end the meeting on Friday said.

Sri Lanka’s impending default on $12.6 billion of overseas bonds is flashing a warning sign to investors in other developing nations that surging inflation is set to take a painful toll, Bloomberg News reported. The South Asian nation is set to blow through the grace period on $78 million of payments Wednesday, marking its first sovereign debt default since it gained independence from Britain in 1948. Its bonds already trade deep in distressed territory, with holders bracing for losses approaching 60 cents on the dollar. The government said last month it would halt payments on foreign debt.

Australia’s largest home building company Metricon Homes has announced that it is still in a strong position when confronted with reports about its insolvency. The company officials had a meeting with Victorian Treasurer Tim Pallas on May 19, and Metricon chief executive Peter Langfelder affirmed that everything was normal. “We’re always in contact with government,” he told reporters. “We had a fantastic engagement with them.

The global economy is in danger of entering a period of so-called stagflation, or high inflation and weak growth, policy makers and corporate leaders say, which could erode living standards around the world, the Wall Street Journal reported. Treasury Secretary Janet Yellen on Wednesday became the latest leader to warn of turbulence for the global economy. “Certainly the economic outlook globally is challenging and uncertain,” Ms. Yellen said in Bonn, Germany, ahead of a meeting of leaders of seven wealthy nations.

Reckoning they have little to lose with prices so ridiculously low, South Korean speculators in recent days have piled into Luna, a cryptocurrency that lost 99.99% of its value last week after its paired stablecoin TerraUSD collapsed, Reuters reported. Both tokens are affiliated with Terra, a blockchain platform co-founded by Korean developer Do Kwon and, according to blockchain analytics firm Elliptic, investors in them have lost around $42 billion.

Google’s Russian subsidiary plans to file for bankruptcy, Reuters reported. The U.S. tech firm said Wednesday (May 18) that Russian authorities had seized the unit's bank account. Alphabet’s Google has been under pressure in Russia for months as Moscow wanted it to delete content it viewed as illegal. It was also criticized in the country for restricting access to some Russian media on YouTube. The Kremlin has so far stopped short of blocking access to its platforms. Google said that by seizing its bank account authorities had made it impossible for its Russian office to function.

The U.K. is due to become the first big European economy to reach pre-pandemic levels of corporate insolvencies as crisis support is unwound and rising inflation threatens companies’ survival prospects, according to research, the London Times reported. Business insolvencies will rise by 37 per cent this year, Allianz Trade, a credit insurer, predicted. It cited as the main causes the withdrawal of Covid support schemes, rising commodity prices, supply chain problems, the fallout from Russia’s invasion of Ukraine and the “lagging effects” of Brexit.

British inflation surged last month to its highest annual rate since 1982, pressuring finance minister Rishi Sunak to offer more help for households and the Bank of England to keep raising interest rates despite a risk of recession, Reuters reported. Consumer price inflation hit 9% in April, the Office for National Statistics said on Wednesday, surpassing the peaks of the early 1990s recession that many Britons remember for sky-high interest rates and widespread mortgage defaults.

Business bankruptcies in Canada moved closer to pre-pandemic levels in the first quarter of 2022, jumping almost 34 per cent year-over-year in what some experts warn could be the start of a growing wave of failures, the Niagra Falls Review reported. There were 807 business bankruptcies and proposals in Q1, up from 733 in the previous quarter and 603 in the first quarter of 2021.