Headlines

Canada's economy does not need more stimulus, but rather more investment from both government and businesses to build up supply capacity to meet strong consumer demand, Bank of Canada Governor Tiff Macklem said on Wednesday, Reuters reported. Macklem, when asked in an audience Q&A session if government should be spending billions to further stimulate the economy, said Canada is already in the midst of a consumer-led recovery, and more capacity investment is needed to sustain that. "To sustain a strong consumer-led recovery, you need investment," he said.

Some data-driven Chinese hedge funds have stumbled, after several years of eye-catching returns and surging inflows from investors, the Wall Street Journal reported. These quantitative fund managers use statistical models to select stocks and time trades, relying on machine-developed trading algorithms to filter out human weaknesses and find patterns in the market. The rise of Chinese quant investing mirrors earlier growth on Wall Street, with stock markets in both countries being large and liquid.

Evidence emerging from the first central bank digital currencies (CBDCs) around the world suggests there is no one-size-fits-all model as stability and privacy are designed into systems, the head of the International Monetary Fund has said, Reuters reported. Roughly 100 countries are now looking at CBDCs, the IMF estimates, and it published a study on Wednesday looking at six nations including China, Sweden and the Bahamas where digital money is already up and running or at an advanced stage.

The owner of two strategic soy crushing plants in southern Brazil has appealed to the country’s antitrust body for a probe into a signed supply deal between U.S.-based grains trader Bunge and brewer Cervejaria Petropolis which is leasing the facilities, Reuters reported. In documents filed with regulator CADE late on Monday, the plants owner Imcopa said the deal falls foul of antitrust laws because the parties involved were already working together to implement it before they sought CADE’s approval.

Brazil's central bank still has further interest rate hikes to make as inflation remains in double digits, Monetary Policy Director Bruno Serra said on Wednesday, reinforcing policymakers' will to extend aggressive monetary tightening, Reuters reported. During an online event hosted by Modalmais bank, Serra said that considering current risks, especially those related to the country's fiscal prospects, 2023 inflation is now seen above the target, forcing authorities to keep a hawkish stance. "The battle is still far from won, we still have double-digit inflation.

The European Central Bank's German policymakers openly discussed prospects for an interest rate hike on Wednesday, with new Bundesbank chief Joachim Nagel arguing that a move could come this year, as inflation remains uncomfortably high, Reuters reported. The ECB last week walked back on a pledge not to raise rates in 2022 and policymakers are now looking at how best to dismantle unconventional policies that have kept the euro zone afloat for much of the past decade.

The International Monetary Fund will hold a virtual visit with Tunisian officials on Feb. 14 to discuss the government's economic reform program, a central bank official told Reuters on Wednesday. The North African country, which is suffering from a financial crisis, is seeking to obtain a rescue package from the fund in exchange for unpopular reforms, including spending cuts. The government says the country requires the rescue package to avert a collapse in public finances. Some public sector salaries for December were paid late in January.

China eased a year-long cap on loans for the real estate sector to fund public rental housing, the latest bid by authorities to tackle a slumping property market, Bloomberg News reported. Bank loans to fund low-cost rental projects will no longer be subject to regulatory curbs, the People’s Bank of China said in a statement on Tuesday. The rules required banks to trim their loan exposure to the property sector to a certain level.

As much as £20 billion of taxpayer-backed Covid loans may have to be written off because of defaults by struggling borrowers, insolvency practitioners have warned, the London Times reported. The resignation of Lord Agnew of Oulton, the counter-fraud minister, has prompted an increased scrutiny of losses to criminals in the government’s emergency schemes, but Azets, an accountancy firm, has warned that these will be eclipsed by the hit to the public purse from legitimate borrowers going bust.

Sweden will phase out the majority of its current pandemic support measures, with the decision coinciding with a lifting of most restrictions from Wednesday, Bloomberg News reported. The support measures to companies will stay in place through February, Finance Minister Mikael Damberg told a news conference in Stockholm on Tuesday. “Now is the time for normality and not least a more normal budget process,” he said. The biggest Nordic nation became an outlier at the start of the pandemic due to its relatively hands-off Covid strategy.