2025-07-25 16:31

BOGOTA, July 25 (Reuters) - Colombia's central bank will cut its benchmark interest rate next week, a Reuters poll suggested on Friday, although analysts expect the bank to act cautiously for the rest of the year due to the worsening state of the government's finances. Sixteen of 20 analysts surveyed said the bank would reduce the benchmark interest rate by 25 basis points to 9%, following a sharper-than-expected slowdown in inflation in June. One analyst forecast a 50-basis-point cut, while the remaining three expected the bank to hold the rate steady, as it did in June. Sign up here. Analysts said the decision is unlikely to be unanimous. "Our expectation (of a 25-basis-point cut) is largely explained by the downward surprise in June's inflation and its effect on expectations for the coming months," said investment firm Corfi. Consumer prices rose 0.10% in June, bringing 12-month inflation to 4.82%, below market expectations, though still well above the central bank's long-term target of 3%. Some analysts who expect a pause cited inflation that is likely to remain above the central bank's 3% target through 2025, as well as growing fiscal concerns. Latin America's fourth-largest economy is facing lower tax revenue, high debt and difficulty reducing spending. "Concern over the fiscal issue continues to increase due to both lower government revenue collection and expectations of a higher fiscal deficit," Colombian bank Davivienda said in a note. "It is also important to mention that the economy is not performing poorly in terms of growth." The central bank's meeting will take place a day after the U.S. Federal Reserve meets on July 29-30, when it is expected to hold U.S. rates steady. Meanwhile, analysts raised their year-end expectation for Colombia's benchmark rate to 8.50% from 8.25%. The forecast for the end of 2026 remains unchanged at 7%. https://www.reuters.com/world/americas/colombia-central-bank-expected-cut-rate-after-inflation-dip-2025-07-25/

2025-07-25 15:13

OTTAWA, July 25 (Reuters) - Canada recorded a sharply higher C$6.50 billion ($4.71 billion) budget deficit for the first two months of the 2025/26 fiscal year as government expenditures grew but revenues stalled, the finance ministry said on Friday. By comparison, the deficit in the same period a year earlier had been just C$3.82 billion, it said in a statement. Sign up here. Program expenses rose 4% on increases across all major categories of spending. Public debt charges increased by 3.8% largely because of higher rates of government bonds. Year-to-date revenues marginally increased by C$26 million, largely reflecting lower corporate income tax and lower revenues from GST. This was partly offset by higher income from customs import duties and personal income tax revenue. Canada's government has been earning higher import duty revenues because of counter-tariffs on the U.S. in response to President Donald Trump's tariffs. The data showed that customs import duties for the first two months of the fiscal year jumped 180% from the same period a year ago. On a monthly basis, Canada posted a deficit of C$228 million in May, compared to a C$1.17 billion surplus in May 2024. ($1 = 1.3701 Canadian dollars) ((Reuters Ottawa bureau; [email protected] , opens new tab)) Keywords: CANADA BUDGET/ https://www.reuters.com/world/americas/canada-budget-deficit-over-first-two-months-202526-jumps-c650-bln-2025-07-25/

2025-07-25 14:58

WASHINGTON, July 25 (Reuters) - President Donald Trump said on Friday he had a good meeting with Federal Reserve Chair Jerome Powell and got the impression that the head of the U.S. central bank might be ready to lower interest rates. The two men met on Thursday when Trump made a rare visit to the U.S. central bank to tour the ongoing renovation of two buildings at its headquarters in Washington. The White House has criticized the cost of the project, and the president and Powell sparred over the issue during the visit. Sign up here. Trump also took the opportunity to again publicly call on Powell to slash rates immediately. "We had a very good meeting ... I think we had a very good meeting on interest rates," the president told reporters on Friday. "He (Powell) said, 'Congratulations, the country is doing really well,' and I got that to mean that I think he's going to start recommending lower rates because of that conversation," Trump said. The Fed is widely expected to leave its benchmark interest rate in the 4.25%-4.50% range at the conclusion of a two-day policy meeting next week. Powell has said the Fed should wait for more data before adjusting rates. The visibly tense exchange between Trump and Powell at the Fed's massive construction site on Thursday marked an escalation of White House pressure on the central bank as well as Trump's efforts to get Powell to lower rates. The U.S. central bank said on Friday it was "grateful" for Trump's encouragement to complete the renovation of its buildings in Washington and that it "looked forward" to seeing the project through to completion. Trump, who called Powell a "numbskull" earlier this week for failing to heed the White House's demand for a large reduction in borrowing costs, also said on Thursday he did not intend to fire the Fed chief, as he has frequently suggested he would. https://www.reuters.com/world/us/trump-suggests-fed-may-be-ready-lower-interest-rates-2025-07-25/

2025-07-25 13:49

Inflation edges up to 5.3% in 12 months through mid-July Central bank has signaled a prolonged pause in rates SAO PAULO, July 25 (Reuters) - Brazil's inflation remained well above the central bank's target range in its mid-July reading, official data showed on Friday, as policymakers gather next week for a meeting at which they are widely expected to hold interest rates at a two-decade high. Inflation in Latin America's largest economy hit 5.30% in the 12 months through mid-July, statistics agency IBGE said, up from 5.27% a month earlier and slightly above the 5.26% expected by economists in a Reuters poll. Sign up here. Brazil's central bank targets inflation at 3%, plus or minus 1.5 percentage points, and policymakers have pledged to bring it back to that level. The bank delivered 450 basis points in interest rate hikes between September and June, taking the benchmark Selic rate to 15%, the highest since July 2006. It signaled last month a "very prolonged" pause to assess the effects of the hikes. "The mid-month inflation figures give policymakers no reason to consider raising rates again," said Capital Economics' emerging markets economist Kimberley Sperrfechter, who expects conditions to allow for rate cuts around the turn of the year. The central bank's rate-setting committee, known as Copom, is scheduled to meet on July 29 and 30. In the month to mid-July alone, consumer prices as measured by the IPCA-15 index rose 0.33%, up from 0.26% in the previous month. The index had been expected to rise 0.30%, according to the median forecast in a Reuters poll. The monthly increase was driven by higher housing costs as electricity prices climbed, IBGE said, as well as higher transport prices, with airfares jumping. Closely watched food and beverage prices, however, dropped for the second straight month. "Today's result will not influence Copom's decision," Inter senior economist Andre Valerio said. "It should keep interest rates unchanged, reaffirm its commitment to meeting the inflation target, and offer no indication of when it might begin a rate-cutting cycle." https://www.reuters.com/world/americas/brazil-inflation-hits-53-central-bank-set-hold-rates-next-week-2025-07-25/

2025-07-25 13:33

MOSCOW, July 25 (Reuters) - Russian Central Bank Governor Elvira Nabiullina and her deputy Alexei Zabotkin addressed a news conference on Friday after the central bank cut its key rate to 18% from 20%. They spoke in Russian and the quotes below were translated into English by Reuters. Sign up here. NABIULLINA ON KEY RATE DECISION: "During the discussion, options for reducing the rate were considered, the option of maintaining the rate was not considered. Options for reducing the rate by 100, 150 and 200 (basis points) were considered, but the options of 100 and 200 (basis points) were discussed in detail." NABIULLINA ON FUTURE RATE DECISIONS: "If you look at our forecast for the key rate, it suggests that by the end of the year, at individual meetings, reductions of 100, 150 and 200 basis points are possible, as well as pauses. Here everything will depend on the incoming data. But such a uniform trajectory of reduction may be possible with a more convincing picture of inflation stabilisation, inflation expectations at a low level and the absence of new inflation shocks. For now, we assume the possibility of various steps." "We are on the path to returning inflation to target, but this path has not yet been completed. There are already initial results. They allowed us to reduce the key rate again today, smoothly adapting the degree of monetary policy tightness to reduce inflationary pressure." "But returning to the target does not simply mean several months of current price growth near 4%. It implies a stable consolidation of inflation at a low level not only in actual data, but also in the perception of people and businesses." "Monetary policy has ensured a downward reversal of inflation, and it must remain tight for as long as it takes to sustainably return inflation to 4% in 2026 and consolidate it near this level." NABIULLINA ON BANK RECAPITALISATION AND BAD DEBTS: "We do not see any need for recapitalisation of large banks due to the potential overhang of bad debts. The banking sector is profitable." *NABIULLINA ON RUMOURS OF POSSIBLE BANKING CRISIS, SUPPORT MEASURES IN SUCH A SCENARIO "I will say again that these are rumours that are not based on anything ... I can also give figures, because you need to look at the figures and the financial indicators. The banks are stable, they earn money, they have capital reserves. All this allows them to feel quite confident." "We are keeping our finger on the pulse, but I do not see any reason to consider state support (for banks) in one form or another." NABIULLINA ON INFLATION RISKS: "In the aggregate, pro-inflationary risks continue to prevail. However, when making decisions, we also take into account disinflationary risks. The main one is a faster cooling of credit and demand than we expect in the baseline forecast." "We will reduce the rate in such a way that a spike of inflation does not occur. But, of course, we are concerned about increased inflation expectations." ZABOTKIN ON INFLATION RISKS: "The indications of caution in further decisions on the rate, which were voiced in the chairman's statement, are essentially a reference, among other things, to the fact that we, of course, will act with an eye on what is happening with inflation expectations. It cannot be otherwise" NABIULLINA ON BUDGET: "Budget policy remains an important input for our forecast. We assume that the budget rule will be followed this year and in the following years. If budget plans change, it may be necessary to adjust the key rate trajectory." NABIULLINA ON ECONOMIC CONDITIONS: "Compared to April, we have lowered our forecast for Russian oil prices to $55 per barrel this year and next. We have also slightly lowered our forecast for exports and the current account of the balance of payments for the next two years." "At the same time, the rouble exchange rate is affected by flows not only on the current account, but also on the financial account of the balance of payments. High interest rates support the attractiveness of rouble assets compared to foreign ones for Russian citizens and companies. This, combined with more moderate demand for imports, ensures the stability of the rouble exchange rate, despite a slight reduction in exports." NABIULLINA ON ROUBLE AND KEY RATE: "The strengthening of the rouble is explained precisely by the effects of a tight monetary policy. This is such a fundamental factor." "If, of course, there is some radical deterioration in external conditions, of such a scale that it will interfere ... with achieving 4% inflation in 2026, we will, of course, be ready to adjust the rate trajectory." NABIULLINA ON INFLUENCE OF ROUBLE RATE ON MONETARY POLICY "As for the influence of the exchange rate, the dynamics of the exchange rate ... we do not consider it, (though) it is still a factor that depends on our monetary policy. And a tight monetary policy, all other things being equal, affects the stabilisation of the exchange rate." NABIULLINA ON THE ROUBLE AND BUDGET "The sensitivity of the rouble to an increase in government spending in general, to the budget deficit, is limited, regardless of the methods of financing it." *"We do not expect any surprises in the autumn. In any case, we are not aware of any surprises. I know that many are now worried about a possible decline in commodity prices and, as a result, a shortfall in revenues, but for monetary policy, it is not just changes in revenues and expenditures that are important, but changes in the structural primary deficit." NABIULLINA ON POSSIBLE TIGHTENING OF SANCTIONS ON FINANCIAL SECTOR: "... We also have an alternative risk scenario, under which we are considering a possible tightening of sanctions. In general, the financial sector has already shown through practice and experience that it is quite resistant to sanctions and we are pursuing a policy so that this resistance does not decrease." *NABIULLINA ON PRESSURE ON THE CENTRAL BANK: "Of course, there are many voices, expert opinions in favor of lowering the rate. They are quite understandable, but ... we do not perceive them as pressure, and we make decisions on the rate, as required by law, independently based on our own analysis of the current situation." https://www.reuters.com/business/finance/russias-nabiullina-rates-economy-banking-sector-2025-07-25/

2025-07-25 13:32

WASHINGTON, July 25 (Reuters) - President Donald Trump said on Friday he had a good meeting with Federal Reserve Chair Jerome Powell and got the impression Powell might be ready to lower interest rates. "We had a very good meeting ... I think we had a very good meeting on interest rates," Trump told reporters. Sign up here. Trump clashed with Powell during a rare presidential visit to the U.S. central bank on Thursday, and criticized the cost of renovating two historic buildings at its headquarters. Trump, who called Powell a "numbskull" earlier this week for failing to heed the White House's demand for a large reduction in borrowing costs, said he did not intend to fire Powell, as he has frequently suggested he would. https://www.reuters.com/business/trump-suggests-fed-chair-may-cut-interest-rates-2025-07-25/