2025-06-24 15:59

MEXICO CITY, June 24 (Reuters) - Mexico's headline inflation landed in line with expectations in the first half of June, reinforcing analysts' expectations that the central bank should continue to steadily bring down interest rates in Latin America's second-largest economy. Mexican consumer prices rose 0.10% during the first half of June compared to the prior two weeks, data from the national statistics agency showed on Tuesday, in line with the 0.11% projected by economists in a Reuters poll. Sign up here. Inflation in the 12 months through mid-June meanwhile hit 4.51%, also in line with expectations, an increase compared with the 4.22% the prior month but easing from the 4.62% registered in the second half of May. Analysts at Banamex said they expect inflation to "resume a downward trajectory in the coming months." A rebound in merchandise prices from low levels last year should continue "albeit at a slower pace, considering the stability of the exchange rate and the moderation in producer price inflation," it added. The increase moves the inflation figure further from the Bank of Mexico's target range of 3%, plus or minus 1 percentage point. The central bank cut its benchmark interest rate by 50 basis points in May - its third consecutive cut of that size - bringing it down to its lowest point since August 2022, at 8.5%. Analysts polled by Reuters expect the bank to announce another cut of 50 basis points later this week. Analysts at Actinver said they expect that the decision to split the board, and that future cuts will likely be just 25 basis points. https://www.reuters.com/world/americas/mexicos-inflation-rises-line-with-forecasts-early-june-2025-06-24/

2025-06-24 15:43

Lane says inflation fight is largely over De Guindos says disinflation is relatively clear LONDON, June 24 (Reuters) - The European Central Bank would react to "material" changes in the euro zone's inflation outlook and ignore "tiny" ones as inflation is now under control, the ECB's chief economist Philip Lane said on Tuesday. The ECB cut interest rates this month for the eighth time in the past year and signalled at least a policy pause next month as it waits for the fog to clear surrounding trade tensions with the United States. Sign up here. Lane appeared to signal that the bar for major policy changes was high as inflation had now all but settled at its 2% target. "We're in a zone of cyclical management," Lane said at an event in London. "Now if we see the downside risks to inflation -- of course, tiny things we can ignore -- but material moves require some kind of monetary policy response, equally to the upside." Euro zone inflation, which briefly hit double digits in late 2022, fell to 1.9% last month and the ECB expects it to stay below its 2% goal next year. Lane said the ECB had "largely" won its fight against high inflation even if prices in the services sector were still growing too fast. They rose by 3.2% in May. "While headline inflation is currently around the target, services inflation still has some distance to travel to make sure that inflation stabilises at the target on a sustainable basis," he said. "Still, there has been sufficient progress in returning inflation to target to consider that this monetary policy challenge is largely completed." Speaking earlier on Tuesday, ECB vice-president Luis de Guindos said the "underlying disinflation process" in the euro zone was "relatively clear" despite swings in oil prices related to conflict in the Middle East. Lane argued that falling oil prices affected inflation more slowly than rising ones, and said the ECB was keen to ensure inflation remained around 2% even after the swings in energy prices fade. https://www.reuters.com/sustainability/boards-policy-regulation/ecb-would-react-material-changes-inflation-outlook-lane-says-2025-06-24/

2025-06-24 15:04

June 24 (Reuters) - Bank of England Governor Andrew Bailey said on Tuesday that central bank reserves in the financial system could reach the top end of estimates from banks for their neutral level during the second half of 2026. The BoE is moving from a system of abundant liquidity provided through years of quantitative easing to a demand-led system, where the level of reserves is determined by banks' needs - likely within what the BoE calls a "preferred minimum range of reserves". Sign up here. "The range (of forecasts from banks) has an upper end of somewhere around about 550 billion (pounds), so if that's ... right, then we'll get there in the second half of next year," Bailey told the House of Lords' Economic Affairs Committee. https://www.reuters.com/world/uk/boes-bailey-sees-more-signs-softening-labour-market-2025-06-24/

2025-06-24 13:52

Lower gasoline prices on annual basis aided CPI data Mortgage costs, rents also cooled from previous month Core measures CPI-median, CPI-trim eased to 3% Inflation in May on a monthly basis was at 0.6% OTTAWA, June 24 (Reuters) - Canada's annual inflation rate in May was unchanged from the previous month at 1.7% as a drop in gasoline costs continued to keep the overall index stable while prices of shelter, food and transportation also cooled, data showed on Tuesday. There are concerns that a raft of tariffs imposed by Trump on steel, aluminum and automobiles exported to the U.S. from Canada and subsequent counter-measures from Canada would increase prices across the board. Sign up here. Those fears have not been reflected in the headline consumer price index as a tax removal on gasoline from April is expected to keep the cost at the pump down for a year. Mortgage costs and rents have also consistently eased. Analysts surveyed by Reuters had expected annual inflation in May to be at 1.7% and monthly inflation at 0.5%. StatsCan said inflation in May on a monthly basis was at 0.6%, largely led by a seasonal increase in travel, accommodation and energy costs. Gasoline prices decelerated by 15.5% in May after falling by 18.1% in April on an annual basis. The cost of shelter component of the CPI, which has the biggest weight of 30% in the overall basket, grew by 3% in May, down from 3.4% in April, as both mortgage interest costs and rents eased. The Bank of Canada closely tracks core measures of inflation - CPI-trim and CPI-median - and both of them eased to 3%, which is the upper band of the central bank's 1% to 3% inflation target range. The May and June inflation data are critical for BoC's rates decision on July 30. If inflation continues to be low, it could tilt the bank towards a rate cut. The bank will also get April's GDP report before its next meeting. "This piles a lot of pressure on to the upcoming GDP report," said Andrew Kelvin, Chief Canada Strategist at TD Securities, adding that if the economy slows materially in April, there could be a possibility of a rate cut. After cutting rates aggressively and consistently for nine months since June last year by 225 basis points to 2.75%, it has paused its rate reduction cycle at its last two meetings, especially due to the uncertainty hanging around tariffs. Money markets are betting around a 68% chance of yet another hold by the central bank of its policy rate at 2.75% on July 30, when it also releases its monetary policy report. The Canadian dollar weakened slightly after the data and was trading up 0.1% to 1.3717 against the U.S. dollar, or 72.90 U.S. cents. Yields on the government's two-year bonds were up 2.4 basis points to 2.637%. https://www.reuters.com/world/americas/canadas-annual-inflation-unchanged-17-may-core-measures-slightly-ease-2025-06-24/

2025-06-24 13:19

Central bank open to resuming hikes if inflation remains above 3% target Brazil's economy has continued to outperform expectations Short-term inflation outlook remains adverse BRASILIA, June 24 (Reuters) - Brazil's central bank said on Tuesday that much of the impact from its "particularly quick and very firm" tightening cycle is yet to be felt, which is why it now foresees a pause in interest rate increases to assess those effects. In the minutes of last week's decision, when the monetary policy committee Copom raised rates by 25 basis points to 15% and signaled a "very prolonged" pause ahead, the central bank also stressed that it will still assess whether the current rate is appropriate to bring inflation back to target. Sign up here. Reiterating that it will not hesitate to resume hikes if needed, the central bank sought to stress that the pause does not necessarily mark the end of the tightening cycle, a message likely aimed at discouraging premature bets on when it might start easing borrowing costs. Since September, Brazil's benchmark Selic interest rate has climbed by 450 basis points. But despite the aggressive tightening, Latin America's largest economy has continued to outperform expectations, supported by resilient economic activity and a tight labor market, with annual inflation running well above the 3% target. "How do you stop raising interest rates in a scenario like this? By trusting the lags of monetary policy. ... So now it's time to wait for it to take effect," said Luis Otavio Leal, partner and chief economist at G5 Partners, who expects an initial rate cut early next year. Policymakers said in the minutes that the most recent data indicate that the economy continues to lose steam, albeit rather gradually. The central bank noted that indicators for trade, services and industry point to more moderate growth, while confidence indicators remain subdued despite some recent improvement. Given the usual lags in monetary policy transmission, these effects are expected to intensify in the coming quarters. "The committee foresees an interruption of the rate hiking cycle to examine its yet-to-be-seen cumulative impacts, and then evaluate whether the current interest rate level, assuming it (is) stable for a very prolonged period, will be enough to ensure the convergence of inflation to the target," the policymakers wrote. They stressed that the short-term inflation outlook remains adverse, although recent readings have surprised to the downside compared with analysts' expectations. The central bank also voiced broad discomfort with inflation expectations, which remain above the official target across all horizons, even after some recent decline in shorter-term projections. "Once the appropriate interest rate is determined, it should remain at a significantly contractionary level for a very prolonged period due to deanchored expectations," it emphasized. Caio Megale, chief economist at XP, said the bar is likely high for increasing rates, with the minutes focused on preventing market participants from expecting rate cuts. https://www.reuters.com/world/americas/brazil-central-bank-says-tightening-effects-yet-be-felt-signals-pause-rate-hikes-2025-06-24/

2025-06-24 12:30

June 24 (Reuters) - New York-based utility Con Edison (ED.N) , opens new tab has asked customers to conserve energy during the ongoing heatwave, adding that it has reduced voltage by 8% in parts of eastern Brooklyn to protect equipment and keep power flowing as crews carry out repairs. Meteorologists at AccuWeather forecast that high temperatures in New York City, the largest city in the United States, could reach up to 98.6 degrees Fahrenheit (37 degrees Celsius) on Tuesday. Sign up here. As temperatures soar, the widespread use of air conditioners by homes and businesses puts extra strain on the power grid, increasing the risk of outages. The heatwave, meanwhile, boosted power prices in some regions to their highest since January. Next-day power prices in New England jumped about 17% to around $189 per megawatt hour for Tuesday, while spot power at the PJM West hub remained over $200 for a second day in a row. That compares with an average of $81 per MWh in New England so far this year and $47 in calendar 2024, and an average of $56 in PJM so far this year and $42 in calendar 2024. https://www.reuters.com/business/energy/new-yorks-con-edison-urges-customers-conserve-power-amid-heatwave-2025-06-24/