2025-06-10 18:18

June 10 (Reuters) - U.S. Treasury Secretary Scott Bessent has emerged as a possible candidate to succeed Federal Reserve Chair Jerome Powell, Bloomberg News reported on Tuesday, citing people familiar with the matter, a report immediately denied by the White House. Bessent joins a small list of Fed chair candidates that has included Kevin Warsh, a former Fed official whom Trump previously interviewed for Treasury secretary, Bloomberg added. Sign up here. A White House official dismissed the Bloomberg report as false. Trump said on Friday he would name a successor to Powell very soon. Bloomberg, citing two unidentified people familiar with the matter, reported that formal interviews for the job have not begun. Bessent is leading Trump's sweeping global trade overhaul and has a hand in pushing for changes to taxes and regulation. https://www.reuters.com/world/us/bessent-emerges-possible-contender-succeed-feds-powell-bloomberg-reports-2025-06-10/

2025-06-10 17:12

Inflation exceeds central bank's target, reaching 4.42% in May Economists expect another 50 bps rate cut despite inflation concerns Experts urge caution in future rate cuts amid economic risks MEXICO CITY, June 10 (Reuters) - Mexico's central bank is expected to cut its key interest rate by another half percentage point this month despite a recent surge in inflation, although analysts believe the pace of rate cuts could slow if prices remain under control. In May, inflation exceeded the central bank's target of 3%, plus or minus a percentage point, after the headline rate accelerated to 4.42%, its highest level since November. Core inflation, meanwhile, rose to 4.06%, its highest level in almost a year. Sign up here. However, a dozen economists surveyed by Reuters still expect the Bank of Mexico to implement its fourth consecutive rate cut of 50 basis points at its next meeting on June 26. "I see it as very unlikely that they will change their plans for a 50 bp cut, unless there's a major surprise," said Julio Ruiz, chief economist for Mexico at Citi. "I think they still believe that the level of monetary restriction is too high compared to the current inflation rate." Gabriela Siller, head of analysis at Banco Base, also expects another half-percentage-point cut this month, but believes the most "recommended" course of action would be for the central bank to pause its monetary easing cycle, which began in early 2024 after rates reached a record high of 11.25%. "Given the surge in inflation and its potential impact on long-term expectations, it would be best for the Bank of Mexico to either cut rates by only 25 bp or pause its rate-cutting cycle," she said. Another 50 bps cut would bring interest rates down to 8%, their lowest level in three years, providing a boost to the struggling economy. However, going forward, experts believe the rise in inflation should lead the central bank to be more cautious in its future moves. "What we should expect at least is a moderation in the bank's statement," said Ramse Gutierrez, co-director of investments at Franklin Templeton. "It would be reasonable to expect the Bank of Mexico to be more cautious in its future rate cuts." Although the bank's governing board has stated it will maintain a restrictive monetary stance, it has also said it plans to continue cutting rates, with a potential half-percentage-point cut on the table in June, depending on consumer price behavior. Last month, the central bank's governor, Victoria Rodriguez, said in an interview that the effects of economic weakness would be taken into account when calibrating monetary policy. Mexico's economy, Latin America's second largest, narrowly avoided a technical recession in the first quarter, but still faces significant risks due to weak domestic activity and uncertainty surrounding U.S. trade policies. The central bank in late May slashed its 2025 growth forecast for gross domestic product to just 0.1% from a previous estimate of 0.6%, which would be its worst performance since the pandemic. "We expect growth to remain the main driver of monetary policy, and we still believe that the Bank of Mexico has room to ease monetary policy," Barclays said. https://www.reuters.com/world/americas/bank-mexico-poised-50-basis-points-rate-cut-despite-inflation-rebound-2025-06-10/

2025-06-10 17:09

June 10 (Reuters) - Power-hungry data centers that provide computing power for artificial intelligence and crypto currency will push U.S. electricity consumption to record highs in 2025 and 2026, the U.S. Energy Information Administration said in its Short Term Energy Outlook (STEO) on Tuesday. The EIA projected power demand will rise to 4,193 billion kilowatt hours (kWh) in 2025 and 4,283 billion kWh in 2026 from a record 4,097 billion kWh in 2024. Sign up here. In addition to data centers, American homes and businesses are expected to use more electricity for heat and transportation. The EIA forecast 2025 power sales will rise to 1,517 billion kWh for residential consumers, 1,474 billion kWh for commercial customers and 1,055 billion kWh for industrial customers. Those forecasts compare to all-time highs of 1,509 billion kWh for residential consumers in 2022, 1,434 billion kWh in 2024 for commercial customers and 1,064 billion kWh in 2000 for industrial customers. The EIA said natural gas' share of power generation would slide from 42% in 2024 to 40% in 2025 and 2026. Coal's share will hold at 16% in 2025, the same as 2024, before easing to 15% in 2026, as renewable output rises. The percentage of renewable generation will rise from 23% in 2024 to 25% in 2025 and 27% in 2026, while nuclear power's share will hold at 19% in 2025, the same as 2024, before easing to 18% in 2026, according to the outlook. EIA projected gas sales in 2025 would rise to 13.1 billion cubic feet per day (bcfd) for residential consumers, 9.7 bcfd for commercial customers and 23.5 bcfd for industrial customers, but fall to 35.9 bcfd for power generation. That compares with all-time highs of 14.3 bcfd in 1996 for residential consumers, 9.6 bcfd in 2019 for commercial customers, 23.8 bcfd in 1973 for industrial customers and 36.9 bcfd in 2024 for power generation. https://www.reuters.com/business/energy/data-center-demand-push-us-power-use-record-highs-2025-26-eia-says-2025-06-10/

2025-06-10 16:30

LONDON, June 10 (Reuters) - Macro hedge funds returned positive results during a volatile trading month, said sources on Tuesday familiar with their performance. Rokos Capital Management returned a positive 1.28% for May, taking this year's return to May-end to a positive 9.46%, said a source who declined to be named. Sign up here. Separately, hedge fund EDL Capital was down 4.5% for May but still up 24% for the year to the end of May, said a separate source. Brevan Howard's Alpha Strategies returned a positive 0.39% in May culminating in a positive year to May-end return of 4.32%. Its Brevan Howard Master fund was down 0.74% in May and is down 2.12% for the year to May-end, said a third source. London-based Capula's main fund returned a positive 0.5% for May and is up 3.5% for the year so far to May-end. https://www.reuters.com/markets/europe/macro-hedge-funds-navigate-choppy-may-with-positive-returns-say-sources-2025-06-10/

2025-06-10 15:49

June 10 (Reuters) - Brazil's central bank governor Gabriel Galipolo said on Tuesday he expects to soon present a solution to finance the real estate sector, which is struggling due to a drop in deposits in savings accounts, historically its largest funding source. Speaking at an event hosted by banking group Febraban in Sao Paulo, Galipolo said a "bridge process" would be introduced to transition from the previous financing model to a new one. Sign up here. The move comes amid discussions with key players in the sector, including state-run lender Caixa Economica Federal (CEF.UL), the market leader in housing credit in Brazil, Galipolo said. During his remarks, Galipolo displayed a chart illustrating declines both in nominal and inflation-adjusted balances held in savings accounts, attributing the trend to the wide offer of more competitive yields through other investment options. "The more people have access to alternatives, and the more financial education they receive, the more natural it is to see, over time, this reduction in savings accounts balances," he said. "This compels the central bank and the financial system to seek alternative funding sources to enable a migration toward a new system, a new model." During periods of high interest rates, including currently in Latin America's largest economy, other fixed-income investments become more attractive than savings accounts, prompting withdrawals. Brazil's benchmark Selic rate stands at 14.75%, the highest level in nearly 20 years, following a tightening cycle that began last September to rein in inflation. Galipolo also called a proposed constitutional amendment before Congress providing for financial autonomy for the institution an "essential" agenda. Galipolo said the proposal, which the left-wing government of President Luiz Inacio Lula da Silva opposes, is not intended to give the central bank a blank check, but rather to provide tools for more effective supervision and regulation. https://www.reuters.com/world/americas/brazils-central-bank-chief-signals-imminent-bridge-solution-real-estate-2025-06-10/

2025-06-10 15:47

BENGALURU, June 10 (Reuters) - The U.S. Federal Reserve will keep interest rates on hold for at least another couple of months, according to most economists polled by Reuters, as risks linger that inflation may resurge due to President Donald Trump's tariff policies. With most trade negotiations incomplete as the July 9 deadline for a 90-day pause on tariffs announced in April approaches, forecasters have been reluctant to change their already fragile economic outlook. Sign up here. Rising concerns about U.S. debt and a deluge of bond issuance fuelled by a sweeping tax cut bill passed by the House of Representatives, but not the Senate, are not helping. Data on Friday showed no signs of significant stress building in the labor market, suggesting the Fed is in no hurry to cut interest rates any time soon. All but two of the 105 economists in the June 5-10 Reuters poll predicted the Federal Open Market Committee would keep the fed funds rate unchanged at its June 17-18 meeting in a 4.25%-4.50% range, where it has been since the start of the year. Around 55% of economists - 59 of 105 - said the Fed would resume cutting next quarter, most likely in September and in line with interest rate futures pricing. That outlook has not changed from last month. "As long as the labor market looks fine, we expect the FOMC to continue to stay on hold, and use rhetoric to bolster their inflation-fighting credibility. Until there is a cost, why signal otherwise?" said Jonathan Pingle, chief U.S. economist at UBS. "At the moment 'grey area' seems more 'charcoal'... the Committee is facing a substantial amount of uncertainty." Inflation expectations have remained elevated on predictions of high U.S. trade barriers. The administration has recently raised aluminum and steel tariffs to 50% from 25%. U.S. officials are currently engaged in trade talks with top Chinese officials in London, looking to secure a breakthrough. In the meantime, consumers are expecting price pressures to surge in coming years, while economists predict inflation to remain well above the Fed's 2% target until at least 2027. A significant 42% minority of poll participants - 44 of 105 - expect the FOMC to resume cutting rates in the fourth quarter of 2025 or later, with 20 predicting no cuts this year. "High tariffs are here to stay, and they will produce elevated inflation that is sustained well into 2026," said James Egelhof, chief U.S. economist at BNP Paribas. "The Fed will see little need to cut... the lesson we have from history is, if inflation becomes entrenched in the economy, it can be very hard and very costly to remove." There was no clear consensus on where the rate would be by end-2025, but about 80% of economists - 85 of 105 - predicted the fed funds rate in a 3.75%-4.00% range or higher. Trump called for a full percentage point reduction to 3.25%-3.50% immediately on Friday. The president's signature bill making its way through Congress is expected to add $2.4 trillion to an already enormous $36.2 trillion debt pile, making a rate cut more unlikely. "With more fiscal stimulus coming out of the tax and spending bill, the Fed sees less of a case for supporting the economy with lower interest rates," said Bill Adams, chief economist at Comerica Bank. "The fiscal policy looks set to push the deficit (higher)... exerting continued upward pressure on long-term interest rates that will be a headwind for credit-intensive parts of the economy like the housing market and business capital spending." The economy, which contracted 0.2% last quarter on a widening trade deficit, is forecast to grow just 1.4% this year, a sharp fall from 2.8% in 2024. Next year, it was predicted to expand 1.5%. That outlook was unchanged from May. (Other stories from the Reuters global economic poll) https://www.reuters.com/business/fed-keep-rates-hold-least-until-september-inflation-risks-linger-2025-06-10/