2025-09-29 14:59
ROME, Sept 29 (Reuters) - Italy and Bahrain said on Monday they had signed a memorandum of understanding aimed at enhancing investments and trade worth over one billion euros ($1.2 billion), according to a joint statement between the two nations. The memorandum was announced after a meeting in Rome between Italian Prime Minister Giorgia Meloni and the Crown Prince of Bahrain Salman bin Hamad Al Khalifa, the statement said. Sign up here. The memorandum "will enhance economic relations and increase trade and investments ... with the partnership committing to investments in excess of one billion euros," as the parties agreed to boost ties in sectors including energy and defence. The two countries also called for the end to the war in Gaza and the release of all Israeli hostages still held by Hamas, while also condemning "any unilateral or violent action in the West Bank." "Both parties called for full and safe humanitarian assistance to the population in Gaza," the statement added, confirming support for a two-state solution between the Israelis and the Palestinians. ($1 = 0.8524 euros) https://www.reuters.com/world/middle-east/italy-bahrain-sign-memorandum-worth-over-1-billion-euros-2025-09-29/
2025-09-29 14:53
Sept 29 (Reuters) - Brazil's central bank continues to see signs of resilience in the country's economy despite indications of an overall slowdown, its governor said on Monday, adding that the authority would maintain a data-driven approach to monetary policy. Gabriel Galipolo's remarks came as the bank earlier this month held interest rates at a near two-decade high of 15% for a second straight meeting, signaling it would keep them unchanged for a long time in a bid to tame persistent inflation. Sign up here. Speaking at an event hosted by Itau BBA, Galipolo emphasized that the central bank is monitoring whether interest rates are at a sufficiently restrictive level to bring inflation back to its 3% target. He noted that Brazil's job market has demonstrated "great resilience, while a current account deficit points to heated demand. "There is still a lot of effort to be made by the central bank," Galipolo said, adding that keeping interest rates high for an extended period will be more difficult than having raised them. "We're going to have to grit our teeth for a while. That will be the bigger challenge," he said. He mentioned that both the bank's own projections and the expectations of various economic agents suggest that inflation will remain above the goal over the relevant horizon, which currently extends to the first quarter of 2027. Galipolo also pointed out that current inflation is above target, adding that all these variables "require us to remain vigilant, calm, and persistent." Even so, the governor said that the bank's data-dependent approach has proven effective so far. https://www.reuters.com/world/americas/brazil-central-bank-still-sees-signs-economic-resilience-says-governor-2025-09-29/
2025-09-29 14:25
CAIRO, Sept 29 (Reuters) - The Central Bank of Egypt is expected to lower its overnight interest rates by 100 basis points on Thursday as inflation continues to abate, a Reuters poll showed. The median forecast of 16 economists surveyed in the poll, published on Monday, is for the CBE's Monetary Policy Committee to cut the deposit rate to 21% and the lending rate to 22% when it meets on Thursday. The rate for deposits is currently 22% and for lending 23%. Sign up here. "We expect that continued disinflation paves the way for the CBE to deliver another aggressive interest rate cut, and would still leave real interest rates in a firmly positive territory," said John Swanston of Capital Economics. Annual urban consumer inflation in Egypt slowed to 12.0% in August from 13.9% in July, continuing a downward trend from a peak of 38.0% in September 2023, according to the state statistics agency CAPMAS. That left real interest rates at over 10%, one of the world's highest. The central bank has gradually lowered interest rates this year, with a 225 basis point cut in April, a 100 point cut in May and a 200 point cut in August. Before that, it had left rates fixed since March 2024, when it lifted them by 600 points as part of an $8 billion financial support package with the International Monetary Fund. M2 money supply growth, at 22.3% in July, has also been inching down over the last few months. "Given recent geopolitical developments and a creep up in oil prices, we are thinking they will remain relatively cautious with a 100 bps cut," said Farouk Soussa of Goldman Sachs. Egypt's fuel pricing committee is scheduled to raise prices of fuel, which is heavily subsidised, in early October as the country works to reach cost recovery and reduce its current account deficit. https://www.reuters.com/world/africa/egypt-seen-cutting-interest-rates-by-100-basis-points-thursday-2025-09-29/
2025-09-29 13:28
Zurich, Sept 29 (Reuters) - The Swiss National Bank is lowering the threshold factor for the interest it pays commercial banks on overnight deposits, a move designed to stimulate interbank lending and smooth the transmission of monetary policy to market rates. The SNB pays 0% to banks on sight deposits up to 18 times their minimum reserve requirement, the method the central bank uses to implement its policy interest rate it kept at 0% last week. Sign up here. Holdings above the 18 times threshold are charged an interest rate of minus 0.25%. On Monday the SNB said it was lowering the threshold when the negative rate applies to 16.5 times, effective from November 1, its fourth change in the last year. "The lowering of the threshold factor counteracts the increase in thresholds due to the raising of the minimum reserve requirement as of 1 July, 2024," the SNB said. The SNB raised the minimum reserve ratio for domestic banks in July 2024, from 2.5% to 4.0% of their relevant liabilities. Monday's decision was designed to ensure the implementation of monetary policy remained effective and supported an active money market, the SNB said. "The adjustment of the factor has no impact on the current monetary policy stance," the SNB added. "This move is designed to stimulate more activity on the interbank lending market because it means more bank's reserves will be subject to the minus 0.25% lower interest rate," said UBS economist Maxime Botteron. The change was likely to prevent declines in interbank lending in future, he said. "If you don’t move the threshold lower, at some point no more banks’ reserves would be subject to the negative rate and the banks would have no incentive to lend to each other." This would mean the Swiss overnight lending rate, SARON, would be less easily calculated, as it based on the actual transactions on the market. "SARON is important for the transmission of monetary policy as it's the base for other interest rates in the economy," said Botteron. https://www.reuters.com/business/finance/swiss-national-bank-lower-threshold-factor-sight-deposit-interest-2025-09-29/
2025-09-29 13:23
Babis's ANO party favourite to win Oct 3-4 election ANO promises spending, tax cuts worth billions of euros Czech deficit first in region back below 3% of GDP Fiscal reversal would push up borrowing, raise bond yields PRAGUE, Sept 29 (Reuters) - Czech billionaire Andrej Babis's ANO party, the favourite in an October 3-4 election, is banking on populist pledges that will cost billions of euros, end austerity and test the country's frugal mindset. The incumbent centre-right government of Prime Minister Petr Fiala has cut the deficit and reformed pensions in the past four years, making it a fiscal standout. Sign up here. Last year, the Czech Republic was the first among central European neighbours to return its fiscal gap below the EU's intended ceiling of 3% of gross domestic product. It forecasts a smaller gap of 1.9% this year. In Babis' previous term from 2017 to 2021, budgets went from surpluses to record deficits of over 5% of GDP as the coronavirus pandemic hit, higher pensions came in, and income tax was cut. With fiscal room again and voters frustrated by slow wage growth, ANO has sought to reclaim power with promises that economists expect will widen deficits and raise debt costs. It wants to raise public sector salaries, reduce corporate income tax, lower some taxes in restaurants, boost pensions and provide mortgage support to young families and various professions like nurses. It could saddle future governments by capping the retirement age at 65, after Fiala's government moved to gradually lift the age in coming decades. Oxford Economics estimated on average budget deficits could be 150 billion crowns - or 1.9% of GDP - higher each year during a four-year term led by ANO in downside scenarios. "There is a good sort of fiscal spending and there is fiscal spending that does not bring much in the long term," said Tomas Dvorak, a senior economist with Oxford Economics. "100% ... we are talking about wasteful spending," he said of ANO's plans, using mortgage subsidies as an example. PRUDENCE STILL POSSIBLE Ratings agencies are not yet sounding alarms and forecast still prudent policy, but will be watching for any reversal. "If we see that looser fiscal policy leads to a sharper increase in debt, then that would be a key negative sensitivity," Fitch analyst Malgorzata Krzywicka said. If ANO kept to rules limiting deficits to 3% of GDP, it still has room to work. Societe Generale said potential consumption-oriented loosening shifted risks to a more bearish outlook on government bonds and the crown currency. The extent of loosening will depend on coalition partners as ANO is unlikely to win an outright majority. Pairing with a party from the existing ruling coalition - something officials on both sides have so far ruled out - could temper any loosening by ANO, whose programme implies easing of around 1.2% of GDP, Dvorak said. But in a scenario where ANO may team with fringe parties on the far-right or far-left, deficits would widen by almost 2 percentage points annually, according to Oxford Economics. The 10-year bond yield could rise to 5.20% from 4.53%, debt will increase, inflation will be higher, and debt servicing costs could jump to 180 billion crowns from 100 billion, Oxford Economics said. Other economists also see high costs. Daniel Munich of the economic institute CERGE-EI estimated tax cuts could leave an up to 82 billion crown hole in the budget, about 1% of GDP. ANO's pension and welfare promises would initially cost up to 35 billion crowns but longer-term that could soar to 239 billion crowns with changes like re-capping retirement at age 65, he said. Moody's ratings agency said in a July review that a reversal of reforms like in pensions "would be highly credit-negative." LAGGING WAGES ANO's ambitions may be pre-election posturing and might still be tempered by legislation on budget responsibility or EU rules. At the same time, a fiscal prudence message is harder now than before. Real household gross disposable income in the Czech Republic has grown by less than 1% since end-2019, according to Oxford Economics and Haver Analytics data. In neighbours Slovakia, Hungary and Poland, the rise is 8-12%. ANO calls the budget a "tool, not a goal". Babis rejects claims his promises are too expensive, arguing they will come over time and money can be found in the informal economy and better state functioning. "It is realistic," Babis said in a September 23 Facebook post to voters. "We are not promising you anything we wouldn't fulfil." ** Click here , opens new tab for an interactive graphic: ($1 = 20.7220 Czech crowns) https://www.reuters.com/markets/europe/populist-czech-vote-frontrunner-babiss-lavish-spending-plans-could-jolt-budget-2025-09-29/
2025-09-29 13:20
Sept 29 (Reuters) - Brazil Finance Minister Fernando Haddad does not believe the country can put its public finances in order without also addressing the need for economic growth, he said on Monday. "This should not be confused with any leniency toward inflation," he added during remarks at an event hosted by Itau BBA in Sao Paulo. Sign up here. Haddad said it was important to be cautious when discussing fiscal adjustment, "not because it isn't crucial for debt sustainability, but because it needs to be fair and intelligent." According to the minister, public spending in Latin America's largest economy averaged around 19.5% of gross domestic product over the last decade, excluding the pandemic, and is currently below 19%. He said this reduction was a result of trimming non-essential expenditures under the administration of leftist President Luiz Inacio Lula da Silva and was not from cuts to health and education. Regarding the 50% tariffs imposed by the U.S. since August on many Brazilian goods, the minister said: "I want to believe that, at some point, a rational debate with the United States will begin." Last week, U.S. President Donald Trump said he planned to meet Lula after months of sparring between the two leaders over what the White House has called a "witch hunt" in Brazil against former President Jair Bolsonaro, a Trump ally. Bolsonaro was sentenced to 27 years in prison after being convicted of plotting a coup to remain in power after losing the 2022 election. https://www.reuters.com/world/americas/brazils-finance-minister-says-public-finances-cannot-be-fixed-without-economic-2025-09-29/
