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Interest rate likely to hike again in US
The Federal Reserve has seen delivering another huge interest-rate hike in 3 weeks’ time and ultimately increasing rates to 4.75pc-5pc by prior next year, if not further after a government report showed inflation remained stubbornly hot last month.
Traders of U.S. interest-rate futures piled into fresh bets on a more aggressive Fed, even pricing in a one-in-three chance that the Fed drives the policy rate above 5% next year, after a Labor Department report showed the consumer price index jumped 0.4pc in September from August. From a year prior, prices rose 8.2pc, far above the Fed’s 2pc target.
“Our policies have not really bitten as much as they need to for us to get to a better place,” Atlanta Fed President Raphael Bostic told the news media on Wednesday, 12 October, before the report.
The Fed has raised interest rates faster this year than any time since the early 1980s when inflation was even higher and so entrenched in day-to-day American life that it took pushing short-term borrowing costs — and the unemployment rate — into double digits before price pressures finally receded.
Policymakers hope to avoid anything like that this time around. But analysts say chances of skirting a rate-hike-induced recession are fading fast, particularly because of price pressures in categories such as shelter that tend be sticky, and ongoing labor market tightness that is feeding wage pressures.
Shortages in labor and in housing, wrote Jefferies’ economist Aneta Markowska, to put a “floor” for underlying inflation at around 4pc, “and we think breaking that floor will require substantial labor market weakness, which makes a recession unavoidable.”
Before the report, traders had all but priced in a fourth straight 75-basis-point hike at the close of the Fed’s Nov. 1-2 meeting. That is still the dominant view, though futures prices now also reflect about a one-in-10 chance of a full percentage-point rate hike next month. The Fed’s policy rate is currently 3pc-3.25pc.
By year-end, traders now expect the rate to reach 4.5pc-4.75p — the level Fed policymakers had just three weeks ago seen taking until next year to reach — and topping out around 4.85pc by March of next year.
Futures prices also reflect about a 35pc chance of rates rising above 5pc, validating the long-held view of some analysts who have argued the Fed will at least that puncture price pressures, and that unemployment, now 3.5pc, will likely shoot up as well.
“Broadly speaking, we see this as supporting our call for a terminal rate of 5pc to 5.25pc,” wrote LH Meyer economists, higher than Fed policymakers had themselves signaled just 3 weeks ago, “higher than markets have been pricing, and higher than markets are pricing even after this report.”
Fed policymakers have raised interest rates sharply this year, from near-zero just seven months ago. Most global central banks are also raising rates fast, and stock prices around the world have fallen as investors and economists expect growth to slow in response.
Despite those concerns, most policymakers are so far more worried about raising rates too little than doing too much and are intent on pushing rates higher until they see progress on inflation, which is eroding Americans’ purchasing power at a faster pace than at any time in 40 years.
The result, analysts fear, will be a Fed that goes too far, forcing it to reverse course late next year to offset what by then could be a full-blown recession.
“With the (Fed’s) backward-looking reaction function intensifying overtightening risks, we now expect the Fed to cut the funds rate by 75 (basis points) in the final three meetings of 2023,” Barclays economists wrote on Thursday.
Traders are pricing a smaller 30 basis point rate cut toward the end of 2023, rate-futures contracts traded at CME Group show.
Russian President Vladimir Putin aims to bolster the count of foreign students in the nation’s universities to at least 500,000 by 2030, as outlined in a decree setting forth national development objectives.
The decree stipulates, “The number of foreign students pursuing higher education in Russian higher learning institutions and scientific organizations should rise to at least 500,000 by 2030.”
As per the Russian Education and Science Ministry, the current tally exceeds 355,000 foreign students studying in Russian universities. Acting Minister Valery Falkov previously highlighted Russia’s position as the world’s sixth-largest host of foreign students.
TASS calculations reveal a notable surge of over 20% in foreign student enrollment across Russian universities over the past five years. Predominantly, foreign applicants admitted to Russian universities hail from China, Vietnam, former Soviet republics, as well as various Asian and Middle Eastern countries.
Prime Minister Sheikh Hasina today (25 April) called for speaking out against all forms of aggression and atrocities, and say ‘no’ to wars.
“We must speak out against all forms of aggression and atrocities, and say ‘no’ to wars,” she said adding that Bangladesh supports the UN Secretary General’s ‘New Agenda for Peace.
The prime minister was addressing the 80th Session of the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) held at the ESCAP Hall (2nd floor), United Nations Conference Center (UNCC) here.
She arrived in Bangkok on Wednesday on a six-day official visit to Thailand.
The PM said the pre-condition for sustainable development is lasting peace and security.
“We must settle regional disputes and tension through dialogue. Our mutual respect for national sovereignty and territorial integrity must remain paramount,” she said.
Hasina called upon the Asia-Pacific region, especially ASEAN, to redouble their efforts to end Rohingya crisis as all efforts at regional connectivity, integration, and prosperity will continue to be marked by a missing puzzle without it.
“The origin of their crisis has been in Myanmar, and its solution also lies in Myanmar,” she declared.
“As long as that solution remains out of reach, all our efforts at regional connectivity, integration, and prosperity will continue to be marked by a missing puzzle. Let us redouble our efforts to put that puzzle back in place,” she said.
She said that in August 2017, when thousands of Rohingya men, women, and children from Myanmar fled to Bangladesh, Bangladesh offered them temporary shelter.
“With an ever growing population, this has now become one of the largest humanitarian situations in the world,” she said.
Sheikh Hasina said that In the backdrop of ongoing armed conflicts in Myanmar, the Rohingya repatriation process is also getting delayed.
“This is creating serious security risks within and beyond our territories,” she said.
She called upon the Asia-Pacific region, especially ASEAN, to play a proactive role in resolving the volatile situation in Myanmar.
“We must ensure that the Rohingya can go back home in safety and dignity at the earliest possible,” she said.
The prime minister said that the Asia-Pacific region must stand united against its common enemies of poverty and hunger.
She said Bangladesh has reduced poverty from 41.51 percent to 18.7 percent between 2006 and 2022.
It also reduced extreme poverty from 25.1 to 5.6 percent during the same period.
“We remain confident about eradicating extreme poverty by 2030,” she said.
She mentioned that Bangladesh has made notable progress on food security, with focused interventions on maternal and child nutrition.
“Our current priority is to address inequalities through income distribution, asset ownership, and social protection,” she said.
The prime minister said that Asia-Pacific region must put up a united front in tackling the climate crisis, biodiversity loss, and transboundary pollution.
“We need to push for ambitious climate financing goals beyond 2025 at COP-29. We need to cooperate on cross-border water management and air quality improvement. We must all prepare for growing extreme weather events,” she said.
In this connection, she suggested looking into Bangladesh’s experience in disaster risk reduction.
“We appreciate UN-ESCAP’s support in improving our early warning capabilities,” she added.
Briefly describing various development programmes and achievements of her govebrment, the prime minister said that much of the development gains are affected by climate impacts.
“As a low-lying delta, Bangladesh has no option but to invest heavily in climate resilience,” she said.
She mentioned that Bangladesh is already recognised as a global leader in climate adaptation.
“We are happy to share our traditional and innovative solutions with other vulnerable countries,” she said.
She said that Bangladesh has urged developed and emerging economies in the region to raise their time-bound emission reduction targets.
“For economies in transition, it is important to have a just energy transition.”
In Bangladesh, she said, “we are working on long-term energy security with a sound mix of clean and renewable energy.”
“We shall continue to do our part in pursuing a circular and low-carbon economic growth pathway.”
She underscored the need for increased and easy access to financing and technology from both the public and private sectors.
“I invite UN-ESCAP to help build the capacity of climate-vulnerable countries to mobilise adequate international climate financing.”
PM Hasina said that Bangladesh now provides critical links to the Trans-Asian Highway and Railway networks.
“Our physical and digital infrastructures are being developed to foster regional trade and connectivity.”
She said Bangladesh offers access to the Bay of Bengal for land-locked territories in its neighbourhood.
“We stand ready to work together with all regional partners through mutual understanding and cooperation,” said the prime minister.
The ongoing internet disruption, which began last night due to a cut in the country’s second submarine cable near Singapore, is expected to persist for at least 4-5 days, according to Mirza Kamal Ahmed, managing director (additional charge) of the Bangladesh Submarine Cables PLC.
Ahmed, the official of the state-owned bandwidth provider, informed The Business Standard that the international consortium is in search of a special purpose ship necessary for restoring the undersea cable.
“The exact duration cannot be specified,” he stated, adding, “Based on past instances, it is likely to take a minimum of 4-5 days.”
Internet users are experiencing significant disruption as the accidental cut in Bangladesh’s second submarine cable, South East Asia–Middle East–Western Europe 5 (SEA-ME-WE 5), is blocking Singapore-Kuakata traffic, the source of 1700 GBPS bandwidth.
“We are serving all our users with the help of other sources of bandwidth – the international terrestrial cable (ITC) and the first submarine cable,” informed Nazmul Karim Bhuiyan, secretary general of the ISP Association of Bangladesh.
However, he mentioned that users are encountering some lag on Saturday afternoon.
“As the main broadband usage peaks during the night, we could learn about the full extent of the disruption and any resulting delays tonight,” he added.
The Bangladesh Submarine Cables PLC (BSCPLC) has issued sincere apologies for the temporary inconvenience to its customers.
Efforts are underway to repair the cable through the SEA-ME-WE 5 and restore connectivity promptly, stated the BSCPLC in a statement released today (April 19).
Currently, Bangladesh requires around 5,200 GBPS of internet bandwidth, with half of the demand being met by ITC companies importing bandwidth from India.
For the remaining half of the demand, the country relies on the state-owned Bangladesh Submarine Cable Company.
The first submarine cable SEA-ME-WE 4, located in Cox’s Bazar, is presently supplying approximately 850 GBPS bandwidth.
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