Headline: Latest Developments on ECB, Fed, and Other Major Economies: What's Happening in Global Markets?
Global economy is being shaped by the actions of central banks and changes in global markets. Notable developments range from the call for agility by François Villeroy de Galhau, Governor of the Bank of France, regarding the European Central Bank (ECB), to remarks concerning the economic stability of the United States. Economic maneuvers by China, Japan, and the United Kingdom could trigger fluctuations in global markets.
Bank of France Governor Calls for ECB Agility
François Villeroy de Galhau, Governor of the Bank of France, issued a notable warning to the European Central Bank, emphasizing the need for the bank to act agilely in rate cuts. Villeroy highlighted the possibility of inflation falling below target and emphasized the risk that the ECB may delay reversing past interest rate increases, especially if economic growth remains stagnant.
The ECB has lowered interest rates three times this year, and market expectations foresee further cuts over the next four or five meetings, given near-zero growth and inflation below forecasts. Villeroy stated, "We are not behind the curve today, but agility should prevent us from falling behind. It is especially important to ease our restrictive stance."
Reuters: ECB Considering Cuts Below Neutral Level
According to Reuters, following discussions with various sources, the ECB's policymakers have begun debating whether interest rates should be cut low enough to stimulate economic activity. While the ECB has made rate cuts this year, the policymakers aim to maintain inflation stability and achieve a neutral interest rate.
Sources suggest that a consensus is yet to be reached, but these discussions indicate a significant shift in the bank's rate policy, potentially leading to interest rates being lowered more significantly and sooner than expected.
San Francisco Fed President Daly: "U.S. Economy Strengthening, Inflation Near Target"
San Francisco Fed President Mary Daly noted that the U.S. economy is strengthening, pointing to a decline in inflation and a more stable labor market. Daly emphasized that the Fed carefully maintains its balance in achieving its 2% inflation target while preserving full employment.
According to Daly, these developments mark a significant improvement compared to the last two years. The Fed continues to proceed cautiously to maintain economic stability.
Yellen and IMF Chief Economist Criticize China
U.S. Treasury Secretary Janet Yellen and IMF Chief Economist Pierre-Olivier Gourinchas criticized China's stimulus measures, stating they are insufficient. They expressed that the current stimuli by the People's Bank of China and the Ministry of Finance fall short in boosting domestic demand.
Yellen highlighted the need to increase the share of consumer spending in China's GDP and address challenges in the real estate sector. Gourinchas pointed out that China's fiscal stimulus measures lack detail, thus not included in the IMF's 4.8% growth forecast.
IMF Expects Continued Rate Hikes from Bank of Japan
The International Monetary Fund expects the Bank of Japan to continue its rate hikes gradually. Nada Choueiri, IMF's mission chief for Japan, noted that Japan's economy is moving in a positive direction with rising consumption and wage indicators.
The IMF estimates Japan's nominal neutral interest rate at approximately 1.5% and anticipates reaching this level by the end of 2026. The fund urged BOJ to advance cautiously, paying attention to risks from both domestic and global economies.
Goldman Sachs' Forecast on Future Oil Prices
Goldman Sachs forecasts oil prices to be at $76 per barrel in 2025, attributing this to a modest crude oil surplus and high spare capacity among producer countries. The bank predicts that while Brent crude oil prices could rise by the end of the year, they will moderately trend downwards in the medium term.
Bank of America CEO Warns Fed About Cautious Rate Cuts
Bank of America Corp CEO Brian Moynihan urged the Fed to be measured in rate cuts. Moynihan stated the Fed was late in raising borrowing costs in 2022 and must now exercise great caution.
Moynihan commented that in an economy with a 4% unemployment rate and a 5% wage increase, expecting a recession would be difficult, and he forecasted a 50-basis-point cut from the Fed by year-end.
UK Employers Anticipate Slowing Wage Increases
An employment survey revealed fluctuations in the UK labor market. UK employers reported a slowdown in wage growth by September and expect further decreases in the coming year.
Human resources data firm Brightmine predicts wage increases to fall to 3%, reflecting a sharp decline in inflation.
China Unveils Major Investment Project List
China announced the projects included in its 2024 investment plans. According to the National Development and Reform Commission (NDRC), the $28 billion projects involve investments in diverse areas such as urban infrastructure, education, and healthcare facilities.
NDRC officials claim these projects aim to boost economic development and resilience nationwide, continuing to impact both Turkish and global economies.