Article #1 -https://www.bbc.

com/news/business-6632807

US economy beats expectations with spring surg

US economic growth picked up this spring, despite a slowdown in

consumer spending.
The world's largest economy expanded at an annual rate of 2.4% in the three
months to June, accelerating from a rate of 2% in the prior quarter
That was far better than expected, lifted by a jump in business investment
Consumer spending increased at an annual rate of 1.6%, slowing after a surge at
the start of the year
Analysts have been warning of looming slowdown for months as the US central
bank, the Federal Reserve, raises interest rates sharply to try to stabilise prices,
which soared last year
But businesses and households have continued to spend, despite the rise in
borrowing costs, confounding the expectations of forecasters

That may help the US economy avoid a recession, but some economists also
warned it may make it more dif cult to root out the in ation pressures fully -
potentially leading to even higher interest rates in the months ahead
"While this growth is a positive sign of a strengthening economy, high demand
will also reinforce the in ationary pressures that are an ongoing concern for the
Fed," said Richard Flynn, managing director at Charles Schwab UK
"As long as the labour market remains tight and in ation remains above the
central bank's 2% target, we can expect to see further rate increases in the
coming months.
In ation, the rate at which prices rise, was 3% in the US in June, down sharply
after peaking at more than 9% last year
The fall followed easing in global food and oil prices, as markets adjusted after
the shock from Russia's invasion of Ukraine last year
Federal Reserve chairman Jerome Powell said this week that he thought the
economy was likely to have to slow further before policymakers could feel
con dent they had stamped out the problem

At 3.6%, the unemployment rate in the US remains unchanged from when the
Fed started its rate-hiking campaign, he noted
Wages are also rising, helping to sustain consumer spending
Average hourly pay was 1.2% higher in June than it was a year ago, after
adjusting for in ation - outpacing price increases for the rst time since 2021
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 "What our eyes are telling us is that policy has not been restrictive for long
enough to have its full desired effects," Mr Powell said at a press conference on
Wednesday after the bank announced it was raising interest rates again, to
the highest level in 22 years
The move brought the target range for the bank's benchmark rate to
5.25%-5.5%, up from near zero in March 2022
On Thursday, the European Central Bank also raised interest rates by quarter of
a percentage point, bringing its key rate to 3.75%, warning that in ation was
"expected to remain too high for too long"

In the US, Mr Powell was non-committal about whether the bank would push
rates even higher
Businessman Casey Stanley, president of the Indiana-based software company
Boyce Systems, said he hoped borrowing costs were nearing their peak
He said his business had seen its monthly interest payments jump more than
50% over the past two years as a result of the Fed's moves
"That does have real impact to our bottom line and our ability in the near term to
make investments," he said. "Even more than that, I think, it makes us more
cautious.
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 Article #2 - https://www.investopedia.com/high-interest-rates-could-

be-here-for-a-while-fed-of cial-says-764384

Relief could be a long time coming for businesses and households feeling
thesqueeze of today’s high interest rates, going by the remarks of one Federal
Reserve of cial Tuesday

KEY TAKEAWAY

• The Federal Reserve is "a long way" from cutting its key interest rate, said
Neel Kashkari, a member of the central bank's policy committee.


• The Fed has raised its fed funds rate to the highest since 2001 and may
keep it there to make sure in ation is thoroughly subdued.


• Individual borrowers and businesses have felt the pain of the Fed's rate
hikes, which have forced interest rates on all kinds of loans higher.


The Fed could keep its benchmark interest rate at least at its current level—the
highest since 2001—through the end of the year and beyond, said Neel
Kashkari, president of the Federal Reserve Bank of Minneapolis and a member
of the central bank committee that sets the nation’s monetary policy. “I think we're
a long way away from cutting rates,” Kashkari said in a Q&A session at a
conference in Minneapolis. The Fed has raised its interest rate 11 times since
March 2022, boosting it from near-zero to a range of 5.25% to 5.5% in an effort
to cool down the scorching in ation that set in as the economy recovered from
the pandemic.

The rate hikes have added friction to the economy in several ways, putting
upward pressure on credit cards, mortgages, and other consumer loans. High
interest rates have also made business harder for banks, which have grown
more reluctant to lend money. Both of those factors have dragged down the
ability of consumers to buy things, and of businesses to hire and expand, raising
fears of an impending recession. To the surprise of many economists, however,
unemployment has stayed low and a severe slowdown has yet to materialize,
while in ation has simmered down.
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 The Consumer Price Index had risen 3.2% over the year as of July, far less than
the 9.1% in ation rate of June 2022 though still above the 2% goal that the Fed is
aiming for. At some point, the Fed will shift out of in ation- ghting mode and
begin to lower interest rates again, though that day could be a long way off.“That
could happen sometime next year,” Kashkari said. “Or the year after that, but we
need to see how the data come in.”

Traders are betting that the Fed won’t raise its rate any more, and will begin to
cut it next May, according to the CME Group’s FedWatch tool, which forecasts
Fed rate hikes based on fed futures trading data

Kashkari noted that while in ation has come down considerably, some measures
of consumer prices closely watched by policymakers are still too high for comfort.
PCE in ation—the Fed’s preferred in ation gauge—was running at around
4% after excluding the volatile food and energy prices that tend to make the
overall in ation reading uctuate from month-to-month.



“It's still around twice of what our target is,” Kashkari said. “We need to be
reasonably con dent that it’s all the way going back down to 2%.

Article #3 - https://www.theguardian.com/world/2023/aug/15/russia-

central-bank-hikes-interest-rates-rouble-fall

“With conflict in Ukraine entrenched, the sanctions grip tight and an ongoing
voracious demand for new weapons, there is no easy escape from the economic
fallout of the invasion,” said Susannah Streeter, the head of money markets at
investment platform Hargreaves Lansdown.

Russian officials on Monday also discussed reinstating capital controls to prop up

the tumbling ruble, Bloomberg reported, but added that no decision was made on
the issue.

The rouble has weakened by 26% against the dollar this year as a result of a
collapse in export revenues and growing military spending, making it the third
worst-performing global currency in 2023.
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 The decline has led to calls from senior Kremlin officials for higher borrowing
costs.

President Vladimir Putin’s senior economic adviser, Maxim Oreshkin, on Monday

blamed the weak rouble on “loose monetary policy” in an op-ed piece for the Tass
news agency, adding that the central bank had “all the tools necessary” to stabilise
the situation.

On Monday evening, the currency gained strongly shortly after the bank’s meeting
was announced, rising by more than 2% to about 98.5 against the US dollar, before
gains fell back below 98 on Tuesday morning after the rate hike was announced,
Moscow exchange data showed.

“As long as the war continues it just gets worse for Russia, the Russian economy
and the rouble,” said Timothy Ash, a strategist at the investment firm Bluebay
Asset Management. “Hiking policy rates won’t solve anything – they might
temporarily slow the pace of depreciation of the rouble at the price of slower real
GDP growth – unless the core problem, the war and sanctions are resolved.”

The rouble has had a period of turbulence since Russia invaded Ukraine in
February 2022, dropping to a record low of 150 to the dollar two weeks after the
start of the war before sharply recovering after the central bank imposed strict
capital controls that limited the flow of money out of the country.

Shortly after Russian troops entered Ukraine, the bank more than doubled interest
rates to 20% and refused to open the Moscow stock exchange as it sought to
protect its economy from Ukraine-related sanctions that sent the value of the
rouble plunging by a fifth.

Since then, the bank has gradually unwound the increase to 8.5% in an effort to
stimulate economic growth.

By last summer the rouble had rebounded to a seven-year high as a rise in oil and
gas prices, partly a result of the invasion, helped Russia raise export revenue while
consumer imports fell.

 But Russia’s currency started to fall this year after the west imposed price caps and
embargos on Russian oil, while domestic imports recovered amid an increase in
government borrowing.

The government has also spent billions on the defence industry to continue the war
in Ukraine, with many critical goods still coming from abroad.

“The rouble is gradually losing value because the current prognosis is that the war
will, and Russian budget deficits [to fund it] will go on for years to come, until
Putin dies or steps down,” Konstantin Sonin, a Russian economic professor at the
University of Chicago, wrote on Twitter last week.

Last week, the central bank said Russia’s current account surplus shrank to $25bn
(£19.7bn) in January to July, an 85% decrease compared with the same period last
year.

The central bank governor, Elvira Nabiullina, previously an economic adviser to

Putin, is widely credited in Moscow for helping Russia weather an unprecedented
flurry of western sanctions imposed shortly after the start of the war.

In the short term, a weaker rouble could help the authorities fund Russia’s
extensive war spending. The country sells its oil in foreign currency and the current
exchange will buy more roubles at home.

However, it could also lead to financial panic and inflation, triggering memories in
Moscow of the battering the currency took during the 1998 Russian financial crisis.

 Article #4

KAMPALA, Aug 15 (Reuters) - Uganda's central bank cut its main lending rate on Tuesday for

the rst time in more than two years, saying it aimed to boost economic growth after in ation fell

faster than expected

The cut in the Central Bank Rate (CBR) to 9.5% from 10.0% (UGCBIR=ECI) came after

in ation fell to 3.9% year-on-year in July (UGCPIY=ECI), down from 10.4% in January and

below the bank's 5% target

Uganda's economy has fared better than many of its African peers in the face of tightening global

nancial conditions, helped by favourable weather and improved harvests, but the central bank

said on Tuesday that growth seemed to be slowing down partly due to weak demand

"Economic activity remaining below capacity over the next two years will exert further

downward pressure on in ation," Bank of Uganda Deputy Governor Michael Atingi-Ego said at

a news conference

"In light of this outlook the MPC (Monetary Policy Committee) decided to lower the CBR to

9.5%, aiming to stimulate economic activity while maintaining in ation around the target.

The deputy governor linked the in ation slowdown to a drop in food and energy in ation, and

tight monetary and scal policy among other factors

Razia Khan, chief economist for Africa and the Middle East at Standard Chartered, said the Bank

of Uganda was typically an early mover on rate hikes, "which gives it more space to ease when

conditions allow.

The central bank's latest forecast is for economic growth of 5.3% in the 2022/23 scal year that

ended in June, and for growth of between 5-6% in the current 2023/24
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"Private consumption, investments in extractive industries, and improved exports are anticipated

to drive this (2023/24 growth)," Atingi-Ego said

Uganda and international oil rms like France's TotalEnergies (TTEF.PA) and China's

CNOOC (0883.HK) are implementing multi-billion dollar projects ahead of the planned start of

commercial oil production in Uganda in 2025

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