Latest news with #CentralBank
CNA
2 hours ago
- Business
- CNA
BOJ to keep raising rates if economy improves, Governor Ueda says
TOKYO :Bank of Japan Governor Kazuo Ueda said on Friday the central bank will continue to raise interest rates if improvements in the economy keep the country on track to durably achieve its 2 per cent inflation target. "Underlying inflation may stagnate due to a slowdown in economic growth, but likely to accelerate thereafter as intensifying labour shortages heighten medium- to long-term inflation expectations," Ueda said in a speech.
Irish Times
4 hours ago
- Business
- Irish Times
The Central Bank's hard-landing scenario: corporate tax crashes, budget deficit balloons to €18bn
For obvious reasons, officials in Ireland can't use the term 'soft landing'. It was trotted out so regularly, so erroneously in the late 2000s when the economy was hurtling towards the hardest of hard landings that it has become synonymous with the opposite. If the Central Bank told us the Irish economy was in for a 'soft landing' from the current US tariff debacle, people would panic. Perhaps in reaction to the misplaced optimism of the Celtic Tiger era, we now seem to have an inherent bias towards highlighting negative scenarios. READ MORE [ US tariffs could punch €18bn hole in public finances, Central Bank warns Opens in new window ] We were certainly prepared for a bigger assault from Brexit than the one we actually got. Some call it 'catastrophising', but regulators should take a sober view on things. In an article published alongside its latest quarterly bulletin, the Central Bank lays out three possible scenarios for how US tariffs and greater US protectionism might impact the economy here. In its baseline scenario, which involves 20 per cent tariffs on European Union goods going into the US from the third quarter of this year, with pharmaceuticals and semiconductors exempt, the economy grows by 2 per cent this year, in terms of modified domestic demand, and 2.1 per cent on average in 2026 and 2027, while the State continues to run a budget surplus out to 2030. Even if it won't say it, this is the regulator's 'soft landing' scenario. In a more adverse scenario with pharmaceuticals and semiconductors getting hit by 20 per cent tariffs and with the EU retaliating with 20 per cent tariffs of its own, growth is slower and the budget surplus shrinks to less than 1 per cent. But what grabbed the headlines was the Central Bank 'extreme scenario' which involves the State losing the entire windfall element of its corporate tax base, which is due to peak at €17 billion in 2026, alongside a 20 per cent reduction in multinational investment 'and a corresponding loss of export market share'. [ Rent pressure zone changes will be 'painful' for tenants, Central Bank warns Opens in new window ] This scenario would see the Government's healthy budget surplus – it was €8.9 billion last year – flip to a budget deficit of more than 4 per cent of national income by 2030, equivalent to €17.7 billion. While there are lots of caveats – the scenario assumes the Government takes no corrective action and continues to make contributions to the two long-term savings funds – such an outcome would pitch us back into another period of austerity. It also highlights how much the State's coffers have become intertwined with the financial fortunes of a small number of US multinationals. 'This could be considered a somewhat extreme scenario as it incorporates a loss of all excess CT [corporate tax] by 2030 along with weaker economic activity, but it is illustrative of a key vulnerability for Ireland relating to the future path of the foreign-owned capital stock,' it said. Central Bank director of economics and statistics Robert Kelly denied he was painting too bleak a picture, saying the bank's worst-case scenario did not envisage the possibility of a big multinational firm leaving the jurisdiction because of tariffs or changes to US tax law, which has been the fear since the corporate tax boom started more than a decade ago. The nightmare scenario for Ireland would be for an Apple or an Intel to up sticks and leave. Despite the threat hanging over Ireland's economic model, there are several reasons to believe that corporate tax receipts, which hit a record €28 billion last year (excluding the Apple tax money), will continue to increase in the medium term. For one, the biggest corporate taxpayers here are in the tech and pharmaceutical sectors, both at present exempt from US tariffs. The Irish Fiscal Advisory Council (IFAC) also expects receipts from the business tax to rise by about €5 billion from 2026 onwards as additional revenue from the new minimum tax rate of 15 per cent over and above the State's headline rate of 12.5 per cent flows into the Exchequer. Big multinationals with a turnover above €750 million have been liable to pay the higher rate since 2024, but are not due to make their initial payments under the new rate until the middle of next year. This is expected to boost tax receipts here by an additional €3 billion next year and €2 billion in 2027. Despite the US signalling its intention to withdraw from the Organisation for Economic Co-operation and Development (OECD) -brokered deal to establish a minimum global rate, tax authorities here and elsewhere are pushing ahead with it. Several big taxpayers here have been availing of generous tax-cutting capital allowances which are due to run out, meaning they will be liable to pay more tax – another factor likely to drive receipts. Some of the frothier predictions suggest corporate tax receipts here could grow to €40 billion and say we should be saving a lot more than the current allocations to the State's savings funds. The windfall has also coincided with a worrying increase in Government spending, over and above what IFAC deems sustainable. It might be that the bigger threats facing the Irish economy are coming from within – housing, government spending, energy security, the high cost of doing business – rather than those emanating from abroad.
Times of Oman
4 hours ago
- Business
- Times of Oman
Global Pause: US, Taiwan and UAE keep interest rates unchanged
Taipei: The Central Bank of the Republic of China (Taiwan) on Thursday kept the key interest rates unchanged after a quarterly policymaking meeting, as reported by the Focus Taiwan. The decision to keep rate cuts unchanged marked the fifth consecutive quarter the central bank has left interest rates unchanged, as the market widely anticipated. This decision comes after the U.S. Federal Reserve made a similar decision overnight to maintain its monetary policy for the fourth policymaking meeting in a row. Additionally, other leading major economies, such as the UAE, also held interest rates steady after their policymaking meetings. Following Thursday's decision, the local discount rate will stay at 2 per cent, which is still the highest in 15 years -- the rate on accommodations with collateral remains at 2.375 per cent, and the rate on accommodations without collateral is 4.250 per cent. "Like the Fed, market analysts said, the central bank needs time to observe the potential impact resulting from the Trump administration's tariff policies," Focus Taiwan added. Analysts said the market remains alert over a possible spike in inflation and a slower global economy caused by higher tariffs. U.S. President Donald Trump first announced "reciprocal" tariffs on April 2 on countries with high trade surpluses with the United States. These included a 32 per cent import duty on goods from Taiwan, though Trump announced a 90-day pause a week later to allow negotiations for a lower levy. In addition, Trump has threatened to impose a tariff on semiconductors, which serve as the backbone of Taiwan's exports.
Times of Oman
5 hours ago
- Business
- Times of Oman
RBI issues final guidelines on project finance; new norms effective from October 1
New Delhi: The Reserve Bank of India (RBI) on Wednesday issued the final Reserve Bank of India (Project Finance) Directions, 2025 which lays down the comprehensive framework for income recognition, asset classification, and provisioning norms for project loans under implementation. As per the Central Bank, these new guidelines will come into effect from October 1 current year. The directions follow the RBI draft guidelines on 'Prudential Framework for Income Recognition, Asset Classification and Provisioning pertaining to Advances - Projects Under Implementation' on May 03, 2024, for stakeholder comments. The draft guidelines proposed an enabling framework for the regulated entities (REs) for financing project loans, while addressing the underlying risks. RBI said that it received feedback from nearly 70 entities, including banks, NBFCs, industry bodies, academicians, law firms, individuals, and the Central Government. According to new rules, the apex bank has introduced a principle-based regime for stress resolution in project finance exposures, applicable across all regulated entities (REs), ensuring a harmonised approach. The framework also rationalises the extension limits for the Date of Commencement of Commercial Operations (DCCO) to three years for infrastructure and two years for non-infrastructure projects, allowing REs commercial flexibility within these ceilings. On the provisioning front, standard asset provisioning for projects under construction has been fixed at 1%, increasing gradually with each quarter of DCCO deferment. "Rationalisation of standard asset provisioning requirement to 1 per cent for projects under construction, which shall gradually increase for each quarter of DCCO deferment. The requirements for under-construction CRE exposures will be however, slightly higher at 1.25 per cent," the RBI said in a notification. "During the operational phase, the standard asset provisioning requirement shall stand reduced to 1 per cent for CRE, 0.75 per cent for CRE-RH and 0.40 per cent for other project exposures, respectively," the RBI added. The new directions are aimed at balancing flexibility in project lending with adequate safeguards to manage risk, a long-standing demand from lenders and developers alike.
Free Malaysia Today
8 hours ago
- Business
- Free Malaysia Today
South Korea drafts second extra budget as new leader seeks to spur growth
The South Korean government is expected to submit the extra budget proposal to parliament on June 23. (EPA Images pic) SEOUL : South Korea's new administration proposed today US$14.7 billion in extra government spending to support sluggish domestic demand, as President Lee Jae-myung makes economic recovery his top policy agenda. The supplementary budget plan totalling ₩30.5 trillion announced by the finance ministry includes ₩20.2 trillion (US$14.7 billion) of new spending to spur economic growth and support vulnerable sectors, while it will also make up for ₩10.3 trillion from an expected shortfall in tax revenue. The second extra budget of the year comes two weeks after Lee, who has vowed expansionary fiscal policy, won a snap presidential election on June 3 and less than two months since the first supplementary budget of 13.8 trillion passed in May. 'Economic conditions and difficulties in people's livelihoods are very serious, and this extra budget means government finances will play a little more active role,' vice finance minister Lim Ki-keun told a media briefing. South Korea's central bank last month slashed its economic growth forecast for this year to 0.8% from 1.5%, citing heightened uncertainty over US tariffs, as it lowered interest rates for a fourth time in its current easing cycle and signaled more rate cuts. Asia's fourth-largest economy unexpectedly contracted in the first quarter amid US President Donald Trump's sweeping tariffs and domestic political turmoil sparked by former President Yoon Suk Yeol's martial law decree in December. The biggest spending will be Lee's flagship policy of a universal cash handout scheme for consumers, providing ₩150,000-500,000 in vouchers to every citizen and totalling ₩10.3 trillion. Lee was one of the first to introduce a cash handout scheme in South Korea when he was mayor of Seongnam City, which was adopted nationwide several times during the COVID-19 pandemic under the previous liberal administration of Moon Jae-in, even as critics questioned the effectiveness of the policy. Other spending plans include financial support for the construction sector, investment in artificial intelligence as well as small and medium-sized enterprises, and debt restructuring programmes for small businesses. Out of the combined total of ₩30.5 trillion, ₩19.8 trillion will be financed by issuing additional treasury bonds, according to the finance ministry. The second extra budget will raise the country's fiscal deficit to 4.2% of gross domestic product (GDP) this year, up from the previous estimate of 3.3% after the first extra budget, and government debt to 49.0% of GDP, from 48.4%. The government will submit the proposal to parliament, controlled by the left-leaning ruling Democratic Party, on June 23.
