Bank of England Considers Shelving Plans for a Digital Pound
The BOE has been privately urging the banking industry to instead accelerate payment innovations that could result in similar benefits without the creation of a central bank digital currency — or CBDC — for consumers, according to people familiar with the matter.
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Miami Herald
41 minutes ago
- Miami Herald
Argentina makes economic recovery, but opposition to Milei grows
July 24 (UPI) -- A report from J.P. Morgan points to a "deep and surprising" recovery in Argentina's economy under President Javier Milei, but warns that the future of his economic plan will depend on the outcome of the October legislative elections. Since taking office in December 2023, Milei has implemented sweeping measures to shrink the state, cut spending and liberalize the economy. According to the investment banking and research arm of the U.S. financial giant, Argentina has managed in just a few months to lower inflation, reach fiscal balance and strengthen its foreign reserves -- after years of stagnation, crisis and heavy dependence on public spending. "The country is undergoing a structural transformation with extraordinary potential, though not without significant risks," economists Diego Pereira and Lucila Barbeito wrote in the report. Monthly inflation fell to 1.6% in June, down from more than 25% in December. The government has posted a primary surplus equal to 1.1% of GDP so far this year, and the Central Bank's reserves are beginning to recover. Moody's upgraded Argentina's credit rating for the second time in 2025, and J.P. Morgan projected 2025 GDP growth at 5.5%. The economic adjustment, however, has come at a significant social cost. The government has laid off public employees, cut subsidies and suspended state infrastructure projects. Despite improvements in macroeconomic indicators, social conditions remain fragile. A recent poll by Zuban Córdoba found that 52.8% of voters plan to punish the government in October's elections, while 38.3% intend to reward it. The survey also showed that 57.5% of Argentines hold a negative view of Milei. According to polling firm Analogías, favorable opinions of the government declined by 2 to 3 percentage points in July. Milei's approval rating dropped 4 points to 44%, while his disapproval rose to 50%, creating a net negative gap of 5.5 points, Perfil reported Wednesday. Respondents were critical of Milei's tone and communication style: 73% said they disagreed with it and 66% described it as "violent." Analysts and banks agree that without political support in Congress, the government's economic course could weaken. Economist Milagros Gismondi wrote on X that many companies are beginning to focus on boosting productivity, which she sees as a positive shift. "Banks are back to being banks, and car dealers are thinking about how to produce more efficiently. That didn't happen before, because everyone was worried about whether they could import, whether there would be energy or whether the dollar would spike," she said. Still, Gismondi noted that the private sector remains cautious. "They're also waiting for the elections to see whether deeper reforms -- such as labor or tax changes -- move forward. If stabilization holds, next year we should finally start talking seriously about how to improve Argentina's productivity," she said. If Milei fails to perform well in October's elections, he could face difficulties passing key legislation, including political reforms, privatizations or potential constitutional changes. The president currently governs with a fragmented Congress, and the legislative vote could either reinforce that dynamic or further weaken his bloc if his party, La Libertad Avanza, fails to retain or expand its seats. Copyright 2025 UPI News Corporation. All Rights Reserved.
UPI
an hour ago
- UPI
Argentina makes economic recovery, but opposition to Milei grows
July 24 (UPI) -- A report from J.P. Morgan points to a "deep and surprising" recovery in Argentina's economy under President Javier Milei, but warns that the future of his economic plan will depend on the outcome of the October legislative elections. Since taking office in December 2023, Milei has implemented sweeping measures to shrink the state, cut spending and liberalize the economy. According to the investment banking and research arm of the U.S. financial giant, Argentina has managed in just a few months to lower inflation, reach fiscal balance and strengthen its foreign reserves -- after years of stagnation, crisis and heavy dependence on public spending. "The country is undergoing a structural transformation with extraordinary potential, though not without significant risks," economists Diego Pereira and Lucila Barbeito wrote in the report. Monthly inflation fell to 1.6% in June, down from more than 25% in December. The government has posted a primary surplus equal to 1.1% of GDP so far this year, and the Central Bank's reserves are beginning to recover. Moody's upgraded Argentina's credit rating for the second time in 2025, and J.P. Morgan projected 2025 GDP growth at 5.5%. The economic adjustment, however, has come at a significant social cost. The government has laid off public employees, cut subsidies and suspended state infrastructure projects. Despite improvements in macroeconomic indicators, social conditions remain fragile. A recent poll by Zuban Córdoba found that 52.8% of voters plan to punish the government in October's elections, while 38.3% intend to reward it. The survey also showed that 57.5% of Argentines hold a negative view of Milei. According to polling firm Analogías, favorable opinions of the government declined by 2 to 3 percentage points in July. Milei's approval rating dropped 4 points to 44%, while his disapproval rose to 50%, creating a net negative gap of 5.5 points, Perfil reported Wednesday. Respondents were critical of Milei's tone and communication style: 73% said they disagreed with it and 66% described it as "violent." Analysts and banks agree that without political support in Congress, the government's economic course could weaken. Economist Milagros Gismondi wrote on X that many companies are beginning to focus on boosting productivity, which she sees as a positive shift. "Banks are back to being banks, and car dealers are thinking about how to produce more efficiently. That didn't happen before, because everyone was worried about whether they could import, whether there would be energy or whether the dollar would spike," she said. Still, Gismondi noted that the private sector remains cautious. "They're also waiting for the elections to see whether deeper reforms -- such as labor or tax changes -- move forward. If stabilization holds, next year we should finally start talking seriously about how to improve Argentina's productivity," she said. If Milei fails to perform well in October's elections, he could face difficulties passing key legislation, including political reforms, privatizations or potential constitutional changes. The president currently governs with a fragmented Congress, and the legislative vote could either reinforce that dynamic or further weaken his bloc if his party, La Libertad Avanza, fails to retain or expand its seats.
Yahoo
2 hours ago
- Yahoo
BoE to cut rates in August and November with steady economic growth anticipated- Reuters poll
By Anant Chandak and Shaloo Shrivastava BENGALURU (Reuters) -Britain's economy will grow at a slow, steady pace this year and next, keeping the Bank of England on course to cut interest rates on August 7 and again in November despite inflation remaining above target in coming months, according to most economists polled by Reuters. After starting the year on a strong footing, the economy lost steam with GDP shrinking in April and May, partly driven by weak factory activity. Manufacturing contracted for a tenth consecutive month in July, a separate survey showed on Thursday. Britain was the first major economy to secure a trade deal with the United States under President Donald Trump, partly shielding its economy. Many others, including the European Union, are still scrambling to land agreements with Washington ahead of a deadline next week. The British economy will grow 1.1% on average this year, the same as in 2024, according to median forecasts in the July 17-24 poll of 67 economists, a view largely unchanged since February. The economy is seen expanding 1.2% next year. "We are seeing some tangible signs the economy is stabilising after a bit of a pull down or a pull back in growth momentum," said Sanjay Raja, chief UK economist at Deutsche Bank. "There has been resilience. We have seen a pick-up in business seen consumer sentiment pick up slowly but surely. Credit conditions remain pretty optimistic." Consumer sentiment has reflected the tug-of-war between persistent inflation and easing borrowing costs. Inflation rose to 3.6% in June, driven by food and transport costs, but falling mortgage rates and expectations of further interest rate cuts later this year are offering some relief to households. "We're expecting inflation to get closer to 4% in Q3. But thereafter we think those price pressures will start to dumping from Asia into the UK and Europe could act as a disinflationary driver going forward," said Raja. The Bank of England has already cut rates four times since August 2024, bringing the Bank Rate down a full point from a peak of 5.25%. An 83% majority of economists, 62 of 75, expect two more 25-basis-point cuts this year – in August and November – maintaining the pace of one cut per quarter. That would put the Bank Rate at 3.75% at year-end, and two further reductions are expected in 2026. "We agree with the slow and steady approach. If wage growth starts to come down that will give (the BoE) hope for overall inflation to come down," said Elizabeth Martins, senior UK economist at HSBC. "Unfortunately, the risk is towards inflation staying higher and that's the way all the surprises have gone in recent times." Inflation is expected to remain above the central bank's 2.0% target at least until the end of next year, averaging 3.2% this year and 2.4% in 2026, according to the poll's median forecasts. (Other stories from the Reuters global economic poll) Sign in to access your portfolio
