IFF Newsletter | U.S. Fed Slashes Rates by 50 Basis Points

TIME：2024-09-20

From the Editor

The Federal Reserve announced on Wednesdaythat it would cut its target range for the federal funds rate by 50 basis points to 4.75% -5%, marking the first rate cut in over four years. The market expected to see more interest rate cuts by the end of this year, marking the beginning of a new interest rate cut cycle.

After announcing the slowdown in financial data for August, an official of the People’s Bank of China said on Friday that the central bank would maintain its monetary policy support to contribute to economic growth.

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Latest from the IFF

Green Finance Working Group (GFWG) 2024

Bamboo Forest Carbon Sink Accounting Methodology Seminar

The Green Finance Working Group and the Huzhou Green Finance Development Service Center held a seminar on "Bamboo Forest Carbon Sink Accounting Methodology" on Sept. 19 in Beijing. Top executives and experts from leading institutions in the field such as the International Finance Forum (IFF), Goldman Sachs Group, Paulson Institute, Anji County Forestry Bureau, Anji Rural Commercial Bank, Institute of Forest Ecology, Environment and Nature Conservation, Chinese Academy of Forestry, Global Green Growth Institute (GGGI), Environmental Defense Fund (EDF), Deep Rock Group, China Energy Conservation Standard, and CATL attended the meeting.

Topics discussed included the progress made in using bamboo forests as carbon sinks as well as the accounting methods needed to accelerate the formation of examples of the use of bamboo forests as carbon pools. The participants recommended that the development of the bamboo industry could be further promoted by combining bamboo forest carbon sinks with green finance.

The IFF will continue to research accounting methods for bamboo forest carbon pools and will produce related reports and policy recommendations to promote the development and value realization of bamboo forest carbon sink projects.

Green Finance Working Group (GFWG) 2024

Transition Finance Reform Seminar

The Green Finance Working Group and Huzhou Green Finance Development Service Center held a "Transformational Finance Reforms" seminar on Sept. 19 in Beijing. Top executives and experts from leading institutions in the field such as the International Finance Forum (IFF), Goldman Sachs, Paulson Institute, Huzhou Municipal Government Office, Huzhou Branch of the People's Bank of China, Beijing Institute of Green Finance and Sustainable Development, Standard Chartered Bank, Bank of China, Société Générale (China), China School of Finance, University of International Business and Economics, Shanghai Trading Group, and China Energy Conservation Standard attended the meeting.

In-depth discussions were held on the remarkable achievements made by Huzhou city in eastern Zhejiang province in the field of transformational finance reforms. They focused on how financial institutions can promote the green transformation and high-quality development of the local economy through innovative service models and optimized credit structures.

The IFF will continue to deepen and refine Huzhou city’s experience in transformational finance reforms and promote its successful models and results. In this way, the IFF will provide strong support for the realization of the "dual carbon" goals and green, low-carbon transformation nationwide as well as promote the sustainable development of the economy and society.

The IFF attends the first Kazakhstan Economic Freedom High-Level Conference

ASTANA - September 17 and 18 marked the first Kazakhstan Economic Freedom High-Level Conference, held in the capital of Central Asia’s largest economy and a crucial global trade partner. International Finance Forum (IFF) represented this important gathering and spoke about economic policies in a world of increasing geopolitical fragmentation.

With an eye toward the future as well as the present, the conference featured four main themes - monetary policy and macroeconomics, the geography of trade, finance and technology, and sustainability leadership. Experts from all over the world gave insightful speeches as they provided their valuable opinions and insights from different national perspectives as well as the perspectives of universities, central banks, international organizations, and more. This conference represented a crucial opportunity for international dialog and brainstorming to safeguard the global economy and financial system, navigate current international challenges, and ensure a more sustainable future for all.

IFF AI Committee Members Attend Sino-German Economic Conference‍

In Stuttgart, Germany, two key members of the IFF Artificial Intelligence Committee, Prof. Patrick and former Minister of Defense of Germany Rudolf Scharping, attended the China-Germany Economic Forum. They shared valuable insights on the future of AI collaboration between China and Germany.

IFF Institute Releases Analysis of Macroeconomic Data from Major Economies

On September 14, the IFF Research Institute released an economic data analysis report on major economies. In August, there was a noticeable slowdown in U.S. employment data, with the unemployment rate slightly decreasing from its July peak to 4.2%, marking the first decline in several months. This further reinforces our expectation that the Federal Reserve will adopt a relatively moderate pace of interest rate cuts.

【IFF Live】"Global Financial Hotspots Analysis" is now on air！

The regular new program "Global Financial Hotspots Interpretation" has officially launched, completing its first live broadcast with favorable results. This program is based on the weekly IFF Member Newsletter released by the International Finance Forum, providing interpretations of global financial hotspots, news, and information.

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China News

PBOC to Roll Out More Policies to Boost Liquidity

People’s Bank of China will maintain its monetary policy support to contribute to economic growth, an official of the central bank said on Friday after the country’s major financial indicators slowed in August.

New Chinese yuan-denominated loans slumped byRMB460 billion to 900 billion in August from the same period last year, while social financing tumbled RMB98.1 billion to RMB3 trillion, according to PBOC's data.

M1, a narrow money supplycovering circulating cash and non-bank and non-government deposits, slumped 7.3 percent in August from the year before to RMB 63 trillion (USD 8.8 trillion). It marks the fifth straight month of declines and is now at a historic low.

China to Boost Private Investment in Key Infrastructure Projects

China's National Development and Reform Commission (NDRC) announced on Thursday that it plans to attract more private capital into major infrastructure projects, including nuclear power and railways.

The commission will steadily implement new public-private partnership (PPP) mechanisms and promote the regular issuance of Real Estate Investment Trusts (REITs) in the infrastructure sector. A list of concession projects for private enterprises will also be developed and implemented, NDRC spokesperson Jin Xiandong said on a press conference.

Over 400 New Products, Technologies to Debut in 3rd Global Digital Trade Expo

More than 400 new products and technologies will debut at the third Global Digital Trade Expo, scheduled from Sept. 25 to 29 in Hangzhou, capital of east China's Zhejiang Province, Tang Wenhong, assistant minister of commerce, said on Wednesday.

Among the new products and technologies, approximately one quarter originate overseas, a significantly higher proportion than the previous edition, Tang told a press conference.

China Firmly Opposes US Tariff Hikes on Chinese Goods

China is strongly dissatisfied with and firmly opposes U.S. abuse of Section 301 to hike tariffs on some Chinese goods, the Ministry of Commerce said Saturday.

Last Friday, the Office of the United States Trade Representative announced final modifications concerning the statutory review of the tariff actions toward China under Section 301.

China has repeatedly lodged solemn representations with the U.S. side concerning the Section 301 tariffs, said a spokesperson for the ministry.

China's August Economic Indicators Show Slowdown

Data released by the National Bureau of Statistics (NBS) last Saturday shows that several economic indicators of China declined in August. Experts call for more growth-stabilizing policies to achieve the annual economic growth target.

China's fixed-asset investment rose 3.4%yoy from January to August, with the growth rate declining 0.2 percentage points compared to the first seven months. In August, retail sales of consumer goods increased by 2.1% yoy, down 0.6 percentage points from the previous month. The value-added industrial output of major enterprises grew by 4.5% year on year, a 0.6 percentage point decrease from July, the NBS data showed.

US Firms' Optimism to China Drops to a Historic Low, AmCham Report Shows

Due to political tensions, slowing economic growth and intense competition in China, the confidence of US firms operating in the country is weak, and their optimism about the business outlooks in China for the next five years has fallen to historic lows, according to the annual China Business Report published by the American Chamber of Commerce in Shanghai on Thursday.

About 47 percent of thesurveyed 306 companies are upbeat, down from 52 percent a year earlier. Thirteen percent ranked China as their top investment destination. Both figures are the lowest since the survey began in 1999.

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International News

U.S. Fed Slashes Rates by 50 Basis Points, First Rate Cut in 4 Years

The U.S. Federal Reserve slashed interest rates by 50 basis points on Wednesday amid cooling inflation and a weakening labor market, marking the first rate cut in four years.

"In light of the progress on inflation and the balance of risks, the Committee decided to lower the target range for the federal funds rate by 1/2 percentage point to 4-3/4 to 5 percent," the FOMC said.

The cut signals the start of an easing cycle. Starting from March 2022, the Fed had raised rates consecutively 11 times to combat inflation not seen in 40 years, pushing the target range for the federal funds rate to between 5.25 percent and 5.5 percent, the highest level in over two decades.

Japan Household Assets Hit Record 15.4 Trln USD

Financial assets held by Japanese households totalled 2,212 trillion yen (about USD 15.4 trillion) at the end of June, hitting another record high on higher share prices, the Bank of Japan said on Thursday.

The figure represented a 4.6 percent rise from a year earlier and exceeded the previous record of 2,186 trillion yen logged in March, the central bank data showed.

France's GDP to grow by 1.1 pct in 2024

France's central bank, Banque de France (BdF), said on Tuesday thatthe country’s GDP would grow by 1.1 percent in 2024,

primarily driven by a strong performance in foreign trade and an extra boost from the Olympic Games held in Paris this summer.

The BdF foresees French GDP growth at 1.2 percent in 2025, but itcut its projection for 2026 to 1.5 percent.

Regarding France's inflation, the BdF's forecast for 2024 remains unchanged at 2.5 percent.

Britain's Inflation Remains at 2.2 Percent in August

Britain's Consumer Prices Index (CPI) rose by 2.2 percent in the 12 months to August 2024, the Office for National Statistics' data showed Wednesday.

The country's CPI was unchanged from July, and August's CPI reading was above the central bank's 2 percent target. Core CPI, excluding energy, food, alcohol and tobacco, rose by 3.6 percent in the 12 months to August, up from 3.3 percent in July.

Canada's Job Vacancies Continue to Decline in Q2

Canada's job vacancies fell by 59,000, or 9.2 percent, to 582,600 in the second quarter (Q2) of this year, marking the eighth consecutive quarterly decline from the record high of 983,600 reached in the second quarter of 2022, Statistics Canada said Tuesday.

The drop in the second quarter was approximately twice the decline observed in the previous quarter. Job vacancies decreased for both permanent positions and temporary positions. Vacancies also fell for full-time positions and part-time positions, the agency said.

U.S. Federal Debt Soars to New High

This year's budget deficit of the United States is on track to top USD 1.9 trillion, or more than 6 percent of economic output, a threshold reached only around World War II, the 2008 financial crisis and the COVID-19 pandemic, according to the data from the US Department of The Treasury last Thursday.

For the first 11 months of the 2024 fiscal year ending in August, the US federal government's budget deficit reached USD1.897 trillion, up 24 percent from a year earlier and interest costs broke through the USD1 trillion mark for the first time in history, reaching USD1.049 trillion, a year-on-year increase of 30%, the department said on its monthly treasury statement.