ECB, BOA, the Fed slow the pace of interest rate hikes
The pace of interest rate hikes by the main central banks of Europe moderated, but they disagreed with one another and the Federal Reserve over how much more work they needed to do to combat excessive inflation, ushering in a new era for the global economy.
Rates have been rising quickly for months, but now that they have reached levels that are likely to have an adverse effect on economic development, policymakers on both sides of the Atlantic are beginning to adjust their strategy. Their estimation of the final interest rate level is crucial because both areas are dealing with a variety of risks and challenges, such as the Ukraine crisis, persisting supply constraints, and uneven growth in China. The central banks of the continent must evaluate how much economic cooling is necessary and how much inflation will naturally evaporate when energy and food costs decline. The fact that it may take years for changes in interest rates to have a significant impact on the economy makes that estimate difficult.
Interest rates were raised by 0.5 percentage points by the central banks of the eurozone, the United Kingdom, and Switzerland, matching the Federal Reserve in decreasing the rate of rises as inflation declines. Officials from the central bank also indicated that they still have work to do to complete the task because inflation is still historically high.
ECB President Christine Lagarde stated at a press conference that the bank may continue to raise rates at its following two sessions and maybe beyond in increments of 0.5 percentage points. In comparison to other central banks, most notably the Fed, the ECB began hiking rates later and with more caution.
“This is not a pivot, this is not a slowdown, we are in for the long game,” she said. “Compared with the Fed, we have more ground to cover, we have longer to go.”
EU Approves 15% Corporate Minimum Tax, Supporting Global Agreement
After Hungary and Poland dropped their concerns, countries in the European Union will begin collecting higher taxes in 2024 as part of a long-stalled worldwide agreement to impose a minimum rate on corporate profits.
A 15% minimum tax on large corporations was agreed upon by 137 nations in October 2021, clearing the stage for the biggest revision of global tax laws in a century. Large governments want to lessen tax-rate competition and the benefits of operating in a low-tax area by imposing the tax in each jurisdiction where a firm conducts business. Years of negotiations that frequently seemed to be headed for failure were needed to arrive at that point.
“This agreement on minimum corporate taxation is a win for fairness, a win for diplomacy and a win for multilateralism,” said Paolo Gentiloni, the EU’s top economy official.
Dubai's GDP expands by more than 4% in just nine months to $84 billion
The wholesale and retail trade sector continued to be the largest contributor to Dubai's economy from January through September of this year, according to the most recent economic data from the Dubai Digital Authority's Dubai Statistics Centre. With a year-over-year gain of 28% over the first nine months of the year, the hospitality and F&B services outpaced all other sectors in terms of growth.
“This exceptional performance is the result of the collective efforts of various entities to make Dubai a global leader across all sectors,” the Crown Prince Sheikh Hamdan bin Mohammed tweeted.
Adapted from WSJ, CNBC, FT, Forbes, Gulfnews