WASHINGTON (Reuters) – U.S. existing home sales rebounded sharply in October, posting the first annual gain since mid-2021, as buyers rushed into the market to take advantage of a brief decline in mortgage rates.

Home sales jumped 3.4% last month to a seasonally adjusted annual rate of 3.96 million units, the National Association of Realtors said on Thursday. Economists polled by Reuters had forecast home resales rebounding to a rate of 3.93 million units. Sales slumped to a rate of 3.83 million units in September, which was the lowest since October 2010.

Sales increased 2.9% year-on-year, the first annual rise since July 2021.

“The worst of the downturn in home sales could be over, with increasing inventory leading to more transactions,” said Lawrence Yun, the NAR’s chief economist.

October’s homes sales likely reflected contracts signed in August and September, when mortgage rates were declining in anticipation of the Federal Reserve launching its policy easing cycle. The U.S. central bank cut its policy rate by an unusually large half-percentage-point in September, its first reduction in borrowing costs since 2020.

The Fed delivered another 25 basis points reduction this month, which lowered its benchmark overnight interest rate to the 4.50%-4.75% range.

Mortgage rates have erased all the decline since August as U.S. Treasury yields have risen on strong economic data and investor fears that President-elect Donald Trump’s policies, including higher tariffs on imported goods and mass deportations, could reignite inflation.

Mortgage rates track the 10-year Treasury note. The average rate on a 30-year fixed-rate mortgage has jumped to 6.78% last week from 6.08% in late September, data from mortgage finance agency Freddie Mac (OTC:FMCC) showed. The Fed hiked rates by 525 basis points in 2022 and 2023 to tame inflation. 

Housing inventory rose 0.7% to 1.37 million units last month. Supply increased 19.1% from one year ago.

Despite the rise in inventory, the median existing home price rose 4.0% from a year earlier to $407,200 in October. That was the highest for any October. Home prices rose in all four regions.

At September’s sales pace, it would take 4.2 months to exhaust the current inventory of existing homes, up from 3.6 months a year ago. A four-to-seven-month supply is viewed as a healthy balance between supply and demand.

Properties typically stayed on the market for 29 days in October compared to 23 days a year ago. First-time buyers accounted for 27% of sales versus 28% a year ago.

That share remains below the 40% that economists and realtors say is needed for a robust housing market.

All-cash sales made up 27% of transactions, down from 29% a year ago. Distressed sales, including foreclosures, represented only 2% of transactions, virtually unchanged from last year.

By Ahmed Eljechtimi

RABAT (Reuters) -U.S. pharmaceutical giant Viatris Inc (NASDAQ:VTRS). has been fined 7.58 million dirhams ($760,000) by Morocco’s competition regulator for failing to notify it regarding its merger, two official sources said on Thursday.

Viatris was formed by the merger of Mylan, which has a subsidiary in Morocco, and Pfizer (NYSE:PFE)’s Upjohn business in 2020.

The fine, equivalent to 2.5% Viatris’ revenue in Morocco last year, has already been paid to the Moroccan treasury, the sources said, requesting anonymity.

Viatris also declined to appeal the decision, the sources said.

Viatris did not immediately respond to a Reuters emailed request for comment.

The regulator is also planning to look into other mergers in which the companies failed to notify the regulator. These could include a joint venture between the phosphates and fertilizers giant OCP and Fertinagro Biotech and the takeover of Whirlpool (NYSE:WHR) Middle East and North Africa operations by Turkey’s appliances maker Arcelik (IS:ARCLK), one of the two sources said.

OCP and Arcelik did not immediately respond to Reuters’ requests for comment.

By Gleb Bryanski and Darya Korsunskaya

MOSCOW (Reuters) – Leading Russian economists expect inflation in Russia to exceed the central bank’s estimate for this year, increasing the likelihood of another aggressive benchmark interest rate hike next month.

Consumer prices rose by 0.37% in the latest week, according to statistical data, pushing the headline figure since the start of the year to 7.4%, close to the central bank’s full-year inflation estimate of 8.0-8.5%.

“There is a real threat that inflation will exceed the October forecast of the central bank, prompting the regulator to aggressively raise the key rate again in December, this time to 23%,” said Denis Popov from PSB Bank.

Reuters collected the views of 10 economists for this story.

The central bank hiked its benchmark rate to 21% in October, stating that a tight monetary policy was needed to combat inflation. The move prompted a barrage of criticism from business leaders who said it was stifling investment and credit.

The October upward revision of the full-year inflation estimate was the third publicly known this year by the central bank.

Some critics argued that the monetary measures had little or no impact on inflation while dampening growth and leading to stagflation, a phenomenon that combines a high inflation rate with economic stagnation.

Dmitry Polevoy from Astra Asset Manager said that if the central bank’s rate-setting meeting took place tomorrow, a hike to 23% would be certain.

“Given the current macroeconomic inputs, everything looks extremely unfavorable for the central bank,” Polevoy said, predicting full-year inflation to exceed 9%.

Inflation was fueled by rises in prices for potatoes, butter, sunflower oil, dairy products, and imported fruits. Prices for potatoes, a staple food for many Russians, have risen by 74% since last December.

The central bank, in its reports, blamed bad weather, which affected crops, poor logistics, a weakening rouble, and increased costs, such as for raw materials and labor, for high inflation.

The government, on its part, is trying to increase imports of some key food products, like butter, lower export barriers, limit or ban some exports, and help improve logistics to contain price growth. Despite this concerted effort, inflation keeps rising.

“The current growth trajectory is unfolding above the forecast of the Bank of Russia,” said Renaissance Capital analysts.

They added that if inflation is above 9% by mid-December, the regulator will respond by hiking the rate to 23%.ond by hiking the rate to 23%.

By Steven Scheer

JERUSALEM (Reuters) – The Bank of Israel is expected to hold the line on short-term interest for a seventh straight policy meeting next week, with a stabilisation in inflation pressures likely taking any rate increases off the table.

All 13 economists polled by Reuters said they expected the central bank to keep its benchmark rate at 4.5% when the decision is announced on Monday at 4 p.m. (1400 GMT).

Driven by supply issues, Israel’s annual inflation rate had accelerated to a 10-month high of 3.6% in August but it eased to 3.5% in September and was holding at that level in October.

At the same time, Israel’s economy grew an annualised 3.8% in the third quarter, rebounding somewhat from near zero growth the prior three quarters as the war against Palestinian Hamas militants in Gaza continued to take its toll.

Central bank officials warned after the prior rates decision on Oct. 9, that rate hikes were possible if inflation remained beyond the government’s annual inflation target of 1%-3%. Before that, the markets had believed another rate cut, after it had reduced the key rate in January was most likely – in line with rates in the United States and in Europe.

“The Bank of Israel might choose to defer any decision on a rate increase to later meetings,” said Citi economist Michel Nies, citing the subsequent decision in January when a “clearer picture of the economy during the period of more intensive conflict on the northern border is available”.

Since Oct. 7, 2023, Israel has largely been fighting Hamas in Gaza to Israel’s south. But in response to a year of rockets by Hezbollah, Israel has escalated attacks on Hezbollah in Lebanon in the north – and fears have grown the conflict could widen to Iran.

With the value added tax rate set to rise in January, analysts believe the inflation rate could reach 4% at the start of 2025 but move back below 3% later in the year.

“We cannot exclude the possibility that the monetary environment will shift significantly towards the middle of 2025, and that the conditions for reducing rates will mature earlier than when the market currently expects,” Bank Hapoalim (TASE:POLI) economist Victor Bahar said.

Bank of Israel Governor Amir Yaron has said interest rate policy going forward was “data dependent”.

MOSCOW (Reuters) – The Russian central bank’s First Deputy Governor Olga Skorobogatova, who was in charge of the regulator’s digital projects including the digital rouble and the domestic payments system, has resigned, the bank said on Thursday.

Skorobogatova, a former executive at the Russian arm of France’s Societe General, joined the central bank in 2014. She is widely credited for the fast digital development of the Russian banking sector and creation of the domestic payments system.

The central bank stressed that digital infrastructure, created by Skorobogatova, helped the Russian financial sector withstand Western sanctions imposed after the start of the military action in Ukraine in 2022.

“Her strategic vision and ability to implement complex technological solutions have allowed for the creation of an advanced payment infrastructure in Russia, of which we can be proud,” the central bank said.

“The true value of this infrastructure for the country became evident in 2022,” it added. Skorobogatova is subject to U.S. sanctions. She will be replaced by her former subordinate Zulfia Kakhrumanova.

By Ezgi Erkoyun and Ceyda Caglayan

ISTANBUL (Reuters) – Berkay Ucar has almost given up hope of finding work after his eight-month search only generated a few unsuccessful interviews.

Living with his parents in the capital Ankara, 24-year-old software developer Ucar, is one of a rapidly growing number of despondent job seekers in Turkey. For him, the mental toll of unemployment is larger than its financial burden.

“My salary and other expectations are at the minimum level, but I still can’t find a job. Psychologically it is very difficult for me. I am losing hope.”

Eighteen months into President Tayyip Erdogan’s abrupt pivot to economic orthodoxy, aggressive interest rate hikes and other tightening measures to tame soaring inflation are increasingly undermining job seekers’ prospects of finding employment.

The number of people who lost hope of finding work and who have stopped actively looking jumped by some 30% since the new economic programme was launched in June 2023, according to data by TUIK statistics institute.

Data shows there are more than 2.17 million people in this category in the third quarter who are not counted as unemployed.

Turkey’s unemployment rate stood at 8.6% in September, with around 3.1 million people looking for jobs, but economists say that this does not reflect the actual picture in the labour market and that the outlook for next year is much worse.

Turkey’s policy U-turn, ditching a previous low-rates policy championed by President Erdogan, is aimed at boosting exports, lowering inflation and rebalancing an overheating economy. But the economic pain created by a chronic cost-of-living crisis has dented his AK Party’s popularity.

The government is committed to the inflation fight now – with bullish foreign investors taking notice – but workers’ growing angst could test Erdogan’s resolve to stay the course next year, just as annual inflation is finally headed down.

Industrial output has dropped four months running and GDP growth slowed to 2.5% in the second quarter. The deteriorating demand outlook, along with high borrowing costs, has triggered company layoffs, notably in manufacturing, such as garments and textiles.

Finance Minister Mehmet Simsek has said this month the government is taking measures to limit the temporary negative impact of the economic programme and that increasing confidence and better global conditions will support jobs and exports.

FEELING HELPLESS

Sema, 29, who did not provide her full name, is one of those who have given up searching for work. She moved to Istanbul to find a job in advertising, but gave up hope and moved back to her parents house in western province Kutahya to save on rent.

“I have no money and I am in despair. I am not looking for a job anymore as I know there is nothing out there for me. I feel useless, helpless and unsuccessful, like I did something wrong somewhere,” she said.

Analysts say traditional unemployment data does not capture the scale of the problem and Aylin Ingenc Eker, a researcher at the Social Policy Research Center at TOBB ETU University in Ankara, calculates additional indices to get a truer picture.

According to her calculations, taking into account job quality and the impact of inflation, an index that analyzes economic difficulties people are experiencing has risen to near pandemic levels since the start of the new economic programme.

In the third quarter, employment increased by 136,000 people, which economists linked to the need for workers to rebuild areas hit by the devastating earthquake in February 2023 in southern Turkey and rising demand in the tourism sector.

Analysts say Ankara faces a major test of its commitment to reining in inflation at end-2024, when it is expected to again hike the minimum wage. A large rise would help workers claw back real income losses, but could stoke labour costs for businesses already struggling.

Economist Can Fuat Gurlesel said that a possible 25-30% increase in the minimum wage could cause firms to lay off staff but less than that will not be enough for employees.

The Turkish central bank forecasts year-end annual inflation of 44%.

“A 25% increase is manageable, but 30% is the maximum limit, the red line. I am not sure if all companies can handle that without laying off staff, especially in the manufacturing sector,” he said.

“No sector can afford a minimum wage increase of over 30% in this economy.”

PRETORIA (Reuters) – South Africa’s central bank opted for another small cut to its main interest rate on Thursday, stressing the global economic backdrop was tough and the outlook highly uncertain despite domestic inflation falling below its target.

The decision to lower the repo rate by 25 basis points (bps) to 7.75% was unanimous, with the Monetary Policy Committee not discussing a larger 50 bps cut, South African Reserve Bank Governor Lesetja Kganyago told reporters.

The majority of economists in a Reuters poll published last week had predicted a 25 bps cut, the same size of cut as in September.

Annual inflation slowed sharply to 2.8% in October, its lowest level in over four years, dropping below the central bank’s 3% to 6% target range.

“The Committee agreed that reducing the level of policy restrictiveness is still consistent with achieving the inflation target. The risk outlook, however, requires a cautious approach,” Kganyago said.

“Global interest rates could well shift higher again, and the recent rand depreciation demonstrates how rapidly changes in the global environment can affect South Africa.”

Alongside other emerging market currencies, the rand has sold off since Donald Trump’s U.S. election win, losing more than 3% against the dollar.

By Leigh Thomas

PARIS (Reuters) – France’s national budget is so strained that lawmakers are pushing a proposal to make the French work an extra seven hours each year without pay – the equivalent of one working day – to generate extra funds for state coffers.

The measure, which was approved in the Senate upper house of parliament on Wednesday but which could still be thrown out of the final budget bill, would yield an extra 2.5 billion euros ($2.63 billion) in revenues from additional labour charges.

It comes as Prime Minister Michel Barnier’s fragile ruling coalition seeks to pass a 2025 budget through a starkly divided parliament, with Marine Le Pen’s far-right National Rally (RN) threatening to topple the government with a no-confidence vote.

The amendment, proposed by centre-right Senator Elisabeth Doineau, would make people work an extra seven hours at some point over the course of the year, for which they would not be paid salary but for which their employers would have to make additional social security contributions.

An earlier idea, which would have had the same effect on the budget, was based around scrapping one of France’s official public holidays and making people work on that day. However there was no agreement on which holiday to eliminate.

France already scrapped Pentecost Monday’s status as a public holiday in 2005 to help better fund healthcare. While France is famed for introducing the 35-hour work week in 2000, in fact the French work an average of around 36 hours a week, longer than many of their western European peers.

COMPANIES CONCERNED

After spending spiralled out of control this year and tax income fell short of expectations, Barnier’s government has proposed 60 billion euros in savings in its 2025 budget through spending cuts and tax increase.

Though the government has targeted the bulk of its tax hikes on the wealthy and big companies, its budget bill includes plans to rein in a tax incentive on employers’ social security contributions for low-income workers.

The measure was intended to raise 4 billion euros, though the government has since opened the door to a lower number if lawmakers come up with an alternative to make up the difference.

Nonetheless, companies are already up in arms that the reduced tax incentive would raise their cost of labour, which is already among the highest in Europe largely because of hefty social security contributions.

Julien Crepin, the head of corporate cleaning firm Bio Propre near Paris, said that any increase in labour costs would threaten his business model and force him to raise prices, potentially leading to layoffs.

“We’ve got small margins in our business. So an earthquake like that would knock us out,” he told Reuters, adding it would be much preferable to get rid of a holiday.

Even Barnier’s own finance minister, Antoine Armand, is critical of reducing the tax incentive, saying that the French generally needed to work longer.

“An hour longer worked is an hour more of social security contributions,” he told Le Parisien newspaper on Wednesday.

($1 = 0.9508 euros)

PRETORIA – The South African Reserve Bank (SARB) has announced a reduction in the repurchase rate by 25 basis points to 7.75%, effective from November 22, 2024, as conveyed in a statement by the Governor, Lesetja Kganyago. This decision, taken unanimously by the Monetary Policy Committee (MPC), comes amidst a complex global economic landscape characterized by a stronger dollar, rising interest rates, and new inflationary pressures.

The MPC noted that South Africa’s growth recovery is gaining traction, with positive indicators such as a decrease in unemployment and a potential boost from the newly implemented Two-Pot pension system. Despite mixed data outcomes and subdued manufacturing figures, the mining sector showed strength and job gains were broad-based. The Committee forecasts growth to reach 2% by 2027.

Consumer price inflation in South Africa has dipped below the target range, registering at 2.8% in October. This is attributed to a stronger exchange rate and lower oil prices compared to the previous year. Inflation is expected to remain below 4% until mid-2025, with a modest increase projected thereafter due to higher electricity prices.

The MPC anticipates that inflation expectations will moderate further, aligning closer to the midpoint objective over the forecast horizon. The risks to the inflation outlook are considered balanced, with potential medium-term uncertainties such as higher food, electricity, water, insurance premiums, and wage settlements.

The committee’s decision to lower the policy rate aligns with the goal of achieving the inflation target while maintaining a cautious approach due to the unpredictable global interest rates and the recent depreciation of the rand. Although further easing of rates is forecasted, the MPC emphasizes that future decisions will be made on a case-by-case basis, responsive to data developments and sensitive to the balance of risks.

The SARB’s commitment to delivering low and stable inflation, coupled with structural reforms aimed at supporting growth capacity and rebuilding fiscal and monetary policy space, remains pivotal in the face of external challenges. The MPC also acknowledged recent positive credit rating outlooks and the potential for structural reforms to bolster long-term growth prospects.

This announcement follows similar rate cuts by the European Central Bank in October, and by the Bank of England and the US Federal Reserve in November. The MPC’s decision is based on a press release statement, which provides insight into the economic conditions and policy considerations guiding the bank’s actions.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

By Ezgi Erkoyun and Huseyin Hayatsever

ISTANBUL (Reuters) -Turkey’s central bank held its policy rate steady at 50% on Thursday, as expected, and said it remained attentive to inflation risks, while analysts said its comments opened the way for a possible rate cut next month.

“The level of the policy rate will be determined in a way to ensure the tightness required by the projected disinflation path, taking into account both realised and expected inflation,” the bank said after its monetary policy committee meeting.

The lira traded at 34.4975 against the dollar after the announcement, off its lows but weaker on the day.

“We believe that the central bank’s new statement on the tightness of monetary policy opens the door to rate cuts,” said Haluk Burumcekci, founding partner at Burumcekci Consulting, adding a cut next month was a serious option.

“However, uncertainty remains regarding the size of the initial step and whether it will evolve into a cycle.”

Governor Fatih Karahan said this month that monetary policy would remain tight even when a rate-cutting cycle started, and that keeping the current interest rate amid improving inflation expectations would amount to a tightening.

The central bank has kept rates steady since March, when it raised its policy rate by 500 basis points to round off an aggressive tightening cycle that started in June last year to rein in soaring inflation.

In a change of messaging in September, it began setting the stage for a rate cut by dropping a reference to potential further tightening, but it has continued to voice caution on inflation.

In October, inflation was higher than expected, dipping only to 48.6% annually, underscoring the continuing battle against soaring prices.

A Reuters poll showed the bank was expected to hold rates steady in November, with a rate cut seen in December or January.

Earlier this month, the central bank raised its year-end inflation forecasts for this year and next to 44% and 21% respectively, vowing to keep policy tight to ensure disinflation continues.

The central bank hiked rates by 4,150 basis points between June last year and March as part of an abrupt shift to orthodox policy after years of low rates that triggered a series of currency crashes and sent inflation soaring.

A test of the government’s commitment to taming inflation will come at the end of the year, when it is set to hike the minimum wage.