Investing.com — In an unexpected move, Bank Indonesia (BI) has trimmed its policy rate by 25bps, a strategy aimed at bolstering domestic growth.

Prior to this, BI had underscored its concentration on stability and the absolute level of the Indonesian Rupiah (IDR), leading to worries about the near-term growth outlook.

These concerns, coupled with fears of potentially diminished loan growth potential in 2025, amplified share price corrections from Emerging Market (EM) sell-off amid broader global macroeconomic concerns.

Despite lowering its 2025 Gross Domestic Product (GDP) growth forecast to a range of 4.7-5.5%, down from the previous 4.8-5.6%, BI anticipates that system loan growth will be sustained at 11-13%.

In response to the rate cut, Morgan Stanley (NYSE:MS) analysts commented that “uncertainties remain regarding the global macro outlook and therefore IDR stability.”

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

By David Shepardson

WASHINGTON (Reuters) – The U.S. Commerce Department said Wednesday it is imposing new export controls on biotechnology equipment and related technology because of national security concerns tied to artificial intelligence and data science.

Washington has raised concerns that China could use U.S. technology to strengthen military capabilities and help design new weapons through AI. The department said the laboratory equipment could be used for “human performance enhancement, brain-machine interfaces, biologically-inspired synthetic materials, and possibly biological weapons.”

The new export controls, which restrict shipments to China and other countries without a U.S. license, are for high-parameter flow cytometers and certain mass spectrometry equipment, which Commerce said can “generate high-quality, high-content biological data, including that which is suitable for use to facilitate the development of AI and biological design tools.”

This is the latest effort by Washington to restrict U.S. technology to China. On Monday, Commerce moved to further restrict AI chip and technology exports from China aimed at helping the United States maintain its dominant status in AI by controlling it around the world.

U.S. lawmakers have been considering a number of proposals to keep Americans’ personal health and genetic information from foreign adversaries and aim to push U.S. pharmaceutical and biotech companies to lessen their reliance on China for everything from drug ingredient manufacturing to early research.

Last week, U.S. lawmakers called on the Commerce Department to consider restricting the export of U.S. biotechnology to the Chinese military, citing concerns Beijing could weaponize it.

The Chinese Embassy in Washington last week said Beijing “firmly opposes any country’s development, possession or use of biological weapons.”

In August, U.S. lawmakers called on the Food and Drug Administration to ramp up scrutiny of U.S. clinical trials conducted in China, citing the risk of intellectual property theft and the possibility of forced participation of members of China’s Uyghur minority group.

Investing.com — US health officials are preparing to prohibit the use of the artificial food coloring Red No. 3, which is found in a wide range of products including candy and cold medicine, Bloomberg News reported today.

This decision comes after the substance has been associated with cancer. An announcement regarding the ban is expected as early as Wednesday, the report added. However, the exact timing of the announcement may still vary.

This decision comes more than three decades after the Food and Drug Administration (FDA) banned the use of Red No. 3 in cosmetics. This move was made after studies discovered tumors in lab rats that were linked to the dyes.

Over two years ago, consumer and patient advocacy groups petitioned the FDA to remove the dye from the American diet.

Among the supporters of the ban on controversial dyes is Robert F. Kennedy Jr., the nominee for secretary of the Department of Health and Human Services by President-elect Donald Trump.

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

PARIS (Reuters) – Any moves to pursue financial deregulation by the incoming U.S. administration would increase the risk of a financial crisis occurring one day, France’s central bank governor warned on Wednesday.

U.S. President-elect Donald Trump’s return to office has raised the prospect of radical changes to the U.S. regulatory framework built up over decades to oversee financial services and banking, as well as digital currencies.

“Financial deregulation as some people are calling for in the United States would be dangerous, including for the financial system itself,” Bank of France Governor Francois Villeroy de Galhau told the French Senate’s finance commission.

The potential next head of a U.S. banking regulator, Trevor Hill, outlined wide-ranging plans earlier this month for a lighter touch on the banking industry on matters ranging from capital reserves to cryptocurrency.

Hill said he expected U.S. regulators to reconsider efforts to impose new capital requirements on large banks under internationally agreed Basel III regulations, which have already stalled under the Democratic leadership.

Washington has dragged its feet on the new rules, which more than two-thirds of the countries belonging to the Basel Committee on bank regulations have already adopted.

While Basel III has helped keep the European banking system stable, Villeroy said regulators in Europe should consider “adjustments” to ensure that the sector remains competitive.

He added that adopting a light U.S. regulatory touch for non-bank financial actors such as various types of funds, venture capital, private equity as well as cryptoassets would also put financial stability at risk.

Investing.com – The European Central Bank should lower interest rates down to 2% by the summer if inflationary pressures cool as expected in the coming quarters, Governing Council member Francois Villeroy de Galhau said on Wednesday.

Speaking to French lawmakers, Villeroy argued the ECB’s current deposit rate of 3% is weighing on businesses and households, adding that the so-called neutral rate — the theoretical level which neither helps nor hinders activity — is 2%.

He said bringing down borrowing costs will bolster the financing of the economy and a drop in the household savings rate.

In December, the ECB cut interest rates by 25 basis points for a third straight meeting and signaled the likelihood of further easing in 2025 as the eurozone’s economy is struggling and inflation is nearly back at target. Policymakers are widely tipped to slash rates by a quarter of a percentage point once again when they meet again later this month.

Debate at the ECB has swirled around whether it is easing policy fast enough to support an economy that is at risk of recession, facing political instability at home, and grappling with the prospect of a fresh trade war with the United States.

While the Eurozone economy expanded faster than anticipated in the quarter ended in September, a slew of economic data points have suggested that it decelerated in the final three months of 2024. Official figures out of Germany on Wednesday showed that Europe’s largest economy contracted for a second straight year and shrank by 0.1% in the fourth quarter, pointing to lingering difficulties heading into 2025.

Meanwhile, Eurozone inflation came in at 2.4% in December, according to preliminary data. This pace is marginally above the ECB’s 2.0% medium-term goal, although the central bank’s recent projections see price growth falling back down to that level in a few months’ time.

Investing.com — The Bank of France has proposed a reduction in a crucial regulated savings rate for the first time in half a decade. This move could potentially elevate profits for French banks.

The rate on a unique type of deposit, known as Livret A, should be decreased next month to 2.4% from the current 3%, according to the Bank of France Governor Francois Villeroy de Galhau. The decision was influenced by the recent dip in inflation and was communicated to the upper house of Parliament on Wednesday.

The decision to implement the French central bank’s recommendation now rests with Finance Minister Eric Lombard. Lombard had previously indicated in a local radio interview that the cut in the Livret A rate should be approximately 0.5 percentage points.

The Livret A savings accounts are extremely popular in France. The rate on these accounts has been steady at 3% since the beginning of 2022. As of the end of November, French consumers held €427 billion ($440 billion) in these accounts, as per data from La Caisse des Depots.

A reduction in the rate would assist in lowering the funding costs for French banks. These banks have largely been unable to capitalize on the surge in net interest income that has benefitted their peers in recent years.

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

Investing.com – Canada is facing pressure to hold a scheduled federal election “sooner than later” this year as threats from US President-elect Donald Trump’s strict tariff plans loom, according to analysts at Jefferies.

Following Prime Minister Justin Trudeau’s announcement that he will resign from the role earlier this month, Canada’s parliament has been prorogued — or suspended — until March 24.

However, this means that the federal election will likely not take place until May at the earliest, placing a politically-weakened Trudeau potentially in charge of overseeing Canada’s initial response to Trump’s trade stance.

The Jefferies analysts said in a note to clients that they expect the vote will be held in mid-May, flagging that investors face the dilemma of “assessing the potential outcomes” of the ballot without having official platforms for any of the major players.

“Objectively, the timing is quite poor as Canada faces an existential threat with the pending inauguration of President-elect Trump,” the Jefferies analysts said on Wednesday. 

Trump, who is set to return to the White House later this month, has vowed to slap a 25% levy on imports from Canada, sparking concerns among economists over a possible recession in the country. Canada sends roughly three-fourths of its exported goods and services to the US, Reuters has reported.

“Regardless of whether his announced 25% tariffs are real or simply an empty threat […], Canada is entering into critical negotiations with its most significant trading partner effectively leaderless,” the Jefferies analysts said.

Trudeau’s office said this week that he will hold a cabinet retreat to determine a response to Trump’s possible tariffs, adding that the leaders will “protect and defend Canadian interests” and “make unequivocally clear the mutually beneficial trade and security relationship the two countries share.”

Should Trump follow through with the imposition of the duties, Trudeau, who is set to step down in early March, has promised to issue countermeasures. He has also called for a united response from Canadian lawmakers.

Separately, Foreign Minister Melanie Joly has said Canada is not ruling out restricting energy exports to the US, although the proposal has received criticism from the premier of oil-producing region Alberta.

Investing.com — Economists are divided on the number of quarter-point interest-rate cuts Sweden’s central bank, the Riksbank, will make during the first quarter of the year.

A survey by Bloomberg revealed a split among twenty respondents, with half predicting a decrease in the benchmark rate to 2.25% by the end of March, and the other half forecasting a fall to 2% by the quarter’s end.

Last month, the Riksbank’s policymakers indicated a preference for a single 25-basis point cut from the current 2.5%, likely to occur in the early months of the year.

This outlook has been reinforced by recent data, including a larger-than-anticipated slowdown in inflation in December.

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

Investing.com — Jefferies analysts delved into the Eaton (NYSE:ETN) Fire in Southern California and the state’s wildfire funding framework. Based on a conversation with Bob Marshall, CEO of Whisker Labs, their analysis explored fire causation, utility involvement, and the intricate “waterfall” funding mechanism under California’s wildfire policies.

According to Jefferies, Whisker Labs’ data “does not find evidence of a major transmission line fault prior to the Eaton Fire,” aligning with Edison International’s (EIX) preliminary report.

The company’s Ting devices detected faults west of Eaton Canyon before the fire began. However, these faults were associated with distribution lines, and the analysts noted, “it still could be that SCE was not de-energized at the distribution level,” though this risk appears minimal.

The Hurst Fire presents a different case, with smaller damage (~800 acres vs. 14,000 acres for the Eaton Fire) and clearer ties to Southern California Edison (SCE).

A key policy issue is the inconsistency in wildfire mitigation efforts between investor-owned utilities (IOUs) and municipal utilities. Municipal utilities like Pasadena Water and Power, which operate in high-risk areas, often lack granular Public Safety Power Shutoff (PSPS) policies.

“We see the lack of uniform mitigation policies across utilities, regardless of the actual cause of the fire, as squarely the biggest policy takeaway,” analysts led by Julien Dumoulin-Smith said in a note.

“While we see implementation of PSPS policies at a much more granular level and across even urbanized geographies as highly likely, the further question is still whether municipal utilities will be incorporated into a wider fund,” they added.

The wildfire funding mechanism, governed by Assembly Bill 1054 (AB 1054), plays a vital role in managing financial impacts. The Wildfire Fund, valued at $13 billion as of 2024, could grow to $27 billion by 2036. Reimbursements from the fund depend on utility prudency.

“If determined prudent and a safety certification is approved, there is no requirement to reimburse the fund,” analysts noted. On the other hand, imprudence findings could lead utilities to cover up to 20% of eligible equity rate bases.

Barclays (LON:BARC) analysts projected that the snap elections held in Germany on February 23 will likely lead to the formation of a coalition government. The current political landscape in Germany is highly fragmented, suggesting that establishing a coalition could take several months.

According to recent polls, the most probable outcome is a government led by the CDU/CSU (conservatives) in partnership either with the SPD (social democrats) or the Greens (environmentalists), as all parties have excluded the possibility of working with the AfD.

The election manifestos have placed a strong emphasis on economic policies. The CDU/CSU’s strategy includes supply-side reforms, cuts in corporate and income taxes, and the repeal of certain laws implemented by the Scholz administration. On the other hand, the SPD and the Greens are advocating for the creation of a new public investment fund and more focused tax rebates for corporate investment.

These measures would be funded by a reform of the German debt brake and increased taxes for higher earners and wealthier segments of society.

Barclays analysts anticipate that the incoming coalition will adopt a pro-growth agenda, which is expected to encompass corporate and income tax reductions, along with tax rebates for private investments. Nevertheless, the specific details of these reforms, particularly regarding their financing and the stance on modifying the debt brake rule, remain uncertain, especially since the CDU/CSU has not divulged comprehensive information on these matters.

The analysts also expect that the new fiscal policy will not hinder German economic growth as it might have under the German Draft Budgetary Plan 2025, which was submitted to the European Commission in October 2024.

While the fiscal policy is not predicted to be as expansionary as the parties’ manifestos would imply, it is forecasted to have a slightly positive impact on growth for the years 2025 and 2026, bolstered by contributions from public investment.

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