By Nikunj Ohri

NEW DELHI (Reuters) – The Indian government is pushing back on two key proposals of the central bank, which will require banks to set aside more funds for infrastructure projects and hold more liquid assets against online deposits, according to a government source.

Large parts of Asia’s third-largest economy rely on bank financing with lenders’ credit growing at nearly 14% over the past year.

The Reserve Bank of India (NS:BOI) (RBI) in May proposed banks set aside 5% of the loans given to infrastructure projects that are under construction, pushing banks to approach the government on concerns over a rise in the cost of funding such projects.

Separately, the central bank proposed in July that banks should provide an additional 5% ‘run-off’ on digitally accessible retail deposits to enable them to better manage risks from heavy withdrawals through internet or mobile banking.

This would result in banks holding more liquid assets such as government bonds, reducing the funds available to lend to customers.

Both the proposals have yet to take effect.

The federal finance ministry’s banking department, on two different occasions, has written to the RBI asking the guidelines be diluted as they could “squeeze credit in the economy”, the government source said.

For the proposed project finance guidelines, the banking department has suggested the RBI take a case-by-case approach towards different sectors for deciding the quantum of funds banks set aside, based on the sector’s risk profile, according to the source.

The source did not want to be named as they are not authorised to speak to media.

The finance ministry and RBI did not immediately respond to an email seeking comment.

High-risk projects in real estate sector can have a higher 5% provisioning limit, but solar and renewable energy projects should not be mandated to provide higher provisioning, the source said, adding the government has not suggested any ceiling for the percentage of funds needed to be set aside.

The regulatory guidelines should strike a balance between credit needs of the economy and the health of the banking sector, the source said.

For online deposits, the “run-off” should be mandated only for categories of deposits that may see heavy withdrawals, and not across the board, the source said.

WASHINGTON (Reuters) – President Joe Biden’s budget director called on U.S. lawmakers on Monday to quickly pass emergency disaster relief funding in the wake of damaging storms and said it would send Congress a funding package in coming days.

Biden’s administration has made multiple requests for more disaster aid since Congress last passed supplemental funding in December 2022, but lawmakers have not acted despite multiple storms including Hurricanes Helene and Milton, White House Office of Management and Budget Director Shalanda Young said.  

Severe storms also have hit Alaska, Connecticut, Louisiana, New Mexico, Virginia, Pennsylvania and Illinois, she wrote in a memo.    

“The Biden-Harris Administration stands ready to work with lawmakers to deliver the vital resources our communities need with strong bipartisan and bicameral support,” Young said, adding that disaster relief is not typically a partisan issue.

Young did not say how much the administration would seek but noted the roughly $120 billion after Hurricanes Harvey, Irma and Maria in 2017, $90 billion in 2015 after Hurricane Katrina, and $50 billion after Hurricane Sandy in 2013.  

She also noted that Republican House Speaker Mike Johnson, who visited North Carolina last month in the wake of Hurricane Helene, had told reporters Congress would take bipartisan action to provide an “appropriate amount” of federal funds.

Representatives for Johnson could not be immediately reached for comment on the request, which requires congressional approval. A new Republican-led Congress convenes in early January and Biden leaves office Jan. 20, handing over the White House to Republican Donald Trump.  

Hurricane Milton came ashore on Oct. 9 and carved a swathe of destruction across Florida, including an estimated $1.5 billion to $2.5 billion in crops and agricultural infrastructure damage alone, among other losses.    

Hurricane Helene had made landfall farther north just weeks earlier.    

 Analysts have said they expect up to $55 billion in insured losses from this year’s Hurricanes Helene and Milton.

Investing.com — Morgan Stanley analysts expect the Federal Reserve to implement a series of four consecutive 25 basis point interest rate cuts, bringing the federal funds rate to 3.625% by May 2025.

The bank’s forecast reflects slower economic growth, labor market cooling, and persistent inflationary pressures.

Morgan Stanley (NYSE:MS) highlighted that “lower immigration flows and more tariffs” are weighing on GDP growth and contributing to “stickier inflation.”

While Morgan Stanley says inflation is projected to decelerate through early 2025, they add that it is expected to remain above the Fed’s 2% target through 2026.

The firm forecasts core PCE inflation at 2.8% for 2024, 2.5% for 2025, and 2.4% for 2026.

The bank adds that economic growth is anticipated to slow significantly, with GDP projected to grow 2.4% in 2024, 1.9% in 2025, and 1.3% in 2026 on a year-over-year basis.

“The consumer slows” as labor income growth decelerates and tariffs dampen activity, Morgan Stanley said. They believe the labor market will also feel the effects, with unemployment rates rising from 4.1% in 2025 to 4.5% by the end of 2026.

Morgan Stanley anticipates the Fed will pause rate cuts in the second half of 2026 as economic growth falls below potential. Quantitative tightening (QT) is also expected to conclude by early 2025.

The bank outlined three alternate scenarios, including a “hard landing,” where the Fed overtightens, and GDP contracts in 2025; a “reacceleration,” where rate cuts fuel economic growth; and a “China reflation,” in which U.S. inflation slightly increases due to more expensive imports.

Amid these uncertainties, Morgan Stanley emphasized the Fed’s caution: “The Fed cuts 25bp in the next four FOMC meetings, taking the fed funds rate to 3.625% by May 25. Signs of stickier inflation and overall policy uncertainty lead the Fed to pause until 2H26 when rapid cuts bring rates below neutral as growth slows below potential. At the same time, the Fed finishes QT in 1Q25.”

Investing.com –Trade tariffs pose a threat to the global economic outlook, as per analysts at Goldman Sachs. 

In their recent note, the brokerage identifies the potential for widespread tariff increases as a major downside risk for international markets and economic growth. 

This concern is particularly acute in light of ongoing geopolitical tensions and the resurgence of protectionist policies across key economic blocs.

Goldman Sachs warns that if implemented, broad-based tariffs—especially on key trade routes involving major economies like the U.S. and China—could disrupt supply chains and drive up costs for businesses and consumers alike. 

These developments may stifle global trade flows and weigh on corporate earnings, particularly in industries heavily reliant on international supply networks such as manufacturing and technology.

In its 2025 economic forecast, Goldman Sachs projects steady growth for major economies, including 4.5% for China and 2.5% for the U.S. 

However, these projections are underpinned by the assumption that trade tensions do not escalate to the extent of introducing large-scale tariffs. 

The note says that any deviation from this assumption—such as the imposition of new trade barriers—could result in a downward revision of these growth forecasts.

The brokerage also flags the broader market implications of increased tariffs, noting that equity markets could face additional valuation pressures. 

With risk asset prices already reflecting optimistic macroeconomic forecasts, the introduction of punitive trade measures could trigger heightened volatility and dampen investor sentiment globally.

NEW DELHI (Reuters) – India’s economic growth requires “far more affordable” bank interest rates, the finance minister said on Monday, adding New Delhi was committed to measures to ensure the economy remained on course.

“At a time when we want industries to ramp up and build capacities, bank interest rates will have to be far more affordable,” the minister, Nirmala Sitharaman, said at an event in Mumbai.

Last week, the nation’s trade minister said the Reserve Bank of India (NS:BOI) (RBI) should cut interest rates to boost economic growth and look through food prices while deciding on monetary policy.

The comments came after a surge in retail inflation, largely driven by a jump in vegetable prices, dashed hopes of an interest rate cut by the RBI in December.

“Inflation gets actually very, very volatile because of the supply demand constraints,” Sitharaman said, while refusing to weigh in on whether perishable items like food should be considered in the nation’s inflation targeting framework and while deciding on monetary policy.

Earlier this year, India’s top economic advisor said India’s monetary policy framework should consider targeting inflation that excludes food, the prices of which are more influenced by supply than demand. The trade minister, Piyush Goyal, backed the suggestion.

Persistently high food inflation has also squeezed middle class budgets, slowing urban spending in the past three to four months and threatening the country’s brisk economic growth.

Sitharaman said there was no cause for undue concern and the government was committed to measures needed to ensure the Indian economy remains on course.

By Olena Harmash

KYIV (Reuters) – Russia’s full-scale invasion of Ukraine reaches its 1,000th day on Tuesday, a grim milestone in Europe’s deadliest conflict since World War Two.

Devastating human and material losses continue to mount, leaving Ukraine more vulnerable than at any time since the early days of the war. Following is a summary of Ukraine’s losses since the invasion.

HUMAN TOLL

As of Aug. 31, 2024 the UN Human Rights Monitoring Mission in Ukraine had documented at least 11,743 civilians killed and 24,614 wounded in Ukraine since the start of Russia’s full-scale invasion.

UN and Ukrainian officials say the actual figures are probably much higher, given the difficulty in verifying deaths and injuries, especially in areas such as the devastated port city of Mariupol that are now in Russian hands.

Ukrainian prosecutors said 589 Ukrainian children had been killed by Nov. 14, 2024.

Though civilians have suffered greatly, the vast majority of the dead are soldiers: a rare all-out conventional war fought by two comparably equipped modern armies has been extraordinarily bloody. Many thousands have perished in intense fighting across heavily fortified front lines under relentless artillery fire, with tanks, armoured vehicles and infantry mounting assaults on trenches.

Both sides closely guard tallies of their own military losses as national security secrets, and public estimates by Western countries based on intelligence reports vary widely. But most estimate hundreds of thousands of wounded and dead on each side.

Western countries believe Russia has suffered far worse casualties than Ukraine, sometimes losing more than 1,000 soldiers killed per day during periods of intense fighting in the east. But it is Ukraine, with around a third of Russia’s population, that is likely to be facing the more severe manpower shortages arising from battles of attrition.

In a rare Ukrainian reference to its military death toll, President Volodymyr Zelenskiy said in February, 2024 that 31,000 Ukrainian service members had been killed. He gave no figures on the number of injured or missing.

Apart from the direct casualties, the war has raised mortality rates from all causes across Ukraine, caused the birth rate to collapse by about a third, sent more than 6 million Ukrainians fleeing abroad to Europe and displaced nearly 4 million inside the country. The United Nations estimated that Ukraine’s population had declined by 10 million, or around a quarter, since the start of the invasion.

TERRITORY

Russia now occupies and claims to have annexed around a fifth of Ukraine, an area around the size of Greece.

Moscow’s forces initially stormed through northern, eastern and southern Ukraine in early 2022, reaching the outskirts of Kyiv in the north and crossing the Dnipro River in the south. Ukraine’s military pushed them back throughout the first year of the war, but Russia has still kept swathes of southern and eastern territory, added to land it and its proxies had already seized in 2014. Moscow has now captured nearly the whole of the Donbas region in Ukraine’s east, and the entire coast of the Sea of Azov in the south.

Many cities in the frontline area that have been captured by Moscow have been destroyed, largest among them the Azov port of Mariupol, with a population before the war of around half a million. In the past year, Russia has slowly extended its grip in intense fighting, mainly in the Donbas. Ukraine, for its part, launched its first large-scale assault on Russian territory in August and has captured a sliver of western Russia’s Kursk region.

DEVASTATED ECONOMY

Ukraine’s economy shrank by about a third in 2022. Despite growth in 2023 and so far this year, it is still only 78% of its size before the invasion, First Deputy Prime Minister Yulia Svyrydenko told Reuters.

The latest available assessment by the World Bank, European Commission, United Nations and Ukrainian government found that direct war damage in Ukraine had reached $152 billion as of December, 2023, with housing, transport, commerce and industry, energy and agriculture the worst-affected sectors.

The total cost of reconstruction and recovery was estimated by the World Bank and Ukrainian government at $486 billion as of the end of December last year. The figure is 2.8 times higher than Ukraine’s nominal gross domestic product in 2023, according to economy ministry data.

Ukraine’s power sector has been particularly hard hit, with Russia regularly targeting infrastructure in long range attacks.

Ukraine is one of the world’s main sources of grain, and the interruption of its exports early in the war worsened a global food crisis. Exports have since largely recovered with Ukraine finding ways to circumvent a de facto Russian blockade.

Ukraine spends most state revenues funding defence, and relies on financial aid from Western partners to pay pensions, public sector wages and other social spending. Each day’s fighting costs Kyiv about $140 million, said Roksolana Pidlasa, the head of parliament’s budget committee.

The draft 2025 budget envisages that about 26% of Ukraine’s GDP, or 2.2 trillion hryvnias ($53.3 billion), would go on defence. Ukraine has already received more than $100 billion from its Western partners in financial aid.

(Reuters) – UK’s main stock indexes traded in a tight range on Monday, as caution prevailed ahead of an inflation report due later in the week, while conglomerate Melrose (LON:MRON) jumped following an upbeat trading update.

In a quiet start to the week, the FTSE 100 index inched up 0.2%, buttressed by gains in precious metal miners as bullion prices rebounded. [GOL/]

Melrose Industries rose 6.4% to levels seen more than three months ago, after the owner of aerospace parts maker GKN (LON:GKN) Aerospace reported a jump in revenue over the past four months and said it expects to deliver a surge in free cash flow in 2025.

“Historically Melrose bought up industrial businesses and executed a buy, improve, sell model – investors will hope the ‘improve’ bit has been retained,” said Russ Mould, investment director at AJ Bell.

The midcap FTSE 250 that houses more domestically exposed companies dipped 0.1%, ahead of October inflation data expected on Wednesday.

A majority of market participants, as per data compiled by LSEG, have priced in that the Bank of England could leave interest rates unchanged at its last meeting for the year in December, despite signs of the economy in contraction.

The main indexes logged losses in the previous week, with the FTSE 100 clocking its fourth straight week in declines.

Meanwhile, Cerillion added 2.7% after the billing, charging and customer relationship management software solutions provider reported strong annual results.

IQE pared early losses and was last down 3.7% after the British semiconductor wafer maker said it would start a strategic review of its assets and warned that revenue would not grow this year due to a slower-than-expected recovery and weak consumer demand in end markets.

The construction and materials index was among the top sectoral decliners. A monthly report from online property portal Rightmove (OTC:RTMVY) said asking prices for homes fell over the last month by more than is usual for the time of year.

Also on tap this week are October retail sales figures and November business activity data.

DUBLIN (Reuters) – European Central Bank policymaker Gabriel Makhlouf said it would be premature to start making decisions on what a new U.S. administration might do when asked if Donald Trump’s election moves the dial on his thinking on inflation.

“I do think it would be premature to come to conclusions as to exactly what it is that the new U.S. administration is going to do, and to start making decisions based on that assumption,” Makhlouf told reporters on Monday.

Makhlouf added that it would be going a bit far to say an ECB interest rate cut next month is “in the bag” and that the evidence would need to be “pretty overwhelming” to consider a 50-basis-point cut at the Dec. 12 meeting.

By Rahul Trivedi

BENGALURU (Reuters) – Bank Indonesia will leave interest rates unchanged on Wednesday, aiming to protect the rupiah from further depreciation amid concerns U.S. President-elect Donald Trump’s policies could spur dollar strength, a Reuters poll of economists found.

With inflation having stayed within BI’s target range of 1.5-3.5% for over a year, the central bank can focus on the rupiah which despite regular interventions has dropped nearly 5% from a September peak, arguing for fewer rate cuts from the bank whose mandate is to maintain currency stability.

Some economists in the latest survey revised their expectations from a rate cut in an October poll to a hold at the Nov. 20 meeting.

Over 70% of respondents, 25 of 34 in the Nov. 11-18 Reuters poll, predicted the central bank would keep its benchmark seven-day reverse repurchase rate at 6.00% this week.

Median forecasts showed BI cutting rates by 25 basis points to 5.75% in December, a quarter percentage point less than the previous poll predicted.

“I think it’s likely to be a close call. They’re a little bit concerned about the currency. It has fallen back since the election in the U.S. so they’d like a bit more clarity on what the outlook is,” said Gareth Leather, senior Asia economist at Capital Economics.

“I suspect they’ll keep rates on hold this month.”

Among those who expected BI to pause in November, two-thirds or 16 of 25 economists expected a 25 basis point cut to 5.75% in December.

Median forecasts showed rates falling to 5.00% in the fourth quarter next year compared to the second quarter in the last two polls.

The expected delay partly reflects diminishing bets on rate cuts from the U.S. Federal Reserve as Trump’s policies – broad-based tariffs and tax cuts – are seen as inflationary, keeping the U.S. dollar stronger for longer.

“BI will likely struggle to find more opportunities to keep easing monetary policy in a stronger U.S. dollar environment,” said Brian Tan, senior regional economist at Barclays (LON:BARC).

“We believe the risks have tilted towards a delayed resumption of BI rate cuts, as well as a higher terminal rate than would otherwise have been the case.”

(Other stories from the Reuters global economic poll)

SAO PAULO (Reuters) – The Brazilian government’s package of spending cuts is practically done and will be released soon, pending only a response from the defense ministry, Finance Minister Fernando Haddad said in an interview with Times Brasil/CNBC on Sunday.

“The package is agreed with the president (Luiz Inácio Lula da Silva). We’re going to announce it soon, because we’re missing a response from one ministry … the Ministry of Defense,” said Haddad.

“We had good meetings with the minister (José Múcio) and the commanders of the forces.”

Haddad did not comment on the total amount of spending that the new fiscal measures will reduce, stating only that “the package is the size of our needs to maintain balanced growth.”

Haddad also said he believed that a fiscal adjustment could eventually lead to interest rate cuts by helping to slow inflation, after market expectations recently led the central bank to accelerate its monetary tightening pace.

The government has been promising to announce measures to contain spending in order to guarantee the sustainability of its fiscal framework, having previously said that the package would be announced after the second round of municipal elections in late October.

The delay in the announcement has caused stress in the markets, putting pressure on Brazilian assets.