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Canada’s central bank has reduced its main interest rate to 4.75 per cent, becoming the first G7 country to ease monetary policy in the current cycle.
“We’ve come a long way in the fight against inflation. And our confidence that inflation will continue to move closer to the 2 per cent target has increased over recent months,” Bank of Canada governor Tiff Macklem told a press conference on Wednesday.
The rate cut comes amid signs of economic slowdown in Canada, with first-quarter GDP growth at 1.7 per cent, below analyst expectations, and an April unemployment rate of 6.1 percent — the highest in over two years. Headline inflation was 2.7 per cent year on year in April.
“Inflation could be higher if global tensions escalate, if house prices in Canada rise faster than expected, or if wage growth remains high relative to productivity,” Macklem added.
The BoC’s move follows similar actions by central banks in Latin American countries, including Mexico, Brazil and Chile. Other G7 members, except Japan, are also expected to loosen monetary policy soon.
The European Central Bank and the Bank of England are predicted to make cuts this month, while a Reuters poll indicates a 55 per cent chance of a US Federal Reserve rate cut in September.
Update: The EU has followed Canada’s decision to cut its main interest rate, becoming the second major western economy to do so. The European Central Bank announced at its June meeting today that it will cut interest rates by 25 basis points from an all-time high of 4 per cent to 3.75 per cent. ECB president Christine Lagarde will explain the decision at a press conference to be held later today.
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The UK’s Financial Conduct Authority said on Wednesday that it will not hastily implement detailed regulations for the use of artificial intelligence in financial services.
“We are not at the moment inclined to just jump in and write lots of detailed rules,” FCA CEO Nikhil Rathi told attendees at an event held by trade body the Investment Association. “When you do that, almost by the time you’ve written the rules, they’re out of date.”
The EU has approved a new law to regulate AI, but other countries, including the UK, have yet to adopt similar measures.
Rathi noted that the UK’s existing regulatory framework already holds senior managers accountable for market stability, reducing the need for immediate new AI-specific rules.
He added that the FCA, alongside the Bank of England, would shortly take on powers to oversee critical third parties such as cloud computing providers, which would help provide oversight.
Additionally, Rathi said the FCA and BoE were also conducting several surveys of finance firms to understand how they were using AI and machine learning.
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Russia’s central bank governor Elvira Nabiullina said the country must remain integrated in the global economy and work with countries willing to engage with Russia despite western sanctions. She was speaking at the St Petersburg annual economic forum on Thursday, as reported by Reuters.
“Despite sanctions, we must be integrated in the global economy with those who are ready for it,” Nabiullina told a panel discussion.
“What does this mean? A working, independent system of settlements and payments, but not only that. It means the interconnectedness of our deposit systems, the mutual recognition of ratings, audit reports, insurance policies,” she added.
This year’s forum, which once attracted top western bankers, now sees participation mainly from countries still friendly to Russia. The presidents of Bolivia and Zimbabwe are due to join Russian President Vladimir Putin at Friday’s plenary session.
According to central bank data, foreign investment in Russia dropped by around 40 per cent to $696bn at the end of 2023, when compared to pre-war figures.
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Former Wirecard CEO Markus Braun, currently on trial for one of Germany’s largest corporate scandals, has lost his main lawyer Alfred Dierlamm due to running out of insurance funds to cover his mounting legal costs.
Munich prosecutors charged Braun with fraud three years after Wirecard’s collapse in 2020, which left creditors owed nearly $4bn after the German payment processor disclosed that €1.9bn in corporate cash linked to outsourced operations in Asia did not exist.
Dierlamm, a prominent defence lawyer, has previously been involved in major corporate cases, including the VW diesel emissions scandal. Braun will now be represented by state-funded lawyers as he continues to deny all charges.
This article has been updated to reflect the ECB’s announcement of its own interest rate cut.
