1 Hint of US rate rise in December (Rupert Neate in
The Guardian) The Federal Reserve on Wednesday kept interest rates unchanged at
their record low of near-zero, but raised the likelihood of a rate hike in
December by dropping previous warnings about the fragility of the global
economy.
Fed policymakers voted to leave rates at 0-0.25% –
where they have been for the seven years since the financial crisis. However,
the bank’s Federal Open market Committee (FOMC), which sets the rate,
significantly raised the prospect of a historic rate rise at its next meeting
in December by removing cautious statements about unstable international
markets could adversely effect the US economy.
In September, following concerns about the health of
the Chinese economy, the committee said: “Recent global economic and financial
developments may restrain economic activity somewhat and are likely to put
further downward pressure on inflation in the near term.”
This was modified on Wednesday to: “The committee
continues to see the risks to the outlook for economic activity and the labor
market as nearly balanced but is monitoring global economic and financial
developments.”
The committee specifically pointed towards the
possibility of raising rates at its December meeting – the last of 2015. “In
determining whether it will be appropriate to raise [rates] at its next
meeting, the committee will assess progress toward its objectives of maximum
employment and 2% inflation,” it said in the statement.
The Fed warned that the pace of job gains has
“slowed”, while the unemployment rate held steady. It also repeated its warning
that it wants to be “reasonably confident” that currently ultra-low inflation
will rise to its 2% target before it raises rates. Other central banks around
the world are closely watching the Fed’s process and a decision to increase
rates is likely to lead to rates being raised across the world.
2 Scandal hurts Volkswagen but sales hold up (San
Francisco Chronicle) Volkswagen lost 1.67 billion euros ($1.83 billion) in the
third quarter as it set aside 6.7 billion euros to pay for recalling and fixing
cars that were rigged to evade U.S. diesel emissions tests.
While the German carmaker warned Wednesday that
operating profit this year would be "down significantly," it
indicated that sales would prove resilient. The company stuck to its prediction
that unit sales would be on a level with last year's record 10.14 million.
Volkswagen, based in Wolfsburg, Germany, had already
announced the set-asides for the recalls, so market analysts expected the
quarterly loss, the company's first in over a decade. The result was in fact
not as bad as analysts' expectations for a loss of 2.11 billion euros, as
compiled by financial data provider FactSet. Sales revenue rose 5.3 percent to
51.5 billion euros.
Analysts say the impact will likely be several times
larger than the set-asides, including fines, recall and repair costs, and
possible lost sales due to damage to the company's reputation. The scandal
became known on Sept. 18, near the end of the quarter, so any impact on
quarterly sales was slight.
The US Environmental Protection Agency says
Volkswagen installed software on 482,000 cars from model years 2009-2015 that
disabled diesel engine emission controls when the vehicles were not being
tested. Up to 11 million cars worldwide have the deceptive software.
The scandal spoiled what would otherwise have been a
profitable quarter, with 3.2 billion euros in earnings excluding interest,
taxes and the scandal set-asides. The scandal has cost Volkswagen the position
as the biggest automaker in the world by sales, which Toyota has regained.
3 Record cash profit for ANZ (BBC) One of
Australia's biggest lenders, ANZ, has posted a record annual cash profit of
7.2bn Australian dollars ($5.1bn). Analysts said the closely watched cash
profit measure, which strips out some one-off items, would be welcomed by
investors despite expectations for profits of A$7.29bn.
The result for the year to September marks a 1% rise
on cash profits from a year earlier. The lender, which is the nation's
third-biggest bank by market value, also said its after-tax profit rose 3% to
A$7.5bn. The results follow National Australia Bank's full-year profit report,
which failed to impress investors after it missed expectations.
Australia's banking sector, particularly the
so-called top four, which includes National Australia Bank, Commonwealth Bank
of Australia and Westpac, is regarded as being highly profitable. The sector
made it through the global financial crisis relatively unscathed, but is now
facing tighter regulatory controls. Banks have been told to increase the amount
of capital they put aside in order to protect their mortgage businesses.
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