Syndicated News Archives - Page 4 of 306 - Kelly Rahill Accountants

US Fed members unanimously reject negative rates – minutes

US central bankers last month dismissed the idea of taking interest rates into negative territory, something President Donald Trump has called for many times, according to meeting minutes released last night. 

Evidence for the benefits of negative interest rates – lenders must pay borrowers rather than the other way around – has proven “mixed” in countries where it has been tried, according to members of the Fed’s rate-setting Federal Open Market Committee. 

US Federal Reserve policymakers also said at the October 29-30 meeting that the world’s largest economy has “proven resilient” in the face of persistent global difficulties but risks remain “elevated,” including from Trump’s trade war.

But the minutes also confirmed Fed members believe further rate cuts should be unnecessary in the near term, barring major changes to the outlook.

The Fed cut the benchmark lending rate last month for the third time this year, bringing it down to a range of 1.5-1.75%. 

Donald Trump has relentlessly attacked the Fed, demanding lower and even negative interest rates, claiming that relatively higher US interest rates put the country at a disadvantage against weaker economies in Europe and Asia.

During an appearance in New York last week, Trump said the Fed was blocking America from the kinds of stimulus other countries enjoyed.

“Give me some of that money. I want some of that money,” Trump said of negative rates. 

“Our Federal Reserve doesn’t let us do it,” he added. 

The minutes of the Fed deliberations made clear that under the current circumstances US central bankers have all but shut the door to negative rates. 

“All participants judged that negative interest rates currently did not appear to be an attractive monetary policy tool in the US,” the minutes said. 

There is “limited scope” to adopt such a policy, which has not clearly benefited other countries and could have untold consequences for bank lending and household spending, the minutes said. 

And negative rates would introduce “significant complexity and distortions” into the US financial system, Fed members said.  

However, they “did not rule out” that circumstances could arise that would cause them to change their position.

Meanwhile, in general, the US economy appears to be doing well, with the risk of recession lessening in recent weeks. 

But, while job markets and consumer spending remain strong, Fed members generally felt businesses will remain skittish about investing and exports will remain weak due to “trade uncertainty and sluggish global growth.” 

The Fed this year has reversed most of last year’s four increases to bolster a slowing economy and provide “insurance” against looming dangers, including Trump’s trade wars. 

After three rate cuts in row, current interest rate levels are “well calibrated” to support growth and “likely would remain so” as long as the outlook remains broadly the same. 

Efforts to end the trade wars, however, appear to be stumbling, with a partial deal announced last month sliding out of view as Trump threatens to jack up tariffs to pressure Beijing to cooperate. 

Futures markets as of this week predict the Fed will hold its fire until June, when a majority of investors expect cutting to resume.

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New lending rules for credit unions from January

The Central Bank has said it will allow credit unions undertake increased longer term lending, including home mortgage and business lending.

From January next year, new regulations will remove the existing lending maturity limits for credit unions which cap the percentage of their lending for periods of greater than five and ten years. 

These maturity limits will be replaced by new concentration limits, on a tiered basis, for home mortgage and business loans, expressed as a percentage of total assets.

The volume of loans a credit union can issue will now be aligned to their asset size, which could enable many credit unions to double or treble their lending in certain loan classes.

 The Central Bank said the changes provide those credit unions who have the financial strength, the competence and the capability, the flexibility to undertake increased longer term lending, including home mortgage and business lending.

The Central Bank’s Registrar for Credit Unions, Patrick Casey, said today’s changes follow a comprehensive review of the lending framework for credit unions. 

Mr Casey said the changes form part of the Central Bank’s commitment to ensuring a responsive regulatory framework.

“It is important that the lending framework remains appropriate for credit unions taking account of their risk management, capabilities, expertise and financial resilience,” he added.

He added that where credit unions wish to undertake increased house and commercial lending, it is important that they understand the risks involved.

The Credit Union Development Association (CUDA) described the introduction of the new rules as a hugely significant development.

A recent survey commissioned by CUDA and conducted by iReach found that 70% of people said that credit unions can and should “take on the banks”.

74% of adults surveyed believe that credit unions could make a bigger impact and should collaborate to compete with the banks.

Kevin Johnson, CEO of CUDA, said that up until now the level of loans the credit union could give out was based on the percentage of loans already issued. 

He said this was holding credit unions back from providing more loans to support their members and their communities. 

“Now the volume of loans will be based on a percentage of assets of the credit union. With an average of just 28% of assets currently lent out, the regulations will allow many credit unions to do more loans for more people,” Mr Johnson said.

CUDA had lobbied for the changes since 2015, adding that they will bring much needed competition to the market for mortgages, home renovations and business loans.

But Mr Johnson also said he was disappointed that credit unions will be prohibited from supporting aspects of Government Housing Policy such as the Repair and Leasing Scheme. 

“There is no logic to prohibiting credit unions from providing much needed loans to their members who want to help rebuild Ireland through the Repair and Leasing Scheme,” he said. 

“We are also disappointed with the limit put on the number of business loans a credit union can do, in a time when many credit union members are small businesses are crying out for funding,” he added.

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Christmas still ‘make or break’ for many retailers

The average retailer still relies on the six weeks around Christmas for up to 30% of its annual trade, according to the Ibec group, Retail Ireland.

The sector has benefitted from rising wages and an increase in disposable income across the economy in recent years.

However, footfall on the streets of towns and cities across the country has been falling with the growing popularity of online shopping.

“In terms of the end of year performance, it’s crucial. The challenge is in attracting disposable income that exists in the consumer market,” Thomas Burke, Director of Retail Ireland said.

“There are 2.3 million people at work across the economy. Wages are increasing and disposable incomes are up, but retail is under pressure from variety of other sectors to attract that disposable income. It’s crucial for Irish retailers when they review their annual numbers,” Mr Burke added.

The sector is facing into the annual ‘Black Friday’ shopping phenomenon which is described as something of a ‘double-edged sword’ for the retailers as they try to strike a balance between attracting customers with discounts while making some return at the same time.

Mr Burke was speaking today as Retail Ireland launched the first national apprenticeship scheme for the retail sector.

“It’s aimed at people who work in the sector and have ambitions to be managers. It’s a level 6 programme aimed at retail supervisors. We’re looking at the entry grade to retail management.

“From an employer’s perspective, it’s a talent identification tool – an opportunity to put their people on a path towards development and management roles in the future.”

The skills involved in the programme include human and digital skills and retail specific knowledge.

It also offers the opportunity for participants to move into a retail degree programme.

“There’s a clear trajectory here towards senior maangement role in industry. We’re trying to build the future leaders of the retail sector with the skills required,” Mr Burke concluded.

More time spent on social media than calls – ComReg

New research shows that consumers here are using our phones less and less for phone calls and more for messaging and social media. 

The research from communications regulator ComReg also finds that almost everyone in the country now has a phone – with Samsung and Apple the most popular brands. 

Consumers are spending about a half an hour a day making regular calls, down slightly on the same survey conducted two years ago. 

People are also spending more time sending emails and chatting on social media – 46 minutes a day on average compared to 33 minutes in 2017. 

Consumers are also sending more and more messages via apps like WhatsApp, instead of old-fashioned texts. 

The average mobile phone user sends 11 and a half texts a day, while they sent almost 29 messages via apps like WhatsApp, which is up from about ten a day two years ago.

The amount of time spent on video and music streaming has more than doubled with consumers now spending more than 20 minutes on each of those each day. 

Consumers also appear to be happy with their mobile phone services, as ComReg found that just one in four have ever switched providers.

77% of people said they were happy with the network coverage they were getting.

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ECB has not reached limits of monetary policy – Lane

The European Central Bank has not reached the limit of what it can do on monetary policy, its chief economist Philip Lane has said.

Despite unprecedented monetary easing, Professor Lane said the ECB still had further tools in its toolbox if needed, but added that they would depend on particular circumstances. 

“Let me emphasise that we don’t think we’re at a limit as of yet,” chief economist Philip Lane, the former Central Bank Governor, told a Fortune conference in Paris.

“We do think that the bigger focus should be rather on what other policies can contribute to make this limits question less relevant, less interesting because the economy would be growing more quickly,” he added.

Euro zone inflation confirmed as slowing to 0.7% in October

Euro zone’s headline inflation slowed in October, the European Union statistics office said today as it confirmed its earlier estimate, with energy prices falling markedly. 

Eurostat also said the 19-country bloc posted in September a larger surplus in its trade with the rest of world, as exports grew more than imports. 

Inflation was confirmed at 0.7% on the year, down from 0.8% in September, in line with preliminary estimates Eurostat issued on October 31. 

The slowdown was caused by a 3.1% drop in energy prices, which more than offset the 1.5% inflation rate recorded in services and for food, alcohol and tobacco products. 

The narrower inflation indicator, which strips out volatile energy and unprocessed food prices and is monitored closely by the European Central Bank, was confirmed at 1.2%, unchanged from September. 

Excluding energy, food, alcohol and tobacco, inflation grew 1.1% in October, Eurostat said confirming earlier figures, up from 1.0% in September. 

In a separate release, Eurostat said the bloc’s trade surplus expanded to €18.7 billion in September, up from €12.6 billion recorded in September 2018. 

It also grew from the €14.7 billion surplus posted in August. 

Despite trade tensions, the bloc increased by 5.2% its export of goods to the rest of the world in September compared to the previous year, more than offseting a 2.1% rise in imports.

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EU Commission gives green light to broadband plan

The European Commission has approved the Government’s National Broadband Plan, saying it complies with EU state aid rules.

The decision means one of the final hurdles preventing the State from signing the contract with the preferred bidder, National Broadband Ireland, has been overcome.

The Commission said the €2.6bn of public support will result in high-speed broadband services being brought to consumers and businesses in areas with insufficient connectivity in Ireland.

“The National Broadband Plan in Ireland is expected to address the significant digital divide between urban and rural areas in Ireland, enabling Irish consumers and businesses to benefit from the full potential of digital growth,” said Competition Commissioner Margrethe Vestager.

“This will help households and businesses in areas of Ireland where private investment is insufficient.”

The Commission assessed the planned measures under the EU state aid rules, including broadband guidelines dating from 2013.

It decided that the scheme’s “positive effects on competition in the Irish broadband market” outweigh potential negative effects brought about by the public intervention. 

The plan aims to bring download speeds of at least 150Mbps and upload speeds of 30Mbps to parts of the country where commercial operators claim it is not commercially viable for them to offer a service.

Services will be offered on a wholesale access basis to all operators and this will incentivise private investment in the provision of high-speed internet services in the areas concerned, the Commission said.

“The Irish authorities have developed a comprehensive mapping of available infrastructure and carried out numerous public consultations in order to determine the target areas,” it stated.

The decision has been welcomed by Minister for Communications, Richard Bruton.

“Today’s decision from the Commission allows the government to proceed towards signing the National Broadband Plan contract with National Broadband Ireland which will commence the roll out of 147,000km of fibre to homes, farms, businesses and schools across our country,” he said in a statement.

Department sources were unable to say how soon it would be before the contract is signed.

WTO members warn on post-Brexit market access

World Trade Organization members have demanded compromises from the EU and Britain to ensure foreign businesses do not lose market access in post-Brexit trade.  

At a meeting of the WTO’s Goods Council, 15 countries – including the US, India, Australia and Canada – raised concern over the so-called Tariff Rate Quotas (TRQs) that will be in place after Brexit. 

Under WTO rules, nations use TRQs to set a threshold at which foreign goods can be imported at reduced tariff rates.  

Non-European nations have warned that their producers could lose access to both the British and EU markets. 

They fear that EU quotas will be soaked up British imports, while British quotas will be filled by imports from the EU.  

“We will be quickly crowded out and face a loss of access to both markets,” the US said in a statement delivered to the WTO meeting. 

New Zealand agreed that it was “hard to see” how WTO members from outside Europe “would have much realistic chance of accessing these quotas”. 

New Zealand also called on London and Brussels to create quotas “explicitly preserved for other WTO members to maintain our existing levels of access, or substantially expanded (quotas) to account for the large bilateral EU-UK trade.” 

Australia said its businesses with licenses to export agricultural products to the EU under the existing quotas system had already suffered “significant commercial disruptions” because of the uncertainty surrounding the system after Brexit. 

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Two thirds of SMEs do not have digital presence

A survey by the IE Domain Registry, which manages the dot-IE web address, h found that two thirds of SMEs do not have a digital presence.

This means that much of the ever increasing amount of money spent online is going to multinationals like Amazon and ASOS.

David Curtin, CEO of the IE Domain Registry, said that as Irish consumers demand is not being satisfied by Irish companies, they are drifting towards the likes of Amazon and Alibaba. 

He said the risk for Irish business is that those consumers will not come back and the gap will continue to widen.

The loyalty of those customers moves from the local SMEs to the international platform, he added.

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Property prices see slowest growth in six years – CSO

Dublin residential property prices fell for the third month in a row in the year to September, the latest Central Statistics Office figures show today.

Dublin residential property prices decreased by 1.3% in the year to September, with house prices falling by 1.5% and apartments slowing by 0.2%. 

The CSO noted that the highest house price growth in Dublin was in Fingal at 1.5%, while Dun Laoghaire-Rathdown saw a decline of 6.8%.

Dublin property prices had slowed for the first time since 2012 in July.

Meanwhile, residential property prices in the rest of the country rose by 3.6% in the year to September, with house prices increasing by 3.4% and apartments by 4.8%. 

According to the CSO, the region outside of Dublin that saw the largest rise in house prices was the Border with growth of 11.8%, while the smallest rise was recorded in the Mid-East at 0.2%.

Overall residential property prices increased by 1.1% nationally in the year to September – the slowest rate of growth in over six years. 

The CSO said this compares with an increase of 2% in the year to August and an increase of 8.5% the same time last year. 

Today’s CSO figures also show that households paid a median price of €255,000 for a home on the property market in the 12 months to September. 

Dublin was the county with the highest median price at €368,000. Within Dublin, Dún Laoghaire-Rathdown had the highest median price of €527,000, while Fingal had the lowest at €340,000. 

The CSO said the highest median prices outside Dublin were seen in Wicklow with prices of €323,500 and Kildare on €304,999, while the lowest price stood at €106,250 in Leitrim.

It also said that a total of 45,192 household dwelling purchases were filed with Revenue in the year to September. 

Of these, 31.4% were purchases by first-time buyer owner-occupiers, while former owner-occupiers purchased 52.7%. The remaining were bought by non-occupiers.

Revenue data shows that there were 1,325 first-time buyer purchases in September 2019, an increase of 15% on last year. 

These buys consisted of 386 new homes and 939 existing homes.

Separate figures from the CSO today show a 22% increase in the number of new dwellings built in the three months to September. 

60% of all new dwellings were completed in Dublin or the Mid East and the CSO said the Eircode with the most new dwellings was Naas. 

Meanwhile, a total of 1,538 bed spaces were completed in the student accommodation sector in the third quarter.

Residential property prices had shot up from 2013 to 2018 following a property crash just over a decade ago that meant just 4,500 homes were built in 2013 despite the fact that a sharp economic recovery had begun to take hold. 

Prices have risen at more sustainable levels this year due to mortgage lending limits, which put a lid on double digit percentage rises, and as supply started to catch up. 

“In previous cycles, we’ve had rampant house price inflation and rampant supply together whereas this time around you have sedate, stable house price inflation but you’re still seeing the supply response come,” Davy Stockbrokers chief economist Conall MacCoille said. 

“Part of that is because home building is just still at a very, very low level. We’re still building the lowest level of homes since the early 1990s when the population was 3.8 million and now it’s 4.9 million,” Conall MacCoille said. 

Data this week also showed housing starts across the country were up 33% in the last year, which Mr MacCoille said should translate into over 25,000 new homes in 2020. 

That is still below the 35,000 analysts estimate are needed every year to meet demand and Central Bank Deputy Governor Sharon Donnery warned on Wednesday that supply was not rising fast enough, noting that for every 12 new jobs created in Dublin over the past five years, just one new dwelling has been built.

While house prices are 16.9% below the unsustainable 2007 peak, rents have long overshot that mark. 

At more than 40% above the previous peak in Dublin, sky-high rents highlight the major affordability problem in the market and difficulties prospective buyers face in saving a deposit to buy a home.

With the number of homes available to rent also beginning to rise, annual rent inflation has slowed to 5.2% from 12% in mid-2018, property website Daft.ie said this week.

“It’s going to take a couple of years of supply before affordability is dealt with,” Conall MacCoille said.

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