Bank of Canada cuts interest rates again, worried about sluggish economic growth

The Bank of Canada has reduced its key policy rate by 0.025% for the second consecutive month, bringing it down to 4.5%. The central bank has indicated that additional reductions may be warranted should inflation persist in its anticipated decline. Previously, the bank had maintained interest rates at 5% for almost a year in order to combat high inflation by suppressing economic growth. Governor Tiff Macklem stated that the necessary conditions are in place to restore inflation to its target level. The bank anticipates that inflation will reach its 2% target on a sustainable basis by the second half of 2025. However, the bank has also revised its growth forecast for 2024 to 1.2%, reflecting increased debt payments and reduced consumer spending. Macklem highlighted the importance of fostering growth to prevent excessive inflation reduction. Furthermore, he acknowledged the growing influence of downside risks to inflation in monetary policy discussions, noting that a weak economy can exert downward pressure on inflation while high housing and service prices can exert upward pressure.

https://internasional.kontan.co.id/news/bank-of-canada-pangkas-suku-bunga-lagi-khawatir-terhadap-lesunya-pertumbuhan-ekonomi

Global Coal Demand is Flat

A recent report by the International Energy Agency (IEA) indicates that global coal demand is expected to remain flat in the coming years. The surge in coal demand in 2023, which reached an all-time high, was largely driven by China and India. However, the rapid expansion of solar and wind power, along with the recovery of hydropower plants in China, has exerted downward pressure on coal use. The primary driver of coal use is the power sector. While there has been an increase in coal demand in the power and industrial sectors, the low electricity output from hydropower plants is serving to fill the gap. The IEA anticipates that global coal demand will remain consistent through 2025, based on current policies and market trends. In the absence of robust growth in consumption, the likelihood is that coal use will decline.

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India Raises Tax on Stock Investment Gains

India is implementing substantial amendments to its taxation system with regard to gains derived from investments in stocks and stock derivatives. The objective is to rein in a surge in speculative trading amounting to $5 trillion. The government will increase the levy on stocks held for less than 12 months to 20%, marking the first increase since 2008. Furthermore, shares held for a period exceeding one year will be subject to a higher tax rate of 12.5%, compared to the previous rate of 10%. Furthermore, the securities transaction tax on stock options will be increased to 0.1%, while futures contracts will be subject to a tax of 0.02%. To mitigate the impact on small investors, the capital gains exemption limit eligible for tax exemption has been raised to 125,000 rupees. The surge in India's stock derivatives volume has prompted concerns about its potential negative impact on household budgets. However, some stock investors have expressed dissatisfaction with the tax hike, arguing that it may deter foreign investment.

https://internasional.kontan.co.id/news/india-menaikkan-pajak-atas-keuntungan-investasi-saham