The Canadian housing market is due for a correction, but it will likely be a slow decline rather than a sharp drop, says a report from the Canadian Imperial Bank of Commerce.
Businesses requested more airplanes, autos, and oil drilling equipment in May. The jump in factory orders after a sluggish spring suggests supply disruptions stemming from the Japan crisis are fading.
Factory orders rose 0.8 percent in May, the Commerce Department said Tuesday. That followed a downwardly revised drop of 0.9 percent in April.
The increase pushed factory orders to $445.3 billion. That’s almost 32 percent higher than the low point during the recession, reached in March 2009.
Much of the increase was driven by a 36.5 percent increase in orders for aircraft, a volatile category. But there were also signs of strength in areas that had slowed sharply in the previous month.
Auto and auto parts orders rose 2 percent. And a measure of business investment rose 1.6 percent, after falling 0.4 percent the previous month. Companies invested more in computers and equipment.
Orders for so-called nondurable goods, such as food, clothing, oil, and plastics, fell 0.2 percent in May. But that was partly because oil prices dropped.
Until this spring, manufacturing had been one of the strongest sectors of the economy since the recession ended two years ago.
Economists largely blamed the weak period on high gas prices and the impact of the earthquake in Japan, which led to a parts shortage that has hampered U.S. manufacturers. Those factors appear to be easing. Gas prices have come down since peaking in early May. And the manufacturing sector expanded at a faster pace in June after slowing sharply in May, according to the Institute of Supply Management.
“There are encouraging signs that the second half will likely get better, particularly for manufacturers,” said Ryan Sweet, an economist at Moody’s Analytics short term personal loan.
A recovery in the auto sector is one reason production is picking up. Japanese automakers with plants in the U.S., such as Toyota Motor Corp., Honda Motor Co. and Nissan Motor Co., sharply cut production in the spring. But they are restoring output. Toyota executives say their North American factories will be back to 100 percent by September.
Busier auto plants would help boost the economy in the second half of this year. The economy grew at a 1.9 percent annual pace in the January-March quarter. Most economists expect a similarly weak pace of growth in the April-June quarter.
The economy is expected to grow at a 3.2 percent in the second half of this year, according to an Associated Press survey of 38 top economists.
Growth must be stronger to significantly lower the unemployment rate, which was 9.1 percent last month. The economy would need to grow 5 percent for a whole year to significantly bring down the unemployment rate. Economic growth of just 3 percent a year would hold the unemployment steady and keep up with population growth.
Employers added only 54,000 net new jobs in May, much slower than the average gain of 220,000 per month in the previous three months.
The government reports Friday on hiring data in June. Economists expect the economy added only 90,000 jobs and the unemployment rate was unchanged, according to survey by FactSet.
NATO said Saturday it has begun ramping up its airstrikes on military targets in the western part of Libya, where rebel forces claim a string of advances through territory still largely under Moammar Gadhafi’s control.
In a boost for Gadhafi, meanwhile, the African Union called on member states to disregard an arrest warrant issued by the International Criminal Court against the Libyan leader. That could enable Gadhafi to travel freely on the continent. The warrant was issued for his alleged role in a brutal crackdown on anti-government protesters earlier this year.
Libyan government spokesman Moussa Ibrahim praised the AU’s decision, saying “we salute their courage.” He said Gadhafi had no immediate plans to leave the country, however.
“We are at war with the mightiest armies in the world, and the safety of the leader is a must for us. So we need to keep him safe to lead us through this difficult time,” he said.
Libya welcomed a road map for dialogue drafted by the AU that outlines plans for negotiations between the government and rebels, Moussa said.
He confirmed that Gadhafi would not be involved in the proposed talks, and expressed hope that a cease-fire could be reached “in the next few days, or weeks at most.”
Gadhafi’s regime is determined to stand firm against opposition fighters moving from southern and eastern fronts toward the capital, Tripoli. The rebels have largely solidified control over the eastern third of Libya but have struggled to push out of pockets they hold in the west.
NATO’s comments about its latest airstrikes suggest the alliance is hoping to tip the balance further in the rebels’ favor despite threats by Gadhafi to carry out attacks in Europe unless the airstrikes stop.
The coalition said it has destroyed more than 50 military targets in the west this week. It says it is targeting government forces in cities and along “major lines of communication.”
“We are engaging all military assets that are being used to indiscriminately target the civilian population throughout Libya,” Lt. Gen. Charles Bouchard, commander of NATO’s Libya mission, said in the statement sent Saturday but dated the previous day.
NATO said more than 1.8 million civilians are at risk from a buildup of forces loyal to Gadhafi in western cities along the coast and in the Nafusa mountain range southwest of the capital.
Rebels control several Nafusa mountain towns and the vital port city of Misrata. The rest of western Libya, including the heavily protected capital Tripoli, remain under Gadhafi’s control payday loans.
Col. Ahmed Bani, a rebel spokesman, said Saturday that rebel fighters have pulled back in some parts of the west, in what he described as a “strategic retreat,” but said they would go on the offensive again in the coming days. Asked about the NATO attacks in the area, he said they have been helpful to the rebels, but did not elaborate.
Bani told a news conference in the rebel-controlled eastern city of Benghazi that the rebels are not sending reinforcements to the west and that the fighters there don’t need more weapons.
A coalition including France, Britain and the United States began striking Gadhafi’s forces under a United Nations resolution to protect civilians on March 19, giving the rebels air support. NATO assumed control of the air campaign over Libya on March 31. It is joined by a number of Arab allies.
In recent days, NATO said it has repeatedly hit Tripoli and Gharyan, a city at the eastern gateway to the Nafusa mountains and on a major road to capital. Gharyan sits about 50 miles (80 kilometers) south of Tripoli.
It also claims to have struck a network of tunnels storing military equipment about 30 miles (50 kilometers) southeast of the capital.
NATO said in a separate statement it struck two armed vehicles Friday near Bir al-Ghanam, a town rebels from the mountains have been trying to take along a road leading toward the capital.
Gadhafi threatened Friday to target European “homes, offices, families” unless NATO halts its bombing campaign. His defiant audio address was played to thousands of supporters packed into Tripoli’s main square during on of the biggest pro-government rallies since the airstrikes began.
It’s not clear whether Gadhafi can make good on the threats.
In the past, the Libyan leader supported various militant groups, including the IRA and several Palestinian factions, while Libyan agents were blamed for attacks in Europe, including a Berlin disco bombing in 1986 and the downing of Pan Am Flight 103 over Lockerbie, Scotland, that killed 270 people, mostly Americans. Libya later acknowledged responsibility for Lockerbie.
In recent years, however, Gadhafi was believed to have severed his ties with extremist groups when he moved to reconcile with Europe and the United States.
General Mills Inc.’s fiscal fourth-quarter net income rose 51 percent on stronger sales but was hampered by higher ingredient costs.
The Minneapolis-based maker of Cheerios, Lucky Charms and other foods also gave a 2012 earnings outlook below analysts’ expectations.
General Mills earned $320.2 million, or 48 cents per share, for the period ended May 29. That’s up from $211.9 million, or 31 cents per share, a year ago.
Adjusted earnings increased to 52 cents per share from 41 cents per share, meeting analysts’ forecasts.
Revenue climbed 3 percent to $3.63 billion from $3.53 billion, but missed Wall Street’s estimate of $3.66 billion.
The company saw its biggest sales gain in its Small Planet Foods organic and natural foods division, with its snacks and Yoplait divisions also reporting increased sales.
Ladue-based McCarthy Building Cos. Inc. topped out a new 134-bed, 359,000-square-foot replacement hospital and broke ground on a 141,000-square-foot medical office building for Good Samaritan Regional Health Center in Mount Vernon, Ill.
The $140 million hospital project doubles the size of the existing facility and is about 30 percent complete. It also includes eight observation beds, and all rooms are private. The medical office building is connected to the hospital and includes a surgery center and outpatient diagnostic services instant credit report. Both buildings are scheduled to be ready for use late next year.
McCarthy and Jefferson County-based partner Shores Builders and Lipps Construction broke ground on the hospital project in April 2010. McCarthy broke ground on the medical office building March 15.
Nigeria’s anti-corruption agency arrested one of the West African nation’s top politicians Sunday night on suspicion of defrauding the oil-rich country, an official said.
Officers arrested outgoing House of Representatives speaker Dimeji Bankole at his home in Nigeria’s capital of Abuja after the lawmaker resisted arrest for more than four hours, said Femi Babafemi, a spokesman for the Economic and Financial Crimes Commission.
Babafemi gave no additional details about the allegations facing Bankole, other than to say that he would be held “in custody to enable him to have sufficient time to answer questions on the numerous fraud allegations against him.” The lawmaker apparently refused several requests by officials to be interviewed.
“An intelligence report … showed that the former speaker was planning to leave Abuja for Lagos on Sunday evening and thereafter flee the country through an illegal route,” a statement from Babafemi read.
It was not immediately clear if Bankole had a lawyer. His spokesman could not be reached for comment early Monday morning.
Bankole conceded defeat to an opposition party candidate in Nigeria’s April elections, one of a number of prominent politicians who lost their seats in the country’s National Assembly.
Many pointed to Bankole’s defeat as a sign that Nigeria’s elections, typically marred by fraud and thuggery, had improved over the nation’s 12 years as a democracy. However, ballot-box stuffing and violence dominated later polls, with more than 800 people dying in religious rioting after the presidential election personal loans for bad credit.
Nigeria, one of the top crude oil suppliers to the U.S., has a long history of corruption, with one officials once estimating the country has lost more than $380 billion to graft since gaining its independence from Britain in 1960. Corruption trickles down from corrupt politicians in Abuja to the lowest police officer shaking down bribes from motorists at one of the country’s many traffic checkpoint.
Bankole’s detention is the highest profile case in many months for the Economic and Financial Crimes Commission, founded by former President Olusegun Obasanjo in 2003. While critics say Obasanjo used the agency to go after his opponents, officers did make major arrests under then-chief Nuhu Ribadu.
After late President Umaru Yar’Adua’s administration forced Ribadu out of office in 2008, the agency largely fell quiet. A U.S. diplomatic cable released by the anti-secrecy website WikiLeaks shows diplomats have questioned new leader Farida Waziri’s preparedness and willingness to take on the country’s powerful political elite. Waziri has been slow to prosecute many of the high-ranking politicians once under heavy scrutiny _ even after Yar’Adua’s May 2010 death.
The chief executive officer of Chrysler and Fiat said Monday he and Canadian authorities have begun talking about purchasing Canada’s 1.7 percent ownership in Chrysler.
The Canadian federal government and provincial Ontario governments received 1.7 percent of Chrysler two years ago as part of a bailout that also provided $1.7 billion in loans to help the Detroit company survive.
Chrysler, already controlled by Fiat, recently paid back the last of the money it borrowed from the Canadian and American governments. Fiat then began the process of buying the shares owned by the U.S. government.
Chief executive Sergio Marchionne joined Canadian Finance Minister Jim Flaherty at a Chrysler Canada casting plant in Toronto on Monday to announce the loan repayment.
Marchionne said that he and Flaherty discussed buying Canada’s shares and said they are quite willing to consider purchasing them.
Unlike with the shares owed by the U.S. government, the company has no right to compel the Canadian government to sell.
Flaherty said Ottawa will wait to see how the stock transfer process unfolds in the United States before deciding whether Canada will also sell its shares guaranteed pay day loans.
The Turin, Italy-based automaker said Friday it will buy the U.S. government’s six percent stake in Chrysler under a process that was put in place in 2009 when Chrysler virtually shut down while in bankruptcy court.
Fiat initially received a 20 percent stake in Chrysler in 2009 for providing Chrysler with management expertise and technology.
Since then Fiat has been increasing its holdings in Chrysler and will soon control more than half of the company.
Fiat has helped change the corporate strategy of Chrysler, brought new fuel-efficient vehicles quickly to market and made the company cut costs and operate more efficiently.
The future looks brighter for the company, which has cut thousands of jobs in the United States and Canada in its bid to survive bankruptcy.
In Canada, the company employs 9,000 people and has major assembly plants in Windsor, a southwestern Ontario border city, and Brampton, a community northwest of Toronto.
The first thing Silvia Huelves was told when she started studying architecture was that she should take up Chinese or Japanese _ she was not going to build anything in Spain any time soon.
It wasn’t criticism of her skills but a reflection on the state of the country, where the jobless rate among 16-24-year-olds is a staggering 45 percent and a construction sector slump caused nearly two years of recession.
Now the young people are protesting, roughing it out in improvised camps in the hearts of Spain’s main cities to bring attention to their plight. While they’re angry about lots of things, bleak job prospects and having to live with Mom and Dad well into adulthood are high on the list.
Huelves, a 19-year-old with a big smile, said her professors make no secret of the dire state of things.
“You go in and the first thing they say is ‘forget about it, you are never going to build buildings,’” she said. “They say architecture is really cool and well-rounded and useful for a lot of things, but you are not going to build buildings.”
Construction is no doubt the hardest hit sector in Spain’s battered economy as it tries to recover from a burst real estate bubble. But in almost any line of work Spain’s young people face a dark outlook. The jobless rate in the under-25 age bracket makes the national unemployment rate of 21.3 percent seem mild by comparison. Widen the bracket to the age of 29 and the rate is still a stunning 35 percent.
To voice their discontent, young people have been coordinating over the past two weeks via social media like Twitter and Facebook to set up huge camps in city centers. The camp in Madrid features makeshift clinics and libraries with grungy sofas as well as stands with donated apples and bananas, juice and baguette sandwiches.
“More than anything, this is about being fed up. We are absolutely fed up,” said Maria Martinez, 32, sitting in a lounge chair under blue sheeting protecting the Madrid camp from a blazing midday sun.
Martinez considers herself relatively lucky because she has been jobless for only about two months and has worked since age 17, mainly in factories and offices. But it was always for low wages, sometimes with no benefits and always getting part of her pay under the table.
Martinez rattled off other gripes _ conservative politicians who watched Spain’s real estate market heat up and took credit as GDP rose nicely, banks that helped and profited by providing streams of easy credit, and the current Socialist government that presided over the bubble’s loud pop in 2008, with its disastrous impact on the country.
“I am the first one to acknowledge we have reacted late and we have been asleep for a long time,” Martinez said.
Another jobless protester, Pablo Luna, 27, has a degree in history, just finished a Masters in journalism and says he has zero prospects for work. He said it is virtually unheard of for people to complete their studies and go right into work in their field.
“Of the people I know, no one has done it,” said Luna, an articulate man with a thick, dark, wild pony tail and the rich voice of a radio announcer. “I should be out looking for a job. But my heart tells me I should be here now.”
Much of the problem lies with rigid rules governing Spain’s labor market, in particular the high cost of laying off established, older and less productive workers under legislation that goes back 30 years, said Gayle Allard, a labor market expert at IE Business School in Madrid.
With employers wary of giving new hires open-ended contracts with full benefits, younger workers often end up with temporary ones, sometimes lasting just a few months. In the good days, companies would roll those contracts over, but since recession hit many have just let them run out.
This makes the Spanish jobless rate highly vulnerable to swings in the economy, as nearly a third of all workers have temporary contracts. The jobless rate has more than doubled in about three years, with young people who often earn just euro1,000 ($1,400) a month taking a particularly hard hit.
In the 27 countries of the European Union, as of March of this year the jobless rate for under-25’s averaged about 21 percent, less than half of Spain’s, according to the statistical agency Eurostat. Even the rate in bailed-out Greece is lower, at 36 percent.
Last year the Spanish government passed labor market reforms designed to make it cheaper and easier for businesses to lay off workers and more expensive to use temporary contracts. The idea was to encourage hiring and make employment more stable.
But Allard says the changes are timid and that today’s young Spaniards _ even with foreign language and computer skills _ are still effectively shut out of the labor market.
The effects go beyond protests and rallies to shape the structure of the country’s society.
Spain has one of Europe’s lowest birth rates _ 1.4 children per woman of childbearing age _ in part because it takes so long for young people to get out of their parents’ house, establish a career and start families.
Until that happens, life for many young Spaniards is a sort of limbo.
“They cannot become productive. They cannot use their skills. They cannot save. They cannot invest in housing. They are not accumulating wealth that they can leave off in the future,” said Allard, an American who has lived in Spain for 25 years.
“These kids are paying our pensions and they are not going to have been able to save anything. It is really scary,” Allard said.
Arcadi Oliveres, an applied economist at Autonomous University in Barcelona, said that compared with other European countries Spain offers comparatively little vocational training as an early alternative to going to jam-packed universities.
The result is that Spain churns out legions of university-trained scientists _ who end up unemployed and eventually work in vocational jobs anyway, Oliveres said.
“Unlike a structure that is pyramid-shaped in other countries, here there is a real inflation of university graduates,” Oliveres said. “As a labor market model it is a bit anomalous.”
At the medical school in Madrid Complutense University, 21-year-old Maria Perez is two weeks away from graduating with a degree in podology and she is far from thrilled. Of her immediate circle of 20 friends and close acquaintances, she says three have jobs.
“There is not a lot of reason to celebrate because you know you are going to keep living with your parents and end up working in a grocery store,” she said.
Purchases of new houses probably held close to a record low in April, showing the real-estate market remains a weak link in the U.S. expansion, economists said before a report today.
New homes sold at a 300,000 annual pace last month, the same as in March, according to the median forecast of 75 economists surveyed by Bloomberg News. Purchases sank to a 270,000 pace in February, the weakest in 48 years of data.
The prospect that foreclosures will keep driving down property values means that buyers may continue to shun new houses in favor of previously owned dwellings, hurting builders like D.R. Horton Inc. Unemployment at 9 percent, stagnant wages and credit restrictions add to the headwinds, signaling a housing recovery will take years to unfold.
“Until that overhang of existing homes works its way down, new-home sales will remain depressed and construction as well,” said Steve Blitz, a senior economist at ITG Investment Research Inc. in New York.
The Commerce Department’s report is due at 10 a.m. in Washington. Estimates in the Bloomberg survey ranged from 280,000 to 320,000.
Stocks of homebuilders have underperformed the broader market. The Standard & Poor’s Supercomposite Homebuilders Index has fallen 1.4 percent so far this year, compared with a 4.7 percent gain for the S&P 500 Index. (SPX)
‘Struggle’ Through 2012
Demand for new houses will remain weak into next year, said Bill Wheat, chief financial officer of Fort Worth, Texas-based D.R. Horton, the second-largest U.S. homebuilder by revenue. “We feel it could still be a struggle in 2012.”
Builders are cutting back as a result. Housing starts fell 11 percent in April to a 523,000 annual pace, the second-weakest reading since April 2009’s record low, figures from the Commerce Department showed last week.
One reason for the slump is growing interest from investors in buying distressed properties. Previously owned homes sold at a 5.05 million annual rate in April, down 0.8 percent from the prior month, data from the National Association of Realtors showed May 19. All-cash deals accounted for 31 percent of transactions, and distressed properties, including foreclosures and short sales, made up 37 percent, the group said.
The supply of existing houses will probably remain an issue for builders. CoreLogic Inc. in March estimated about 1.8 million homes were more than 90 days delinquent, in foreclosure or bank-owned, a so-called “shadow inventory” set to add to the unsold supply of 3.87 million previously owned homes already on the market.
Sinking Share
As distressed transactions have played a bigger role, new- home sales have shrunk as a share of total sales. They accounted for 5.6 percent of the market in March, down from 16 percent at their peak in July 2005.
Foreclosures have weighed on home prices. The S&P/Case- Shiller index of property values in 20 cities fell 3.3 percent in February from a year earlier, the biggest 12-month decrease since November 2009, the group said last month. The gauge is down 33 percent from its July 2006 peak.
In addition to the drop in values, persistent joblessness may be keeping potential buyers away. The 9 percent unemployment rate last month, almost two years into an economic recovery, compares with an average of 4.8 percent in the three years before the recession began.
That’s helping damp wages. Average hourly earnings for all workers rose 1.9 percent in April from a year earlier compared with a 3.4 percent gain in the 12 months through December 2007, when the recession began, according to Labor Department data.
Douglas Yearley Jr., chief executive officer at Toll Brothers Inc. (TOL), the largest U.S. luxury-home builder, last week said the spring home-selling season has been “disappointing” and that “people are still scared.”
Bloomberg Survey ==================================================== New Home New Home Richmond Sales Sales Fed ,000’s MOM% Index ==================================================== Date of Release 05/24 05/24 05/24 Observation Period April April May —————————————————- Median 300 0.0% 9 Average 301 0.2% 8 High Forecast 320 6.7% 11 Low Forecast 280 -6.7% 1 Number of Participants 75 75 11 Previous 300 11.1% 10 —————————————————- 4CAST Ltd. 303 1.0% — ABN Amro 306 2.0% — Action Economics 295 -1.7% — Aletti Gestielle 310 3.3% — Ameriprise Financial 305 1.7% 6 Banesto 300 0.0% — Bank of Tokyo- Mitsubishi 310 3.3% — Bantleon Bank AG 310 3.3% — Barclays Capital 305 1.7% — BBVA 295 -1.7% 11 BMO Capital Markets 300 0.0% 10 BNP Paribas 310 3.3% — BofA Merrill Lynch 315 5.0% — Briefing.com 290 -3.3% — Capital Economics 300 0.0% — CIBC World Markets 300 0.0% — Citi 290 -3.3% — ClearView Economics 300 0.0% — Commerzbank AG 300 0.0% — Credit Agricole CIB 303 1.0% — Credit Suisse 290 -3.3% — Daiwa Securities America 320 6.7% — DekaBank 290 -3.3% — Desjardins Group 290 -3.3% — Deutsche Bank Securities 300 0.0% — DZ Bank 280 -6.7% — Exane 310 3.3% — Fact & Opinion Economics 300 0.0% 8 First Trust Advisors 310 3.3% — FTN Financial 295 -1.7% — Goldman, Sachs & Co. 285 -5.0% — Helaba 295 -1.7% — HSBC Markets 300 0.0% — Hugh Johnson Advisors 280 -6.7% — Ibersecurities — — 1 IDEAglobal 310 3.3% — IHS Global Insight 286 -4.7% — Informa Global Markets 295 -1.7% — ING Financial Markets 300 0.0% 8 Insight Economics 300 0.0% — Intesa-SanPaulo 310 3.3% — J.P. Morgan Chase 305 1.7% — Janney Montgomery Scott 300 0.0% — Jefferies & Co. 295 -1.7% — Landesbank BW 290 -3.3% — Manulife Asset Management 305 1.7% — Maria Fiorini Ramirez 305 1.7% — MET Capital Advisors 310 3.3% — MF Global 285 -5.0% — Mizuho Securities 303 1.0% — Moody’s Analytics 290 -3.3% — Morgan Keegan & Co. 310 3.3% — Morgan Stanley & Co. 310 3.3% — National Bank Financial 300 0.0% — Natixis 307 2.3% — Nomura Securities 305 1.7% — OSK Group/DMG 300 0.0% — Parthenon Group 295 -1.7% — Pierpont Securities 315 5.0% — PineBridge Investments 312 4.0% 11 PNC Bank 295 -1.7% — Raymond James 305 1.7% — RBC Capital Markets 310 3.3% — RBS Securities 300 0.0% — Scotia Capital 310 3.3% — Societe Generale 287 -4.3% — Standard Chartered 310 3.3% — State Street Global Markets 300 0.0% 9 Stone & McCarthy Research 305 1.7% — TD Securities 290 -3.3% 5 UBS 280 -6.7% — University of Maryland 300 0.0% — Wells Fargo & Co. 310 3.3% — WestLB AG 306 2.0% — Westpac Banking Co. 300 0.0% 10 Wrightson ICAP 300 0.0% 10 ====================================================
To contact the reporters on this story: Bob Willis in Washington at sbwillis@bloomberg.net
Polish central bank Governor Marek Belka said inflation in the eastern European country will peak within two months and a surprise interest rate increase in May isn’t a start of “a new trajectory” in monetary tightening.
“We are really very close to the peak” of consumer-price growth, Belka said in an interview in the Kazakh capital Astana today. The rate increase wasn’t to signal “a new trajectory of interest rate increases. It’s simply that we want to implement our strategy faster.”
The central bank unexpectedly raised its benchmark seven- day rate by a quarter-point to 4.25 percent on May 11. The bank sought to pre-empt pressure on prices as consumer spending is picking up. The inflation rate rose to a 2 1/2-year high of 4.5 percent last month.
Wage growth is accelerating in Poland, the European Union’s largest eastern member which escaped a recession altogether during the credit crisis. The Polish central bank raised borrowing costs three times since January as policy makers across the globe struggle to curb inflation.
The rate move probably changed perceptions of how fast prices are going to rise and will “moderate” economic growth in Poland, Belka said cash advance. Imported inflation is also eroding the purchasing power of consumers, he said.
‘Hysteria Is Over’
Following the rate increase “we are observing a certain attenuation of inflationary expectations.” Belka said. “The hysteria is over.”
The inflation rate may drop “close” to the central bank’s target of 2.5 percent late next year, Belka said. The rate has been above the bank’s goal for seven months.
Government efforts to limit public spending may help combat inflation in the country, he said.
Even so, Belka said he has “some doubts” the government will be able to reduce the budget deficit to 2.9 percent of gross domestic product as planned next year.
The central bank took the government’s pledge “seriously” that it will implement “additional measures if necessary” to cap expenditures, he said.