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Interest rate cuts are doing their thing. Will more come soon?
Recent rate cuts by the Federal Reserve and the Bank of Canada, along with lower inflation rates in both countries, are spurring … talk of more cuts. This includes a potential “jumbo” cut this month in Canada.
A former deputy governor of Canada’s central bank is arguing for a half-point cut when the bank meets in late October, and he’s betting on it. Paul Beaudry argues that the economic stimulus would spur the Canadian economy – by boosting consumer and business spending.
Statistics Canada reports that the country’s inflation rate was 2% in August while the US Bureau of Labor Statistics pegged the rate south of the border at 2.5%.
In September, the Fed cut rates by 50 basis points, its first trim in four years. That had effects on both sides of the border, given how close the US and Canadian economies are linked. Some Canadian mortgage rates on offer ticked down after the cut, dipping below 4%. So too did their US counterparts, triggering an immediate jump in real estate hunting and refinancing.
Experts believe the Fed will embrace more cuts in the coming months, aiming for a target of 4-4.25%, with even lower rates on the docket for 2025. The Fed and Bank of Canada will drive borrowing costs down and offer some relief to consumers and borrowers as both economies continue to level out.Sri Lankans reject the Old Guard
Sri Lankan election authorities announced Sunday that Anura Kumara Dissanayake, a Marxist, will become the island’s next president, in a rebuke of the political establishment. Outgoing president Ranil Wickremesinghe congratulated Dissanayake on Sunday and urged him to continue working toward Sri Lanka’s economic recovery after defaulting on its sovereign debts in 2022.
The election was widely seen as a referendum on the austerity measures that Wickresmesinghe imposed as part of a bailout deal with the International Monetary Fund. Although they brought down inflation and stabilized foreign exchange reserves, they also inflicted pain on ordinary Sri Lankans, who were swayed by Dissanayake’s campaign promises to renegotiate terms with the IMF. But Dissanayake will need to tread carefully: roughly $3 billion in IMF support is on the line.
He also must find a way to kickstart a moribund economy, and here’s where geopolitics come into play. In recent years Colombo has looked to China for major infrastructure investments, only to see revenues fall well short of expectations. Despite Sri Lanka losing ownership of a major Chinese-backed port, Dissanayake is expected to continue deepening ties with Beijing, even as the US backs its own Sri Lankan port project.Can Kashmiri voters keep Modi’s party out of control in local assembly?
The Indian-occupied region of Kashmir kicks off its first phase of elections on Wednesday for its own truncated government and local legislative assembly, as New Delhi reintroduces some local authority after taking direct control in 2019. Kashmiris, the majority of whom are Muslim, have frequently boycotted elections in the past to protest Indian occupation but reportedly plan to participate this time to attempt to deny the Hindu-nationalist Bharatiya Janata Party control.
Who are the main players? Besides the BJP, which enjoys support from the regional Hindu minority, especially around the city of Jammu, the local People’s Democratic Party and National Congress party are the main contenders. PDP was in coalition with BJP from the last election in 2014 to 2018, while NC has allied with the Indian National Congress, BJP’s main rival on the national level. In addition, 145 independent candidates have registered – a record high — which some Kashmiris say is due to the BJP attempting to dilute the opposition vote. Vote counting is scheduled for Oct. 8, after two additional phases on Sept. 25 and Oct. 1.
The new assembly will have partial control over social policy like education, culture and taxation but not over the police, and it will not enjoy the special privileges it had prior to 2019.
The upshot? If Kashmiri parties can form a governing coalition, they will still be very limited in what legislation they can pass, but it may reduce the appeal of armed insurrection for disaffected youth. Violence in the Vale of Kashmir, which India accuses Pakistan of supporting, has already cost tens of thousands of lives, and we’re watching whether the ballot might prove mightier than the bullet.Venezuela arrests six in coup plot claim
Six foreign nationals, including three American, two Spanish, and one Czech citizen, were arrested in Venezuela on Saturday,accused of plotting to assassinate strongman President Nicolás Maduro. Interior Minister Diosdado Cabello announced the arrests on state television, claiming the suspects were part of a CIA-led plan to overthrow the government. One of the Americans is a US Navy SEAL identified as Wilbert Joseph Castañeda Gomez.
In response,the US State Department denied any involvement, called the claims “categorically false,” and reaffirmed support for a peaceful resolution to the crisis stemming from Venezuela’s recent elections. The Spanish Foreign Ministry said that the two Spanish citizens detained “do not form part of the Centre for National Intelligence or any state organization” and called for a “democratic and peaceful solution to the situation in Venezuela.”
The arrests cometwo days after the US Treasury imposed sanctions on 16 Maduro allies, and a week after Venezuelan opposition leader Edmundo Gonzales, who was facing arrest, fled to Spain. Washington refuses to recognize the results of Venezuela's July 28 election, in which Maduro claimed victory despite evidence that Gonzales was the real winner. Caracas called the US sanctions a “crime of aggression” that seeks to “overthrow, without success, the Bolivarian democracy.”Will Maduro yield amid protests and calls for transparency?
Seven EU member states on Sunday demanded that the Venezuelan government publish the electoral rolls to settle last weekend’s heavily disputed election, and the US and Argentina have taken the lead in recognizing opposition candidate Edmundo González as president. Thousands of Venezuelans have put their lives and freedom at risk to protest President Nicolás Maduro’s claimed electoral victory this past week,and the regime has arrested hundreds and deployed armed paramilitaries to intimidate them.
Human Rights Watch reports that 17 people have died since protests broke out last Monday.
Gonzalez is in hiding to protect his well-being. But Maria Corina Machado, a fellow opposition leader who was barred from running, held a defiant rally on Saturday to galvanize the demonstrators. “After six days of brutal repression, they thought they were going to silence us, intimidate or paralyze us,” she said. “The presence of every one of you here today represents the best of Venezuela.”
Her coalition collected electoral tally sheets from 80% of the precincts, and they showed a landslide victory for the opposition, with 6.89 million votes for Gonzalez and 3.13 million for Maduro. Venezuela’s government claimed Maduro won 6.4 million votes to Gonzalez’s 5.3 million.
What happens now? Brazil, Colombia, and Mexico are leading diplomatic efforts to set up an impartial audit of the results, and they can count on wide backing in the Americas and Europe. We’re watching how they apply pressure this week, and whether Caracas might make agreeable noises, if only to try to calm the furor in the streets.
France's snap election: Understanding why Macron took the risk
With Emmanuel Macron’s approval ratings at a historic low, and far-right parties gaining popularity, could France’s upcoming election be its own “Brexit” moment? Mark Carney, former governor of the Banks of England and Canada and current UN Special Envoy on Climate Action & Finance, joins Ian Bremmer on GZERO World to discuss snap elections in the UK and France, the complexities of Brexit, and its ongoing impact on domestic politics in Europe.
“There are a wide range of aspects of the UK-European relationship which don't work,” Carney says, “There's massive red tape, for example, in agricultural products, massive red tape and delays at the border, the inner workings of a very interconnected financial system.”
Calling a snap election in France is a big risk, Carney explains, but after his party underperformed in the EU parliamentary elections, Macron wants a referendum from the French people. He’s betting that voters used the EU election to send a message but will vote more moderately in national elections closer to home. Meanwhile, Labour is expected to win big in the UK elections, but the aftermath of Brexit still looms large. But the geopolitics of 2024 are very different than in 2016 during the Brexit referendum.
“There's a range of things that could be made better if the UK government and the European government wanted to work together,” Carney stresses, “And it's all operating in a GZERO World.”
Catch GZERO World with Ian Bremmer every week on US public television (check local listings) and online.
Viewpoint: Russian authorities seek strong election showing for Putin
Amid tight control of dissent, a crackdown on the opposition, and a big pressure campaign to get voters to the polls, there is little doubt President Vladimir Putin will win another term in office in elections being heldon March 15-17. Still,the Kremlin is working hard to ensure a strong showing for the 71-year-old leader who has ruled the country for 25 years. Displays of public support are important for his legitimacy.
Eurasia Group expert Alex Brideau says one important watchpoint will be whether the followers of opposition leader Alexei Navalny, who recently died in a Russian prison, can organize a symbolic protest vote. We sat down with Alex to learn more about what to expect in the election and the strength of the Putin regime.
What steps is the Kremlin taking to ensure Putin’s victory?
The Kremlin is not worried about Putin losing the election, but it doesn’t want any big surprises. The authorities have ensured that voters have few options when choosing the president. Along with Putin, three other candidates represent loyal opposition parties that lack substantial public support. The state’s repression of critical politicians and activists through arrests, bans on activities and fundraising, exile, or killings has been so strong that there were few real opposition candidates capable of rallying large numbers of voters. Those who tried this time to get on the ballot failed to get past the Central Election Commission.
Putin’s team also has been working with regional and local officials to ensure that both turnout and support for the president will be high. It is aiming for 70%-80% of the vote, according to independent Russian media outlet Meduza. Government employees, soldiers, and people working for state-owned companies will be under pressure to vote and ensure others vote for Putin, too.
Will Navalny’s death have any impact?
The crowds that gathered in Moscow to say farewell to Navalny showed that people will show their opposition to Putin, if very cautiously. Still, there is no candidate on the ballot to rally those voters. Navalny’s organization has been hounded by the security services since his arrest in 2021, making it hard for them to have an effect. But they will nevertheless try. Navalny’s widow Yulia has encouraged people to vote for anyone other than Putin, while others have encouraged opponents to do this together at noon on the 17th. The tactic won’t stop Putin from winning, but it could embarrass the regime if enough voters follow their advice.
What do you make of the level of support garnered by anti-war candidates before they were barred?
Two candidates running on anti-war messages tried to get on the ballot: Ekaterina Duntsova and Boris Nadezhdin. This offered an imperfect gauge of anti-war sentiment in January, when thousands of people lined up in cities across the country to give Nadezhdin the needed signatures to become a candidate. But Russian authorities stepped in and both politicians were barred from the ballot on technicalities widely seen as a way to ensure their anti-war campaigns would not continue.
Nonetheless, it is important to note that Putin has not shied away from talking about the war while campaigning. Instead, he has expressed optimism about continued success in the invasion and has not dialed back his previously declared objectives for the war. He has also played up his narrative of a threat from NATO and the West.
What other indications do we have about the true level of public support for Putin and the war in Ukraine?
Experts continue to debate the reliability of opinion polling in Russia, especially as repression has increased. At the very least, polls like those from the independent Levada Center have shown Putin gets consistently high backing in the upper-70% to mid-80% range. Putin’s apparent high popularity has long been an important part of how he demonstrates his legitimacy and manages Russia’s elites.
Polls also show the public’s consistently strong support for Russia’s military actions in Ukraine. However, they also show contradictory views on the issue. A majority support negotiations to end the war, but a majority also opposes giving back any occupied Ukrainian land to secure peace. Mobilization is not popular, something seen during the partial mobilization drive in the fall of 2022. Putin appears sensitive to this and has stated multiple times that a new mobilization won’t be necessary.
How would you place the level of repression in Russia now in a historical context?
Dissent in Putin’s Russia has always carried some risk, but the last three years have seen the highest level of repression in Russia’s post-Soviet existence. It started in the wake of Navalny’s 2021 imprisonment and expanded as Russian authorities used the war to further clamp down on dissent. The public now has very few legal outlets to protest government actions.
It’s hard not to see some similarities to the Soviet era's use of the security services, and their tactics, to squash opposition to the regime. But the societal control Russian officials can muster today through arrests, intimidation, and censorship is not nearly on the same level as what the Communist Party exerted over the everyday lives of Soviet citizens.
What would it take to loosen Putin’s grip on power?
Putin enters this election confident about the war and an economy that has grown despite major Western sanctions. But the war and the economy present a risk to him if they falter down the road. Moreover, some of the biggest protests during Putin’s time in power have been reactions to corruption or the abuse of power. The lack of outlets to oppose the government without fear of jail or fines creates a danger for the Kremlin: that an incident triggers spontaneous unrest that spreads nationwide. That said, Putin will enter his next term quite firmly in power, with little to suggest that he is under threat of losing control anytime soon.
Edited by Jonathan House, Senior Editor at Eurasia Group
South Africa to hold May elections
The election will be a referendum on the ANC, which has been mired in controversy over record levels of crime, slow economic growth, unemployment, and rolling blackouts. Alongside the election announcement, the ANC bumped up social benefits in an attempt to raise polling numbers.
The ANC’s biggest rival, the Democratic Alliance, is trying to build a coalition of smaller parties to break the ANC's majority. The third biggest party, Economic Freedom Fighters, is not considering joining the opposition coalition and is eating into ANC’s support following its promise to double social benefits if elected.
Right now, opinion polls show ANC approval ratings below 50%. If this translates into votes, it will mean the ANC will have to form the country’s first-ever coalition government to keep Ramaphosa — a political protege of Mandela — as president for a second and final five-year term.