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Turkey’s central bank, banks discuss rates after lira tumble – Aljazeera.com

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Central Bank Governor Sahap Kavcioglu said after his meeting with top bankers and the country’s BDDK banking watchdog that the banking sector and all its actors ‘are very much in harmony’.

Turkey’s central bank governor said he discussed recent interest rate cuts with bankers at a meeting on Thursday after a slide in the lira to record lows, and he also said that the banking sector was able to overcome market volatility.

Turkey’s lira was flat on Thursday after a historic slide to all-time lows this week, triggered by President Tayyip Erdogan’s defence of interest rate cuts, despite widespread criticism of his policy direction.

Governor Sahap Kavcioglu said after the meeting with top bankers and the country’s BDDK banking watchdog that they made general evaluations on economic developments, and he said that the banking sector was very strong.

“We informed them about everything, whether it be interest rate cuts and other issues,” Kavcioglu told reporters after the meeting. “The sector, central bank and BDDK are very much in harmony and in strong communication.”

The lira was unchanged after the meeting, trading 0.5 percent firmer at 12.025 to the dollar. Before a rebound in the last two days, it hit a record low of 13.45 on Tuesday, down 45 percent this year, touching record lows in 11 consecutive sessions.

Global and domestic developments, the markets and banking sector developments were discussed at Thursday’s meeting, the Association of Turkish Banks said in a statement, describing the meeting as very beneficial.

One market participant said the BDDK told the meeting that it would consider measures such as the country’s capital adequacy ratio.

The BDDK was not immediately available for comment.

Separately, officials told Reuters Erdogan had ignored appeals, even from within his government, to reverse the policy.

Inflation on ‘volatile course’

The central bank said earlier on Thursday inflation would follow a volatile course in the short term.

It made the comments in the minutes of last week’s monetary policy committee meeting, where it cut its policy rate by 100 basis points to 15 percent. It has lowered the rate by a total 400 points since September.

“The central bank can hasten the end of this overshoot by signalling an end to rate cuts and a willingness to use hikes to defend the lira,” a note from the Institute of International Finance said.

“This would help re-anchor inflation expectations, which are rising due to FX pass-through from devaluation, raising the risk of accelerated dollarization. We maintain our fair value at $/TRY 9.50.”

Many Turks, already grappling with inflation of about 20 percent, fear price rises will accelerate. Opposition politicians have accused Erdogan of dragging the country towards disaster.

Erdogan has defended central bank policy and pledged to win his “economic war of independence”, having pressured the central bank to move to an aggressive easing cycle with the goal of boosting exports, investment and jobs.

But many economists have described the rate cuts as reckless and opposition politicians called for immediate elections, Turks told Reuters news.

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P.E.I. announces 6 new COVID-19 cases, 17 exposure sites – CBC.ca

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P.E.I. announced six new cases of COVID-19 on Wednesday.

Two of the cases are in their 40s, one is in their 30s, one is in their 20s and two are children under 12.

Three of the announced cases are related to travel outside the province, and three are contacts of previously reported cases.

The two children are students at Westwood Primary School. The school will be closed on Thursday and Friday to allow for close contacts to get tested, and so the province can determine if there’s been any transmission within the school.

Classmates and other children who travelled on the same bus with the students will be contacted by public health and advised on testing and isolation requirements.

The province said other Westwood students and staff should monitor for symptoms and get tested and isolate if any develop.

Earlier on Wednesday, the Public Schools Branch said four schools in eastern P.E.I. will remain closed for another day to allow for mass testing amid worries of community transmission in the eastern Kings region.

The situation at Westwood is not considered an outbreak at this time.

17 exposure sites announced

Seventeen new public exposure site notifications were issued, including two on the Northumberland Ferry. Most of the exposures are in Charlottetown.

The province is also advising anyone who was at St. Francis Xavier University in Antigonish, N.S., between last Friday and Monday to get tested and isolate while they await results.

There are currently 27 active cases in P.E.I. and there have been 403 total cases.

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Pfizer says COVID booster ‘effective’ against Omicron variant – Al Jazeera English

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Lab tests show the three-shot course of Pfizer-BioNTech vaccine neutralises Omicron, while two shots appear less effective.

Pfizer has said a booster dose of its COVID-19 vaccine was able to neutralise the new Omicron variant in lab studies, even though the initial two doses appear significantly less effective.

The announcement on Wednesday is the first official statement from vaccine manufacturers on the efficacy of current shots against Omicron.

Pfizer and its partner BioNTech said that lab tests showed a booster dose increased by 25-fold the level of so-called neutralising antibodies against Omicron. Their results have not been peer-reviewed.

According to the early laboratory research using blood serum from vaccinated people, a booster third dose generated around the same level of antibodies against Omicron as is seen after a second dose with other variants.

Scientists have speculated that the high jump in antibodies that comes with a third dose of COVID-19 vaccines might be enough to counter any decrease in effectiveness.

Antibody levels predict how well a vaccine may prevent infection with the coronavirus but they are just one layer of the immune system’s defences. Pfizer said two doses of the vaccine may still induce protection against severe disease.

“Although two doses of the vaccine may still offer protection against severe disease caused by the Omicron strain, it’s clear from these preliminary data that protection is maximised with a third dose of our vaccine,” Pfizer CEO Albert Bourla said in a statement.

“Ensuring as many people as possible are fully vaccinated with the first two dose series and a booster remains the best course of action to prevent the spread of COVID-19,” Bourla said.

The companies also said an Omicron-specific version of their coronavirus vaccine, which is currently under development, would be available by March.

The findings are broadly in line with a preliminary study published by researchers at the Africa Health Research Institute in South Africa on Tuesday, saying that Omicron can partially evade protection from two doses of the Pfizer-BioNTech vaccine. The findings also suggested that a third shot might help fend off infection.

The detection of the first Omicron cases two weeks ago coincided with a spike in infection numbers across the world.

The variant has fuelled concerns about a global COVID-19 resurgence.

Omicron has so far been found in 57 countries, according to the World Health Organization, with many reimposing travel restrictions to stem the spread.

No deaths have yet been associated with the variant, with some health officials saying that while Omicron may be more contagious than previous variants, early signs suggest it may cause less severe disease.

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Bank of Canada signals worries about inflation, but keeps rate on hold – Financial Post

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If not for worries about inflation, Canada’s outlook would be almost entirely positive, though the floods in British Columbia and the new COVID-19 variant certainly raise questions about the immediate future, and “could weigh on growth by compounding supply chain disruptions and reducing demand for some services,” the Bank of Canada said.

Still, the economic impact could be fleeting. The destruction caused by the floods will reduce gross domestic product in the fourth quarter, but rebuilding efforts will provide a temporary GDP jolt in the first half of next year. Pfizer Inc. and BioNTech SE on Dec. 8 said trials suggest a third dose of their vaccine will neutralize Omicron, giving a lift to global financial markets, since the news provided a reminder that science and economies have become progressively better at adapting to new waves of COVID-19 infections.

Regardless, Canada’s economy will be confronting those headwinds at full throttle. Exports surged 6.4 per cent in October from September, to a record $56.1 billion, according to Statistics Canada on Dec. 7. The trade data followed more evidence that the country’s labour market is well on its way to the “complete” recovery Macklem has said he wants to orchestrate.

Statistics Canada on Dec. 3 said employers added 154,000 positions last month, pushing employment to where it would have been if the trend in February 2020 hadn’t been interrupted by the COVID-19 crisis. The jobless rate plunged to six per cent, a level some economists associate with full employment, a theoretical condition where everyone who wants a job has one, and additional hiring would put upward pressure on inflation.

“Recent economic indicators suggest the economy had considerable momentum into the fourth quarter,” the central bank said. “This includes broad-based job gains in recent months that have brought the employment rate essentially back to its pre-pandemic level. Job vacancies remain elevated and wage growth has also picked up.”

Mounting evidence that the recovery from the pandemic recession is secure will allow policy-makers to shift their attention to prices. A year ago, the worry was deflation, which is why the central bank dropped its benchmark interest rate to 0.25 per cent and began creating billions of dollars per week to purchase government bonds, an aggressive form of monetary policy called quantitative easing (QE). The strategy successfully staved off disinflationary forces, but timing the return to normalcy was always going to be difficult.

The Bank of Canada began by slowly tapering its bond purchases before abruptly ending the program in October as year-over-year changes in the CPI approached five per cent, well in excess of the central bank’s target of about two per cent.

Macklem, who took over from Stephen Poloz in June 2020, wasn’t around for the most intense phase of the pandemic. His contribution was to make an explicit promise to keep the benchmark interest rate near zero until at least the second half of 2022, unusual clarity for a central bank meant to give businesses and households confidence they could borrow at low rates for an extended period.

But as growth picked up, it became clear the economy wouldn’t require interest rates at an emergency setting for such a lengthy period of time. At the same time the Bank of Canada ended QE in October, it also advanced the timeline for raising interest rates by three months, rewriting the official guidance to state that increases would likely start at some point during the middle two quarters of 2022.

Macklem and his deputies repeated that commitment on Dec. 8 almost word for word. The value of the Canadian dollar fell, suggesting investors were disappointed the Bank of Canada didn’t open the door to raising rates sooner than the second quarter. “We will provide the appropriate degree of monetary policy stimulus to support the recovery and achieve the inflation target,” the central bank reiterated in its new statement.

Saying more would have been difficult without a new economic forecast. The Bank of Canada has made a point of tying its guidance to its quarterly outlooks; specifically, its estimate of when GDP will reach the level policy-makers associate with “full capacity,” which is essentially the maximum output policy-makers think the economy can generate without stoking inflation.

The most recent revisions prompted the October pivot, and the central bank won’t update its forecasts again until late January. The next three interest-rate announcements are scheduled for Jan. 24, March 2 and April 13. Most Bay Street economists assume the first interest-rate increase will come in April, but that will depend on the forecast the central bank generates when it runs the numbers a month from now.

“We think there’s risk that the economy reaches full capacity even sooner given rapid improvement in the labour market,” said Josh Nye, an economist at Royal Bank of Canada. “The BoC was held back by Omicron uncertainty, but today’s statement suggests that as long as that risk doesn’t intensify in the next seven weeks, the BoC will sound more hawkish in January.”

• Email: kcarmichael@postmedia.com | Twitter: carmichaelkevin

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