By Ann Saphir and Michael S. Derby

(Reuters) -Federal Reserve policymakers have coalesced around the idea of keeping borrowing costs where they are until perhaps well into the year, given slow and bumpy progress on inflation, and a still-strong U.S. economy.

On Thursday New York Fed President John Williams became the latest U.S. rate-setter to embrace the "no rush" on rate cuts view articulated in February by Fed Governor Christopher Waller and since echoed by many of his colleagues.

"I definitely don't feel urgency to cut interest rates" given the strength of the economy, Williams said at the Semafor's World Economy Summit in Washington. "I think eventually...interest rates will need to be lower at some point, but the timing of that is driven by the economy."

Cleveland Fed President Loretta Mester, in comments late on Wednesday, also said the Fed will likely cut rates "at some point," steering clear of the later "this year" language she - and Williams - had previously used.

Speaking in Fort Lauderdale, Florida on Thursday, Atlanta Fed President Raphael Bostic offered "the end of the year" as his view of the likely timing for a first rate cut, saying "I'm comfortable being patient."

Minneapolis Fed President Neel Kashkari told Fox News Channel he also wants to be "patient," with the first rate cut "potentially" not appropriate until next year.

As recently as a few weeks ago many policymakers signaled they expected hotter-than-expected inflation in early 2024 would give way to cooler readings in the face of the Fed's tight monetary policy, necessitating several rate cuts before the end of the year to prevent policy from slowing the economy too much.

But strong growth in jobs, a third-month-in-a-row upside surprise on inflation in March, and robust retail spending among other recent economic indicators have convinced more central bankers that rate cuts ought to wait.

Earlier this week Fed Vice Chair Philip Jefferson omitted any reference to the appropriate timing for rate cuts, and Fed Chair Jerome Powell said it's likely to take longer to get enough confidence on inflation's decline to reduce borrowing costs.

As San Francisco Fed President Mary Daly put it on Monday, "the worst thing to do is act urgently when urgency is not required."

With Fed rhetoric shifting and the labor market data showing few signs of cracks, financial markets have also moved to price in fewer and later rate cuts. Futures contracts that settle to the Fed's policy rate now reflect expectations that the first reduction comes in September, versus June just a few weeks ago. The odds of a second rate cut by the end of the year have dropped to about 50-50, based on the CME FedWatch Tool.

A Reuters poll released on Thursday showed economists are on the same page.

Inflation by the Fed's targeted measure, the personal consumption expenditures price index, was 2.5% in February, and Fed policymakers say they expect the March reading of core PCE - a gauge of where inflation is heading - to be even higher. The Fed targets 2% inflation.

That has even raised questions of whether the Fed may have to hike rates again to ensure price pressures ebb. Williams said that appears unlikely but noted that it was impossible to rule out.

Bostic, in an appearance in Miami late on Thursday, said that stalled progress on inflation, while not his expectation, would mean "I'd have to be open to increasing rates."

Fed policymakers next meet April 30-May 1 and are expected keep the policy rate in the 5.25%-5.5% range, where it has been since last July.

(Reuters) - Cryptocurrencies fell heavily and bitcoin broke below $60,000 on Friday in a rush out of risky assets following reports of an Israeli missile strike on Iran.

Bitcoin slid more than 5.5% to $59,961 in the Asia session as the U.S. dollar rose broadly. Ether fell by a similar margin, dropping below the $3,000 barrier to $2,895.

Israeli missiles hit a site in Iran, ABC News reported, citing a U.S. official, days after Iran launched a drone strike on Israel.

Iran's Fars news agency said an explosion was heard at the airport in the Iranian city of Isfahan.

Oil, gold and bonds rallied sharply.

By Rae Wee

SINGAPORE (Reuters) - The resurgent dollar headed towards a second straight week of gains on Friday as a hotter-than-expected U.S. economy has pushed back investors' and policymakers' expectations of the trajectory of Federal Reserve rate cuts this year.

The greenback's 0.17% gain for the week was somewhat capped by a slight stall in its rally since Thursday following a rare trilateral warning from finance chiefs in the United States, Japan and South Korea over the latter two's sliding currencies, raising the risk of a potential joint intervention.

That's as Asian currencies, in particular, come under immense pressure from the dollar's strength.

"It is symbolic that they made that joint statement," said Carol Kong, a currency strategist at Commonwealth Bank of Australia (OTC:CMWAY) (CBA).

"Given the recent developments, the prospect of a joint Asian FX intervention is definitely rising. I'm not sure about whether or not the U.S. will be involved in that intervention, because ultimately, a stronger U.S. dollar will just help the FOMC's inflation fight."

The yen was last little changed at 154.61 per dollar, languishing near a 34-year low and not far from the 155 level which traders see as a new line in the sand that would prompt an intervention from Tokyo.

The Japanese currency was eyeing a weekly loss of more than 0.8% and was down 2% for the month thus far, ahead of the Bank of Japan's (BOJ) monetary policy meeting next week.

BOJ Governor Kazuo Ueda said on Thursday the central bank may raise interest rates again if the yen's declines significantly push up inflation, highlighting the impact currency moves may have on the timing of the next policy shift.

Elsewhere, sterling fell 0.08% to $1.2427, leaving it on track to lose 0.18% for the week. The euro eased 0.06% to $1.0637 and was set to clock a marginal weekly loss.

While expectations of a first Fed rate cut have been pushed back to later this year, traders expect the European Central Bank to begin its rate easing cycle in June, which will likely keep the common currency weak for some time.

"Once the ECB starts cutting, it'll be apparent that global central banks will face divergent monetary policy easing cycles, and that will just exacerbate the strength in the dollar against the euro and other major currencies," said CBA's Kong.

Fed funds futures now show just about 40 basis points (bps)worth of cuts priced in for the U.S. central bank this year - a significant pullback from the 160 bps of easing expected at the start of the year.

The shift in rate expectations has come on the back of a slew of resilient U.S. economic data which has repeatedly surpassed expectations, alongside still-sticky inflationary pressures.

That's also resulted in Fed policymakers pushing back on bets for U.S. rate cuts beginning as early as June, and Chair Jerome Powell early this week similarly said monetary policy needs to be restrictive for longer.

"Although policy easing may arrive a bit later than previously expected, we still believe the FOMC will start cutting rates before the year is out," said economists at Wells Fargo. "We expect inflation to trend lower throughout the year, but progress will likely be gradual."

Against a basket of currencies, the greenback rose 0.05% to 106.22, hovering near a more than five-month high of 106.51.

The Australian dollar fell 0.15% to $0.6411 and eyed a weekly drop of more than 0.8%.

Data on Thursday showed domestic employment fell in March after an enormous gain the month before while the jobless rate resumed its uptrend, a sign that the relatively-tight labour market was still on track to loosen, albeit at a slower pace.

The New Zealand dollar edged down 0.1% to $0.5895, and was similarly on track to lose 0.7% for the week.

By Jamie McGeever

(Reuters) - A look at the day ahead in Asian markets.

Asian markets will hope to end a bruising week on a positive note on Friday, but fraying global sentiment and a reluctance to take on much risk ahead of the weekend amid persistent Middle East tensions could limit any upside.

Headlines from the great and the good of global finance gathered in Washington continue to keep traders on edge, especially regarding exchange rates and central banks' policy path relative to an increasingly hawkish Fed.

The world's biggest exercise in democracy gets underway on Friday too, as the first of seven phases opens in India's general election, with 166 million voters across 21 states and territories casting their vote.

Asia's economic calendar, meanwhile, sees the release of first quarter GDP from Malaysia and Japanese inflation for March. The latter could determine whether the dollar, currently around 154.50 yen, makes another push to break above 155.00.

Bank of Japan Governor Kazuo Ueda said on Thursday the central bank may raise interest rates again if the yen's declines significantly push up domestic inflation.

The IMF on Thursday urged Asian central banks to focus on domestic inflation and avoid tying their policy decisions too closely to anticipated moves by the U.S. Federal Reserve.

On Wednesday, the United States, Japan and South Korea issued a joint statement to "consult closely" on the yen and won's recent weakness against the dollar.

The greenback is firm, rallying 3% in the last few weeks to its highest since November. 

U.S. bond yields are ticking higher again and will post their third weekly rise in a row, with the 2-year Treasury yield back up at 5%. The two- and 10-year yields are up 40-45 basis points in the last few weeks. 

That's a tightening of financial conditions that emerging markets are struggling to handle. Asian stocks are eyeing their biggest weekly fall since January, with the MSCI Asia ex-Japan index down 2.3% this week and off 5% from its high last week. 

Japan's Nikkei, which hit an all-time high above 41,000 points in late March, is off 7% since then and on Thursday hit a two-month low. A flat close or fall on Friday will seal its worst week since December 2022.

The Nasdaq and S&P 500, meanwhile, have fallen five days in a row, their worst runs since October and December 2022, respectively. 

Figures on Thursday, meanwhile, could help soothe fears that the yuan's weakness will accelerate capital flight out of the country - foreign investors increased their holdings of China's onshore yuan bonds in March for a seventh straight month.

Here are key developments that could provide more direction to markets on Friday:

- Japan CPI inflation (March)

- Malaysia GDP (Q1)

- India general election opens

(By Jamie McGeever; Editing by Josie Kao)

By Lefteris Papadimas

ATHENS (Reuters) - A decade ago, Greece was in the throes of a devastating debt crisis marked by years of austerity, hardship and unrest. Now, officials and investors say 2024 could be the year its rebound is finally complete.

The Greek economy is forecast to grow nearly 3% this year, approaching its pre-crisis size of 2009 and far outpacing the euro zone average of 0.8%.

Borrowing costs have plummeted to below those of Italy, and banks bailed out during the crisis are set to be fully privatised for the first time in decades - a move some of the country's largest investors see as a final sign of normality.

"With (the state's participation) out of the way, that's a landmark," said Wim-Hein Pals of asset manager Robeco, which recently bought shares in Greek banks.

"The Greek economy is in good shape to benefit from further growth going forward."

The turnaround in Greece, whose debt crisis threatened to cause the demise of the whole euro zone, is stark - on paper at least. Now the country faces a novel problem: being held back by stagnation in the same euro zone giants that once imposed strict reforms on its economy.

After years shut off from international markets, Greece returned to investment grade credit rating in 2023. When the state's bailout fund last month sold its stake in Piraeus Bank, one of the country's largest, the sale was oversubscribed eight times.

Challenges remain, however. Falling birthrates and labour shortages threaten the long-term outlook, and the spread of climate-related disasters like wildfires and floods have strained government finances.

Many ordinary Greeks reeling from the crisis say they see little difference as economists say the wider benefits of the rebound will take time. To ensure long-term growth, the country needs to diversify beyond the typical economic drivers of tourism, real estate and services.

More than half of foreign direct investment into Greece, which totalled about 7.5 billion euros ($7.98 billion) in 2022, comes from northern European countries like France and Germany that are struggling with weak growth. Greek exports, such as agricultural goods, fuel and pharmaceutical products - two thirds of which head to the EU - fell almost 9% last year. Economic growth slowed to 2% in 2023, partly a result of its lagging neighbours.

"The lower expectations for growth in Europe affect Greece in two main ways. Through pressure on exports... and through the higher cost of money," said Nikos Vettas, head of economic think tank IOBE.

FINANCES REVIVE

Decades of rampant tax evasion and overspending caught up with Greece in 2009, when it went into recession and the government revealed a giant hole in its finances that sent shockwaves across global markets.

By 2015, it had signed three bailouts with the euro zone and the International Monetary Fund worth 280 billion euros. In return it agreed to austerity measures that slashed public sector wages and pensions, and triggered years of violent protests.

Since Greece emerged from the bailout in 2018 it has revived its banking system and has relied solely on debt markets for its borrowing needs. In 2022, it paid off the IMF two years ahead of schedule.

Calm is largely restored. In Athens' central Syntagma Square, where 10 years ago protesters would hurl petrol bombs at riot police in protest at austerity measures, today buskers entertain tourists who sit in the shade of its sour orange trees.

Visits to the Acropolis, Greece's best known ancient site, hit 3.8 million in 2023, nearly four times the number seen at the height of the crisis.

INEQUALITY REMAINS

For many Greeks though, economic recovery has not translated into improved living standards.

Unemployment remains above 10%, the second highest in the EU after Spain, and GDP per capita in purchasing power is among the lowest in the bloc, Eurostat data show. The average monthly salary of 1,175 euros is 20% lower than 15 years ago, according to labour ministry figures.

Greece needs to develop sectors where investments are more long term, said Vettas from IOBE, "like infrastructure projects and manufacturing."

Unions held a general strike on Wednesday in which trains, buses, ships and taxis were halted and hundreds took to the streets calling for higher wages. Some people haven't recovered from losing everything when the economy tanked.

Periklis Fryganas took out a bank loan in 2009 to expand his motorcycle repair shop in Athens, only for the crisis to reduce his turnover by 90% over the next six years. He closed the shop in 2020 and recently lost an apartment he shared with his unemployed wife and three sons after using it as collateral for the loan.

"The crisis broke a lot of people and I was one of them," Fryganas, 61, said. "Things are getting better only for the 'rich ones', all the others are lοsing."

($1 = 0.9404 euros)

BEIJING (Reuters) - China's central bank cautioned on Thursday against a "one-sided" pursuit of credit expansion after data showed a slowdown in bank lending, vowing to prioritise the quality of credit over size and move to revitalise existing loans.

New bank lending in China rose less than expected in March from the previous month, while broad credit growth hit a record low, boosting the case for the central bank to roll out more stimulus steps to help achieve an ambitious growth target.

The central bank will channel more funds into technology innovation, green manufacturing and small firms, the Communist party committee of the People's Bank of China (PBOC) said in an article in the official People's Daily.

"With the transition of the economy from high-speed growth to high-quality development, ... it is even more necessary to change the traditional mindset of one-sided pursuit of scale and establish the concept of prioritising quality and efficiency," the PBOC said.

"Credit allocation should ultimately be in line with the needs of high-quality development of the real economy. The key is to grasp the level well, rather than the more, the better."

The central bank will guide financial institutions to maintain balanced credit allocation and boost stability and sustainability of loan growth, it said.

The world's second-biggest economy grew faster than expected in the first quarter, but several March indicators, such as property investment, retail sales and industrial output showed that domestic demand remains frail, weighing down momentum.

The central bank said 2024 growth of money supply and total social financing - a broad measure of credit and liquidity in the economy - would match expected goals for economic growth and inflation.

"Revitalising existing credit is of great significance in improving the quality and efficiency of financial services to the real economy," it added.

The central bank will take steps to free up financial resources inefficiently taken up by some firms and sectors, it said, adding that China's outstanding yuan loans approach 250 trillion yuan ($34.55 trillion).

($1=7.2357 Chinese yuan renminbi)

SYDNEY (Reuters) - Australian employment fell in March after an enormous gain the month before while the jobless rate resumed its uptrend, a sign that the hot labour market was still on track to loosen from here.

Figures from the Australian Bureau of Statistics on Thursday showed net employment dropped 6,600 in March from February, when it rose a revised 117,600. Market forecasts had been for a small gain of 10,000 after a blockbuster February.

Full-time employment rose 27,900 in March. The jobless rate climbed slightly to 3.8% from 3.7% the previous month, although that was under a forecast of 3.9%.

By David Lawder and Andrea Shalal

WASHINGTON (Reuters) -Finance leaders from the Group of Seven industrial democracies on Wednesday condemned Iran's attack on Israel and pledged to continue work on "all possible avenues" to harness frozen Russian sovereign assets to aid Ukraine.

In a joint statement issued after a meeting, the G7 finance ministers and central bank governors said they would "ensure close coordination of any future measure to diminish Iran's ability to acquire, produce, or transfer weapons to support destabilizing regional activities."

The ministers met on the sidelines of the International Monetary Fund and World Bank spring meetings in Washington and said that they view risks in the global economy as "more balanced" amid recent resilience to multiple shocks, with inflation receding.

"Central Banks remain strongly committed to achieving price stability and will continue to calibrate their policies in a data-dependent manner. Price and financial stability are a pre-requisite for sustainable and balanced growth," the G7 officials said.

But the group said there were significant geopolitical risks to the outlook, primarily from Russia's war in Ukraine and conflict in the Middle East, which "could affect trade, supply chains and commodity prices."

The G7 finance officials said they were strongly committed to help Ukraine meet urgent short-term financing needs as it struggles against Russia's invasion, including harnessing extraordinary revenues stemming from frozen Russian assets.

"We reaffirm our determination to ensure that Russia pays for the damage it has caused to Ukraine. Russia’s sovereign assets in our jurisdictions will remain immobilized until then, consistent with our respective legal systems," the G7 officials said.

The statement did not include a specific plan for the assets, but said they would "continue working on all possible avenues by which immobilized Russian sovereign assets could be made use of to support Ukraine" with a view to presenting options to G7 leaders at a June summit in Italy.

'WORK IN PROGRESS'

Earlier on Wednesday, Deputy U.S. Treasury Secretary Wally Adeyemo said the G7 discussions on frozen Russian sovereign assets, estimated at about $300 billion, were still a "work in progress."

Adeyemo told an event hosted by the Semafor news outlet that finance ministers were doing technical work to come up with options that still include building a strong legal foundation for outright seizure of the assets.

"We're talking through a number of different options. One of them is seizure, but another is collateralizing, or even using the windfall profits or the interest from these assets to fund a loan," Adeyemo said.

Because the bulk of the assets are being held in Europe, it was important that the U.S. work closely with European allies on the issue, Adeyemo said.

French Finance Minister Bruno Le Maire said on Wednesday that the G7 needed to be in a position to harness the interest earned on the assets.

"These revenues are estimated between 3 billion to 5 billion euros per year, depending on the level of the interest rates," Le Maire said. "So our proposal is to better understand and better define how these 3 to 5 billion euros could be used over the next month to help Ukraine and to help the Ukrainian government. So let's focus on that question."

By Gertrude Chavez-Dreyfuss

NEW YORK (Reuters) - Foreign holdings of U.S. Treasuries surged to a record in February, its fifth straight monthly rise, Treasury Department data released on Wednesday showed.

Holdings totaled $7.965 trillion, up from a revised $7.945 trillion in January. Treasuries owned by foreigners rose 8.7% from a year earlier.

Holdings of Treasuries grew the most in Belgium, by $27 billion, to hit $320 billion. Japan, the largest non-U.S. holder of Treasuries, increased its U.S. government debt to $1.167 trillion, the largest since August 2022 when the country's holdings were at $1.196 trillion.

Investors have been alert to the threat of Japanese intervention in the currency market to boost the yen, which plunged to a 34-year low of 154.79 per dollar on Tuesday.

The Bank of Japan intervened three times in 2022, selling the dollar to buy yen, first in September and again in October as the yen slid toward a 32-year low of 152 to the dollar.

In September and October 2022, Japan's Treasury holdings declined $131.6 billion from $1.196 trillion in August.

China's pile of Treasuries also fell in February to $775 billion, data showed. The monthly decline of $22.7 billion was the second biggest among the 20 major countries on the Treasury's list.

Holdings of Treasuries by China, the world's second largest economy, have been declining, reaching $763.5 billion in February, the lowest since March 2009.

Britain listed its Treasury holdings at $700.8 billion, up about $9 billion from January.

The benchmark 10-year Treasury yield started February at 3.863% and ended the month at 4.252%, up nearly 39 basis points. Yields rose as a slew of solid economic data was released that month, reflecting expectations that the Federal Reserve will delay cutting interest rates.

Major U.S. asset classes had inflows during the month, the data showed.

On a transaction basis, U.S. Treasuries posted inflows of $88.8 billion, up from $46.3 billion in January.

Foreign buying of U.S. corporates and agencies persisted in February, with inflows of $52.7 billion and $3.7 billion, respectively.

U.S. equities showed a minor inflow of $400 million, compared with outflows of $15.4 billion in January.

Overall, net foreign acquisitions of long- and short-term securities, as well as banking flows, showed a net inflow of $51.6 billion in February, up from outflows of $30.8 billion the previous month, Treasury data showed.

LONDON (Reuters) - Global property and casualty insurers showed "alarming" underwriting losses in 2022 as natural catastrophes increased and risk models failed to keep up, a report from consultants Capgemini said on Wednesday.

Global insured losses from natural catastrophes have been surpassing $100 billion annually in recent years, driven higher by issues such as winter storms. Industry sources see climate change and increased building in exposed areas as contributing to the losses.

The insurers' global combined ratio, a measure of claims and expenses against premium revenue, was 103% in 2022, Capgemini said. A level above 100 indicates an underwriting loss. Property insurers have suffered three years of underwriting losses in the past four years, the report said.

Only 27% of insurance executives surveyed believe their firms have advanced predictive modelling capabilities.

"Accurate risk prediction and pricing are becoming increasingly challenging and leading to insurability concerns," Anirban Bose, Capgemini financial services strategic business unit CEO, said in the report.

The report gathered information from 18 insurance markets, including Britain, Hong Kong, India and the United States, through polling of insurance customers and interviews with insurance executives and underwriters.