By Devayani Sathyan

BENGALURU (Reuters) - The Reserve Bank of Australia (RBA) will hike its key interest rate once more by the end of September to 4.35% following a surprise hike on Tuesday and then hold policy for the rest of the year, according to economists in a snap Reuters poll.

Having paused rate increases in April, the central bank resumed tightening in June, underscoring the challenges of managing inflation.

Australian inflation fell to 7.0% last quarter but the latest monthly data showed a rise to 6.8% in April from 6.3% in March, still more than double the RBA's target range of 2-3%, suggesting it has more work to do.

Following confusion in recent months over whether rates might go higher, Governor Philip Lowe in a speech on Wednesday said "more tightening may be required", adding his "patience has a limit and (inflation) risks are starting to test that limit".

Around three quarters of economists polled, 20 of 26, forecast the RBA would hike by at least 25 basis points to 4.35% by the end of September. The remaining six forecast the cash rate to stay at 4.10%.

But nearly two thirds, 16 of 26, expect the RBA to hold fire at its next meeting on July 4, with 10 forecasting a 25 basis point rise. Markets are pricing in a slightly greater than 50% probability of a July hike.

"Given our own views about the outlook for productivity, unit labour costs and the stickiness of services inflation we continue to expect another 25 basis point increase from the RBA, most likely in August," said Adelaide Timbrell, senior economist at ANZ.

"Our forecast is August because that is when the Reserve Bank will have the fresh inflation data from the quarterly CPI report. It is possible that they'll raise earlier in July, and certainly the Reserve Bank has surprised the market before. "

Among major local banks, ANZ, CBA and NAB forecast a July pause while Westpac expects a quarter-point hike. All four saw rates peaking at 4.35% by the end of September. The RBA meets to set interest rates monthly.

The median forecast showed the cash rate at 4.35% at year-end, 25 basis points higher than the peak expected in a poll taken before the June meeting. The highest forecast was 4.85%.

Australia's economy grew 0.2% last quarter, its weakest pace in one and a half years, suggesting 400 basis points of rate increases from the RBA are beginning to restrain the economy.

But a surge in savings during the COVID pandemic and a tight labour market have made the interest rate sensitive housing market more resilient.

Home prices were expected to stagnate on average this year compared to a near double-digit fall predicted three months ago, a separate Reuters poll found.

SEOUL (Reuters) -South Korea will discuss with Japan re-establishment of their bilateral foreign exchange swap line that expired in 2015, its finance minister said on Thursday.

"Current economic issues, including bilateral and regional financial cooperation, will be discussed at the bilateral finance minister meeting on June 29," Minister Choo Kyung-ho said, adding that currency swap arrangement was also on the agenda.

Choo was speaking at a discussion forum, in response to a reporter's question about the bilateral finance minister meeting between Japan and South Korea that is scheduled to be held in Tokyo.

The meeting will mark the revival of regular dialogue between the two countries' finance ministers, which they agreed to bring back to life during their prior meeting in early May and had been suspended since 2016.

On the domestic economy, Choo said this year's economic growth would likely be "slightly lower" than the government's previous projection of 1.6%.

He said the revision would be contained in the government's economic forecast due in late June or early July, when it releases its biannual policy plans.

Meanwhile, the government is not considering a supplementary budget for this year and does not plan to do so for a while, he said.

The country's inflation, which cooled to a 19-month low in May, is likely to fall to the upper 2% level this month, but is still high and controlling it will remain as the top priority for a while, Choo said.

SEOUL (Reuters) - South Korea's finance minister said on Thursday this year's economic growth would likely be lower than the government's previous projection of 1.6%.

The government will "slightly lower" the growth forecast for this year when it releases its biannual policy plans in late June or early July, Finance Minister Choo Kyung-ho said during a media event.

The government is not considering a supplementary budget for this year and does not plan to do so for a while, Choo said.

Choo said the country's inflation, which cooled to a 19-month low in May, was still high and controlling it would remain as the top priority for a while.

TOKYO (Reuters) - Japan posted a current account surplus for the third month in April as the trade deficit narrowed and income gains from overseas investment grew, government data showed, easing worries about declines in the country's balance of payments.

The current account stood at 1.9 trillion yen ($13.58 billion) surplus in April, Ministry of Finance data showed on Thursday, beating economists' median forecast for a surplus of 1.66 trillion yen in a Reuters poll.

It followed a surplus of 2.3 trillion yen in the previous month, the data showed.

A weak yen and rises in global interest rates helped drive up primary income gains from Japanese securities investments overseas, an MOF official said.

That reflected the trend in which the country increasingly earns income from capital parked abroad rather than from sales of goods and services.

The primary income surplus stood at 3 trillion yen, more than enough to offset the trade deficit of 113 billion yen, the data showed.

Over the past year, the current account data often highlighted the pain that high energy costs and a weak yen were inflicting on Japan's economy, the world's third biggest, which relies heavily on imports of fuel and raw materials.

Japan's position as an export powerhouse has also waned in recent years, in part because companies have moved production overseas, making overseas investment a pillar of the country's earning power.

($1 = 139.9600 yen)

(Reuters) -Britain's Payment Systems Regulator (PSR) said on Wednesday it has made it mandatory for banks and payment firms to reimburse victims of online bank fraud within five days, in cases where users at a business send money to a bank account controlled by fraudsters.

Thousands of people have seen their savings swept away in recent years by an unprecedented wave of fake online bank transactions hitting Britain, called authorised push payment (APP) fraud.

The PSR said the new rules will be imposed on the Faster Payments system, where the vast majority of APP fraud has occurred so far, with the reimbursement requirements coming into force next year.

The regulator also said that all payment firms will be incentivised to take action, with both sending and receiving firms equally splitting the reimbursement costs.

"We are pleased the PSR has said it will now use its powers to compel all banks and building societies which make and receive payments over the UK's Faster Payment system to reimburse victims of APP scams when the regime goes live in 2024," Pay.UK, a retail payments firm, said in response to the regulator's decision.

The PSR last year said it planned to introduce new rules to tackle APP fraud once the parliament expands the powers of the regulator.

By David Lawder

WASHINGTON (Reuters) -The World Bank on Tuesday raised its 2023 global growth outlook as the U.S., China and other major economies have proven more resilient than forecast, but said higher interest rates and tighter credit will take a bigger toll on next year's results.

Real global GDP is set to climb 2.1% this year, the World Bank said in its latest Global Economic Prospects report. That's up from a 1.7% forecast issued in January but well below the 2022 growth rate of 3.1%.

The development lender cut its 2024 global growth forecast to 2.4% from 2.7% in January, citing the lagged effects of central bank monetary tightening and more restrictive credit conditions that were reducing business and residential investment.

These factors will slow growth further in the second half of 2023 and into 2024, but the bank released a new 2025 global growth forecast of 3.0%.

World Bank Chief Economist Indermit Gill put a gloomy spin on the new forecasts, saying that 2023 would still mark one of the slowest growth years for advanced economies in the last five decades.

Two thirds of developing economies will see lower growth than in 2022, dealing a major setback to pandemic recovery and poverty reduction and increasing sovereign debt distress, he added.

"Even by the end of next year, a third of the developing world will not beat the per-capita income levels that they had at the end of 2019," Gill told reporters. "That's five lost years for nearly a third of the world's countries."

In January, the World Bank had warned that global GDP was slowing to the brink of recession, but since then, strength in the labor market and consumption in the U.S. had exceeded expectations as has China's recovery from COVID-19 lockdowns.

U.S. growth for 2023 is now forecast at 1.1%, more than double the 0.5% forecast in January, while China's growth is expected to climb to 5.6%, compared to a 4.3% forecast in January after COVID-reduced growth of 3% in 2022.

The bank, however, halved its previous 2024 U.S. growth forecast to 0.8%, and cut China's forecast by 0.4 percentage point to 4.6%.

The euro zone got a forecast increase to 0.4% growth for 2023 from a flat outlook in January, but the forecast for next year was also cut slightly.

BANKING STRESS

Recent banking sector stress is also contributing to tighter financial conditions that will continue into 2024, the lender said.

It cited one potential downside scenario where banking stress results in a severe credit crunch and broader financial market stress in advanced economies. This would likely cut 2024 growth by nearly half to just 1.3% - the slowest pace in 30 years outside of the 2009 and 2020 recessions.

"In another scenario where financial stress propagates globally to a far greater degree, the world economy would fall into recession in 2024," the bank added.

The bank said inflation is expected to gradually edge down as growth decelerates and labor demand in many economies softens and commodity prices remain stable. But it added that core inflation is expected to remain above central bank targets in many countries throughout 2024.

By Stella Qiu

SYDNEY (Reuters) -Australia's central bank chief on Wednesday stepped up a warning of more rate hikes ahead to temper rising price pressures, even as risk of a steep economic downturn heightens with data showing GDP expanded at its weakest pace in 1-1/2 years last quarter.

Reserve Bank of Australia Governor Philip Lowe said the assessment of inflation risks has changed in the past few months since it paused a months-long policy tightening campaign in April, including upside surprises on wages, housing prices and persistently high services inflation.

"We have been prepared to be patient... but our patience has a limit and (inflation) risks are starting to test that limit," Lowe said in a speech at the Morgan Stanley (NYSE:MS) Australia Summit in Sydney, a day after the central bank raised the benchmark cash rate a quarter point to an 11-year high of 4.1%.

"We couldn't just sit idly and say well this is just all accidental. It's all just noise."

Lowe reiterated that further tightening may still be required to bring inflation to heel, with some analysts now expecting rates to peak at 4.6% while Goldman Sachs (NYSE:GS) is picking 4.85% - well above a 4.35% peak projected by many banks just weeks earlier.

The RBA has projected headline inflation - which is at about 7% now - to return to the top of the bank's target of 2%-3% by mid-2025, a slower path than many other economies as Lowe wants to preserve strong gains in the labour market.

However, the RBA chief said that "the desire to preserve the gains in the labour market does not mean that the Board will tolerate higher inflation persisting," raising the risk of a hard landing for the economy.

Gross domestic product (GDP) data earlier on Wednesday showed the Australian economy expanded 0.2% in the first quarter, its weakest pace since the third quarter 2021 when COVID lockdowns paralysed activity. That missed analysts' forecast of 0.3% growth.

PRODUCTIVITY, PRICE CHALLENGE

Price pressures have led the RBA to raise its cash rate by 400 basis points since last May, the most aggressive tightening campaign in its modern history.

Markets now see rates are almost certain to reach 4.35% by September, and a hike could come as soon as next month.

That could further hamper drivers of economic growth.

In the last quarter, for instance, GDP growth was underpinned by business investment, which analysts expect to slow from here. Also, Australian consumers, squeezed by high costs of living and rising interest rates, have cut back on discretionary spending, making just a 0.1 percentage points contribution to first quarter GDP growth.

"On the face of it, that would suggest the RBA could well take its foot off the brake. However, we're not convinced," said Marcel Thieliant, a senior economist at Capital Economics.

"Dismal productivity gains raise the risk that the RBA will have to raise interest rates above the 4.35% peak we have pencilled in."

A productivity measure showed GDP per hour worked fell 0.3%, while compensation of employees (COE), the broadest measure of economy-wide labour costs, increased 2.4% in the first quarter, after a rise of 2.0%.

On Wednesday, Lowe elaborated on four areas that the board would be paying close attention to in upcoming policy decisions - global economy, household spending, growth in unit labour costs and inflation expectations.

Services price inflation remained high, with rents rising quickly and electricity prices set to increase further, while unit labour costs are rising briskly without a pickup in productivity, and medium-term inflation expectations could start to shift higher, said Lowe.

"It is in Australia's interest that we get on top of inflation and we do so before too long. The Board will do what is necessary to achieve that."

By Darya Korsunskaya and Alexander Marrow

(Reuters) -Russia recorded a marginal budget surplus in May, enabling it to slightly reduce its deficit for the first five months of the year to 3.41 trillion roubles ($41.9 billion), the finance ministry said on Tuesday, as monthly spending slowed.

In January-May 2022 Russia posted a surplus of 1.59 trillion roubles, but outlays to support its military campaign in Ukraine and Western sanctions on its oil and gas exports have since depleted government coffers. This year's deficit is already 117% of the annual plan.

Soaring defence spending has kept Russia's industrial sector ticking along, driving forecasts for economic growth this year and helping Moscow to continue its military campaign in Ukraine.

The finance ministry stopped publishing individual monthly budget fulfilment data last year, but based on Tuesday's figures, Russia posted a surplus in May of 13 billion roubles.

That compares with a 1-trillion-rouble deficit in April. Monthly spending in May was its lowest this year, 1.1 trillion roubles lower than in April, but to meet this year's overall 29.1-trillion-rouble expenditure target, spending will have to fall further.

Meanwhile, non-oil-and-gas revenues for January-May were 9.1% higher than the same period last year.

But Moscow's crucial oil and gas revenues were 49.6% lower year-on-year in the first five months, which the finance ministry put down to lower prices for Urals crude and lower natural gas export volumes.

Spending was 26.5% higher year-on-year in that period, the preliminary data showed, while income was down 18.5%.

Finance Minister Anton Siluanov has repeatedly said Russia's budget deficit this year would be no more than 2% of GDP, although most analysts disagree. The International Monetary Fund is among those expecting Russia to see a sharply wider budget deficit this year.

The finance ministry on Tuesday said it expects tax revenues from the oil sector to recover in the second half of the year.

The fall in revenues has forced Moscow to start selling international reserves to help cover the deficit, while analysts have suggested raising taxes is another option.

Russia has spent almost 440 billion roubles covering the deficit from the National Wealth Fund (NWF) so far this year.

($1 = 81.3705 roubles)

By Sarah Meyssonnier and Layli Foroudi

PARIS (Reuters) -French anti-pension reform protesters stormed the headquarters of the Paris 2024 Olympic Games on Tuesday as trade unions made a last-gasp attempt to pressure lawmakers into reversing President Emmanuel Macron's raising of the retirement age.

BFM TV broadcast images of several dozen hard-left CGT trade union militants briefly occupying the building in Aubervilliers in northern Paris.

"There was no violence and no damage," a Games spokesperson told Reuters.

The latest nationwide protests attracted far fewer people compared to the last demonstration on May 1.

The French government said a total of 281,000 people took to the streets across France on Tuesday, well below the figure of 782,000 for the prior protests on May 1.

Trade unions have fought Macron's move to make the French work longer since mid-January, with rolling strikes and protests that have at times descended into violence on the fringes.

However, the level of violence at the demonstrations has gradually abated, after major clashes broke out in March and April, although some minor vandalism occurred at the end of Tuesday's protest in Paris.

Macron says it was necessary to lift the legal retirement age by two years to 64 to plug a widening pension deficit. However, trade unions say the money can be found in other ways, such as raising taxes on the wealthy.

The new pension law is already on the statute books and after months of rare unity among the biggest trade unions, there are now divisions over where to focus energies.

Sophie Binet, the secretary-general of the CGT, said her union would fight on.

"There's a lot of anger but also fatigue," Binet said, adding that strikers had felt their wallets pinched.

'BALANCE OF POWER'

Between 400,000 and 600,000 people were expected to join the protests, authorities said, which would be down from more than a million who took part at the height of the pension protests earlier this year.

Some protesters have threatened to disrupt next summer's Olympics if Macron does not back down. Banners reading "No retirement, No Olympics" were visible in Paris.

Some 11,000 police were deployed, including 4,000 in Paris, on Tuesday. Fuel deliveries were blocked from leaving TotalEnergies' Donges site, near Nantes in western France where riot police clashed with black-clad protesters.

Disruption to rail travel was light. The civil aviation authority asked airlines to cancel a third of the flights out of Paris-Orly, the capital's number two airport, and a walkout by some air traffic control staff forced some overflight cancellations.

"Again today we've had to cancel some 400 flights ... because of French ATC strikes. The majority of these flights are overflights and not going to France," Ryanair CEO Michael O'Leary tweeted.

Macron and his government have been on a blitz in past weeks to shift the narrative. The French leader has unveiled electric vehicle battery investments, tax credits for green industry and middle-class tax cuts.

Lauren Berger, head of the reform-minded CFDT trade union, said the aim was now to turn anger into a "show of strength" in talks with the government on issues such as improving work conditions and purchasing power.

On Thursday, an opposition-sponsored motion aimed at cancelling the minimum pension age increase will be reviewed by the French parliament.

It is expected to be rejected by the lower house's speaker, a member of Macron's party, because under the constitution, lawmakers cannot pass legislation that weighs on public finances without measures to offset those costs.

But unions hope a big protest turnout could pressure lawmakers into holding a vote and set the stage for further challenges.

"We need to prepare for what's to come (after the summer)," said Jean-Luc Carbonari, a 60-year-old sewer works engineer. "We need to reverse the political balance of power."

By Chris Taylor

NEW YORK (Reuters) - Consumers facing high asset prices and rising interest rates have a few loan options. None are particularly attractive.

Buyers of homes or new cars might be better off waiting. But if you must go ahead, either face taking on a big monthly payment, or stretching out the loan term to keep the monthly bill down - as many are doing.

New car loans lasting 73-84 months (over six years) rose to 34.4% of the market in 2022 from 28.6% in 2018, according to auto information site Edmunds. A few borrowers are going even longer, with less than 1% of new car loans lasting 85 months or more.

"It's a reflection of the world we live in: Transportation affordability is a significant problem, as is housing," said Ira Rheingold, executive director of the National Association of Consumer Advocates.

"More and more dealers are offering extended loan terms: Instead of three or four or five years, they are now going way beyond that," Rheingold added. "It's the same thing with housing: Sometimes the only way to get someone into a house is to increase the mortgage length."

Ultra-long loan terms are showing up in the housing market.

Homeowners straining to pay their Federal Housing Administration (FHA) mortgages can now apply to have their loans extended to 40 years to reduce monthly payments.

For personal loans closed through the LendingTree platform, the median term in May rose to 60 months from 57 months in April, and 54 months in March.

Stretching out a loan is not always a bad idea. It can be a solid foundation for family wealth if fixed at a low rate for an asset that appreciates over time such as a 30-year mortgage.

One principle applies, no matter what the asset, Rheingold advised. "Be very wary of extending the life of your loan, just to make it affordable in the short-term."

Here are few tips from financial experts:

DO THE MATH

A lower monthly payment may seem attractive now, but a longer term loan will end up costing more in interest, likely at a higher rate to compensate the lender for additional risk. That is why such loans appeal to banks, but less to borrowers.

"Buyers should be very wary of taking lenders up on those offers," said financial planner Eric Scruggs of Stoneham, Massachusetts.

For example, a $35,000 car, with a five-year loan at 3% interest, would have a total of $37,734 in payments, he said. That same car financed over seven years at 5% would cost $41,554 – $3,820 more.

MAKE SOME HARD DECISIONS

If you must keep pushing out the loan term to afford an asset, that may be a signal to get real.

"If you have to stretch out to a seven-year loan to buy a car, perhaps you should buy a less expensive car," said Brandon Gibson, a Dallas financial planner.

BEWARE OF SLIDING ‘UNDERWATER’

Extending loans further into the future means increasing the amount of time you could be "underwater," or owe more than the asset is worth. That certainly happens with cars, but also with homes in eras of declining prices, as during the subprime mortgage crisis of 2007 to 2008.

"This situation triggers a host of issues," said Erin Witte, director of consumer protection for the Consumer Federation of America. "Being underwater can make it very difficult to trade in a car in future when you need a new one.

"Consumers are faced with the situation of 'negative equity,' where they still owe money on the car they want to trade in and end up rolling that debt into the finance contract on the new car," Witte added. "Unfortunately, that means the consumer is now paying interest on that debt twice."