WASHINGTON (Reuters) - Ethiopia has secured an agreement with the International Monetary Fund for a new financing program worth $3.4 billion, the IMF said on Monday.

Ethiopia's central bank floated the country's birr currency on Monday, a key step to secure IMF support, and to make progress on a long-delayed debt restructuring.

The Horn-of-Africa nation, which is struggling with high inflation and chronic foreign currency shortages, became the third economy on the continent in as many years to default on its debt at the end of last year.

It has been in talks with the IMF since last year to establish a new lending program, after the last fund-supported program agreed in 2019 was abandoned due to conflict in the northern region of Tigray that ended with a November 2022 peace deal.

Reuters previously reported Ethiopia was seeking to secure about $3.5 billion in a deal with the IMF.

The IMF said the agreement will enable an immediate disbursement of about $1 billion.

Africa's second-most populous country requested a debt restructuring under the Group of 20's Common Framework process in early 2021, but progress was slowed by the civil war in Tigray that lasted two years.

The government in Addis Ababa has unveiled some economic reforms, which analysts say are linked to the negotiations for a new IMF program, including the adoption of an interest rate-based monetary policy earlier this month.

By Leika Kihara

TOKYO (Reuters) - Japan's government and central bank must guide policy by taking into careful consideration recent yen weakness that is hurting consumption, the government's top economic council said on Monday.

Achieving a recovery in consumption, which shrank for four straight quarters, is key to the government's near-term economic policy, the council said in a statement that laid out guidelines for crafting next year's state budget.

"We cannot overlook the impact a weak yen and rising prices are having on households' purchasing power," the council said.

"It's important for the government and Bank of Japan to guide policy with a close eye on recent yen declines," the council said in the statement presented at its meeting on Monday.

The statement underscores concerns policymakers share on the economic fallout from the weak yen, which has hit consumption by pushing up the cost of fuel and food imports.

The weak yen is also likely to be a key topic of debate at the Bank of Japan's two-day policy meeting ending on Wednesday, when its board will lay out a detailed plan to taper its huge bond buying and debate whether to raise interest rates.

The yen briefly hit a 38-year low of 161.96 to the dollar earlier in July, down 14% from the start of this year, triggering yen-buying intervention by Japanese authorities. It has recouped some of the losses to hover at 154.09 on Monday.

The government, for its part, will seek to raise the minimum wage and take steps to cushion the blow from rising prices, such as payouts to low-income households and temporary subsidies to curb utility bills, the council said.

Consumption has been a soft spot in Japan's fragile recovery with its weakness blamed for the economy's contraction in the first quarter.

In its monthly economic report for July, the government described a pick-up in consumption as stalling. The assessment is bleaker than that of the BOJ, which has described consumption as "resilient."

By Leika Kihara

TOKYO (Reuters) - Japan's government and central bank must guide policy by taking into careful consideration recent yen weakness that is hurting consumption, the government's top economic council said on Monday.

Achieving a recovery in consumption, which shrank for four straight quarters, is key to the government's near-term economic policy, the council said in a statement that laid out guidelines for crafting next year's state budget.

"We cannot overlook the impact a weak yen and rising prices are having on households' purchasing power," the council said.

"It's important for the government and Bank of Japan to guide policy with a close eye on recent yen declines," the council said in the statement presented at its meeting on Monday.

The statement underscores concerns policymakers share on the economic fallout from the weak yen, which has hit consumption by pushing up the cost of fuel and food imports.

The weak yen is also likely to be a key topic of debate at the Bank of Japan's two-day policy meeting ending on Wednesday, when its board will lay out a detailed plan to taper its huge bond buying and debate whether to raise interest rates.

The yen briefly hit a 38-year low of 161.96 to the dollar earlier in July, down 14% from the start of this year, triggering yen-buying intervention by Japanese authorities. It has recouped some of the losses to hover at 154.09 on Monday.

The government, for its part, will seek to raise the minimum wage and take steps to cushion the blow from rising prices, such as payouts to low-income households and temporary subsidies to curb utility bills, the council said.

Consumption has been a soft spot in Japan's fragile recovery with its weakness blamed for the economy's contraction in the first quarter.

In its monthly economic report for July, the government described a pick-up in consumption as stalling. The assessment is bleaker than that of the BOJ, which has described consumption as "resilient."

By Marcela Ayres and Bernardo Caram

RIO DE JANEIRO (Reuters) -G20 financial leaders said on Friday the global economy was likely heading for a "soft landing", but warned wars and escalating conflicts could endanger this outlook, while more global cooperation could make growth stronger.

In a joint communique after a two-day meeting in Brazil, finance ministers and central bankers from the Group of 20 major economies also committed to resist protectionism in trade and stressed the need to reduce economic inequalities.

Last month, the World Bank forecast that the global economy would avoid a third consecutive decline in growth since a major post-pandemic jump in 2021, with 2024 growth stabilising at 2.6%, in line with 2023, but warned that overall output would remain well below pre-pandemic levels through 2026.

"We are encouraged by the increasing likelihood of a soft landing of the global economy, although multiple challenges remain," the communique said. "Downside risks include wars and escalating conflicts," it said.

By avoiding explicit mention of the conflicts in Ukraine and Gaza, diplomats have worked to sidestep the disagreements between Russia and major Western nations that derailed a consensus at the finance chiefs' gathering in February.

To defuse the disagreement, Brazil drafted a chair statement on geopolitical issues, stressing that these matters will be addressed by G20 leaders in November.

"The G20 made a wise decision to put geopolitical issues in their place to allow the cooperation agenda to move forward," Brazil Finance Minister Fernando Haddad told a news conference.

Haddad also hailed the group's first-ever declaration calling for cooperation to effectively tax the world's largest fortunes, although that separate joint statement papered over disagreements about the right forum to advance the agenda.

The G20 communique said economic activity had proved to be more resilient than expected in many parts of the world, but the recovery had been highly uneven across countries, contributing to the risk of economic divergence.

BALANCE OF RISKS

The document flagged risks to the economic outlook that remain broadly balanced, with more economic cooperation, faster-than-expected disinflation and technological innovations, like the safe development of Artificial Intelligence (AI), cited among upside risks.

But at the same AI tech could also turn out to be a downside risk to growth, the document said, along with economic fragmentation and persistent inflation keeping interest rates higher for longer, extreme weather events, and excessive debt.

Climate change and significant loss of biodiversity were key topics of concern, the G20 financial leaders agreed, warning that if poorer nations had to shoulder more of the cost of fighting climate change, it would make global inequality worse.

"We reiterate the understanding that the cost of inaction is greater than the cost of action," the communique said.

The document also stepped-up language calling for a reform of the International Monetary Fund, that would give emerging and developing economies a bigger say in the lender of last resort.

The G20 communique underlined the "urgency and importance of realignment in quota shares to better reflect members' relative positions in the world economy."

SEOUL (Reuters) - South Korea's financial authorities will provide at least 560 billion won ($404.55 million) of liquidity support to small businesses having trouble due to recent payment delays by e-commerce platforms, the finance ministry said on Monday.

"The government will utilise all available resources to minimise damage," vice finance minister Kim Beok-seok said.

Last week, South Korean authorities launched an investigation into TMON and WeMakePrice, owned by Singapore-based Qoo10, after the Seoul-based e-commerce firms failed to make payments to vendors.

On Saturday, TMON and WeMakePrice said that they were making efforts to minimise damage to customers and actively notifying them of ways to cancel credit card payments.

Qoo10 has told financial authorities it would secure $50 million to remedy the situation, but no detailed plan has been submitted, the Financial Services Commission said on Sunday.

($1 = 1,384.2700 won)

Investing.com -- It’s set to be a big week for markets with the Federal Reserve, the Bank of England and the Bank of Japan all set to hold policy meetings. Also in the spotlight will be Friday’s U.S. jobs report and more big tech earnings results. Here's your look at what's happening in markets for the week ahead.

1. Fed decision

With markets currently pricing in an 88% chance of a September rate cut amid signs of cooling inflation and an uptick in the unemployment rate this week’s policy statement by Fed Chair Jerome Powell will be firmly in the spotlight.

The Fed, which concludes its July policy meeting on Wednesday, has said it wants to be confident inflation is moving sustainably towards its 2% target before cutting interest rates.

Inflation data on Friday underscored expectations for the U.S. central bank to set the stage for a September rate cut this week.

The Fed has maintained its benchmark overnight interest rate in the current 5.25%-5.50% range since last July. It has hiked its policy rate by 525 basis points since 2022.

2. Nonfarm payrolls

Wednesday’s Fed statement will put the already closely watched nonfarm payrolls report, due out on Friday, under heightened scrutiny as investors try to gauge whether recent signs of cooling in the labor market continued in July.

Economists are expecting the U.S. economy to have created 177,000 jobs in July, moderating from 206,000 in the prior month.

The unemployment rate, which has ticked higher in each of the past three months, is expected to hold steady at 4.1%.

Ahead of Friday’s report the U.S. will release data on JOLTS job openings on Tuesday.

3. Big tech earnings continue

Big Tech earnings are set to continue in the coming days and any disappointments could potentially further roil markets already on edge amid worries over stretched stock valuations.

Microsoft (NASDAQ:MSFT) is scheduled to report earnings on Tuesday, followed by Facebook-parent Meta (NASDAQ:META) on Wednesday and Apple (NASDAQ:AAPL) and Amazon (NASDAQ:AMZN) on Thursday.

Disappointing numbers could re-ignite the worries that caused a bruising selloff in U.S. stocks on Wednesday, when both the S&P 500 and Nasdaq suffered their worst day since late 2022.

The huge run-up in tech stocks may have set a high bar for their results. Google-parent Alphabet (NASDAQ:GOOGL) whose earnings were one of the triggers for the selloff, actually reported better-than-expected revenue, but investors grew wary that rising spending on AI infrastructure could squeeze margins, sending shares 5% lower.

4. Bank of England meeting

The BoE meets on Thursday with investors divided over whether policymakers will deliver their first rate cut since 2020.

The level of uncertainty is higher than usual in the run-up to the meeting as key central bank officials have not spoken publicly for over two months due to rules in the lead up to Britain’s July 4's general election.

Investors have been left guessing whether recent higher-than-expected service price inflation is enough to prevent the BoE cutting rates from their 16-year high of 5.25%.

Last month, the BoE's Monetary Policy Committee voted 7-2 to keep rates on hold, but minutes of the decision recorded that it had been a "finely balanced" decision for some of the policymakers who had not voted for a cut.

5. Bank of Japan decision

The BOJ concludes its latest policy setting meeting on Wednesday and speculation over the prospect of a rate hike is mounting after high-profile politicians, including the prime minister, hinted at the need for near-term policy normalisation.

The impact of the weak yen on household and business spending appears to be turning the exchange rate into a central issue for the ruling Liberal Democratic Party's leadership convention in September.

The fact that the currency has rebounded by a staggering 10 yen per dollar from three-decade lows at the start of the month hasn't deterred some from predicting a July hike.

They argue the BOJ can get the most bang for its buck by hiking into a rallying yen. Others worry a fragile economy and weak consumer sentiment couldn't weather higher borrowing costs, with slowing U.S. growth set to have a knock-on effect already.

--Reuters contributed to this report

By David Milliken

LONDON (Reuters) - The Bank of England's first interest rate cut since 2020 hangs in the balance next week, with greater uncertainty than usual as key policymakers have not spoken publicly for more than two months due to rules in the run-up to July 4's election.

Investors are left guessing whether recent higher-than-expected services prices are enough to prevent the central bank cutting rates from their 16-year high of 5.25%.

Interest rate futures show a 50% chance of a quarter-point rate cut on Aug. 1. And while most economists in a Reuters poll still expect a cut, many would not be too surprised if the BoE instead waited until its following meeting on Sept. 19.

"We've run out of ways to describe how close the decision next week will be," RBC Capital Markets global macro strategist Peter Schaffrik and senior UK economist Cathal Kennedy wrote in a note to clients on Thursday.

Last month, the BoE's Monetary Policy Committee voted 7-2 to keep rates on hold, but minutes of the decision recorded that it had been a "finely balanced" decision for some of the policymakers who had not voted for a cut.

Governor Andrew Bailey, in a written statement alongside June's decision, said policymakers "need to be sure that inflation will stay low" before cutting rates.

Financial markets see only gradual loosening, with two quarter-point cuts expected this year and a further three or four cuts in 2025, reducing rates to 4% or just under.

Consumer price inflation has been at the BoE's 2% target in May and June, down from 6.7% when the BoE last raised rates in August 2023 and lower than in the United States or the euro zone, where the European Central Bank cut rates in June.

But in the short term this may be as good as it gets for the BoE. Both it and most external economists expect inflation to rise in the coming months as the downward pull of sharp falls in energy prices last year drops out of the annual price index.

UNDERLYING PRICE PRESSURES

The BoE has said its rate cut decision will be focused on underlying measures of inflation pressure: chiefly wage growth, labour market tightness and services prices.

Since June's rate decision, the job market has eased, with fewer vacancies and slightly higher unemployment.

Wage growth has also slowed - though at 5.7% in the three months to May it was still roughly double the rate the BoE views as compatible with 2% inflation, and on track to be just above the BoE's expectation for the second quarter.

But the big outlier is service price inflation, which at 5.7% in June was well above the BoE's 5.1% forecast.

Much of this overshoot was due to unusually high hotel prices, possibly related to concert tours that month.

But the extent to which MPC members will discount this reading is unclear.

Of the four who have spoken publicly since the BoE lifted its self-imposed election campaign restrictions, only Chief Economist Huw Pill is regarded as a swing voter.

Pill said an August rate cut was "an open question". Wage inflation and services prices showed "uncomfortable strength" but even so, inflation pressures might be beginning their path back to tolerable levels, he said.

Particular uncertainty surrounds the views of deputy governors Clare Lombardelli and Sarah Breeden. Lombardelli joined the BoE this month after spending most of her career at the finance ministry and Breeden's last substantive comments on monetary policy were in February.

Unexpectedly strong economic growth in the first five months of 2024 might reduce any urgency felt by the MPC to cut rates.

RBC expects the BoE next week to revise up its 2024 growth forecast to 1% from May's prediction of 0.4%, which followed an expansion of just 0.1% in 2023 as Britain struggled with a surge in energy costs after Russia's full-scale invasion of Ukraine.

However, James Smith, developed markets economist at ING, said it would be risky for the MPC to seek too much certainty that inflation pressures were buried.

"Decent growth for the rest of 2024 relies, in part, on those cuts being delivered, a fact that won't have been lost on BoE officials," he said.

BANGKOK (Reuters) - Thailand's economy is expected to grow 2.7% in 2024, the Finance Ministry said Friday, up from a previous forecast of 2.4% due to higher foreign tourist arrivals and exports.

"We see positive signs from exports due to improving economic growth from trading partners," Deputy Finance Minister Paopoom Rojanasakul said, adding the growth could hit 3% this year on due to policies still to be implemented.

"It's a good number, but we have to do better."The growth forecast did not factor in the 450 billion baht ($12.5 billion) cash handout scheme to be rolled out in the fourth quarter, Paopoom said, adding that would contribute 1.2 to 1.8 percentage points to growth.

Exports were seen rising 2.7% in 2024, stronger than an earlier forecast of 2.4%.

Tourism is a key driver of Southeast Asia's second-largest economy and the ministry now expects 36 million foreign arrivals, who are expected to stay longer and spend an estimated 1.69 trillion baht more due to relaxed visa requirements, said Paopoom.

The previous forecast expected 35.7 million foreign arrivals with projected spending of 1.59 trillion baht.

The Thai economy expanded 1.9% last year, slower than expected and less than 2.5% growth in 2022.

The ministry saw the baht trading at an average of 36.2 baht per dollar, slightly weaker than the 36 baht seen in April, due to capital outflows in the first half of the year.

($1 = 36.1300 baht)

Investing.com -The latest economic indicators point to a moderation in consumer price inflation since its peak in June 2022.

Analysts from the Economic Policy Institute (EPI) noted on Thursday that prices for several key goods have actually declined over the past few years, bringing some relief to consumers.

According to underlying commodity data from the Bureau of Labor Statistics, major improvements have been observed in energy prices. Families preparing for winter can expect to pay 36% less for heating fuel compared to mid-2022. Similarly, gasoline prices have declined by 29%, and heating and cooking gas is 15% cheaper.

In the realm of household goods, prices for washers and dryers are currently 10% lower than they were two years ago. Grocery shopping has also become slightly more affordable, with apples now costing 8% less and both milk and bacon seeing a 3% price reduction. Tomatoes have experienced a more modest decrease, with prices falling by 1%. Additionally, clothing prices for boys' and girls' shoes are down by 2%.

While the overall Consumer Price Index (CPI) growth remains above the Federal Reserve's 2% target for inflation, the trend indicates a downward shift. Since June 2022, inflation has decelerated by nearly six percentage points. Notably, prices for several household staples, such as chicken, bananas, eggs, and car tires, are increasing at rates that are slower than the Fed’s inflation target.

Perhaps most encouraging is the positive outlook for wages. Over the past two years, wages have grown 1.2 percentage points faster than prices. This accelerated wage growth, combined with the declining prices in key sectors, is beneficial for consumers' purchasing power. Looking ahead, there is hope that this favorable trend in wages and prices will persist, providing continued economic relief.