25/05/2026

BIZ & FINANCE MONDAY | MAY 25, 2026

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New US Federal Reserve chair says will be ‘reform-oriented’

consolidation would be needed. It said that if governments did not act now, the problem would only get worse. “The ‘muddling-through’ approach that many countries have adopted so far is reaching its limits, and a more strategic response seems essential to respond to rising spending pressures,” the IMF said. “Making changes in a piecemeal way, or tinkering at the margins, is likely to be inadequate,” it said. – Reuters Bangladesh central bank unveils stimulus package as growth slows DHAKA: Bangladesh’s central bank on Saturday announced a 600 billion taka (RM19.4 billion) stimulus package to revive shuttered factories and support businesses as economic growth slows. The package aims to restart production, create jobs and restore business confidence, as export oriented industries, especially the ready-made garment sector, struggle with weaker global demand, higher input costs and supply chain disruptions, while rising import bills add to pressure on the economy amid geopolitical tensions in the Middle East. Bangladesh Bank governor Mostaqur Rahman said the stimulus includes a 410 billion taka refinancing fund raised from banks with excess liquidity through long-term deposits of at least three years at a 10% interest rate, alongside a 190 billion taka fund drawn from the central bank’s own resources and backed by a government guarantee. The largest allocation, amounting to 200 billion taka, will be used to reopen closed and distressed factories and support service-sector businesses. The central bank estimates the programme could help create around 250,000 jobs. Another 100 billion taka has been earmarked for agriculture and the rural economy, to support food production and rural employ ment, officials said. The refinancing scheme is intended to prioritise export oriented industries, particularly garments, which account for more than 80% of Bangladesh’s export earnings. Bangladesh’s economic growth eased to 3% in the second quarter of the 2025-26 fiscal year, which ends in June, compared to 3.5% a year earlier, according to provisional data from the Bangladesh Bureau of Statistics. Businesses have been calling for stronger policy support as high borrowing costs, persistent inflation and tight financing conditions weigh on investment and industrial activity. Economists say reopening idle factories and improving access to credit could help stabilise production, protect jobs and support exports. – Reuters

to a dual mandate on inflation and employment – to be sworn in at the White House. The last central bank chief to do so was Alan Greenspan in 1987. At his Senate confirmation hearing, Warsh insisted he would “absolutely not” be a puppet for Trump. Supreme Court Justices Clarence Thomas and Brett Kavanaugh were among those in attendance at the glitzy ceremony on Friday, with the former administering the oath of office. Warsh will take over a divided Fed facing high inflation – fuelled by the energy price surge from Trump’s war on Iran -- and a labor market showing signs of weakness. The US central bank has a dual mandate to keep inflation to its long term target of 2% while also maintaining maximum employment. US consumer inflation in April came in at 3.8%, a three-year high, with American households battered by years of above-expected price increases since the Covid-19 pandemic.

Fresh data released by the University of Michigan on Friday showed record-low US consumer confidence in May was even worse than initially reported. According to final figures, the university’s consumer sentiment index came in at 44.8 points, down from 48.2 points in its preliminary estimate released on May 8. The reading is the lowest level since data collection began in 1952, according to the survey’s website. “The cost of living continues to be a first-order concern, with 57% of consumers spontaneously men tioning that high prices were eroding their personal finances, up from 50% last month,” said Joanne Hsu, director of the survey. “Critically, consumers appear worried that inflation will increase and proliferate beyond fuel prices, even in the long run,” Hsu said. Respondents to the survey expected consumer inflation to hit 4.8% in the year ahead, up significantly from before the war. Long-run inflation expectations rose to 3.9%. – AFP

o Trump insists central bank chief will be ‘totally independent’

WASHINGTON: New US Federal Reserve (Fed) chair Kevin Warsh vowed to be “reform-oriented” as he was sworn in at the White House on Friday, with President Donald Trump insisting the central bank chief would be “totally independent”. Trump has exerted unpre cedented pressure on the central bank to reduce interest rates, attempting to fire a Fed governor and pursuing a criminal probe against Warsh’’s predecessor Jerome Powell. “I will lead a reform-oriented Federal Reserve, learning from past successes and mistakes both, escaping static frameworks and models, and upholding clear stan dards of integrity and performance,” Warsh said. He called for central bankers to pursue their goals “with wisdom and clarity, independence and resolve”, MEXICO CITY: The European Union (EU) and Mexico on Friday signed a deal reducing tariffs on each other’s goods as both seek to lessen their dependence on trade with the United States. The expansion of an accord dating to 2000 comes as Mexico fights hard to preserve a three-way free trade agreement with the US and Canada, which is crucial to all three economies. The EU is Mexico’s third-largest trading partner, lagging far behind the US and China. Mexican President Claudia Sheinbaum has stressed the importance of “opening other horizons” at a time when both Mexico and the EU are grappling with US President Donald Trump’s tariff offensive. The updated agreement, signed by Sheinbaum and European Commission President Ursula von der Leyen during the eighth EU Mexico Summit, removes most remaining barriers to trade and investment. “At a time marked by increasing turbulence and profound transformations, we have chosen to NICOSIA: European Union countries will face large bills for defence, energy and pensions in the next 15 years, the International Monetary Fund (IMF) told EU finance ministers on Saturday, suggesting a mix of reforms, conso lidation and joint borrowing as a way to manage that. “If left unchecked, public debt will be on an unsustainable path. Under unchanged policy, debt of the average European country would reach 130% of GDP by 2040 – roughly doubling from today,”the IMF said in a paper used as a

adding that “inflation can be lower, growth stronger, real take-home pay higher, and America can be more prosperous” if they did so. Trump, who frequently criticised and insulted Powell, praised Warsh and said he wanted him to be fully independent, before urging the Fed chair to let the economy “boom”. “Kevin understands that when the economy is booming, that’s a good thing. We want to stop inflation, but we don’t want to stop greatness,” Trump said. Speaking at an event later in the day, Trump vowed to get interest rates down “very quickly”.

Warsh has backed rate cuts in the past, even as the world’s largest economy faces inflation at a three-year high. It is unusual for the chief of the Fed – an independent nonpartisan body that sets monetary policy according Mexico and European Union sign deal to reduce tariffs

expand, deepen and update the bonds of our Strategic Partnership,“ a joint statement read. The updated accord facilitates trade in auto parts, a sector particularly affected by Trump’s tariffs. Mexico also agreed to recognise hundreds of food and drink products from specific EU regions, such as Parma ham and Roquefort cheese. The agreement will lower tariffs on more products, and give duty-free access to pasta, chocolate, potatoes, canned peaches, eggs and certain poultry products. “Mexico wants to reduce its dependence on its northern neighbour, but also on Asian, or rather, Chinese, supply chains, and in Europe we are pursuing the same objectives,” an EU official told AFP on condition of anonymity. The lower tariffs enjoyed by Mexico will benefit the EU, according to Sergio Contreras, president of the Mexican Business Council for Foreign Trade. Mexico will be “the point of convergence, the platform for the European Union and North America to come together,” he said. – AFP basis for the ministers’discussions at an informal meeting here. The paper said that to prevent such a scenario, EU countries must improve incentives for citizens to move around the 27-nation bloc to find work and for companies to hire them. The EU should also integrate its energy markets, make it easier for citizens’ savings to flow across the bloc into profitable investments and unify laws that now often differ from country to country.

Sheinbaum (centre), European Commission President Ursula von der Leyen (right) and European Council President Antonio Costa posing for a picture at the National Palace, in Mexico City on Friday. – REUTERSPIC IMF: EU must reform, consolidate, borrow jointly to meet spending needs

Pension reforms and a higher retirement age would also help, as would government guarantees for riskier investments in low-carbon and climate-resilient projects that would help attract private capital to them. Finally, governments should agree that innovation, energy and defence are European public goods and they should be paid for through joint borrowing. Joint debt is a highly controversial issue in the EU, where some countries like Spain, Italy or France are in favour, but others, like Germany and several

northern European countries, strongly oppose the idea. “This is one of those areas where there are differences of opinion, but it’s certainly one of the areas which we will be discussing in the coming months,” the chairman of eurozone finance ministers Kyriakos Pierrakakis told Reuters. The IMF said that even with reforms, most EU countries would still need fiscal consolidation to put debt on a declining path, though the more ambitious the reforms, the less