China’s central bank prepares for historic monetary policy shift

Good morning and welcome back to FirstFT Americas. Today we are covering:

• China’s central bank plans monetary policy shift

• Cold snap stokes US energy prices

• Hollywood braces for Trump 2.0

• The latest TikTok trend: “fridgescaping”

The People’s Bank of China plans to cut interest rates this year as it makes a historic shift to a more orthodox monetary policy in line with the US Federal Reserve and the European Central Bank.

In comments to the Financial Times, the Chinese central bank said it was likely that it would cut interest rates from the current level of 1.5 per cent “at an appropriate time” in 2025.

It added that it would prioritise “the role of interest rate adjustments” and move away from “quantitative objectives” for loan growth in what would amount to a transformation of Chinese monetary policy.

Most central banks, such as the Fed, have only one policy variable, the benchmark interest rate, which they use to influence demand for credit and activity in the economy. Read more on the PBoC’s planned reforms.

• Comment: Investors need to understand how much China has altered in recent years, writes Swetha Ramachandran, a global equity manager at Artemis.

And here’s what else we’re keeping tabs on today and over the weekend:

• US monetary policy: Federal Reserve Bank of Richmond President Thomas Barkin speaks before the Maryland Bankers Association First Friday Economic Outlook Forum.

• US politics: Mike Johnson faces a knife-edge vote today to keep his job as Speaker of the US House of Representatives and President Joe Biden is expected to block Nippon Steel’s $15bn bid for US Steel.

• South Korea: Investigators have until Monday to arrest Yoon Suk Yeol after abandoning their first attempt following an hours-long stand off at the impeached president’s residence.

Five more top stories

1. Prices for US home heating fuels have surged as a polar vortex bears down on the country, reviving volatility in markets left dormant. After years of mild winters, some commodity traders have been caught off guard as the country’s north faces its coldest January in more than a decade.

• Other market news: The dollar surged to a two-year high against the euro and an eight-month high against sterling yesterday after robust US jobs market data added to investor confidence about the strength of the world’s largest economy.

2. Meta’s global affairs chief Nick Clegg will be replaced by a prominent Republican just weeks ahead of Donald Trump’s inauguration. Joel Kaplan, known for overseeing the company’s relationship with conservatives, was previously deputy chief of staff in the George W Bush White House. Here’s more on the shake-up.

• Q&A: Do you have a burning question about the incoming Trump administration? Email [email protected], giving your full name and location, and it could appear in a special edition of the newsletter ahead of the inauguration.

3. Donald Trump and his Republican allies have seized on the New Orleans terrorist attack to blame Joe Biden and his immigration policies for the violence. Shamsud-Din Jabbar, the suspect of Wednesday’s attack, was an Isis sympathiser who had acted alone, the FBI said yesterday. Here’s more on the political fallout from the attack.

4. South Korean cryptocurrency mogul Do Kwon made his first appearance in a Manhattan courtroom after the co-founder of the bankrupt Terraform Labs was extradited from Montenegro on Tuesday to face criminal charges in the US. A new indictment unsealed on Thursday adds a new count of money laundering to the eight original charges announced last year against Kwon. Read more on the indictment.

5. Syria’s new government has triggered outrage after introducing an overhaul of the education curriculum that critics argue will impose an Islamist agenda on students. Official adjustments and omissions affect topics including Arabic, history, sciences, social studies and religion. Here are the changes that sparked public anger.

• More on Syria: A senior delegation including the country’s foreign and defence ministers arrived in Riyadh this week, its first official foreign trip since Assad’s fall.

How well did you keep up with the news this week? Take our quiz.

Today’s big read

In 2016 Hollywood promised “resistance” when Donald Trump was elected. This time, it seems less likely. The influence of America’s entertainment industry is in decline, revenues are falling and streaming platforms threaten movie theatre receipts. But some in Hollywood believe the incoming administration could help ease some of the industry’s problems. Will a weakened Hollywood embrace Trump 2.0?

We’re also reading . . . 

• YouTube: Neal Mohan, the video platform’s chief executive, is betting on artificial intelligence and “creators” to supercharge growth.

• Latin America: Donald Trump wants to roll back China’s growing footprint in Latin America. But using strong-arm tactics — like the recent Panama Canal intervention — could backfire, argues Will Freeman.

• Inequality: Most measures show the gap between the richest and poorest has not widened, writes John Burn-Murdoch, so why does it feel like it has?

• Renewable energy: Labour’s ambition of turning the UK into “a clean energy superpower” is facing fierce local opposition — a battle that is being watched closely around the world.

Chart of the day

Tesla yesterday reported the first drop in annual vehicle deliveries in more than a decade as the world’s largest electric-vehicle maker came under pressure from Chinese competition. BYD, Tesla’s Chinese rival, on the same day reported record sales of EVs and hybrids. Investors had been expecting a strong fourth quarter from Tesla on the back of cost cutting and discounts of existing vehicles. The shares ended the day down more than 6 per cent.

Take a break from the news

Feeling the post-holiday blues? Try “fridgescaping”. Influencers claim the TikTok trend of displaying flowers, ornaments and framed photographs of loved ones alongside sausages and vegetables can deliver a much-needed dopamine hit.