Madrid poised to sack Catalan government
The Spanish senate is today expected to approve the application of Article 155 and suspend Catalan autonomy.
Catalan President Carles Puigdemont turned down an invitation to debate the article in Madrid and will instead spend today formulating a response in Barcelona’s parliament. If Catalonia formally declares independence, Spain’s chief prosecutor has warned that Puigdemont and any legislator who votes in favour will face 30 years in jail.
Regional elections had been seen as a way to stall the provisions of Article 155, but Prime Minister Mariano Rajoy seems intent on bringing the crisis to a head, declaring it “the only option”. With little room left to manoeuvre, snap elections could strengthen Puigdemont’s mandate for independence or allow him a dignified exit.
Rajoy’s cabinet is expected to convene immediately following the vote and begin implementation of the article. If implemented, the intervention package is not likely to end Catalan autonomy, but it will remove Puigdemont and those responsible for the independence referendum, with fresh elections expected within 6 months.
Delve Deeper: The Catalan independence vote: statehood or autonomy?
UP AND AWAY
US GDP likely to show growth in three months to September
The advance reading of US third-quarter GDP growth releases today. Projections range from economists’ predictions of 2.6% to the New York Fed’s 1.5%.
The figures point to stability in the US economy through President Donald Trump’s first year in office. However, the Federal Reserve is concerned that the growth is not accompanied by rising inflation, which languishes at 1.3%, well below the 2% target.
Trump will soon make his pick for the Fed’s chair. Conservatives want John Taylor, who favours deregulation and hiking interest rates. Yet the president may be warming to incumbent Janet Yellen, having called her her “terrific” recently and saying the two are “doing very well together”.
The stronger today’s figures, the more Trump may wish to play it safe by staying the course with Yellen or Jerome Powell, another frontrunner. After all, a hawkish turn under Mr Taylor could hurt Republicans in next year’s congressional races if higher rates make costs like home and auto loans more expensive.
Russia’s economic optimism suggests a rate cut is likely
Russia’s central bankers are expected to cut interest rates today, probably by 25-basis points to 8.25%.
Despite the doom and gloom of recent years, Russia’s economy is beginning to gain momentum. Last month, the economy grew 2.4% year-on-year and is expected to post annualised growth of 1.7% this year—the fastest since 2012.
A pick-up in commodity markets is partly responsible. The price of oil has stabilised at around $50 a barrel this year after dipping below $30 in early 2016. Strengthening domestic demand and private consumption is also helping boost economic activity.
Today’s expected rate cut will further ease the cost of borrowing, spurring investment. The central bank has been afforded room to manoeuvre; last month inflation—a key monetary policy consideration—hit a record post-Soviet low of 3%.
All this comes at an opportune time for Vladimir Putin. Although yet to formally announce his candidacy for elections next March, Mr Putin is likely to capitalise on the substantial improvement in Russia’s economy.
Fateful court decision in Australia, Malaysia’s budget
Australia’s top court will rule on whether seven lawmakers should be allowed to continue sitting in parliament. Among them is deputy PM Barnaby Joyce, who is a crucial part of the Turnbull government’s one-seat majority in the lower house. If Mr Joyce is removed from the house, he will face a by-election that’s likely to take place in December.
Malaysian PM Najib Razak will table the 2018 budget today, his last before elections expected by next June.