BRUSSELS — A new European Union (EU) plan to sharply cut steel import quotas goes too far and threatens European automakers with higher input and administrative costs, the European Automobile Manufacturers’ Association (ACEA) said on Wednesday.

ACEA said European carmakers source about 90% of their direct steel purchases in the EU and were “most concerned” about the inflationary impact of tighter restrictions on steel imports.

The European Commission proposed on Tuesday cutting tariff-free steel import quotas by almost half along with a doubling of the out-of-quota duty to 50% in a bid to preserve viable steelmakers in the EU.

The proposal will still need approval from EU governments and the European Parliament.

“We do not contest the need for some level of protection for a commodity industry like steel, but we feel that the parameters as proposed by the Commission go too far in ring-fencing the European market,” ACEA Director-General Sigrid de Vries said in a statement.

ACEA said automakers still needed to import, adding automotive grades had always been rapidly exhausted under the current quota system.

The auto group also questioned a requirement for importers to identify where the initial steel of their product had been melted and poured, a rule designed to prevent circumvention. It said this would be very complex in a deep, global supply chain such as automotive.

“We need to find a better balance between the needs of European producers and users of steel in this measure,” it said. — Reuters

WELLINGTON — New Zealand’s central bank slashed its benchmark rate by an aggressive 50 basis points (bps) on Wednesday, surprising some in the markets as policymakers signaled concerns about the frail state of the economy and kept the door open for further easing.

The New Zealand dollar and interest rate swaps tumbled in the wake of the move that took the official cash rate to over a three-year low of 2.5%, as investors bet on more stimulus in the coming months to shore up demand and buffer the economy from rising global headwinds.

“The Committee reached consensus to reduce the official cash rate by 50 bps to 2.5%,” the Reserve Bank of New Zealand (RBNZ) said in its accompanying policy statement. “The Committee remains open to further reductions in the OCR as required for inflation to settle sustainably near the 2% target mid-point in the medium term.”

The dovish stance will be a welcome relief for the New Zealand government and the country’s prime minister, Christopher Luxon, whose popularity has taken a sharp hit in recent months as the economic recovery he and his party campaigned on has failed to eventuate.

Mr. Luxon has said publicly he would like to see the cash rate lower to try and shake off the economic torpor, with business confidence worsening and households in a depressed mood as they fret about the rising cost of living and scarcity of jobs. The Taxpayers’ Union-Curia Poll released earlier Wednesday found that the current government would not have enough seats to govern if an election was held today.

Finance Minister Nicola Willis said the rate cut is good news for growth, jobs and investment, adding: “We know many New Zealanders are still doing it tough.”

The RBNZ decision went against 15 of 26 economists surveyed in a Reuters poll who had forecast it would cut the cash rate by 25 basis points.

However, the larger cut wasn’t totally unexpected as the remaining 11 economists had picked a 50-bp reduction and markets were primed for the RBNZ to pull harder on its monetary policy levers to inject impetus to a weakened economy.

The New Zealand dollar tumbled to six-month lows, losing 0.90% to $0.5745, while two-year interest rate swaps fell to 2.5251% from 2.6194% before the decision. The market is now fully pricing in a further 25-basis-point cut to 2.25% and is ascribing a 60% chance of a 2.00% terminal cash rate.

“The RBNZ’s decision signals that the likelihood of inflation pressures being weaker than previously anticipated carried more weight than waiting to see how quickly the economy rebounds and what ripple effects come from the current spike in inflation,” ASB Chief Economist Nick Tuffley said in a note.

The central bank has cut rates by 300 basis points since August 2024, and with inflation within its target band of 1% to 3%, policymakers have leeway to lower borrowing costs further.

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Wednesday’s policy review is Christian Hawkesby’s second-to-last meeting as RBNZ Governor, after the government last month appointed Swedish policymaker Anna Breman to the role starting Dec. 1.

A global front-runner in withdrawing pandemic-era stimulus, the RBNZ lifted rates 525 bps between October 2021 and September 2023 to curb inflation in the most aggressive tightening since the cash rate was introduced in 1999.

The punishing borrowing costs, however, slammed the brakes on demand and tipped the economy into recession last year. Since then, it has struggled to motor on, contracting by 0.9% in the second quarter in a shock result that fueled bets of steeper rate cuts.

While trading partner growth has been resilient, it is expected to slow in part due to US President Donald J. Trump’s sweeping tariffs and the government’s tight fiscal policy, hurting business confidence and pushing up unemployment.

One challenge for the central bank is that inflation is expected to reach 3.0% in the third quarter.

However, in its statement on Wednesday, the RBNZ said spare capacity in the economy should see inflation return to near its midpoint in 2026.

New Zealand is one of several countries to ease rates as inflation has moved lower, but its sharp reductions to borrowing costs contrast with a more cautious approach by the US Federal Reserve and its counterpart in Australia.

The Reserve Bank of Australia held the cash rate steady last week as it flagged inflation concerns. And last month, the Federal Reserve delivered its first rate cut for the year.

Zoe Wallis, investment strategist at brokerage Forsyth, is retaining her terminal rate forecast at 2.25% for now.

However, she said “there is a chance that further easing beyond that level could be on the cards if inflation proves well contained and the economy fails to fire up convincingly in coming months.” — Reuters

MUMBAI — Britain will not pursue a visa deal with India, Prime Minister Keir Starmer said, as he aims to deepen economic ties with the country following this year’s trade agreement.

Mr. Starmer begins a two-day trip to India on Wednesday, bringing a trade mission of businesses to promote the trade deal, which was agreed in May, signed in July and due to come into effect next year.

Mr. Starmer said that visas had blocked up previous efforts to seal a trade deal, and that, having reached an agreement which had no visa implications, he didn’t wish to revisit the issue when he meets Indian Prime Minister Narendra Modi for talks on Thursday.

“That isn’t part of the plans,” he told reporters en route to India when asked about visas, adding the visit was “to take advantage of the free trade agreement that we’ve already struck.”

“Businesses are taking advantage of that. But the issue is not about visas.”

Mr. Starmer is trying to take a more restrictive stance on immigration amid high public concern about the issue, as his Labour Party trails the populist Reform UK party in polls.

He said visas would not be on the table in order to attract tech sector professionals from India, after US President Donald J. Trump hiked fees on H-1B visas, though he said more broadly he wanted to have “top talent” in Britain.

Asked if he would stop issuing visas to arrivals from countries who won’t take back foreign criminals or people wanted to deport, Starmer said it was a “non-issue” with India as there is a returns agreement, but it was something he would look at more broadly.

“We are looking at whether there should be a link between visas and returns agreements,” he said. — Reuters