FRANKFURT, GERMANY (AFP) – The European Central Bank (ECB) will almost certainly deliver another interest rate hike on Thursday, pressing ahead with its fight against inflation even as the eurozone slides into a recession.

Analysts predict that ECB policymakers will copy May’s move and again raise borrowing costs by 25 basis points, taking the closely watched deposit rate to 3.50 per cent. It would be the Frankfurt institution’s eighth-consecutive hike since last July, when it kicked off an unprecedented campaign of monetary tightening after the war in Ukraine sent food and energy costs surging.

Eurozone inflation slowed to 6.1 per cent year-on-year in May after hitting a peak of 10.6 per cent last October, suggesting the ECB’s efforts were having an impact.

But with the bank’s two-per-cent inflation target still out of reach, policymakers have stressed it was too early to take the foot off the gas, hinting at rate hikes even beyond June.

ECB President Christine Lagarde said earlier this month rates were getting “closer to our cruising altitude”, but “we need to continue climbing”.

The picture is different in the United States where the Federal Reserve is expected to pause its rate-hiking cycle tomorrow after 10 consecutive increases, as it takes stock of how its tightening is feeding through to the real economy.

Like central banks around the world, the ECB has to walk a fine line between raising borrowing costs to dampen demand and tame inflation, without triggering a deep economic downturn.

Revised data last week showed that the 20-nation eurozone unexpectedly shrank by 0.1 per cent for two straight quarters at the end of 2022 and the start of 2023, meeting the technical definition of a recession.

Much will depend on the ECB’s latest economic forecasts, set to be unveiled on Thursday.

Observers expected little change from the previous projections, which saw inflation only returning to target in 2025, at 2.1 per cent.

MILAN (AP) – When it comes to skyrocketing pasta prices, Italians are crying: Basta!

They have had enough after the cost of the staple of every Italian table soared by twice the rate of inflation. One consumer advocate group is calling for a weeklong national pasta strike starting June 22 after the Rome government held a crisis meeting last month and decided not to intervene on prices.

“The macaroni strike is to see if keeping pasta on the shelves will bring down the prices, in the great Anglo-Saxon tradition of boycotting goods,” said Furio Truzzi, president of the group, Assoutenti. “The price of pasta is absolutely out of proportion with production costs.”

Grocery prices have risen more sharply in Europe than in other advanced economies – from the United States (US) to Japan – driven by higher energy and labour costs and the impact of the war in Ukraine.

That is even though costs for food commodities have fallen for months from record highs, including wheat for the flour used to make pasta.

Stores and suppliers have been accused of profit-padding “greedflation,” but economists say retail profits have been stable and the problem comes down to the higher cost to produce food.

Feeling the pressure, some governments in Europe have capped prices on staples or pushed for agreements with grocery stores to bring down costs, something that’s popular with the public but can actually make food prices worse.

Shoppers like Noée Borey, a 26-year-old picking up groceries at a chain store in Paris, said she is all for setting ceilings for some food to help low-income workers and students. She buys less meat and opts for less expensive grocery stores.

“Inevitably, all the products I buy have gone up by 20 per cent, whether it’s butter or berries,” Borey said. “I’m not buying cherries anymore because they cost EUR15 a kilo”

The French government reached a three-month agreement with supermarket chains for them to cut prices on hundreds of staples and other foods, which is expected to be extended through the summer.

Britain – where food inflation has reached 45-year highs – is discussing a similar move.

Countries like Hungary, with the highest food inflation in the European Union (EU), and Croatia have mandated price controls for items like cooking oil, some cuts of meat, wheat flour and milk.

The Italian government says it will strengthen price monitoring by working more closely with the country’s 20 regions but won’t impose such limits.

Spain has avoided price controls but abolished all value-added tax on essential products and halved tax on cooking oil and pasta to five per cent. The measures come as food banks are seeing soaring demand in some countries.

“Things are not getting better, they are getting worse for people,” said Helen Barnard of the Trussell Trust, a charity that operates more than half of the food banks in the United Kingdom (UK).

Spending much more to buy essentials like milk, pasta and fresh vegetables to “top up” donations received from supermarkets is a struggle for Anna Sjovorr-Packham, who runs several community food pantries serving discounted groceries to some 250 families in
south London.

“While the demand from families hasn’t gone up hugely, the cost has, and that’s been really difficult to support,” she said.

Prices for food and non-alcoholic drinks have actually fallen in Europe, from 17.5 per cent in the 20-country euro area in March to a still-painful 15 per cent in April. It comes as energy prices – key to growing and transporting what we eat – have dropped from record highs last year. But economists say it will be many months before prices in stores settle back down.

In comparison, US food prices rose 7.7 per cent in April from a year earlier, 8.2 per cent in Japan and 9.1 per cent in Canada.

They hit 19 per cent in the UK.

The numbers play into expectations that the European Central Bank will raise interest rates again this week to counter inflation, while the US Federal Reserve is expected to skip a hike.

In Europe, turning to price controls plays to voters, who get constant reminders of the inflation every time they hit the checkout counter, said Neil Shearing, group chief economist for Capital Economics.

But he said such changes should be reserved for instances of supply shocks, like war.

Such controls could actually make food inflation worse by increasing demand from shoppers but discouraging new supply, he said.

While pasta remains one of the most affordable items in many grocery baskets, the symbolism hits the Italian psyche hard and comes as families are absorbing higher prices across the board, from sugar to rice, olive oil and potatoes.

Italian families of four are spending an average of EUR915 more a year on groceries, an increase of nearly 12 per cent, for a total of EUR7,690 a year, according to Assoutenti.

A full one-third of Italians have reduced grocery store spending, according to SWG pollsters, and nearly half are shopping at discount stores.

But even discounts are not what they used to be, and it’s toughest for pensioners.

“Before, you could get two packs (of pasta) for EUR1,” said Carlo Compellini, a retiree who was shopping in central Rome. “Now with EUR2, you get three packs.”

SEOUL (AP) – South Korean prosecutors have arrested and indicted a former executive of Samsung Electronics suspected of stealing trade secrets while attempting to establish a copycat computer chip plant in China.

The Suwon District Prosecutors’ Office said yesterday that the unnamed 65-year-old unlawfully obtained Samsung’s factory blueprints and clean-room designs from 2018 and 2019 while trying, unsuccessfully, to replicate a chip factory in the Chinese city of Xi’an, near where Samsung operates a plant.

The technology allegedly stolen by the man’s China-based company would have been worth at least KRW300 billion for Samsung, prosecutors said.

They charged six people employed by the man with “active participation” in the tech theft.

South Korea is highly sensitive to breaches of technologies related to semiconductors, which accounted for nearly 17 per cent of its total exports in 2022.

Samsung, the world’s largest manufacturer of computer memory chips, didn’t immediately comment on the charges.

In a statement, prosecutors described the arrested man as an “undisputed top domestic expert in semiconductor manufacturing.” After an 18-year career at Samsung he held executive roles for a decade at SK Hynix, another major South Korean chip maker which trails Samsung in the memory chip market.

The man later created chip manufacturing companies in China and Singapore with the backing of investors and lured more than 200 chip experts from Samsung and Hynix with higher pay before arranging to smuggle out crucial technologies from Samsung, prosecutors said.

The manufacturing secrets allegedly taken from Samsung included processing blueprints and “basic engineering data” for designing clean-room environments to prevent contamination during semiconductor manufacturing, which prosecutors described as “core national technologies”.

WASHINGTON (AP) – First came the crypto winter, then the alleged fraud wrought by FTX founder Sam Bankman-Fried, and now the lawsuits.

The United States Securities and Exchange Commission (SEC) filed lawsuits last week against the world’s biggest cryptocurrency exchanges, Binance and Coinbase, deepening tensions between the government and a volatile industry that has been marred by scandals and market meltdowns.

Binance and Coinbase are both alleged to have violated the law by operating as securities exchanges without registering their businesses with the SEC.

Binance faces additional charges, along with its CEO, of diverting customer funds to a separate business, among other accusations.

Most recently, the SEC asked a federal judge to freeze the assets of Binance’s US platform.

The lawsuits are the latest in an ongoing tussle between government officials who describe the crypto industry as the ‘Wild West’ and creators of digital assets who seek to legitimise cryptocurrency as a currency of the future.

Industry leaders say that, with their latest actions, US regulators are more clearly signaling that they seek to ensure cryptocurrency has no room in the traditional financial system.

And leading regulators are more open about their thoughts on the merits of cryptocurrency.

SEC Chair Gary Gensler told Bloomberg last Tuesday: “We don’t need more digital currency … we already have digital currency – it’s called the US dollar.”

What results from the legal battle could greatly diminish the growth of the crypto industry or, alternatively, restrict the scope of the SEC’s regulatory authority.

An attorney at Davidoff Hutcher & Citron in New York Federica Pantana, who handles SEC cases, has been watching the episode unfold and is now clear with her crypto clients in the interim.

“With the SEC taking a strong enforcement agenda, there is no question that firms have to take the view that crypto assets are securities and platforms that exchange these assets have to accept that,” she said.

Whether companies that trade in crypto decide it makes business sense to register with the SEC, or drop their businesses all together, will determine the landscape of the industry in the future, Pantana said. The reverberations of the litigation could put some companies out of business, she said.

The crypto industry already knew it was under a tough spotlight from Washington’s regulators and politicians. The collapse of crypto prices last year as well as the demise of several notable crypto companies – including FTX – exposed investors to billions of dollars in losses.

Gensler had repeatedly stated, both to Congress and in public appearances, that he believes the SEC has more than enough authority to regulate the industry.

Treasury Secretary Janet Yellen told CNBC last Wednesday that she’s “very supportive” of the SEC using the tools it has to protect consumers and investors.

WILL NEW LAWS HELP?

Despite the increased scrutiny from regulators, the crypto industry was expecting Congress to eventually intervene and help legitimise the industry through new laws.

Several bills were introduced last year by Democrats and Republicans that would have put crypto under the authority of the Commodity Futures Trading Commission and made other products, including stable coins, more legitimate by standardising what assets those products could hold.

Yellen said that she sees “some holes in the system where additional regulation I think would be appropriate and we would like to work with Congress to see additional legislation passed”.

Crypto lobbyists now believe that those laws are more urgently needed to stop the SEC from moving forward with its lawsuits.

The most viable piece of legislation sits in the House Financial Services Committee, spearheaded by Representative Patrick McHenry, , who chairs the pane. The legislation was co-authored by chairman of the House Committee on Agriculture Glenn Thompson.

Their discussion draft of legislation seeks to delineate agencies’ jurisdiction over certain digital assets and “strike the appropriate balance between consumer protection and encouraging responsible innovation”, McHenry said in a news release.

New legislation would grant digital-asset issuers an exemption from securities laws if they meet certain conditions and would exclude digital commodities and payment stablecoins from the definition of a security under the securities laws, among many other provisions.

“Congress has no choice but to thoughtfully move forward with legislation to clear up this confusion,” said CEO of the Blockchain Association Kristin Smith.

Founder of the Chamber of Digital Commerce Perianne Boring, one of the top lobbyists for the cryptocurrency industry, said the lawsuits the SEC filed against Binance and Coinbase are “arbitrary and capricious” and “the SEC’s vigorous enforcement in this space is politically motivated, opening up legal risk against SEC.”

She said Gensler’s public comments about the merits of cryptocurrency in the backdrop of the traditional financial system go outside the scope of his role as SEC chair to protect consumers and investors. “They’re not a merit regulator,” Boring said.