>> it's 11:00 in the morning in tokyo. this is bloomberg markets. yvonne: saying the central bank will enter the gilt market this friday. president biden hints that a slight u.s. recession is a possibility. pivoting back to outsize rate hikes as it continues with the current pace of tightening. rishaad: a look at what is going on with these markets, it is read over in new york, to be ok moving because of the weakness seeing into the yen. discussing the bank of england as well and andrew bailey's

plans for support for the financial system. having a look at what's going on with global explain just -- global exchanges. equity markets seeing a downdraft lately, president biden saying we would see a little chance of recession. it's been ultimately about what the dollar is doing, the dollar strength, and the bank of england having its own issues to deal with on top of that. yvonne: it's more like u.k. weakness is fueling the dollar too, right? you look at pound volatility, it wasn't as bad as a few weeks ago but certainly the fact that andrew bailey was very clear

that we are not going to continue to intervene, it was a shock to the system once again. here is more from governor bailey. >> we've announce that we think rebalancing must be done, you got three days left now, you've got to get this done. it is clearly temporary. rishaad: that's against the backdrop of the global economy as it tips toward recession. the imf looking at this year and next year. have a look at the green or turquoise line, the full-year growth estimate of 2.5 percent, according to economist we've been talking about -- talking to for 2023.

china being downgraded again, and joe biden coming out this morning say he doesn't think there will be a recession but if there was, a very slight one. the cleveland fed president saying they will keep at it until the data shows something different. >> the real issue is, we need to do more. we have not seen inflation back down and we need to see that, because leaving inflation where it is, there is a higher chance that it does become embedded in the economy. yvonne: let's bring in kathleen hays. there is a credibility issue now surrounding governor andrew bailey. how much has this sparked the warnings from the imf now? kathleen: they didn't even wait for the meetings in washington

this week, they started criticizing, the imf has been very concerned that they're taking the steps that are fiscally responsible, that are roiling markets, and they still have a big inflation program. andrew bailey kind of stuck in the middle of all that. that is this concern, looking at the guardian, one of the british newspapers the last couple of hours, saying they see the possible risk even before -- trying to get the pension funds to deleverage and all that. people are saying what if the u.k. would have to go back to the imf like they did back in 1976. it seems very ironic that when we think of the imf we think of developing nations, emerging-market nations that need help. you don't think of a g10 country needing it. this is why this is rather

shocking, surprising, and of course it is still not clear what the government is going to do. they pulled back on some of the aggressive parts of the budget proposal, tax cut proposal they had. the governor of the bank of france saying these missteps by the bank of england or something that everybody else can learn from. you got to make sure monetary policy and fiscal policy are working in unison, and i think that's a great web putting it. a lesson in what not to do. rishaad: all sorts of conversations about britain going cap in hand to the imf. you got joe biden saying the recession risk isn't small. is it politics ahead of the midterms? kathleen: i think there's a bit of that in there, don't you?

figuring the boe is handling their situation, she doesn't see any spillover to u.s. markets in any sense that would create disorderly markets. she says they will barely get to neutral, because they have to fight inflation. she has said publicly that recession is in her base case. ivy that gives her -- gives credence to what joe biden said. they might be able to finesse something, at least a mild recession instead of a deeper recession that some investors are pounding the table about. i think it is true that, midterms are coming, this will not be the best thing for the democrats who are trying to hold control of the house and the senate.

a lot of people watch the fed, it was a no-brainer a couple of days ago, talking about some caution at the fed. people said that is democrats talking. i don't think it's the biggest black mark but it does seem there some politics involved, which is one reason some see the fed doing something like this, it's always try to avoid rate hikes post any kind of election, and this time they will be right in the middle of it. yvonne: kathleen, thank you. is the boe -- we talk about how big of a gamble this is. will they have to do a walk back on this? mark: they will be in a very difficult spot.

if the u.k. bond market becomes as unruly as it was a couple of weeks ago, and of course the bank of england, part of their job is to enforce stability and make sure that markets function properly in their backyard. if we get disorderly from the money markets and the u.k., they will just have to bite their tongue. you can see the government is in an uncomfortable situation. trying to get inflation down, he's got a plan where he would like to reduce the balance sheet , and along comes the u.k. government with a mini budget that has a few loopholes in it. now he's having to clean up that mess as well. so is not an easy job on the bank of england there, but they will have to show stability.

you cannot have a major market like the u.k. in complete disarray. as we've heard from other central bankers like the ecb, it affects the whole community. so the bank of england will have some late nights and a lot of work to do in the days ahead. rishaad: you look at what happened to the bank of korea earlier, trying to defend the won, and you look at the again as well. the chief cabinet secretary talking about looking at changes with a strong sense of urgency. this is posing a problem for everyone. mark: it's a hot topic this week in the world bank imf meetings. i'm sure there are several people approaching these individuals and saying your dollar is costing us a lot of problems, is there anything you can do to help us out? so far it has been radio silence

from the u.s. side. there haven't been steps to reach out to other countries. until the u.s. themselves are ready to either intervene directly, there's not a whole lot other people can do. just continuing on the path that kathleen was explaining earlier. they're trying to beat inflation, but they've got a long way to go. you can see the employment that is very, very good. there are people who are not dissuaded from owning u.s. dollars. the message has to come from the euro side. yvonne: mark, thank you very much. we're waiting for the bank of korea presser to speak about what was behind the rate decision that led to that hawkish hike.

the signal was pretty downbeat when it comes to growth as well. they are not expecting growth to be below 2.3% for 2023. rishaad: also they will keep hiking rates, so again it is data contingent, if you will. growth is a big subject in washington dc. >> the imf warning that the worst is yet to come to the world economy after cutting its growth forecast. lowering projections next year to 2.7% from 2.9% siding damage from russia's attack on ukraine. china's credit growth recovered

more than expected in september. aggregate financing came in, financial institutions offered also $350 million worth of deals. the u.k. is set to declare china and official threat. preparing to toughen the government's -- stance against china last month. on tuesday, the u.k. chief warned that china's leadership is seeking to use technology to -- g-7 nations have vowed to support ukraine for as long as it takes. the 90 minute video call, the g7 leaders pledge financial and military support.

the u.s. is tracking shipments of advanced air systems to ukraine. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. yvonne: still ahead, our guest joins us to take a deeper look into the be ok rate hike and the booming economic outlook, perfect timing for him. rishaad: veronica clark joining us live from sydney, we will get her take on the global fight against inflation. that is just ahead. you are with bloomberg. ♪

yvonne: live pictures out of soul, the governor speaking on the back of the decision to resume the hike of 50 basis points. let's look at what led to that, mentioning major currencies weakening on dollar strength and stability in the financial markets. slower growth trends likely to continue, next year's growth forecast could be at risk. rishaad: the governor there, let's see what he is saying, concerns about growth of course really the forefront for most economies. the u.s. of course seen as risk-averse, but joe biden saying there could be a little risk of recession. this is how he framed it.

>> i don't think there will be a recession, if there is, it will be a very slight recession. think about what has happened. we have done more, we are in a better position than any other major country in the world. yvonne: interesting how he says that, downplaying the risk of that. rishaad: a slight recession is still a recession. yvonne: in terms of the labor market. inflation numbers very much in focus this week. haidi: it will make a meaningful difference to the fed trajectory. policymakers around the world being affected by surging inflation.

expecting another 75 basis point hike. i want to bring in my next guest to the conference. so great to have you here. let's start with president biden's comment about the risk of a slight recession, as my colleagues just said. a slight recession is still a recession. >> interesting to hear president biden say that, that is certainly in line with our base case. we are expecting a mild recession, i think people are aware that is step that -- that it is definitely a risk. our best case is that it would be mild, you would have a couple of quarters of negative growth but it would also mean arise in the unemployment rate. we are expecting not to rise above 5% by the end of next year. >> that's one of the things keep

falling back on his being resilient. where do you see the weakness that we might not be seeing? >> labor market data is generally some of the last to show the weakness. then you see negative monthly job trends like we had a week ago, not negative yet but we've expect that in 20 between three. we will be watching for signs, additional jobless claims starting to rise, for example. unfortunately this is a consequence of various actions of fed policies. it could be intentional, that is what the fed needs to do. >> this chart is really interesting, it starts coming

down after march of next year. does that suggest it might cause a policy pivot, or at least a pause? >> we are expecting 4.75 by next year. maybe by then rates are restrictive enough that you see activity slowing, starting to see signs that inflation might return closer to target. but unlike what the market is expecting, we would think that rates need to stay restrictive for all of next year to be sure you're headed on the right track for inflation to go lower. >> you look at the way the pressure is playing out, in austria where we are, it is infuriating.

how do you make that inflation -- when it comes to how it's impacting people in the u.s.? >> i think in the u.s., we do see a resilient consumer right now. a lot of that has to do with the fact that the market has been so strong and still is strong. you have a low unemployment rate, incomes on aggregate terms are in -- outpacing the rate of inflation. eventually you would see that worsening as you start to seat layoffs and the labor market. but for right now i would say that is still a factor that is keeping inflation pretty strong. we are expecting a resurgence he from slowing goods prices, people are not spending as much on goods, but the other risk is

obviously a topic globally, as well as the strength of the dollar, are these worries? >> i would say it is certainly a question we get asked, it is something that the fed is watching. don't really see any imbalances yet, this is a question we've gotten the last couple of weeks especially, is that what we should be expecting? to global financial stability concerns and how the dollar is part of that, what the fed is seeing on inflation and the underlying drivers of inflation is the high labor market, which eventually will inform policy.

we've definitely seen signs of the wage price dynamic, maybe we don't call it a spiral, but that certainly what we've seen as the driver of high inflation for some time. think that still is the driver. i think the fed knows that. you hear fed chair powell talking about the ratio of job opening to the number of unemployed people that has been around six months or so, it has fallen a little bit, 1.7 or so now, but that's the sign of a really tight labor market and that is what is driven wave -- wage growth -- wage growth and what is eventually driving higher inflation. >> i think for individual corporations it definitely is a factor. with the macroeconomy, a strong

dollar on the margin would actually benefit the fed with less inflationary pressure and some deflationary pressure. unfortunately for the u.s. that pass through of inflation to a strong dollar is small. is not enough to cause much comfort that you are breaking inflation down because of the strong dollar. >> great to have you with us. rishaad: we have a lot more on the way. this is bloomberg. ♪

yvonne: the latest when it comes to the bank of korea, in the last couple of minutes, there

were two members that oppose the rate decision, and why the be ok was willing to go back, given how downbeat the statement is when it comes to growth. rishaad: a 20% chance of recession, according to economist we've been talking to. i .6% unemployment, again really low, 2.5%. yvonne: keeping an open mind when it comes to november on what to do next. this is bloomberg. ♪

rishaad: the think of korea

government, talking, having a news conference at talking about multiple members of his monetary policy committee at 3.5%. that has made suggestion --, suggesting growth will be slower than the expect. it may be raining prices and by sacrificing the economy. a bit of a broader markets. you can see what is going on. this one reversal that has taken place now, isn't great results for them. yvonne: not quite. we saw strain on the back of the 50 basis point hike. we have a race that already, due to the dollar strength we have seen across the board. between 58 and 75, they leaned towards 50, due to a share of rate loans as well. very much watching ho -- household markets, debt the likes. certainly a lot of questions about what november brings.

rishaad: this is one economy which is seriously leveraged up. let's get our global politics editor, kathleen hays. it looks like they're pivoting back to the outside rate increases to defend the currency. let's not forget this causes pain in itself. >> it certainly does. inflation is running high. it is not surprising they may have decided to do this. joining me is the imf mission shift for korea -- chief for korea. what you make of this turned from when he five to 50? -- 25 to 50? >> thank you. good morning and get evening. -- good evening. it's important to step back. i understand that the bank of korea has been nimble, along the tightening of monetary policy. it has been head of the curve,

and started tightening before the economy. that's the first element that is important to recognize. i think they have been very data dependent. that has been important given how fluid global and domestic conditions are. so, i think what we are seeing now is that being data dependent, moving early and being very pragmatic has been important. to the bank of korea and that is where they are. >> you think where they are now is where they will be at the next meeting. is there chance they will go back to a 25 basis point hike? the fed doesn't show any signs of letting up on aggressive rate hikes and that keeps the dollar strong. >> i cannot say what they are to do in the next meeting. i think they have been very data

dependent. that's what's important given the high uncertainty in global conditions. the fact that markets will -- were not expecting 50 basis points and now the bok will do basis point hikes shows how much they are dependent on assessments going forward. it's the broader picture, they have been acting very early and they've been acting in a nimble way. that is what we should expect going forward. more of this trend that the bank of korea shown in the beginning. >> the latest report, it is of rising -- advising market economies to adjuster interest rates to deal with weakening currencies and say for eventuality for real financial

instability, something where they really need to protect their currencies. is that appointed korea? >> for me it is on an emerging market. they have deep markets. they don't have -- they have little foreign currency exposures. in many respects, it's on the economy to beat the market. having said that, money economies can face, in the context with significant tightening of monetary conditions, particularly because of the fed, they can face these conditions. in those instances, the bank says it can be appropriate to use intervention. that is our understanding of what the bank of korea has done, intervene only on those conditions. . they have not been shy, devon

tightening monetary policy because that is the main tool that aids -- they have been tightening monetary policy because that is the main tool they need to fight inflation. they have been on the ball to use the right instrument, monetary policy, to make sure that inflation expectations are made and converge to their target. rishaad: martin, the korean economy is saddled with death -- step, the highest household debt in the world. this could really, really hurt them if they go too far. >> so, let's step back again. i think household debt in korea, is elevated. but, in line with other economies, just to put it in context, it's also important to understand banks are tightly regulated in korea with loan-to-value rates, which are low.

a significant share of the loans up to high wealth individuals, so i think that is important to understand that household debt is not a financial concern. however, as you say, the interest rates can keep household spending going forward and that is a consideration of how effective monetary tightening will be in korea if it's equal, 25 or 60 basis point hike in korea may have a stronger impact on consumption than in other economies were household debt is not a problem. >> a big problem of the economy is the semiconductor industry. given this a downturn in chips as of late, the consumer demand is being sacked. is this the beginning of this

downturn? or do you think korea can emerge out of this quickly than other economies can? >> so, i think, there are important points to make about korea. korean manufacturing has a proven to be adaptable. it has shown that during the recent period of one there were supply chain disruptions, that is an important element to take into account. also, korea has two different integration regional agreements. korea being highly integrated economy has pursued all of these efforts, to remain highly integrated. that is the strategy. if you are highly integrated whether there is a global slowdown you will suffer more, i

would say that is you have to be careful when you look at the trade balance. trade balance has significantly suffered because of the high cost of energy imports. airports have slowed down. if you asked me, they have been resilient, given what is going on. yvonne: i when ask you, about trade. -- i want to ask about trade. that is what we got out of the economic outlook, a forecast for an even sharper slowdown in the glow -- growth of global trade. korea is in the top 10 of exporters in the world. china's economy is slowing down. are they buying stuff in korea? are you worried about this having an impact on growth? even tilting them to recession as economists in citigroup are? >> so, korea is highly, globally integrated, as i said. they are very significant

economic drivers. korean exports have slowed but they have remained resilient and certain sectors, in car manufacturing and in certain markets. i think there is something to be said about that because it speaks to the korean exporters' ability to shift two different markets. our projection for 2023 incorporates global slowdowns and the fact that korea is very integrated. so, we don't -- we see a slowdown but we don't see a recession in our scenario. we recognize that it there is high uncertainty -- that there is high uncertainty and if it materializes in the global economy korea will suffer. rishaad: martin, thank you so much for joining us. martin kaufman from the international monetary fund,

with kathleen hays. this, from the bank of korea governors saying the rate was really based on fx. yvonne: just goes to show how much of a big factor the fed is. central banks are thinking about this. our first word news. let's bring in vonnie quinn. vonnie: thank you. president biden has downplayed the risk of her session of the u.s. saying it is possible, but any downturn would be close. speaking in an interview, when asked if americans should repair -- prepare for recession he replied no. the forecast for next year's is 1%. cleveland fed president says officials need to keep raising interest rates in order to quell inflation. policymakers poised to deliver a fourth 75 basis point hike when they meet early next month. speaking to bloomberg, metros plan to shrink its balance sheet. >> i think we want to stick to that plan. the markets have understood the

plan. they see it, they understand it. we did very well broadcasting what we are planning to do an implement to get. vonnie: elon musk denied he spoke with putin about ukraine, musk was refuting a tweet from the head of a group, who was not told about the alleged conversation with the russian president. he said the talks came, after ukraine urged russia to secede for good. there discussion was about space. nasa has changed the space agency, for planetary defense that he monetary. the dart probe slammed into a 160 meter wide asteroid weeks ago, to determine its trajectory could be altered. global news 24 hours a day on air and on bloomberg quicktake, powered by 2700 journalists and

analysts in more than 120 countries around the world. i vonnie quinn, this is bloomberg. yvonne: take a look at when it comes to social movers, we are watching holdings closely, downgraded. . to a triple see were talking about liquidity risks again. you see the stocks at 3%, country garden had similar fears given what they are seeing with the situation as well. continuing to see day two of this route when it comes to global chips on the back of this china chips will. following semi, getting an interesting upgrade, from credit suisse. we are seeing a pop in the shares this morning. rishaad: you would think this would not be the right time to come to the market. yvonne: but. rishaad: it's not there. it's a chip design firm in japan, extended gains was 11% on its debut after completing its biggest ipos this year. and it's out there, but it is

11%. shareholders including panasonic, jiu-jitsu, the bank of japan as well. a bit of a relief i suppose given what we have been seeing, managing to call back some of the recent losses. intel. i mean, there you go, this is a reflection of the pain going on. yvonne: sources telling the team, the planning, thousands of job cuts, how that may trickle down. chipmakers, next. plenty more to come. this is bloomberg. ♪

rishaad: let's look at markets, a thousand cuts. hang seng cannot catch a break, 2.1% down. a little bit of pressure. korea down. intel planning a major work duction -- reduction in headcount. it could be in the thousands to cut costs. sputtering pc market, the pain keeps coming, doesn't it? yvonne: let's bring in our bloomberg opinion columnist. we got the warnings from samsung

and then you have the chips act. there's a lot going on in the whole semiconductor space. does the problem at intel, it's one of many. >> it really is. you mentioned the chips act. it was only two months ago that joe biden signed off on it. it was intel that was very, very hard pushing for the chips act to get through, and hand out a lot of corporate welfare to chipmakers. two months later it looks like they will cut staff. that's delicious irony. it's most going to be marketing and sales according to bloomberg. which is what you would expect. we're going into a downturn. we all. know that is coming. intel is bracing themselves for that. not that surprising, sadly enough. we will see other companies announcing similar things. rishaad: you look at amd and it is horrible. you cannot put it all down on

the thirst -- doorstep on liking pc sales. tim: it's a flagging economy. it's as simple as that. we've had this a chip shortage two years ago about a year ago, we are looking at a lag in memory. we've got rising interest rates and inflation is struggling to get under control and a probable recession. all of these things mean in the next two years people are not rushing out to buy the next phone, the next server, the next playstation, all the things we buy without -- our hard earned cash. the chipmakers are bearing the brunt of it. that a great growth period, but now the penny is dropping. yvonne: tell us more about the chips act we heard from president biden and his team. obviously, we have been telegraphing it for some time, what he think the market has reacted so negatively -- why do you think the market has reacted so negatively? tim: it's also much the chips

act does the restriction that they're placing on china. i don't think that will be as impactful on a lot of companies as has been played out. equipment companies like lamb, those kinds of companies will be hit. you're taking a big market off the table. all companies like tmca will not be impacted. the actual details in that bias statement that came out, people are not paying. attention to the details. they're paying attention to the sentiment. what we are seeing is yet another excuse sell chip stocks. that is what it comes down to. there's no good news in the latest restrictions. people are taking it is bad news. yvonne: getting so much, great to have you on the show. if you talk about, yeah, he mentioned the man down -- meltdown ribbon singing chip shares --in chip shares.

the fastest pace since 2008. the focus on the stocks index, this is the philadelphia semiconductor index, the analysts have downgraded in following where the trend is. seriously, it is strap on your helmet, this could get worse. how asian affairs will be interesting. morgan stanley had in interesting take. asia may emerge faster than the u.s. in the recovery. rishaad: stocks down 42% this year. it -- semiconductor demand is falling rapidly. we got warnings out of amd, micron sam son, intel is taking -- micron, samsung, intel. share down a 60% in less than three months too. slashing the recommendations, but is it a day late? yvonne: yeah, as was said, this

is just the beginning of the downturn. every market is going to feel it, is what they were saying. morgan stanley is more optimistic when it comes to these asia tech players as well. they think a return to growth for the industry by the end of the second half of 2023. we have plenty more ahead. this is bloomberg. ♪

yvonne: bookings have increased fivefold since the government eased restrictions. we spoke to the president and ceo. >> this is extremely positive. we hope it will bring back much business to japan, before covid. there are 30 million visitors japan a year, with inbound tourism consumption of -- tourists have economic impact. we are ready to contribute to the revitalization of the japanese economy. yvonne: what else does japan need to do to bring back more international visitors? >> i would like to ask for revitalization of japan. we do not need a negative -- to enter japan.

however, you do not need proof of it to enter countries into europe. i hope that japan will align with police the u.s., which allows entry. >> tell us about the landscape of international bookings now. but companies do we see -- what companies do we see people book flights to japan? >> the prime minister believes. bookings have increased. bookings are increasing, especially from countries like singapore, hong kong, and bookings to sapporo. with eased restrictions, bookings and flights this week have increased by 30%, compared

to flights last week. >> tell us about the number of your international flights. how many are you flying more or less of compared to pre-pandemic? >> we are making progress. for example, the flights between north america and japan, we almost recovered to pre-pandemic levels this winter. >> that will be just-in-time for skiing season. you raise the targets, for them to be profitable at the earliest timing. are you facing any hurdles? >> i am satisfied with the way we have made progress this year. and i'm confident that we can come back. bookings have increased in this country after the announcement by the government to restore the visa exemption program. increasing flights from october, especially from the u.s. and asia to prepare for the rising

demand. we did not laugh any employees during -- lay off any pleasure in the pandemic, allowing us -- any employees during the pandemic. >> there is the week yen. you are facing several headwinds. what concerns you the most? >> there are various factors that affect is this, like rising fuel prices and in the geopolitical issues. our task is to manage this combination of many factors to continue growing. rishaad: ana ceo. we've got weakness across the board for equities, we are sick a dollar strength resume. this is bloomberg. ♪

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