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00:00The U.S. Federal Reserve cutting interest rates for the first time in more than four years,
00:03a major shift after spending the past two years fighting inflation.
00:06Tell us more.
00:07The U.S. Central Bank lowered its benchmark rate by half a percentage point,
00:11a significant amount.
00:13The last time the Fed cut interest rates was back in March of 2020,
00:16as it tried to shore up the economy during COVID.
00:19But as the economy went into overdrive post-pandemic
00:22and the labor market faced a shortage,
00:24it rapidly raised rates to a 20-year high and kept it there for over a year.
00:29The Fed also now signaled more cuts to come
00:32and that the rate could come down to 3.5% by the end of next year.
00:36While inflation has come down significantly from its 2022 peak of 9.1%,
00:40the job market has been showing signs of slowing.
00:43Let's take a listen to the Fed's Chairman.
00:48As inflation has declined and the labor market has cooled,
00:51the upside risks to inflation have diminished
00:53and the downside risks to employment have increased.
00:57We now see the risks to achieving our employment and inflation goals
01:01as roughly in balance.
01:03And we are attentive to the risks to both sides of our dual mandate.
01:07We know that reducing policy restraint too quickly
01:09could hinder progress on inflation.
01:12At the same time, reducing restraint too slowly
01:15could unduly weaken economic activity and employment.
01:19The last few years have been challenging for businesses around the world.
01:22So what's keeping corporate bosses awake at night these days?
01:25Yuka.
01:26Well, Mark, from geopolitical tensions to climate change
01:29to the race to get on top of artificial intelligence,
01:32there are many issues surrounding the business world
01:34that leaders need to respond and adapt to.
01:37Accounting giant KPMG has just released its annual survey of top CEOs
01:42with more than 1,300 corporate leaders sharing their views.
01:46It's the 10th edition and compared to when the survey started,
01:49CEO confidence in the global economy's growth prospects for the next three years
01:53has declined significantly,
01:55with 72% saying they're confident compared with 93% back in 2015.
02:01Now to discuss more, let's bring in Regina Meyer,
02:03Global Head of Clients and Markets at KPMG International.
02:07Thank you for joining us, Regina.
02:10Thank you for having me.
02:11Now, these are tough times for corporate leaders.
02:14What's keeping them awake at night the most?
02:18Well, one of the things we found in the 10-year retrospective
02:21is that CEOs are really focused on the long-term sustainability
02:25of their companies against the backdrop of ever-growing uncertainty
02:29and volatility, as you well pointed out.
02:31Interestingly, this year, supply chain and operational risks
02:36edged out geopolitical risk as top of mind for CEOs.
02:40But when you think about it, supply chain operability
02:43and running your business are manifestations of the challenges
02:46that corporations have when they confront geopolitical risk.
02:50So how are they going to shore up the companies
02:52and focus on that long-term sustainability?
02:55They're betting big on AI and on talent.
02:58Now, you mentioned AI.
02:59Now, businesses are clearly in a race to embrace AI.
03:03The technology has become mainstream, we can say,
03:06but brought with it some worries as well.
03:08We know that chat GPT can hallucinate and some workers worry
03:12that AI can replace them in their workplaces.
03:15What's the view on this among big companies?
03:18Well, we say 64% of our CEO respondents say they're going to bet big
03:22and it's a top investment priority,
03:24but they also recognize that they don't necessarily have the skills
03:27in the workforce to be able to take advantage of the technology
03:30as well as manage against the risks,
03:32with only 38% believing that they have the capabilities
03:36to take advantage of the technology today.
03:39So they're also investing in talent,
03:41with 80% saying that they will invest in long-term skill development
03:46and in lifelong learning,
03:48because we need humans as the co-pilot for AI,
03:51for AI to be successful.
03:53So there's clearly, there's some work to be done
03:56on brushing up those skills to cope and work with AI among workers.
04:01Now, speaking of workers and jobs,
04:04your survey also shows a significant increase in the number of CEOs
04:08expecting a full return to office in the next three years
04:11compared to last year.
04:13Amazon recently announced an end to remote working.
04:16Why is this necessary?
04:18Hasn't the world of work evolved since COVID
04:21to embrace the hybrid form of working?
04:24Well, definitely we've embraced the hybrid form of working,
04:27but what CEOs are realizing is talent and access to talent
04:31is a fundamental competitive differentiator
04:34and you can't really grow your talent when you only are working remote.
04:37So we did see in the survey a big 20 plus percent jump
04:41in CEOs that are going to require more face-to-face time in the offices.
04:45That doesn't mean five days a week necessarily,
04:48but that's a big jump from last year's 62 percent.
04:51But it is because you can't inculcate culture,
04:53you can't build the skills that you need,
04:55you can't leverage the technologies
04:57without some form of face-to-face gathering.
04:59That's why we see more of an emphasis on return to work in this year's survey.
05:04Are the bosses also seeing wage growth going forward?
05:08Absolutely. I think we're finally seeing wage growth
05:11that's keeping pace or even ahead of inflation
05:14in some of the latest results that I was looking at this morning.
05:18And then we're also focusing on things that are important for society.
05:21So ESG was another topic that showed up in the survey.
05:24In 2015, it wasn't even a top risk.
05:27In 2024, it's at the top table of risks.
05:30And 66 percent of CEOs say they don't believe that their narrative
05:35will necessarily stand up to external scrutiny
05:37to know how hard it is to continue to drive that.
05:40But 76 percent said that they would divest of a profitable business
05:45if it had reputational risk.
05:46So I think those are some of the other things that are coming from society at large
05:50that are finding its way into the corporate boardroom.
05:53Yeah, I mean, as you just mentioned, sustainability, of course, is another top agenda.
05:57And as you said, many big companies are under pressure to do more to tackle,
06:01you know, social issues as well as climate change and move away from fossil fuels.
06:06But there's also a huge profit at stake.
06:08Has the attitude of corporate leaders towards environmental issues
06:12changed significantly over the past decade or so?
06:16For sure, in terms of the last decade, we have seen a big change.
06:19As I said, it wasn't even a top risk in 2015, and now it's definitely a big concern.
06:24The challenge is how to get there.
06:26And I think that's also why supply chain and operational risks show up as top risks,
06:30because how one actually decarbonizes the entire supply chain
06:35is incredibly tricky.
06:37And that requires lots of different changes in fuel mixes, transport modes, supplier ecosystems.
06:43And that's where you're seeing the complexity of how do you respond to climate challenges
06:48in a way that retains earnings and grows opportunity for your shareholders and your people,
06:55but is also responsive to the needs of the environment
06:58and to the external regulators that are watching more and more closely
07:02what these companies are delivering.
07:03So it's a whole tricky set of factors that they're balancing.
07:07Tricky set of factors, indeed.
07:10Regina Meyer from KPMG, thank you so much for joining us on France 24.
07:16And that's it for business.
07:17Absolutely fascinating.
07:19Yuka, thank you very much indeed.
07:20Great to see you there with the business.