BBC News - Eurozone recovery gathering pace, says Draghi

European Central Bank (ECB) head Mario Draghi has said the eurozone's economic recovery is "increasingly solid" and faces fewer risks.

But he added that inflation in the 19-nation bloc was still not high enough to raise interest rates.

The ECB has kept its main interest rate on hold at zero for another month.

It also decided not to change the ECB's bond-buying stimulus scheme, which is already being trimmed to 60bn euros (£51bn) a month from 80bn euros.

Economic confidence is at its highest since the eurozone debt crisis, but inflation continues to miss the ECB's target for a fifth straight year.

'Subdued'

Mr Draghi said the recovery was helped by higher consumer spending, wage growth and a global economic rebound.

But inflationary pressures also "remain subdued", with prices largely only going up earlier this year because of higher energy costs, he said.

He also sounded a note of caution about growth. "The risks surrounding the euro area growth outlook, while moving toward a more balanced configuration, are still tilted to the downside," he said.

The ECB cut its main interest rate to zero last year to try to stimulate economic growth and avoid deflation or falling prices.

As well as the rates decision, the bank said it would continue buying 60bn euros of bonds a month "until the end of December 2017, or beyond, if necessary".

'Here to stay'

Analysts were watching for any hints that the bond-buying programme, known as quantitative easing (QE), would be reduced.

Paul Sirani, an analyst at Xtrade, said: "Put simply, it seems that Draghi is reluctant to reveal his hand amidst unsatisfactory, yet improving, economic and political conditions."

Ranko Berich, of Monex Europe, said: "Barring a wholesale change in opinion among the governing council against Draghi's position, ECB QE is here to stay for now."

The euro fell about 0.5% against the dollar to below $1.09, having briefly swung higher on Mr Draghi's comments about a firming recovery.

Economic growth has picked up in recent months, with employment rising and economic sentiment hitting a 10-year high this month.

Inflation, though, slipped back to 1.5% in March after briefly going above the ECB's target in February for the first time in four years.

Reuters News - Deutsche Bank weighs moving thousands of jobs from London after Brexit

FILE PHOTO: A woman cycles behind a London bus as they pass by a Deutsche Bank building in the City of London March 30, 2016.REUTERS/Russell Boyce/File Photo -

Deutsche Bank is considering whether it needs to move thousands of staff from London to Frankfurt following Britain's decision to leave the European Union, one of its top executives said.

After Britain triggered Article 50 last month and has begun divorce talks with the EU, financial firms have stepped up planning on how to deal with any disruption that might ensue, such as losing access to the bloc's single market.

"For front office people if you want to deal with EU clients you need to be based in the EU, in continental Europe. Does that mean that I have to move all the front office people to Germany or not?" said Deutsche Bank's Chief Regulatory Officer Sylvie Matherat.

"And we are speaking of 2,000 people – that's not a small number," she told a conference hosted by Frankfurt Main Finance, a group that promotes the German financial capital.

Matherat said that any such move would require the bank to build up its information technology in Frankfurt and would also depend on local regulators' stance on how trillions of euros in future deals should be cleared or processed.

"What are you going to do: Do you have the technical capacity to move it? Do you have the willingness of the local regulators to supervise something that looks like hundreds of trillions in terms of exposure," Matherat said.

She said that some local supervisors also are asking for risk management to be done locally, a demand that would require more jobs to be moved.

"It means another 2000 people. Everybody needs clarity - and the sooner the better." She said the bank had 9,000 staff in Britain.

Despite Deutsche considering such moves, it is likely to retain a large presence in the UK and recently chose a new office for its London headquarters.

(Reporting by Andreas Kröner; Writing by Arno Schuetze; Editing by Keith)

Bloomberg News - South Africa to Study Annual Wealth Tax as It Targets Rich

by 

Gordon Bell

 and 

Michael Cohen

South Africa’s finance ministry has asked for a study into the introduction of an annual wealth tax as the government seeks to boost the standard of living of the black majority.

The Davis Tax Committee, which makes recommendations to the National Treasury, also requested submissions from the public on the feasibility of a land tax and a national tax on the value of property in addition to existing charges, it said in an emailed statement on Tuesday. It will take comments until May 31 before holding hearings.

The move comes two months after the government increased the top income tax bracket by 4 percentage points to 45 percent and as President Jacob Zuma called for “radical economic transformation” in his final year as leader of the ruling party. The African National Congress says the white minority still dominates ownership of the economy more than two decades after the end of apartheid.

“The distribution of wealth in South Africa is highly unequal,” the committee, led by Judge Dennis Davis, said. “It is well established that economic inequality inhibits economic growth and undermines social, economic and political stability.”

Tax Shortfall

South Africa currently has estate duty, transfer duty and a donations tax, while capital gains tax is viewed as a tax on income rather than wealth, the committee said. The study was requested by now ex-finance minister Pravin Gordhan, Davis said by text message.

The Treasury is struggling to meet its revenue targets amid sluggish economic growth and unemployment that was 26.5 percent in the fourth quarter of last year. The tax agency fell 30 billion rand ($2.3 billion) short of its projection in the past fiscal year, the biggest gap in seven years. The government has pledged to cut the fiscal deficit to 2.6 percent of gross domestic product in two years from 3.1 percent.

“The only way we can look at how we can address income inequality is to create more wealth and more jobs,” said Mike Schussler, chief economist at Johannesburg-based research group Economists.co.za. “In an era where there is competition between tax jurisdictions, they are going to struggle to collect more revenue. People are going to spend more time hiding their wealth.”

BBC News - Government deficit at lowest since financial crisis, says ONS

Government borrowing fell by £20bn to £52bn in the year to the end of March, according to official data.

That was the lowest level since the financial crisis of 2008, the Office for National Statistics (ONS) said.

In Chancellor Philip Hammond's Budget last month, the Office for Budget Responsibility had forecast the deficit would be slightly lower at £51.7bn.

The OBR also predicted that government borrowing would rise again this year as tax receipts fall.

The chancellor has said he wants to cut the deficit more slowly than his predecessor George Osborne.

Government borrowing was 2.6% of gross domestic product in the latest financial year, in line with the OBR's forecast.

The hole in the UK's public finances has shrunk since hitting a peak of nearly 10% of GDP shortly after the global financial crisis.

Temporary fall?

However, economists said that the reduction in borrowing last year was helped by one-off factors.

John Hawksworth, an economist at PwC, said: "It is good news that the deficit is coming down, but it is too soon to be complacent about the state of the public finances.

"As the OBR said last month, a number of one-off factors relating to the timing of tax receipts and spending flattered the deficit figures for 2016-17 but are likely to be reversed in 2017-18."

Higher inflation, an ageing population and rising healthcare costs will continue to put pressure on the public finances, he said.

"So while the deficit is now approaching a more sustainable level, there will still be some tough choices ahead on tax and spending for the next government," he said.

Tax hint

Samuel Tombs, UK economist at Pantheon Macroeconomics, was of a similar view, saying taxes would probably have to rise to help keep down the deficit.

"The OBR expects borrowing to rise to £58.3bn this year, nearly 3% of GDP, as self-assessment tax receipts fall back.

"The chance that the Autumn Budget contains net tax rises - like all of the last six post-election Budgets have done - is very high," Mr Tombs said.

Mr Hammond hinted last week the Conservative party may drop its 2015 pledgenot to raise income tax, national insurance or VAT.

BBC News - IMF meeting drops anti-protectionism pledge

Image copyright

Image captionFinancial leaders have been meeting in Washington

Global finance leaders from the IMF and World Bank have dropped a pledge to fight trade protectionism from the closing note of their spring meetings.

An IMF statement said members would "work together" to reduce global trade and current account imbalances "through appropriate policies".

It comes as the Trump administration looks to cut US trade deficits.

It has threatened to impose tariffs on nations that have trade surpluses with the US, including China and Germany.

The administration is aggressively pursuing an "America First" policy.

'Reciprocal trade'

Earlier in the week the International Monetary Fund (IMF) had warned that protectionist policies could choke off improving global growth.

But at the meeting in Washington, US Treasury Secretary Steven Mnuchin said that President Donald Trump "believes in reciprocal trade deals and reciprocal free trade".

"What that means is that if our markets are open, there should be a reciprocal nature to other markets which should be open as well," he added.

He also called for the IMF to step up its surveillance of members' foreign exchange rates.

Meanwhile, Mexican central bank chief Agustin Carstens, who chairs the IMF steering committee, attempted to downplay the significance of omitting the pledge on protectionism, saying it was an "ambiguous" term.

"Instead of dwelling on what that concept means, we managed to put it in a more positive, more constructive framework," he said.

The development comes after ministers from the G20 group of leading industrial nations left their two-day meeting in March without renewing their long-standing pledge to bolster free trade.

They dropped an anti-protectionist commitment after opposition from the US.

Bloomberg News - World Bank Cuts Sub-Saharan Africa's 2017 Growth Forecast

The World Bank cut its growth projection for sub-Saharan Africa this year because of weak expansion in the region’s three biggest economies.

The area’s gross domestic product will expand 2.6 percent in 2017, the bank said in an emailed copy of its Africa Pulse report Wednesday. That compares with a January projection of 2.9 percent and matches the International Monetary Fund’s prediction released this week.

“The region’s three largest economies -- Angola, Nigeria, and South Africa -- are projected to post only a modest rebound in growth following a sharp slowdown in 2016,” it said. “Investment growth will recover only gradually amid tight foreign-exchange liquidity conditions in major oil exporters and low investor confidence in South Africa.”

The economy of South Africa, which vies with Nigeria’s to be the region’s biggest, expanded 0.3 percent last year, the slowest pace since a 2009 recession, due to a slump in commodity prices, weak demand for the country’s exports and a continuation of the worst drought since records started more than a century ago. Nigeria suffered its first economic contraction in 25 years in 2016 due to a drop in oil exports and foreign-currency shortages that raised inflation to a decade high.

Growth this year will be “better than the 1.3 percent in 2016, the lowest in two decades, but we are not out of the woods yet,” World Bank Africa Chief Economist Albert Zeufack told reporters in a video conference from Washington on Wednesday. “Africa is still growing at negative per-capita rates.”
Country Forecasts


The bank cut South Africa’s GDP growth forecast for this year to 0.6 percent from 1.1 percent earlier, and raised Nigeria’s to 1.2 percent from 1 percent.

Pravin Gordhan’s ouster as South Africa’s finance minister in a cabinet reshuffle prompted S&P Global Ratings and Fitch Ratings Ltd. to cut the nation’s credit rating to sub-investment grade. Moody’s Investors Service put its assessment of the nation’s debt, which is two levels above junk, on review for a downgrade on April 3.

“The recent events represent a setback to business and investor confidence, and are likely to weigh down on the country’s prospects,” the World Bank said.

The bank reduced its forecast for the region’s expansion in 2018 to 3.2 percent from 3.6 percent in January.

Among non-resource intensive countries, such as Ethiopia, Senegal, and Tanzania, growth is expected to remain generally solid this year, supported by domestic demand, it said.

The economy of Angola, Africa’s biggest oil producer, will probably expand 1.2 percent this year, the bank said, leaving its January forecast unchanged.

Reuters News - Exclusive: Putin-linked think tank drew up plan to sway 2016 U.S. election - documents

By Ned Parker, Jonathan Landay and John Walcott | WASHINGTON

A Russian government think tank controlled by Vladimir Putin developed a plan to swing the 2016 U.S. presidential election to Donald Trump and undermine voters’ faith in the American electoral system, three current and four former U.S. officials told Reuters.

They described two confidential documents from the think tank as providing the framework and rationale for what U.S. intelligence agencies have concluded was an intensive effort by Russia to interfere with the Nov. 8 election. U.S. intelligence officials acquired the documents, which were prepared by the Moscow-based Russian Institute for Strategic Studies [en.riss.ru/], after the election.

The institute is run by retired senior Russian foreign intelligence officials appointed by Putin’s office.

The first Russian institute document was a strategy paper written last June that circulated at the highest levels of the Russian government but was not addressed to any specific individuals.

It recommended the Kremlin launch a propaganda campaign on social media and Russian state-backed global news outlets to encourage U.S. voters to elect a president who would take a softer line toward Russia than the administration of then-President Barack Obama, the seven officials said.

A second institute document, drafted in October and distributed in the same way, warned that Democratic presidential candidate Hillary Clinton was likely to win the election. For that reason, it argued, it was better for Russia to end its pro-Trump propaganda and instead intensify its messaging about voter fraud to undermine the U.S. electoral system’s legitimacy and damage Clinton’s reputation in an effort to undermine her presidency, the seven officials said.

The current and former U.S. officials spoke on the condition of anonymity due to the Russian documents’ classified status. They declined to discuss how the United States obtained them. U.S. intelligence agencies also declined to comment on them.

Putin has denied interfering in the U.S. election. Putin’s spokesman and the Russian institute did not respond to requests for comment.

The documents were central to the Obama administration's conclusion that Russia mounted a “fake news” campaign and launched cyber attacks against Democratic Party groups and Clinton's campaign, the current and former officials said.

“Putin had the objective in mind all along, and he asked the institute to draw him a road map,” said one of the sources, a former senior U.S. intelligence official.

Trump has said Russia’s activities had no impact on the outcome of the race. Ongoing congressional and FBI investigations into Russian interference have so far produced no public evidence that Trump associates colluded with the Russian effort to change the outcome of the election.

Four of the officials said the approach outlined in the June strategy paper was a broadening of an effort the Putin administration launched in March 2016. That month the Kremlin instructed state-backed media outlets, including international platforms Russia Today and Sputnik news agency, to start producing positive reports on Trump’s quest for the U.S. presidency, the officials said.

Russia Today did not respond to a request for comment. A spokesperson for Sputnik dismissed the assertions by the U.S. officials that it participated in a Kremlin campaign as an “absolute pack of lies.” “And by the way, it's not the first pack of lies we're hearing from 'sources in U.S. official circles'," the spokesperson said in an email.

PRO-KREMLIN BLOGGERS

Russia Today and Sputnik published anti-Clinton stories while pro-Kremlin bloggers prepared a Twitter campaign calling into question the fairness of an anticipated Clinton victory, according to a report by U.S. intelligence agencies on Russian interference in the election made public in January. [bit.ly/2kMiKSA]

Russia Today’s most popular Clinton video - “How 100% of the 2015 Clintons’ ‘charity’ went to ... themselves” - accumulated 9 millions views on social media, according to the January report. [bit.ly/2os8wIt]

The report said Russia Today and Sputnik “consistently cast president elect-Trump as the target of unfair coverage from traditional media outlets."

The report said the agencies did not assess whether Moscow’s effort had swung the outcome of the race in Trump’s favor, because American intelligence agencies do not “analyze U.S. political processes or U.S. public opinion.” [bit.ly/2kMiKSA]

BBC News - IMF says pace of global economic growth is picking up

By Andrew WalkerBBC World Service economics correspondent

The world economy seems to be gaining momentum, according the chief economist of the International Monetary Fund.

Writing in the IMF's new World Economic Outlook, Maurice Obstfeldt said "we could be at a turning point".

The report forecasts global growth this year of 3.5%, up from 3.1% predicted in 2016.

The UK's economy is forecast to expand by 2% this year, stronger growth than any of the major developed economies apart from the US.

The prediction for Britain this year is now only marginally below what the IMF predicted a year ago, its last full forecast before the Brexit referendum.

The figure then was 2.2%. The revised forecast reinforces the picture of the British economy's performance being little affected by the aftermath of the referendum, contrary to the expectations of the IMF and many independent economists. The IMF does, however, expect the longer term impact on Britain to be adverse.

The IMF also warns of headwinds that could weaken its global projections. The organisation highlights the possibility of protectionism and what the report calls "trade warfare".

However, the dominant tone of the report is rather sunnier than it has been for some time. For much of the period since the financial crisis of 2008 the IMF has worried that the recovery was failing to generate momentum.

Dispelling fears

This time the IMF sees buoyant financial markets and "a long awaited cyclical recovery in manufacturing and trade".

The rebound in the prices of commodities has also helped dispel fears of deflation, or falling prices, which has been seen as a danger, especially in the developed world. Deflation can, in some circumstances, aggravate economic weakness.

The forecast for this year would be a marked improvement on last year's 3.1%.

It's striking that in the forecast for the larger economies, there are none predicted to suffer a decline in economic activity this year or next.

Even Brazil and Russia, two countries that have suffered from the fallout of international and domestic political difficulties, are forecast to see growth this year, although it's not particularly strong.

China first quarter growth hits 6.9%

Eurozone growth 'nears six-year high'

Inevitably, the IMF identifies possible risks that could weaken its main forecasts. In particular, the report refers to increasing "pressures for inward looking policies in the advanced economies".

The report notes the loss of what it calls middle-skilled jobs in advanced economies as a result of technological change since the early 1990s. There is controversy about to what extent increased global trade might have contributed to those losses.

Combined with the slow recovery from recent economic crises, this has affected people on lower incomes and led to growing disillusionment with globalisation the, IMF says.

The report warns that this could trigger more protectionist policy actions on trade and immigration.

UK growth strengthens

Mr Obstfeldt writes: "Capitulating to those pressures would result in a self-inflicted wound, leading to higher prices for consumers and businesses, lower productivity, and therefore, lower overall real income for households."

The report also says that the increased fragmentation of production processes across countries aggravates the potential economic damage.

The forecast for Britain has been revised up markedly for this year - to growth of 2%, from 1.6% predicted in 2016. That is a stronger than any of the leading developed economies apart from the US, whose growth is forecast to be 2.3%.

The revision for the UK reflects what the report calls the "stronger-than-expected performance of the UK economy since the June Brexit vote".

But the IMF still expects negative effects from leaving the EU including "reduced consumer purchasing power following the pound's depreciation and its gradual pass-through to prices and the impact of uncertainty on private investment".

It also says that longer term prospects have been diminished because of the expected increase in barriers to trade and migration and the potential impact on the UK's financial services.

One decidedly weak area is Africa, for which the IMF describes the outlook as subdued. For sub-Saharan Africa, economic growth is likely to only moderately exceed population growth. That means correspondingly only moderate progress in raising average living standards in the region.

Although commodity prices such as oil have rebounded from recent troughs, they are still relatively low. The Fund says that is holding back growth in oil-producing nations in Africa such as Nigeria and Angola.

Reuters News - Greek debt must be sustainable for IMF to join bailout: Lagarde

International Monetary Fund (IMF) Managing Director Christine Lagarde delivers a speech at the Solvay Library in Brussels, Belgium April 12, 2017. REUTERS/Francois Lenoir

The International Monetary Fund will not take part in a bailout program for Greece if it deems the country's debt is unsustainable, the international lender's chief Christine Lagarde said in an interview published on Tuesday.

Greece needs to implement reforms agreed by euro zone finance ministers earlier this month to secure a new loan under its 86 billion-euro ($91.58 billion) bailout program, the third since 2010.

The loan is needed to pay debt due in July, but talks continue and the IMF has not yet decided whether to join the bailout. The fund's participation is seen as a condition for Germany to unblock new funds to Greece.

"If Greek debts are not sustainable based on IMF rules and reasonable parameters, we will not take part in the program," Lagarde told German newspaper Die Welt when asked if the IMF would take part in the plan if Greek debt is not restructured.

(Reporting by Joseph Nasr and Paul Carrel)

BBC News - Donald Trump: China 'not a currency manipulator

Mr Trump made the comments days after meeting Chinese President Xi Jinping in Florida

Donald Trump has said his administration will not label China a currency manipulator, rowing back on a campaign promise.

The US president also left open the possibility of re-nominating Janet Yellen as the head of the Federal Reserve, despite having criticised her.

He made the comments days after meeting China's President Xi Jinping.

China has been accused of suppressing the yuan to make its exports more competitive with US goods.

Before the US election, Mr Trump likened this to "raping" the US, and promised to label China a currency manipulator on his first day in office.

That would have triggered talks between the countries and potentially led to US sanctions - something experts warned would have prompted retaliation.

But in an interview with the Wall Street Journal on Wednesday, Mr Trump said China had not been "currency manipulators" for some time and had been trying to prevent further weakening.

He also said: "I think our dollar is getting too strong, and partially that's my fault because people have confidence in me."

He added that a strong dollar had benefits, but would ultimately hurt the US economy.

"[It is] very, very hard to compete when you have a strong dollar and other countries are devaluing their currency."

'Respect' for Yellen

Mr Trump has been highly critical of Ms Yellen in the past, saying that the Fed's low interest rate policy had hurt savers.

He has also indicated that he would not nominate her for a second four-year term when her current one expires in February 2018.

But in Wednesday's interview he said he now liked "a low-interest rate policy" and "respects" the Fed chair.

He also said she would not be "toast" when her current term ended, although he added: "It's very early."

Mr Trump's administration was also said to be "very close" to filling three vacancies on the Fed's board.

Reuters News - U.S.-Russia relations at another low after Syria attacks

By Yeganeh Torbati, Denis Dyomkin and Jeff Mason | MOSCOW/WASHINGTON

Russian Foreign Minister Sergei Lavrov and U.S. Secretary of State Rex Tillerson arrive for a news conference following their talks in Moscow, Russia, April 12, 2017. REUTERS/Sergei Karpukhin

The presidents of the United States and Russia on Wednesday both presented souring views of the relationship between their two countries, exchanging sharp words as Moscow extended an icy welcome to the United States' top diplomat in a face-off over Syria.

In Washington, President Donald Trump said the United States' relationship with Moscow "may be at an all-time low."

Trump's comments came after he made his biggest foreign policy decision of his new presidency last week, firing missiles at Syria to punish Moscow's ally for its suspected use of poison gas. Russia condemned the U.S. action.

(For graphic on battle for control in Syria click here: tmsnrt.rs/2nm68H0)

Hours earlier on Wednesday, Russian President Vladimir Putin was equally pessimistic, saying in an interview broadcast on Russian television, "The level of trust on a working level, especially on the military level, has not improved but has rather deteriorated."

The rhetorical salvos came as U.S. Secretary of State Rex Tillerson received an unusually hostile reception in Moscow, where any hope that the Trump administration would herald less confrontational relations was dashed in the week after the U.S. missile strike on Syria.

Tillerson met Putin in the Kremlin after talking to his Russian counterpart, Sergei Lavrov, for about three hours. The Kremlin had previously declined to confirm Putin would meet Tillerson, reflecting the renewed tensions.

Trump had frequently called during the 2016 U.S. presidential election campaign for warmer ties with Putin, despite criticism from lawmakers in his own Republican Party.

But the civil war in Syria has driven a wedge between Moscow and Washington, upending what many in Russia hoped would be a transformation in relations, which reached a post-Cold War low under Trump's predecessor, Barack Obama.

As Tillerson sat down for talks with Lavrov on Wednesday, a volley of statements, including from a senior Russian official, appeared timed to maximize the awkwardness during the first visit to Moscow by a member of Trump's cabinet.

Lavrov doubled down on Russia's support for Syrian President Bashar al-Assad, repeating denials that Assad's government was to blame for the gas attack last week and adding a new theory that the attack may have been faked by Assad's enemies.

Tillerson reiterated the U.S. position that Assad must eventually relinquish power in Syria.

"We discussed our view that Russia as their closest ally in the conflict perhaps has the best means of helping Assad recognize this reality," he said.

Asked whether Assad could be subject to war crimes charges, Tillerson said people were working to make such a case, though he cautioned doing so would require clearing a high legal hurdle.

AN ICY WELCOME

Lavrov greeted Tillerson with unusually icy remarks, denouncing the missile strike on Syria as illegal and accusing Washington of behaving unpredictably.

One of Lavrov's deputies was even more undiplomatic.

"In general, primitiveness and loutishness are very characteristic of the current rhetoric coming out of Washington," Deputy Foreign Minister Sergei Ryabkov told Russia's state-owned RIA news agency.

But Lavrov said some progress had been made on Syria at the meeting and that a working group would be set up to examine the poor state of U.S.-Russia ties. He also said Putin had agreed to reactivate a U.S.-Russian air safety agreement over Syria that Moscow suspended after the U.S. missile strikes.

Tillerson noted the low level of trust between the two countries. "The world's two foremost nuclear powers cannot have this kind of relationship," he said.

Moscow's hostility to Trump administration figures is a sharp change from last year, when Putin hailed Trump as a strong figure and Russian state television was often full of effusive praise for him.

In another possible setback to a thaw with Moscow, Trump said on Wednesday that NATO is not obsolete, as he had declared during the election campaign last year. But he told a news conference at the White House with NATO Secretary General Jens Stoltenberg that alliance members still need to pay their fair share for the European security umbrella.

Trump said U.S. relations with Russia were not going well.

"Right now, we’re not getting along with Russia at all. We may be at an all-time low in terms of a relationship with Russia. This has built for a long period of time. But we’re going to see what happens," Trump told the news conference.

In an interview with The Wall Street Journal, Trump said his administration's policy was not to demand Assad step down as part of a "peaceful resolution to the conflict," in some contrast to Tillerson's remarks in Moscow.

"Are we insisting on it? No. But I do think it’s going to happen at a certain point," Trump said.

The Wall Street Journal cited Trump as saying that Assad's use of chemical weapons again would elicit another military response, but he also said he would not intervene in depth in the conflict.

The White House has accused Moscow of trying to cover up Assad's use of chemical weapons after the attack on a rebel-held Syrian town last week killed 87 people.

Trump responded to the gas attack by firing 59 cruise missiles at a Syrian air base on Friday. Washington warned Moscow, and Russian troops at the base were not hit.

Moscow has stood by Assad, saying the poison gas belonged to rebels, an explanation Washington dismisses as beyond credible.

Russia blocked a Western effort at the U.N. Security Council on Wednesday to condemn the gas attack and push Assad to cooperate with international inquiries into the incident.

Trump came to the presidency promising greater cooperation with Russia in fighting against the two countries' common enemy in Syria, the Islamic State militant group. Tillerson is a former oil executive who was awarded Russia's Order of Friendship by Putin.

Trump's relations with Russia are also a domestic issue, as U.S. intelligence agencies have accused Moscow of using computer hacking to intervene in the U.S. presidential election to help Trump win. The Federal Bureau of Investigation is investigating whether any Trump campaign figures colluded with Moscow, which the White House denies.

(Additional reporting by Polina Devitt, Andrew Osborn and Vladimir Soldatkin; Writing by Peter Graff, Anna Willard and Dustin Volz; Editing by Yara Bayoumy and Leslie Adler)