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BOV Market Watch - Week ending 15th July 2022
15 Jul 2022

US consumer prices jump by most in 40-years. Government data on Wednesday showed a steep, faster-than-expected rise in the consumer price index in June compared to May. The increase was driven by significant increases in gasoline prices. The Bureau of Labour Statistics said prices, which include food, gasoline and housing were up 1.3 percent in June compared to May. This number is also considered to be a substantial jump, following increases in the preceding months that are having a negative impact on the household budgets of millions of American families,. With the higher than anticipated monthly surge, the annual rate of consumer price growth accelerated to 9.1 percent in June, the biggest increase since November 1981. The Federal Reserve is already engaged in the fastest series of interest rate hikes in three decades, hoping it will bring down inflation by curtailing borrowing and spending by consumers and businesses.

Eurozone industrial output rises for second month. May Eurozone industrial production increased by more than expected, as capital and non-durable consumer goods output increased sharply during the month, data published by Eurostat showed on Wednesday. Industrial output gained 0.8 percent on month, faster than the 0.5 percent increase registered in April. This was the second back-to-back monthly rise in production and also better than the expected growth of 0.3 percent. For the 27 countries that make up the European Union, industrial production notched up by 0.6 percent on month in May and advanced 2.7 percent annually. Among member states, the highest monthly increase was seen in Ireland, up 13.9 percent whereas Lithuania reported the biggest fall of 7.6 percent.

German economic growth expectations fall in July. Expectations for economic growth in Germany tanked in July, falling even slightly the pandemic levels, data from the ZEW economic research institute showed Tuesday. The ZEW economic sentiment index plummeted to -53.8 points in July from -28.0 in June. The July figure is a touch below the reading seen in March 2020, when Germany saw its first pandemic-related closures. The survey, which is conducted among professional economists rather than businesses, is the first since Russia started curtailing gas supplies to Germany, its largest customer, as a means of exerting political pressure. "Expectations for energy-intensive and export-oriented sectors of the economy have fallen particularly sharply, and private consumption is also assessed as significantly weaker," ZEW President Achim Wambach said on current expectations.

Indian inflation eases. Inflation in India eased for the second month in a row in June, albeit marginally, and remained above the central bank's tolerance band, official data showed on Tuesday. The Indian retail price inflation eased marginally to 7.01 percent on an annual basis, from 7.04 percent in May, due to easing crude and edible oil prices. On a monthly basis, the headline inflation slowed to 0.52 percent in June from 0.94 percent in May. The core inflation, which omits   food and fuel items, came in at 6 percent in June. Soaring global commodity prices have kept retail inflation above the Reserve Bank of India’s six percent upper tolerance range so far this year. A weakening rupee has aggravated the situation even further.

Bank of Canada hikes benchmark rate to 2.5%. On Wednesday, the Bank of Canada raised its key interest rate by a full percentage point. This is the largest increase in more than 20 years and considerably hikes the cost of borrowing in an attempt to bring the runaway inflation under control. The unexpected and huge increase comes after two consecutive 50 basis point hikes, bringing the policy interest rate to the highest level since 2008. This marks a first for the central bank since the last time it hiked its benchmark rate by a full percentage point was in 1998. This was more hawkish than the 75 basis point increase most economists had widely expected.

 

 

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Bank of Valletta p.l.c. is a public limited company regulated by the MFSA and is licensed to carry out the business of banking and investment services in terms of the Banking Act (Cap. 371 of the Laws of Malta) and the Investment Services Act (Cap.370. of the Laws of Malta).