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BOV Market Watch - Week ending 14th October 2022
14 Oct 2022

IMF warns 'worst is yet to come'. The International Monetary Fund (IMF) lowered its global growth expectations for 2023 whilst warning that the global economy is set to face further headwinds in the coming year. The IMF anticipates global expansion to slow to 2.7 percent in 2023, 0.2 percentage point below its July forecast, whilst anticipating it will feel like a recession for millions around the world. “Risks to the outlook remain unusually large and point downwards,” the report said, while enumerating a broad list of threats from energy and food shocks to China’s property crisis spreading across borders that could be detrimental on financial institutions.

Fed officials expect higher rates to stay in place, meeting minutes show. According to the minutes of the Federal Reserve’s (Fed) September meeting, policymakers were surprised at the rate prices are rising and indicated that they expect higher interest rates to prevail until prices come down. Participants felt the need to maintain a restrictive stance for as long as necessary, with some members of the rate-setting committee stressing that historical experience showed the danger of prematurely ending periods of tight monetary policy designed to bring down inflation. During the meeting, US central bankers agreed to raise the benchmark interest lending rate by 75 basis points for the third time in a row, lifting it to a target range of three percent to 3.25 percent as they try to reduce persistent inflation pressures.

U.S. consumer prices rise more than expected in September. New inflation data released in the US on Thursday showed that consumer prices rose by more than expected in September, heralding more bad news for the Fed as it struggles to bring the multi-decade high inflation rate back under control. The Labour Department said that its consumer price index rose by 0.4 percent in September after rising by 0.1 percent in August. Economists had expected monthly consumer prices to edge up by 0.2 percent. Despite the continued moderation in supply chains and the fall in oil prices from third quarter highs, inflation remains stubbornly above the Fed’s two percent target.

UK house price growth slows to weakest since July 2020 – RICS. UK estate agents pivoted into pessimistic mode on the housing market, expecting prices to decline over the next year for the first time since the start of the global pandemic. The Royal Institution of Chartered Surveyors’ (RICS) house price balance - that gauges the difference between the percentage of surveyors reporting price rises and those seeing prices declining - fell sharply to +32 in September from +51 in the prior month, likely heralding a slowdown in price growth. September's reading was the lowest since July 2020. In the meantime, the balance for sales volumes was the most negative since May 2020, the figures showed. “Storm clouds are visible in the deterioration of near-term expectations for both pricing and sales,” said Simon Rubinsohn, chief economist at RICS.

China’s inflation remains contained. China’s consumer inflation maintained its relatively low levels in September as lockdowns continued to have a negative effect on the Chinese peoples’ spending habits. Consumer price inflation inched up to just 2.8 percent in September from 2.5 percent in August, the National Bureau of Statistics said. Prices rose the most since April 2020 as expected by economists and inflation moved close to Beijing's target of around three percent. In the meantime, core CPI fell to 0.6 percent, the lowest since Q1 2021. Manufacturing activity, in particular, has suffered the most due to continued factory closures.

In case of any queries, please email us on [email protected] or call 2275 3857.

 

 

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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).