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BOV Market Watch - Week ending 4th June 2021
04 Jun 2021

Fed Beige Book sees US economy picking up. The US economy appears to be on an upward trajectory, as consumers returned to restaurants, hotels and shopping malls, a report by the Federal Reserve (Fed) showed on Wednesday. The report, a collection of business anecdotes from around the country known as the Beige Book, said that the economy grew at a moderate pace between early April and late May. However, businesses told the Fed that ongoing supply chain disruptions and severe labour shortages have made it difficult for them to satisfy demand. The report found that inflationary pressures continued to build as both input and selling prices moved higher.

Eurozone inflation rises as economies reopen. Inflation in the eurozone reached its highest level in more than two years after Europe’s pandemic-battered economies started to lift restrictions and rebounding demand intensified the effects of supply bottlenecks. Consumer prices in the countries that share the euro currency rose by an annual rate of two percent in May, higher than economists had forecast as energy costs underpinned the jump. Germany, Spain and Italy, three of the four largest eurozone economies, all reported price increases. On the other hand, the European Central Bank has stressed that price increases are not likely to last, as much of the price rise can be explained by temporary factors such as energy prices.

UK house prices rise at fastest rate since 2014. UK house prices have risen by their fastest annual rate in seven years, supported by demand for larger homes outside London and a temporary stamp duty holiday, according to the Nationwide Building Society. The UK Nationwide house price index rose by 1.8 percent in May compared with the previous month, bringing the average house price to a record 243,000 British points, up by 24,000 British pounds over the past 12 months. The average house price accelerated by 10.9 percent compared with May last year, up from 7.1 percent the previous month, its fastest rate since August 2014.

German labour market starts to overcome pandemic crisis. German unemployment dropped by 84,000 in May, lowering the number of unemployed to 2.687 million. The seasonally-adjusted unemployment rate remained unchanged at six percent. This is not only the lowest unemployment number since April of last year but also the best performance of the German labour market in May since 2012. According to the German labour agency, there are still some 2.6 million in short-time work, even though the number of new applications has dropped significantly to 96000 in May. "The consequences of the Corona crisis are still very clearly visible, but they are getting a little smaller," the official added.

India’s central bank keeps interest rates unchanged, cuts growth forecast. India's central bank decided to keep its key interest rates unchanged and expanded the government bond purchase programme as policymakers downgraded the growth outlook with the second wave of the coronavirus pandemic taking its toll on economic activity. At the end of three-day rate setting meeting on Friday, the Monetary Policy Committee (MPC) of the Reserve Bank of India unanimously voted to hold the benchmark policy rate at four percent. The MPC observed that the second wave of Covid-19 has altered the near-term outlook. The economy is projected to grow by 9.5 percent in the financial year 2021-22, which is less than the previous outlook of 10.5 percent. Consumer price inflation was seen at 5.1 percent during 2021-22.
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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).