Macro-News round-up:

#MarketNews

  • ·        UK: Andrew Bailey, the Governor of the Bank of England, has pledged to do “whatever it takes” to reduce inflation to the bank’s 2% target, as per his interview with Reuters (don’t forget to catch his speech today). He admitted to a slight downturn in economic activity but stressed that the primary objective of the BoE is to achieve the inflation target. He clarified that the bank would not contemplate reducing interest rates until inflation is managed. Bailey also pointed out that the BoE has not seen sufficient progress towards its inflation goal to feel assured, and that the path to 2% inflation will require “hard work.” The BoE has maintained interest rates for a second consecutive meeting, following 14 straight increases to combat high inflation

  • US: FED members are divided: Yesterday, Christopher Waller stated, “If inflation is consistently decreasing, there’s no need to keep rates extremely high.” Shortly after, Michelle Bowman expressed, “I support rate hikes if inflation remains stagnant.”

    Waller also hinted at potential rate reductions once the Fed achieves its 2% inflation target, further stimulating the market.

    John Williams, President of the Federal Reserve Bank of New York, expressed his appreciation for the stability of long-term inflation expectations, noting that “long-term inflation expectations in the United States have remained remarkably stable.”
  • China: Bloomberg has reported what it calls a Chinese-style QE programme designed to assist property developers. The Pledged Supplemental Lending Plan would use the developers’ loans as collateral and then provide policy banks with inexpensive cash to lend to the struggling property sector
  • New Zealand: The Reserve Bank of New Zealand has kept its cash rate unchanged, but has observed that inflation is still too high and additional policy tightening might be necessary if price pressures do not subside.
  • Commodities: OPEC+ continues to face challenges. Negotiations are tough, further delay of the meeting is possible, and a change in policy is a potential outcome.
  • The Pope is a champion of the climate: Since Pope Francis issued his significant encyclical on environmental stewardship in 2015, calling for a departure from fossil fuels, hundreds of Catholic institutions worldwide have declared their intention to divest their finances from oil, gas, and coal to aid in combating climate change.

    However, in the United States, the leading producer of oil and gas and home to approximately a quarter of the world’s Catholic population, no diocese has declared divestment from its fossil fuel assets.

    U.S. dioceses possess millions of dollars in fossil fuel company stocks through portfolios designed to finance church operations and pay clergy salaries, as per a Reuters review of financial statements.

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