QNB Expects ECB to Implement 2 More Rate Cuts in 2024

Doha: Qatar National Bank (QNB) expects that the European Central Bank will implement two additional interest rate cuts, by 25 basis points, during the current year, as it continues to closely monitor price developments and labor market activity.

QNB…


Doha: Qatar National Bank (QNB) expects that the European Central Bank will implement two additional interest rate cuts, by 25 basis points, during the current year, as it continues to closely monitor price developments and labor market activity.

QNB noted that despite the beginning of the easing cycle, there is still significant uncertainty about the pace of rate cuts going further, as well as what level will be the neutral rate, at which the nominal policy rate should stabilize.

The report said that, every summer, the European Central Bank (ECB) organizes a sought-after monetary policy forum in Sintra, Portugal. The event is one of the most important central banking conferences in the world, bringing together top economists, bankers, market participants, academics and policy makers to discuss relevant macro issues. It added that the forum has garnered significant attention due to the impactful speeches delivered by senior policymakers, rivalling the Jackson Hole conference in its appeal to investors. This
years meeting was particularly relevant, as the ECB had just started a new phase of its monetary policy cycle last month, when policy rates were cut for the first time in five years. This came after a holding period of nine months, which followed the most aggressive tightening in the history of the ECB, when rates were hiked by 425 basis points (bps) as a response to the post-pandemic inflationary shock.

The weekly note highlighted the introductory speech of the Sintra forum from ECB President Christine Lagarde, which expressed what is behind the hesitation to take a more aggressive path towards a faster monetary policy easing, saying that: “Now, we are still facing several uncertainties regarding future inflation, especially in terms of how the nexus of profits, wages and productivity will evolve and whether the economy will be hit by new supply-side shocks. And it will take time for us to gather sufficient data to be certain that the risks of above-target inflation have passed.

QNB’s report sees that, wit
h inflation still running at 2.5% y/y in June, above the 2% target of the ECB but much below the recent peak from October 2022, there is comfort for the beginning of an easing cycle but still no consensus for a more “dovish” stance, which would translate to faster rate cuts.

The note said that the insights shared during the meeting by senior ECB officials pointed to a “rather unusual economic cycle,” which increases uncertainty and requires a more nimble, data dependent approach to monetary policy.

The weekly report also noted that despite five straight quarters of stagnation since late 2022, the Euro area economy has so far avoided a sharper downturn. This is an unusual outcome given the magnitude of the supply shocks that had to be tamed, such as the Covid pandemic and the Russo-Ukrainian War. QNB added that these events had major implications, such as input shortages, a regional energy crisis and the de-anchoring of fiscal policies, which caused wider budget deficits and higher government indebtedness. T
he ECB had to then respond strongly, taking policy rates to restrictive levels in order to re anchor inflation expectations.

“In previous periods, such negative headwinds from external shocks and central bank policy would have produced a more pronounced recession. This time, however, seems to be different. A mix of labor shortages, fiscal expansion and nominal earnings growth contributed to support exceptionally benign labor markets, despite the stagnant economy. In fact, the unemployment rate is at all-time lows at the same time that wages are still growing at more than 4% per year,” the report added.

QNB’s report concluded that the lack of more severe weakness in labor markets prevents the ECB from embarking on a firmer policy easing stance.

Source: Qatar News Agency

Oil Rises on Cooling US Inflation

Oil prices went up on Friday amid signs of easing inflationary pressures in the United States, though the contracts were headed for a weekly decline.

Brent crude futures rose 33 cents, or 0.4%, to $85.73 a barrel. US West Texas Intermediate crude fut…


Oil prices went up on Friday amid signs of easing inflationary pressures in the United States, though the contracts were headed for a weekly decline.

Brent crude futures rose 33 cents, or 0.4%, to $85.73 a barrel. US West Texas Intermediate crude futures climbed 46 cents, or 0.6%, to $83.08 a barrel.

Both contracts gained in the prior two sessions but were still poised for weekly declines.

Brent futures were set to fall about 1% week-on-week following four weeks of gains. WTI futures were broadly stable on a weekly basis, set for a 0.1% dip.

Investor confidence was bolstered after data on Thursday showed US consumer prices fell in June, which could mean that the Federal Reserve will cut interest rates soon.

Lower rates are expected to boost economic growth which would help raise fuel consumption.

Source: Qatar News Agency

Kuwaiti Oil Price Rises to $87.39 a Barrel

The price of Kuwaiti oil went up by $0.88 to $87.39 a barrel on Thursday as opposed to $86.51 a barrel last Wednesday, Kuwait Petroleum Corporation (KPC) said today.

In the global markets, Brent crude futures rose $0.32 to reach $85.4 a barrel, while…


The price of Kuwaiti oil went up by $0.88 to $87.39 a barrel on Thursday as opposed to $86.51 a barrel last Wednesday, Kuwait Petroleum Corporation (KPC) said today.

In the global markets, Brent crude futures rose $0.32 to reach $85.4 a barrel, while US West Texas Intermediate crude futures rose $0.52 to reach $82.62.

Source: Qatar News Agency

Gold Prices Decline, but Set for Weekly Gains

Gold prices declined on Friday, but are poised to record gains for the 3rd consecutive week, amid hopes that the US Federal Reserve will cut interest rates in September.

Spot gold slipped 0.2% at $2,409.19 per ounce after rising 2% on Thursday. US go…


Gold prices declined on Friday, but are poised to record gains for the 3rd consecutive week, amid hopes that the US Federal Reserve will cut interest rates in September.

Spot gold slipped 0.2% at $2,409.19 per ounce after rising 2% on Thursday. US gold futures eased 0.3% at $2,414.10.

Data released on Thursday showed an unexpected decline in consumer prices in the United States, bolstering expectations of a US interest rate cut.

Lower interest rates reduce the opportunity cost of holding non-yielding bullion.

As for other precious metals, spot silver fell 0.8% to $31.18 per ounce, after scaling an over one-month high on Thursday. Platinum edged 0.1% lower at $1,003.25 and palladium dropped 1.3% to $982.44.

Source: Qatar News Agency

France’s Inflation Rate Retreats to 2.2% in June

Data from the French National Institute of Statistics and Economic Studies (INSEE) showed today that the inflation rate in the country retreated to 2.2 percent on an annual basis last June.

The institute’s data attributed this slight slowdown to weak…


Data from the French National Institute of Statistics and Economic Studies (INSEE) showed today that the inflation rate in the country retreated to 2.2 percent on an annual basis last June.

The institute’s data attributed this slight slowdown to weak inflation in energy prices, especially for petroleum products, as well as smaller increases in food prices, while service prices accelerated, and prices of manufactured goods and tobacco remained stable.

The French National Institute of Statistics and Economic Studies explained that the inflation rate on a monthly basis rose by 0.2 percent in June, which is considered a slight adjustment given its previous reading, which indicated an increase of 0.1 percent.

Source: Qatar News Agency

European Stock Indices Close at Highest Level in More Than Month

European stock indices rose on Friday at the close and achieved their second weekly gain in a row thanks to strong business results and optimism among investors regarding an interest rate cut in the US next September.

The European Stoxx 600 index clo…


European stock indices rose on Friday at the close and achieved their second weekly gain in a row thanks to strong business results and optimism among investors regarding an interest rate cut in the US next September.

The European Stoxx 600 index closed up by about 0.9 percent, while the leading stock index in the eurozone advanced 1.3 percent, and the two indexes reached their highest levels in more than a month during the session.

Swedish AdTech shares jumped 16 percent to an unprecedented level after the technology solutions company said that expectations for the coming quarters are within reach.

Ericsson shares also rose 4.3 percent after the Swedish communications equipment maker exceeded profit and sales expectations thanks to a recovery in demand in North America. The Swedish index rose 2.2 percent.

The French CAC 40 index advanced 1.3 percent after a volatile week coinciding with the parliamentary elections.

The Swedish Oxfood shares fell by 9 percent in a performance that was the worst on the Eu
ropean Stoxx 600 index, after quarterly profits were negatively affected by costs associated with operational disruptions and restructuring of logistics services.

Source: Qatar News Agency