The most important events and reports on the economy, central banks and politics from the Dow Jones Newswires program
Scholz: Key points on the recommendations of the gas commission Wednesday in the cabinet
According to Chancellor Olaf Scholz (SPD), the cabinet wants to decide on key points on the recommendations of the gas commission on Wednesday, which submitted its final report to Scholz at noon. “We will now work through this along with the report. This week we will present the cornerstones of how the Gas Commission’s proposals can be implemented, as well as the electricity price brake, so that the gas price brake and electricity price brake can be implemented quickly,” said Scholz at a press conference after talks with employers and unions.
Red-green coalition negotiations in Lower Saxony successfully concluded
Bountiful US government aid during the pandemic has left household and corporate finances in unusually good shape. This could complicate the Federal Reserve’s task of curbing high inflation. The Fed is attempting to slow economic growth to prevent inflation from entrenching. To that end, it has been raising rates aggressively this year and is likely to raise them by a further 75 basis points on Wednesday (7pm GMT).
Eurozone inflation rises to 10.7 percent in October
The inflation rate in the euro zone rose to a new record high in October. As the statistics authority Eurostat reported in a first estimate, consumer prices rose by 1.5 percent compared to the previous month and were 10.7 (September: 9.9) percent above the level of the same month last year. Economists polled by Dow Jones Newswires had forecast monthly inflation of just 0.9 percent and annual inflation of 10.0 percent. Core consumer prices excluding energy and food increased by 0.6 and 5.0 (4.8) percent respectively. Rates of 0.4 and 4.8 percent were expected.
Coba: Data suggests ECB 75bps in December
Commerzbank economist Christoph Weil believes that the again unexpectedly strong increase in consumer prices in October and the ongoing economic growth in the euro area are making a difference rate hike European Central Bank (ECB) likely up 75 basis points in December. “The ECB (assumed) so far that the inflation rate in the final quarter of 2022 will only increase slightly to 9.2 percent – this also increases the pressure on the ECB Council to further increase the key interest rate significantly,” writes Weil in one Comment. For December he expects another 75 basis point move.
KfW: Turnaround in euro area inflation still pending
According to KfW chief economist Fritzi Köhler-Geib, the again surprisingly sharp increase in euro area consumer prices in October shows that inflation has not yet reached its turning point and that the European Central Bank (ECB) still needs to tighten monetary policy. “This policy is aimed at reducing demand support and preventing the risk of a permanent upward shift in inflation expectations,” Koehler-Geib wrote in a comment.
Nordea: The ECB’s dovish swing was probably premature
According to Nordea economists Anders Svendsen and Tuuli Koivu, the slightly dovish tones of the European Central Bank (ECB) last Thursday were “probably a bit premature, as core inflation is not yet slowing down”. The analysts point out in a comment that the inflation expectations derived from financial market variables in five years for the following five years are approaching the peak value of almost 2.5 percent recorded at the end of April/beginning of May and the inflation expectations collected under “Professional Forecasters” as well had risen.
ECB: Analysts expect the first in November 2023 at the latest rate cut
According to the analysts regularly surveyed by the ECB, the European Central Bank (ECB) will have to cut interest rates again relatively soon after the end of its current rate hike cycle. As can be seen from the results of the current Survey of Monetary Analysts, these experts expect that the ECB will reduce its key interest rates by 25 basis points in January 2023 at the earliest, but by November 2023 at the latest. March was the median – that is the value in the middle of the data series, not the average.
British Home Secretary admits further wrongdoing
British Home Secretary Suella Braverman has admitted further misconduct in handling government documents. About a week and a half after Braverman resigned for using her private email address to send an official document, the now-reappointed minister admitted to sending government documents to her personal email account a total of six times. However, none of the documents was classified as confidential, she emphasized in a letter to the parliament’s interior committee.
Chicago Purchasing Managers’ Index falls against expectations in October
Sentiment among purchasing managers from the greater Chicago area deteriorated further in October. Contrary to expectations, the indicator fell to 45.2 points, as announced by the Chicago Purchasing Managers Association. In September the index stood at 45.7 points. Economists had expected an increase to 47.0 points.
Opec raises long-term oil demand forecast
The Organization of the Petroleum Exporting Countries (OPEC) has called for trillions of dollars in investments in the oil industry over the next two decades to meet what it says will be booming demand for fossil fuels well into mid-century. In an annual report on long-term energy trends, OPEC said the oil industry would need to invest a total of $12.1 trillion through 2045 – $300 billion more than expected last year – to meet demand and address global energy security concerns .
Norway’s army is put on increased alert
Norway, which borders Russia, will put its forces on high alert. The measure will apply from Tuesday, announced Prime Minister Jonas Gahr Störe in Oslo. At the same time, he stressed that no direct threat from Russia had been identified.
Stock exchange in Brazil reacts positively to election outcome
The Brazilian currency and stock market are reacting positively to Sunday’s election results. The real made up for early losses and gained around 1 percent against the US dollar to 5.2437 per dollar, the Bovespa stock index rose 0.9 percent after left-wing leader Luiz Inácio Lula da Silva’s narrow victory in the presidential elections.
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(END) Dow Jones Newswires
October 31, 2022 14:00 ET (18:00 GMT)