BoE rush in rate hike may be unjustified
US credit rating Standard & Poor’s expressed doubts that British economy needs interest rate hike saying BoE aims at specific targets such as curbing import prices growth and offsetting effects of excessive Pound devaluation.
“In general, we believe that the recent statements of the Bank of England and Mark Carney are primarily aimed at supporting the pound to reduce the pressure of imported inflation,” wrote S&P analyst.
“This strategy could indeed include an increase of 25 basis points in November, which will bring the figure back to the level seen before the referendum on Brexit.” Additional actions in 2018 do not seem to be justified especially during slowdown of the economy”
The agency also said it was keeping tabs on signs of a setback in companies’ investment in Britain due the clouded economic and political future ahead of the final Brexit deal.
Pound upside momentum has been deteriorating in recent weeks as BoE-induced spike has faded bring back economy and Brexit concerns into play.
Oil pact may be extended
Continuing fight for the market between OPEC and US firms may force the cartel to further cut supplies. The president of Russia, one of the world’s largest oil suppliers, said on Wednesday that he doesn’t not rule out possibility of delivering more cuts until the end of 2018 to stabilize the world market.
“All of us are interested in a stable market, and what we did together with OPEC seems to be to the benefit of the entire world economy.” Whether we extend these agreements or not, will depend on how the situation on the world market develops. , I do not rule out such a possibility, but we will proceed from the realities that will unfold in March 2018, “Vladimir Putin said at the Russian energy forum in Moscow.
The OPEC oil cartel and several countries outside the club agreed to reduce oil production by the end of the first quarter of 2018 in an attempt to trim surplus and foster market recovery. Financial stability of cartel members including Russia largely depend on oil exports. Putin said that if the producers decide to extend the pact, then at least until the end of 2018.