The Day at a Glance | August 3 2023

*The Bank of England increased its interest rate to 5.25%, its highest level in 15 years.

*Producer inflation in the Eurozone decreases by -3.4% on an annual basis.

*Saudi Arabia will voluntarily extend the 1 million barrels per day oil cut for another month, including September.

*Unemployment insurance claims in the US rose to 227 thousand requests (+6 thousand) in the week ending on July 29th.

*Russia attacked a major port in Ukraine, causing international grain prices to rise.

*The central bank of Brazil cut its benchmark interest rate by 50 basis points to 13.25%.

*China’s Caixin PMI for the services sector expanded slightly, rising from 53.9 points in June to 54.1 in July. With this, the composite index receded to 51.9 points (52.5 prev.).

Economic environment

The Bank of England (BoE) raised its interest rate for the fourteenth consecutive time. This Thursday, the BoE increased its benchmark rate by 25 base points, bringing it to a level of 5.25%, its highest level in 15 years. Additionally, officials from the Bank of England stated that rates will need to remain high for a while. It’s worth noting that unlike the FED and the ECB, the BoE’s monetary policy committee gave very few signs that the end of the restrictive cycle is near due to high inflation. Because of this, the market’s expectation is that there will be another 25 base point increase in its next meeting, scheduled to take place in September. 

Producer inflation in the Eurozone fell by 3.4% y/y due to a significant decrease in energy prices. On a monthly basis, industrial producer prices in the Eurozone decreased by 0.4% (-1.9% previously). Intermediate goods decreased by -0.7%, and energy prices by -0.5%, while capital goods marginally increased 0.1%. On a year-on-year basis, producer inflation decreased for a second consecutive month, largely driven by a -16.5% decrease in energy prices. By country, the largest price decrease occurred in Ireland (-17.1%), Belgium (-12.4%), and Bulgaria (-11.4%).