The Federal Reserve announces a slowdown in the growth of economic activity and a prospective meeting of the European Central Bank (ECB) today

2021-09-09T18:35:53
conomic activity European Central Bank slowdown in the growth The Federal Reserve
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The Federal Reserve announces a slowdown in the growth of economic activity and a prospective meeting of the European Central Bank (ECB) today

The Federal Reserve announces a slowdown in the growth of economic activity and a prospective meeting of the European Central Bank (ECB) today:

Market participants are awaiting today’s European Central Bank (ECB) meeting,
through which the Bank’s fiscal policy will be announced in the coming period,
while the Big Book had a key role yesterday, through which the Federal Reserve announced the country’s economic activity in August.

Evest follows all this in the following report:

 

Topics:

  1. The Federal Reserve announces a slowdown in the growth of economic activity
  2. The Federal Reserve survey, reports on agriculture and energy
  3. Analysts expect the ECB to keep the interest rate unchanged
  4. According to ECB chief economist Philip Lane
  5. Aluminum continues to rise with the support of the Guinea coup

 

The Federal Reserve announces a slowdown in the growth of economic activity

US economic growth slowed slightly in July and August to a moderate level,
according to a regional survey published by the Federal Reserve on Wednesday, called “Big Book.”

In recent years, the most powerful sectors of the economy have been manufacturing, transportation,
non-financial services, and residential real estate.

In the meantime, the slowdown in economic activity is largely due to lower consumer demand for food in restaurants,
travel, and tourism in most counties. 

This is due to security issues that arise amidst the increasing spread of the COVID-19 Delta strain, and, in some cases,
due to restrictions on international travel.

The report said that other economic sectors with slower growth or slower activity faced problems related to supply disturbances and labor shortages,
rather than falling demand. 

In particular, the weak auto sales were largely due to lower inventories due to continuing chips shortages,
while the limited activity in home sales was due to lower supply.

Non-auto retail sales in some of the 12 US counties slowed slightly but grew moderately across the country.

On the other hand, the volume of residential and non-residential construction has increased slightly.

 

The Federal Reserve survey, reports on agriculture and energy

According to the Federal Reserve survey, reports on agriculture and energy have been mixed from region to region, but generally positive.

Respondents in most regions remain optimistic about the near future,
although concerns about continued supply chain disruptions and resource constraints remain widespread.

All regions of the country reported an increase in employment rates,
although the rate of job creation in different counties ranges from low to strong. 

The demand for workers continued to rise, with all regions experiencing severe labor shortages,
limiting the improved employment situation and, in many cases, impeding the growth of the business.

In a number of regions, employee return to work schedules has been postponed due to the spread of the Delta strain.

With a persistent and large labor shortage, a number of regions have reported accelerating wage growth,
with most regions featuring strong growth rates.

Inflation continued to rise steadily.

 

Increase in consumer prices

Half of the counties described the rate of increase in consumer prices as high, and the other half as moderate. The lack of resources continued to put upward pressure on prices.

Most counties have seen significant increases in the value of minerals, metal products, freight services,
transportation, and construction materials, with the exception of sawn wood,
which has declined after reaching unusually high levels.

The report said that companies in many regions expect large increases in sales prices in the coming months.

The Beige Book review, formed on the basis of 12 FRB data, is traditionally published two weeks before the Fed meeting.

The information used in this report was collected between August 30 and processed by the Federal Reserve Bank of New York.

The next US central bank leadership meeting is scheduled to take place from September 21 to 22 and will be accompanied
by a press conference of Fed Chairman Jerome Powell, as well as the publication of an updated economic outlook.

 

Analysts expect the ECB to keep the interest rate unchanged

Analysts and economists expect that the European Central Bank (ECB), following its meeting today on Thursday, is likely to leave its key rate unchanged,
but will announce a slight decrease in the pace of asset purchases under the Pandemic Emergency Purchase Program (PEPP).

Deutsche Bank economists say: “Financial conditions are not deteriorating. Inflation projections grow in the short and medium-term.”

In this regard, the decision not to slow the pace of asset purchases under the PEPP, even slightly, would raise questions about the reliability of the ECB.

Measures are in place, and the outlook could undermine the importance of the new price outlook.

“The data is broadly in line with the outlook, except for strong inflation, but the European Central Bank
is giving way to a positive outlook to prepare markets for the inevitable decline in support over the next year,” SocGen economists said.

 

According to ECB chief economist Philip Lane

According to ECB chief economist Philip Lane, a small reduction would be a “modification”
rather than a “complete rollback” of stimulus procedures.

Economists at Berenberg believe that the European Central Bank will reduce the monthly volume of asset purchases from €80 billion to €70 billion or €60 billion.

Such a slight reduction in volume will boost experts’ expectations that the ECB will pursue a soft monetary policy longer than the US Federal Reserve system,
even if it is the first to start rolling back support procedures, according to MarketWatch.

After the results of the July meeting, the ECB, as expected, kept the benchmark loan rate at zero,
the rate on deposits at 0.5%, and the rate on margin loans at 0.25%.

In the meantime, the European Central Bank has set new guidelines for the future direction of monetary policy (future guidelines)
in accordance with the recent audit of the strategy. 

The ECB’s Board of Governors predicts that the key rates will remain at or below current levels
until inflation reaches 2% before the end of the forecast horizon and remains stable at this level until the end of the forecast period.

The experts predicted that the European Central Bank also did not change the volume of the PEPP, remaining at 1.85 trillion euros.

Meanwhile, the regulator said that the purchase of assets under the EPP in the current quarter would continue at a much higher pace than in the early months of this year.

 

Aluminum continues to rise with the support of the Guinea coup

Aluminum prices continue to rise amid risks associated with Guinea’s bauxite supply after the coup in that country,
as well as the decline in aluminum production in China as a result of policies to reduce CO2 emissions.

Aluminum futures for three-month deliveries on the London Metal Exchange (LME) rose by 1.6% on Thursday to $ 2837.5 a ton,
the highest level since June 2008, Bloomberg reported.

Aluminum prices in Shanghai rose by 2.1%, the highest since 2006.

Guinea’s coup over the weekend threatens the country’s supply of bauxite,
the main raw material for aluminum production, from that country.

Guinea’s production accounts for nearly a quarter of the world’s bauxite supply.

Experts still have concerns

Experts still have concerns, despite the fact that the detained army commander, Mamadi Dembuya,
called on mining companies operating in the country to continue operations
and assured them of respecting existing agreements with the government.

The Guinean army announced on September 5 its takeover of power in the country
and the arrest of the country’s president, Alpha Condé.

It was later followed by statements about closing the borders, dissolving the government and parliament, and suspending the constitution.

The price of aluminum has nearly doubled since the beginning of this year,
particularly following measures taken by the Chinese authorities in an effort to reduce carbon dioxide emissions,
including by reducing
energy-intensive aluminum production.

 

The Federal Reserve announces a slowdown in the growth of economic activity
and a prospective meeting of the European Central Bank (ECB) today

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