In today’s briefing:
- Central Bank of Russia Hiked Key Rate to 19% as Inflation Continues to Soar
- OPEC and EIA Cut Oil Demand Forecasts; EIA Projects Nat-Gas Rise in 2025 on Strong LNG Exports
- FOMC: 25bps Or 50bps?
Central Bank of Russia Hiked Key Rate to 19% as Inflation Continues to Soar
- Central Bank of Russia (CBR) announced that it increased its policy rate by 100 bps to 19% to tame the stubborn price pressures stemming from high military spending.
- CBR said in a press release that the current inflationary pressures remain high, and annual inflation is likely to exceed the July forecast range of 6.5–7.0% by end-2024.
- The regulator emphasized that growth in domestic demand is still significantly outstripping the capabilities to expand the supply of goods and services.
OPEC and EIA Cut Oil Demand Forecasts; EIA Projects Nat-Gas Rise in 2025 on Strong LNG Exports
- OPEC cuts demand growth estimates for the second straight month, lowering its 2024 and 2025 forecasts by 3.8% and 2.2%, respectively, citing demand weakness in China.
- Total production of OPEC members obliged to implement supply cuts averaged 21.48m bpd in August, exceeding the target by 1.6%.
- EIA lowered its 2024 and 2025 oil price forecasts due to slower demand growth. However, it expects a quick recovery in prices driven by declining inventories.
FOMC: 25bps Or 50bps?
- Looking at press reports that the September FOMC call is a close one between 25bps and 50bps does not persuade us to change our call from 25bps.
- The slightly disappointing August CPI does not exclude a 50bps move, and that whichever option the Fed does choose for September, markets should not assume a string similar moves.
- Economists are still looking for a more moderate 0.2% increase in August core PCE prices, with a number slightly softer before rounding possible.
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