Minutes of the July Federal Reserve monetary policy committee meeting, released on Wednesday, show that officials refrained from cutting interest rates, while inching closer to the much-anticipated interest rate cut in September. The July meeting took place before the weak July jobs report, according to data which pointed to abating inflation and a softening but robust economy.
The minutes show that the “vast majority” of officials thought that “if the data continued to come in about as expected, it would likely be appropriate to ease policy at the next meeting”.
Meanwhile, the UK government’s borrowing requirement exceeded the official estimate in July, owing to increased public spending, data released on Wednesday by the Office for National Statistics (ONS) showed.
Public borrowing, the difference between government spending and tax collections, hit three billion British pounds in July, the highest level for that month since 2021. The increase was £1.1 billion British higher than what most economists had predicted.
The ONS also revealed the UK’s national debt remained at its highest level since the early 1960s. Despite resilient economic growth in recent weeks Chancellor of the Exchequer Rachel Reeves is widely expected to raise some taxes in her first budget in October.
Finally, in Germany, producer prices continued to decrease in June on lower energy costs, albeit the rate of decline in prices paid by factories and businesses decelerated.
The year-on-year producer price index (PPI) report for June came in at -1.6%, according to the Federal Statistical Office. This was in line with economists’ predictions, as well as the 12th consecutive month of falling prices. However, it was still higher than the -2.2% print in May.
June’s fall in prices was mainly caused by energy prices, which fell by 5.9%, with electricity prices dropping by 11% and natural gas prices plummeting 14.8 per cent.
The article does not constitute legal and/or financial advice and is being issued for information purposes only by Bank of Valletta plc, 58, Zachary Street, Valletta. Bank of Valletta is a public limited company regulated by the MFSA and is licensed to carry out the business of banking and investment services in terms of the Banking Act (Cap. 371 of the Laws of Malta) and the Investment Services Act (Cap. 370 of the Laws of Malta).