In his twice-yearly report on the US economy to the Senate, Federal Reserve (Fed) chair Jerome Powell noted that inflation had improved considerably since reaching a four-decade-high two years ago. However, Fed policymakers still want to see more progress before cutting interest rates, though they are also carefully monitoring the jobs market.

Powell left the Fed’s options open as to when the central bank will cut interest rates. Financial markets are currently predicting the first rate cut in September. Powell thinks ultralow interest rates are a thing of the past.

“I think we probably won’t go back to that era between the global financial crisis and the pandemic, when rates were very low and inflation was very low,” Powell said.

Meanwhile, confidence among eurozone investors darkened significantly in July, the latest investor survey by behavioural research institute Sentix showed on Monday. The confidence index declined from 0.3 in June to -7.3 in July, ending eight consecutive months of improvements. The expectations index fell from June’s 10.0 to 1.5 in July.

The index on the current situation also decreased to -32.3 in July from -26.3 in June. Investors are worried about the forthcoming state elections in Germany, the French elections, and the US presidential election later this year, the survey found.

Finally, the British economy grew at a faster pace than expected in May as more shoppers returned to the high streets and construction work rebounded, official data by the Office for National Statistics (ONS) showed last week. GDP rose 0.4 per cent in May compared to the prior month, after the flat reading in April. That compares with the 0.2 per cent uptick economists had expected, on the heels of the fastest expansion in construction in almost a year.

Growth was widespread across the major sectors of the economy. Retailers had a good month, rebounding from a weak April, while strength in housebuilding and infrastructure underpinned construction growth with the fastest pace in almost a year. Manufacturing also grew, led by the food and drink industry.

This 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).