Inflation in the eurozone slowed for the first time in one-and-a-half years, offering a glimmer of hope to the European Central Bank (ECB) in its efforts to combat the worst consumer-price shock in a generation.
Initial data published on Wednesday by Europe’s statistics office Eurostat showed headline inflation running at an annual rate of 10 per cent in November, representing a 0.6 percentage point drop from October.
The energy and food component continued to contribute to the sky-high inflation figures, but with a noticeable drop in the former. Energy is expected to have stood at an annual rate of 34.9 per cent in November, compared with 41.5 per cent in October, according to Eurostat.
However, ECB president Christine Lagarde warned on Monday that inflation in the eurozone has not peaked and risks rising even higher than predicted.
In the meantime, US Federal Reserve chair Jerome Powell confirmed on Wednesday that smaller interest rate hikes are likely in the months ahead, even as he sees progress in the fight against inflation as largely insufficient.
“It makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down,” Powell said in a speech in Washington. “The time for moderating the pace of rate increases may come as soon as the December meeting.”
Investors have been closely watching for any signal by the Fed that it is about to slow or even pause its stringent schedule of rate hikes and somewhat release the brakes the central bank has applied to cool the economy.
Finally, in the UK, the number of mortgages approved by lenders fell in October to the lowest since June 2020, soon after the onset of the COVID-19 pandemic.
Bank of England (BOE) data made public on Tuesday indicate that a sharp downturn in the UK’s housing market is under way. Lending approvals for house purchases, an indicator of future borrowing, declined more than expected to 58,977 in October from 65,967 in September, the data showed. Economists had predicted 60,200.
The figures cover the period immediately after the September 23 mini budget that sent the markets into turmoil and forced the BOE to intervene in order to stabilise the market.
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).