LONDON — The&nbsp;<a href="https://www.cnbc.com/bank-of-england/">Bank of England</a>&nbsp;on Thursday hiked interest rates by 50 basis points, its largest single increase since 1995, and projected the U.K.’s longest recession since the global financial crisis.



The sixth consecutive increase takes borrowing costs to 1.75% and marks the first half-point hike since the bank was made independent from the British government in 1997.



The Monetary Policy Committee voted by a majority of 8-1 in favor of the historic half-point rise, and cited climbing inflationary pressures in the U.K. and the rest of Europe since its previous meeting in May.



“That largely reflects a near doubling in wholesale gas prices since May, owing to Russia’s restriction of gas supplies to Europe and the risk of further curbs,” the MPC said in its accompanying statement.



“As this feeds through to retail energy prices, it will exacerbate the fall in real incomes for UK households and further increase UK CPI inflation in the near term.”



Britain’s energy regulator, Ofgem, increased the energy price cap by 54% from April to accommodate soaring global costs, but is expected to rise by a greater degree in October, with annual household energy bills&nbsp;<a href="https://www.cornwall-insight.com/press/price-cap-to-remain-significantly-above-3000-a-year-until-at-least-2024/" target="_blank" rel="noreferrer noopener">predicted</a>&nbsp;to surpass £3,600 ($4,396).



The bank now expects headline inflation to peak at 13.3% in October and to remain at elevated levels throughout much of 2023, before falling to its 2% target in 2025.



The MPC noted that the labor market remains tight, with domestic cost and price pressures elevated, adding that there is a risk that a “longer period of externally generated price inflation will lead to more enduring domestic price and wage pressures.”



“The labour market has remained tight, with the unemployment rate at 3.8% in the three months to May and vacancies at historically high levels,” the MPC said. “As a result, and consistent with the latest Agents’ survey, underlying nominal wage growth is expected to be higher than in the May Report over the first half of the forecast period.”



<a href="https://www.cnbc.com/quotes/GBP=">Sterling</a>&nbsp;was down over 0.5% against the dollar following the bank’s announcement, trading at around $1.209, while the&nbsp;<a href="https://www.cnbc.com/quotes/.FTSE">FTSE 100</a>&nbsp;index climbed 0.5%.



<h3 class="wp-block-heading" id="h-cost-of-living-crisis">Cost-of-living crisis</h3>



In a news conference following the announcement, Bank of England Governor Andrew Bailey said the shock of&nbsp;<a href="https://www.cnbc.com/2022/08/04/russia-ukraine-live-updates.html">Russia’s war in Ukraine</a>&nbsp;is now the largest contributor to U.K. inflation “by some way.”



“There is an economic cost to the war, but I have to be clear, it will not deflect us from setting monetary policy to bring inflation back to the 2% target,” he added.



Markets had broadly priced in the more aggressive approach at the August meeting, after&nbsp;<a href="https://www.cnbc.com/2022/07/20/uk-inflation-hits-new-40-year-high-of-9point4percent-as-cost-of-living-crisis-deepens.html">U.K. inflation hit a new 40-year high of 9.4% in June</a>&nbsp;as food and energy prices continued to surge, deepening the country’s historic cost-of-living crisis.



Bailey vowed last month that there would be “no ifs or buts” in the central bank’s commitment to returning inflation toward its 2% target.



Analysts had been keen to assess the bank&#8217;s language, particularly its previous commitment to act &#8220;forcefully&#8221; on inflation, and the MPC retained that language in Thursday&#8217;s report.



&#8220;I recognize the significant impact this will have, and how difficult the cost-of-living challenge will continue to be for many people in the United Kingdom,&#8221; Bailey said.



&#8220;Inflation hits the least well-off hardest, but if we don&#8217;t act to prevent inflation becoming persistent, the consequences later will be worse, and that will require larger increases in interest rates.&#8221;



The bank said that it intends to start active government bond sales worth approximately £10 billion ($12.1 billion) per quarter from September, subject to a final green light from policymakers.



<h2 class="wp-block-heading"><a></a>Recession incoming</h2>



The bank issued a dire outlook for economic growth, suggesting that the latest gas price rise has led to another &#8220;significant deterioration&#8221; in the outlook for activity in the U.K. and the rest of Europe.



The MPC now projects that the U.K. will enter recession from the fourth quarter of 2022, and that the recession will last five quarters as real household post-tax income falls sharply in 2022 and 2023 and consumption begins to contract.



&#8220;Growth thereafter is very weak by historic standards. The contraction in output and weak growth outlook beyond that predominantly reflect the significant adverse impact of the sharp rises in global energy and tradable goods prices on U.K. household real incomes,&#8221; the MPC said in its monetary policy report.



The forecast warns of a peak-to-trough fall in output of 2.1%, with the economy beginning to shrink in the fourth quarter of 2022 and contracting throughout 2023.



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/08/107056415-1651740731891-gettyimages-1240456389-UK_BOE.jpeg" alt="" class="wp-image-418998" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/08/107056415-1651740731891-gettyimages-1240456389-UK_BOE.jpeg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/107056415-1651740731891-gettyimages-1240456389-UK_BOE-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/107056415-1651740731891-gettyimages-1240456389-UK_BOE-160x90.jpeg 160w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>BOE Governor Andrew Bailey has warned the Bank is walking a “narrow path” between growth and inflation. Bloomberg | Bloomberg | Getty Images</figcaption></figure>



Luke Bartholomew, senior economist at Abrdn, said the bank&#8217;s forecasts make clear just how difficult the U.K.&#8217;s economic picture is compared with other major countries.



&#8220;The Bank is simultaneously forecasting a long recession starting later this year and an even higher peak in inflation. This is a toxic economic combination, which would be difficult for the central bank to navigate at the best of times, let alone when it is increasingly being dragged into the political spotlight,&#8221; he said.



Liz Truss, the favorite to win the Conservative Party leadership contest and succeed Boris Johnson as prime minister, is reportedly considering a review of the Bank of England&#8217;s inflation mandate and the extent of its independence from the central government.



&#8220;With inflation now expected to stick around for longer, it is hard to see how the Bank can pivot towards supporting the economy any time sooner. As such, investors should expect further interest rate increases from here even as markets and the economy struggle,&#8221; Bartholomew added.

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Bank of England launches biggest interest rate hike in 27 years, predicts lengthy recession

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="554" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/08/DWZGTMGIKJI6PEJDJRYIQMRDYU-820x554.jpg" alt="" class="wp-image-418882" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/08/DWZGTMGIKJI6PEJDJRYIQMRDYU-820x554.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/DWZGTMGIKJI6PEJDJRYIQMRDYU-300x203.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/DWZGTMGIKJI6PEJDJRYIQMRDYU-133x90.jpg 133w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/DWZGTMGIKJI6PEJDJRYIQMRDYU-768x518.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/DWZGTMGIKJI6PEJDJRYIQMRDYU.jpg 960w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>Visitors to the Yamana Gold mining company booth speak with representatives during the Prospectors and Developers Association of Canada (PDAC) annual convention in Toronto, Ontario, Canada March 4, 2019. REUTERS/Chris Helgren</figcaption></figure>



KALGOORLIE, Australia, Aug 2 (Reuters)&nbsp;&#8211;&nbsp;Gold Fields&nbsp;GFIJ.J&nbsp;Chief Executive Chris Griffith said on Tuesday that convincing the company&#8217;s shareholders to back its takeover offer for Canada&#8217;s Yamana Gold&nbsp;YRI.TO&nbsp;was still a &#8220;work in progress&#8221;.



The South Africa listed miner, with assets in Australia, Africa and South America, announced plans in May to acquire Yamana in an all-share deal valuing the Canada-listed miner at $6.7 billion on May 31.



But shares of Gold Fields plunged after news of the proposed takeover. Last month the miner promised higher dividends and a Toronto Stock Exchange (TSX) listing to sweeten its takeover offer.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL1N2YS0CB&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



The market has started to understand the strategy and the timing of the deal, but is still miffed with the premium the company offered to pay, Griffith told reporters at a mining conference in Kalgoorlie, Australia.



&#8220;We are trying to get them to see the massive upside that exists in this deal. So work in progress is probably the best way to describe it,&#8221; he said when asked if investors and shareholders were on board with the deal.



Gold Fields shareholders will vote on the deal in the second week of October.



Griffith said the company has held a couple of road shows in recent weeks to &#8220;educate&#8221; shareholders.



Redwheel, one of the 10 biggest investors in Gold Fields, publicly told the miner to cancel the takeover, which it described as an expensive error with no guarantee of growth and profitability.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL8N2XX3FQ&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



Gold Fields&#8217; shares tumbled 25% in the first few days after the details of the deal and the premium it was paying emerged. But the shares have made a comeback since, Griffith said.



When asked if the deal terms would be changed if there&#8217;s pushback from shareholders, Griffith said: &#8220;The deal structure has been locked in. We don&#8217;t foresee that we will change the deal structure. But I do say that never say never.&#8221;



(Reporting by Praveen Menon; Editing by Muralikumar Anantharaman)

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Gold Fields CEO: Shareholder buy-in for Yamana takeover is still ‘work in progress’

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="517" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/02/GNZ4EKIZHBJMHAHGTKTLUHIQ54-820x517.jpg" alt="" class="wp-image-415106" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/02/GNZ4EKIZHBJMHAHGTKTLUHIQ54-820x517.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/02/GNZ4EKIZHBJMHAHGTKTLUHIQ54-300x189.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/02/GNZ4EKIZHBJMHAHGTKTLUHIQ54-143x90.jpg 143w, https://cms.cnbcafrica.com/wp-content/uploads/2022/02/GNZ4EKIZHBJMHAHGTKTLUHIQ54-768x484.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/02/GNZ4EKIZHBJMHAHGTKTLUHIQ54.jpg 1200w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>A 3D-printed oil pump jack is seen in front of displayed OPEC logo in this illustration picture, April 14, 2020. REUTERS/Dado Ruvic/File Photo</figcaption></figure>



July 31 (Reuters)&nbsp;&#8211;&nbsp;OPEC&#8217;s new secretary general said that Russia&#8217;s membership in OPEC+ is vital for the success of the agreement, Kuwait&#8217;s Alrai newspaper reported on Sunday, quoting an exclusive interview with Haitham al-Ghais.



He said OPEC is not in competition with Russia, calling it &#8220;a big, main and highly influential player in the world energy map&#8221;, Alrai reported.



OPEC+ is an alliance of the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia.



Al-Ghais, Kuwait&#8217;s former OPEC governor, will head his first OPEC+ meeting on Aug. 3, in which the group will consider keeping oil output unchanged for September, despite calls from the United States for more supply.



Although, a modest output increase is also likely to be discussed, eight sources told Reuters last week.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL8N2Z94QT&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



AL-Ghais told Alrai that &#8220;OPEC doesn&#8217;t control oil prices, but it practices what is called tuning the markets in terms of supply and demand,&#8221; describing the current state of the oil market as &#8220;very volatile and turbulent.&#8221;



He added of the recent hikes in oil prices: &#8220;As for me, I still stress that the recent rise in oil prices is not only related to the developments between Russia and Ukraine.



&#8220;All the data confirm that prices began to rise gradually and cumulatively, and before the outbreak of the Russian-Ukrainian developments, due to the prevailing perception in the markets that there is a shortage of spare production capacity, which has become confined to a few and limited countries,&#8221; al-Ghais said.



Oil&nbsp;LCOc1&nbsp;has soared in 2022 to its highest since 2008, climbing above $139 a barrel in March, after the United States and Europe imposed sanctions on Russia over its invasion of Ukraine. Prices have since eased to around $108, as soaring inflation and higher interest rates raise fears of a recession that would erode demand.



Replying to a question about the factors that will affect oil prices by the end of the year, al-Ghais said: &#8220;In my view, the most important factor will be the continued lack of investments in the field of drilling, exploration and production.&#8221;



&#8220;This will push prices in an upward direction, but we cannot determine the level they will reach.&#8221;



(Reporting by Moataz Mohamed and Nayera Abdallah; editing by Philippa Fletcher and Sandra Maler)

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OPEC secretary general says Russia’s membership in OPEC+ is vital for success of agreement

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107058125-16521097772022-05-09t151547z_832530222_rc2k3u9582mq_rtrmadp_0_ukraine-crisis-austria-gas.jpeg" alt="" class="wp-image-418752" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107058125-16521097772022-05-09t151547z_832530222_rc2k3u9582mq_rtrmadp_0_ukraine-crisis-austria-gas.jpeg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107058125-16521097772022-05-09t151547z_832530222_rc2k3u9582mq_rtrmadp_0_ukraine-crisis-austria-gas-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107058125-16521097772022-05-09t151547z_832530222_rc2k3u9582mq_rtrmadp_0_ukraine-crisis-austria-gas-160x90.jpeg 160w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>Europe has previously received around 45% of its annual gas supplies from Russia. Leonhard Foeger | Reuters</figcaption></figure>



Europe’s descent into an economic contraction looks to have been confirmed with Russia squeezing natural gas supplies to the bloc and heavy industry facing tough rationing in the coming months.



Just days after Europeans breathed a sigh of relief as Russian gas giant Gazprom announced that it would resume supplies through the Nord Stream 1 pipeline, it then announced Monday that flows would be reduced yet again.



The announcement, with Gazprom saying it would be for maintenance of a turbine along the pipeline, was greeted with incredulity and condemnation in Europe.



Ukraine’s President Volodymyr Zelenskyy said the move — which will see flows to Germany fall to 20% of its capacity from an already low level of 40% — was tantamount to a “gas war” with Europe. Germany’s Economy Minister Robert Habeck said the excuse that maintenance was the reason for the supply cut was a “farce.”



It puts Europe in a tricky situation as it contends with rampant inflation, the war in Ukraine and an already troubled supply chain following the Covid-19 pandemic.



Germany, the region’s largest economy and traditional growth driver, has a particular reason to worry. It’s largely reliant on Russian gas and is sliding toward a recession. The government is particularly worried about how it will keep the lights on over winter: Habeck said Monday evening that “we have a serious situation. It is time for everyone to understand that,” during an interview with broadcaster ARD.



He also said that Germany must reduce its gas consumption, noting “we’re working on that.” He said that in a scenario of low supplies, gas for industries will be reduced before private residences or critical infrastructure such as hospitals.



“Of course it’s a big concern, which I also share, that this can happen. Then certain production chains in Germany or Europe would simply no longer be manufactured. We have to avoid that with all the strength we have,”&nbsp;he said.&nbsp;



<h2 class="wp-block-heading" id="h-reliance-on-russia"><a></a>Reliance on Russia</h2>



With Russia under a raft of international sanctions in response to its war on Ukraine, gas is one weapon it can use against Europe.&nbsp;



The region has previously received around 45% of its annual supplies from Russia and while it desperately tries to seek alternatives, such as U.S. liquefied natural gas, it cannot replace its Russian hydrocarbons fast enough.



Unless the situation dramatically changes, analysts are predicting a difficult winter ahead for the continent.



“High energy costs are pushing Western Europe toward recession,” S&amp;P Global Market Intelligence said in a report Sunday. 



“Our July forecast already incorporates mild second-quarter contractions in real GDP in the UK, Italy, Spain, and the Netherlands. With inflation surprising on the upside, the central banks are stepping up the pace of monetary policy tightening. While a rebound in tourism and consumer services might give the region a slight lift in the summer quarter, another setback is likely in the fourth quarter given unreliable energy supplies,” it added.



<h2 class="wp-block-heading"><a></a>‘Clear-cut’ recession</h2>



Exceptionally high natural gas and electricity prices will damage industrial competitiveness in Germany and other manufacturing centers. S&amp;P warned the destructive Russia-Ukraine war will likely drag on through 2022, deflating consumer and business confidence across Europe.&nbsp;



It noted that euro zone real GDP growth is projected to slow from 5.4% in 2021 to 2.5% in 2022 and 1.2% in 2023, before improving to 2.0% in 2024.



EU governments agreed Tuesday to ration natural gas in the coming winter in a bid to insulate themselves from further supply cuts by Russia with the bloc’s energy ministers approving a draft European law aimed at lowering demand for gas by 15% through the fall and into next spring.



Whether the gas savings can be achieved remains to be seen and there has been dissent among EU members about the rationing of gas use.&nbsp;



“Cutting consumption can only do so much. Fundamentally, there is huge demand for natural gas and especially liquid natural gas (LNG) in Europe. Rationing, which will especially impact energy intensive industries like car makers, chemical companies and cryptocurrency mining, can’t be ruled out,” Simon Tucker, global head of energy, utilities and resources at Infosys Consulting, said in emailed comments Tuesday.



“EU countries and the UK must do all they can to replenish gas stores before the cold kicks in – this means looking at every way possible to reduce energy use and improve supply. We’re already seeing a large increase in shipments of LNG from the Middle East and North America. But countries need to accelerate the modernisation of their own infrastructure. Mass deployment of low-carbon, domestic energy alternatives like mini nuclear reactors and community renewables is not just a ‘nice to have’, it’s an imperative if we are to come out of this crisis stronger.”



With such a program of infrastructure modernization likely to take time, Europe is likely to feel more economic pain in the near term.



The possibility of a recession in Europe now seems “clear-cut,” Citi economists and strategists said in a note Tuesday, with Russia’s decision to cut gas flows again likely to have “the consequence of pushing Europe into a deeper recession.”



“As plans for energy rationing for winter get agreed upon, we expect that tighter financial conditions in Europe will induce a much worse reaction in the real economy, given the stance in savings, household leverage and corporate balance sheets. Winter is knocking on Europe’s door,” Citi concluded.



There is, of course, the chance that Russia could again turn up the taps on its gas flows to Europe once the supposed maintenance of this turbine on the Nord Stream 1 pipeline is completed.



“It’s a bit confusing as to whether this will be a short restriction of supply while the repaired turbine makes its way back online or whether the paperwork will never quite be resolved, and we live with only 20% supplies for a considerable time,” Deutsche Bank analysts led by Jim Reid said in a note Tuesday, adding that Russia was likely looking for clearer guarantees on future sanctions exemptions for maintenance of NS1 and related issues.&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;&nbsp;



“This will likely be hard to achieve and the Russians will know this.&nbsp;So it appears like Russian politics will be in control here for now,” they said.



The strategists believed that with the pipeline flowing at 40% capacity Germany could make it through the winter even if some light rationing was needed. “At 20% you would likely need some notable rationing unless they cut gas exports which would be a very delicate thing to do politically,” they said.&nbsp;&nbsp; &nbsp;&nbsp;



In the meantime,&nbsp;the potentially enforced 15% reduction that all EU member states have just agreed upon could be hard to enforce in reality. “Expect lots of carve-outs and compromises to appear if a plan that can progress is agreed,” they said.

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Putin’s new gas squeeze condemns Europe to recession and a hard winter of rationing

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2021/08/GettyImages-1233035258-820x547.jpg" alt="" class="wp-image-411043" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2021/08/GettyImages-1233035258-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2021/08/GettyImages-1233035258-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2021/08/GettyImages-1233035258-120x80.jpg 120w, https://cms.cnbcafrica.com/wp-content/uploads/2021/08/GettyImages-1233035258-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2021/08/GettyImages-1233035258-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2021/08/GettyImages-1233035258-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>UKRAINE &#8211; 2021/05/21: In this photo illustration the International Monetary Fund (IMF) logo is seen on a smartphone screen. (Photo Illustration by Pavlo Gonchar/SOPA Images/LightRocket via Getty Images)</figcaption></figure>



WASHINGTON, July 26 (Reuters)&nbsp;&#8211;&nbsp;A&nbsp;new issue of International Monetary Fund Special Drawing Rights reserves is among options that could be considered to aid countries struggling with spillovers from the Ukraine war but there are no active discussions on the matter, IMF officials said on Tuesday.



&#8220;There has been no discussion at the IMF of a further SDR allocation,&#8221; an IMF spokesperson said in an emailed statement. &#8220;Despite recent developments and high global uncertainty, it would be premature to conclude that the long-term global need for reserves has changed significantly.&#8221;



The statement was issued after IMF chief economist Pierre-Olivier Gourinchas told a news conference that a new SDR allocation was&nbsp;&#8220;part of a menu of options that the fund is exploring currently&#8221;&nbsp;to aid countries dealing with crises prompted by high food and energy costs.



The IMF in August 2021 created and issued $650 billion in SDR assets to member countries to aid their recovery from the COVID-19 pandemic, and the spokesperson said most still hold these assets as reserves.



More than 45 progressive U.S. lawmakers led by Senator Elizabeth Warren and Representative Pramila Jayapal, both Democrats, earlier this month urged President Joe Biden and U.S. Treasury Secretary Janet Yellen <a href="https://progressives.house.gov/_cache/files/f/3/f3aa15fe-cca2-40da-a68b-937e3d8646f9/15748EFE144F03BA67ADE35DF1A98155.7-12-22-jayapal-warren-sdr-issuance-letter.pdf" target="_blank" rel="noreferrer noopener">to support</a> a new SDR allocation of at least $650 million to avoid famine and a destabilizing debt crisis in developing countries.



<h3 class="wp-block-heading" id="h-read-more-imf-s-board-to-review-kenya-s-performance-in-mid-july-239-mln-at-stake">Read more: <a href="https://www.cnbcafrica.com/2022/imfs-board-to-review-kenyas-performance-in-mid-july-239-mln-at-stake/">IMF’s board to review Kenya’s performance in mid-July, $239 mln at stake</a></h3>



The SDR issue of that size last year did not require legislative approval in the United States, the IMF&#8217;s controlling shareholder.



Gourinchas said an SDR allocation is &#8220;not a panacea&#8221; for difficulties facing developing countries and there are limitations on how it could help countries.



Another complicating factor is that Russia, as an IMF member, would receive an allocation, which would draw some political opposition given its invasion of Ukraine.



The IMF spokesperson said the Fund is currently focusing on channeling SDRs from wealthier members to those in need of additional reserve assets.



This includes scaling up lending of the reserves through the existing Poverty Reduction and Growth Trust and establishing the new Resilience and Sustainability Trust to include vulnerable middle income countries. The IMF hopes to begin lending from the new trust in October.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL1N2YV1GQ&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



(Reporting by David Lawder; Editing by Mark Porter and Marguerita Choy)

In this photo illustration the International Monetary Fund (

IMF says not holding active discussions on potential new SDR issue

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107088192-1657728004585-GettyImages-1197381795-820x461.jpg" alt="" class="wp-image-418745" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107088192-1657728004585-GettyImages-1197381795-820x461.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107088192-1657728004585-GettyImages-1197381795-300x169.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107088192-1657728004585-GettyImages-1197381795-160x90.jpg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107088192-1657728004585-GettyImages-1197381795-768x432.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107088192-1657728004585-GettyImages-1197381795-1536x864.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107088192-1657728004585-GettyImages-1197381795.jpg 1600w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>Image: via CNBC</figcaption></figure>



U.S. Treasury yields pushed higher on Wednesday as investors geared up for a key policy decision from the Federal Reserve.



The yield on the benchmark 10-year Treasury note rose 1 basis point to 2.8068% by 1:30 a.m. ET, while the yield on the 30-year Treasury bond moved 2 basis points higher to 3.0284%. Yields move inversely to prices and a basis point is equal to 0.01%.



Much of this week’s focus will center on the U.S. Federal Reserve’s two-day policy meeting, which began on Tuesday. Economists are broadly expecting a 75 basis point hike to interest rates.



The Fed is attempting to curb inflation while navigating a backdrop of slowing growth, as evidenced by weaker-than-expected data last week on business activity and jobs.



In earnings news Wednesday, Boeing&nbsp;and Shopify are expected to release their quarterly results before the bell, while&nbsp;Qualcomm,&nbsp;Ford&nbsp;and&nbsp;Meta Platforms&nbsp;will report at the end of the day.



On the economic front, durable goods figures for June are out at 8:30 a.m. ET, while pending home sales for the same month are out at 10 a.m. ET.



— CNBC’s Holly Ellyatt and Tanaya Macheel contributed to this report.

107088192-1657728004585-GettyImages-1197381795

U.S. Treasury yields edge higher ahead of key Fed decision

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107081177-16563461242022-06-27t160407z_1933862849_rc2e0v9ukpi3_rtrmadp_0_usa-stocks.jpeg" alt="" class="wp-image-418705" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107081177-16563461242022-06-27t160407z_1933862849_rc2e0v9ukpi3_rtrmadp_0_usa-stocks.jpeg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107081177-16563461242022-06-27t160407z_1933862849_rc2e0v9ukpi3_rtrmadp_0_usa-stocks-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107081177-16563461242022-06-27t160407z_1933862849_rc2e0v9ukpi3_rtrmadp_0_usa-stocks-160x90.jpeg 160w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>A trader works on the floor of the New York Stock Exchange (NYSE), June 27, 2022. Brendan McDermid | Reuters</figcaption></figure>



There’s a head-spinning amount of news for markets to navigate in the week ahead, the biggest of which will be the Federal Reserve’s midweek meeting.



The two largest U.S. companies —&nbsp;Microsoft&nbsp;and&nbsp;Apple&nbsp;— report Tuesday and Thursday, respectively. Google parent&nbsp;Alphabet&nbsp;releases results Tuesday, and Amazon reports Thursday.&nbsp;Meta Platforms, formerly Facebook, reports Wednesday. In all, more than a third of the S&amp;P 500 companies are reporting.



On top of that are several hefty economic reports, which should add fuel to the debate on whether the economy is heading toward, or is already in, a recession.



“Next week, I think, is going to be the most important week of the summer between the economic reports coming out, with respect to GDP, the employment cost index and the Fed meeting — and the 175 S&amp;P 500 companies reporting earnings,” said Leo Grohowski, chief investment officer at BNY Mellon Wealth Management.



Second-quarter gross domestic product is expected Thursday. The Fed’s preferred personal consumption expenditures inflation data comes out Friday morning, as does the employment cost index. Home prices and new home sales are reported Tuesday and consumer sentiment is released Friday.



“I think what those bigger companies say about the outlook will be more important than the earnings they post. &#8230; When you combine that with the statistical reports, which will be backward looking, I think it’s going to be a volatile and important week,” Grohowski said.



The run-up to the Fed’s meeting on Tuesday and Wednesday has already proven to be dramatic, with traders at one point convinced&nbsp;a full point rate hike was coming. But Fed officials pushed back on that view, and economists widely expect a second three-quarter point hike to follow the one last month.



“Obviously a 75 basis point hike is baked in the cake for next week,” said Grohowski. “I think the question is what happens in September. If the Fed is continuing to stay too tight for too long, we will need to increase our probability of recession, which currently stands at 60% over the next 12 months.” A basis point equals 0.01%.



The Fed’s rate hiking is the most aggressive in decades, and the July meeting comes as investors are trying to determine whether the central bank’s tighter policies have already or will trigger a recession. That makes the economic reports in the week ahead all the more important.



<h2 class="wp-block-heading" id="h-gdp-report"><a></a>GDP report</h2>



Topping the list is that second-quarter GDP, expected to be negative by many forecasters. A contraction would be the second in a row on top of the 1.6% decline in the first quarter. Two negative quarters in a row, when confirming declines in other data, is viewed as the sign of a recession.



The widely watched&nbsp;Atlanta Fed GDP Now&nbsp;was tracking at a decline of 1.6% for the second quarter. According to Dow Jones, a consensus forecast of economists expects a 0.3% increase.



“Who knows? We could get a back-of-the-envelope recession with the next GDP report. There’s a 50/50 chance the GDP report is negative,” Grohowski said. “It’s the simple definition of two down quarters in a row.” He added, however, that would not mean an official recession would be declared by the National Bureau of Economic Research, which&nbsp;considers a number of factors.



Diane Swonk, chief economist at KPMG, expects to see a decline of 1.9%, but added it is not yet a recession because unemployment would need to rise as well, by as much as a half percent.



“That’s two negative quarters in a row, and a lot of people are going to say ‘recession, recession, recession,’ but it’s not a recession yet,” she said. “The consumer slowed quite a bit during the quarter. Trade remains a huge problem and inventories were drained instead of built. What’s interesting is those inventories were drained without a lot of discounting. My suspicion is inventories were ordered at even higher prices.”



Stocks in the past week were higher. The&nbsp;S&amp;P 500&nbsp;ended the week with a 2.6% gain, and the&nbsp;Nasdaq&nbsp;was up 3.3% as earnings bolstered sentiment.



“We’re really shifting gears in terms of what’s going to be important next week versus this week,” said Art Hogan, chief market strategist at National Securities. “We really had an economic data that was largely ignored. Next week, it will probably equal the attention we pay to the household names that are reporting.”



<h2 class="wp-block-heading"><a></a>Better-than-expected earnings?</h2>



Companies continued to surprise on the upside in the past week, with 75.5% of the S&amp;P 500 earnings better than expected, according to I/B/E/S data from Refinitiv. Even more impressive is that the growth rate of earnings for the second quarter continued to grow.



As of Friday morning, S&amp;P 500 earnings were expected to grow by 6.2%, based on actual reports and estimates, up from 5.6% a week earlier.



“We have kind of a perfect storm of inputs, pretty deep economic reports across the board, with things that have become important, like consumer confidence and new home sales,” said Hogan “For me, the real tell will be whether the attitude of investors continues to be that the earnings season is better than feared.”



While stocks gained in the past week, bond yields continued to slide, as traders worried about the potential for recession. The benchmark&nbsp;10-year Treasury yield&nbsp;fell to 2.76% Friday, after weaker PMIs in Europe and the U.S. sent a chilling warning on the economy. Yields move opposite price.



“I do think the market is pivoting,” said Grohowski. “I do think our concerns at least are quickly shifting from persistent inflation to concerns over recession.”



The potential for volatility is high, with markets focused on the Fed, earnings and recession worries. Fed Chair Jerome Powell could also create some waves, if he is more hawkish than expected.



“There are a lot of signs out there about slowing economic growth that will bring down inflation. Hopefully, the Fed doesn’t stay too tight for too long,” said Grohowski. “The chance of a policy error by the Fed continues to increase because we continue to get signs of a rapidly cooling — not just cooling — economy.”

107081177-16563461242022-06-27t160407z_1933862849_rc2e0v9ukpi3_rtrmadp_0_usa-stocks

Markets face what could be the most important week of summer with Fed, earnings and economic data

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/GettyImages-1233279123-820x547.jpg" alt="" class="wp-image-418652" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/GettyImages-1233279123-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/GettyImages-1233279123-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/GettyImages-1233279123-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/GettyImages-1233279123-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/GettyImages-1233279123-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/GettyImages-1233279123-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>UKRAINE &#8211; 2021/06/04: In this photo illustration, Universal Music Group (UMG) logo is seen on a smartphone and pc screen. (Photo Illustration by Pavlo Gonchar/SOPA Images/LightRocket via Getty Images)</figcaption></figure>



ABIDJAN, Ivory Coast, July 22 (Reuters)&nbsp;&#8211;&nbsp;Global media and music brands are racing to claim a stake in Africa&#8217;s music market&nbsp;as&nbsp;internet and smartphone penetration&nbsp;popularize artists and genres far beyond Africa&#8217;s borders.



Companies are taking note of global interest, with&nbsp;Universal Music Group&nbsp;UMG.ASlaunching Virgin Music Africa Label &amp; Artist Servicesin June for&nbsp;independent African labels and artists.&nbsp;The service will digitise&nbsp;out-of-print music catalogues to tap into the growing market for the sounds and chart-toppers of the continent.



Music streaming platforms including Spotify&nbsp;SPOT.N, Apple Music and Boomplay are also&nbsp;entering&nbsp;the market with dedicated and expanded offerings and services.



The interest from global companies is coming as African artists headline festivals and concerts such as, Afro Nation in Portugal and Africolor in France and genres including Afrobeat, Rhumba and Amapiano are topping charts.



Franck-Alcide Kacou, managing director of Universal Music Africa and the&nbsp;new Virgin Music Africa Label, said it has over 15,000 music titles, 50 partner labels and around 100 artists from 25 countries.



The artists include&nbsp;Senegal&#8217;s&nbsp;M&#8217;balax maestro Youssou Ndour, Congo&#8217;s Lokua Kanza, Magic System from Ivory Coast and Cabo Snoop from Angola.



Kacou added that the service will digitize and distribute African music currently in vinyl, cassette or CD formats to reach today&#8217;s younger audience.



&#8220;It&#8217;s a real opportunity for countries that are also experiencing this digital transformation to integrate all this heritage into the cultural offer that is made on platforms,&#8221; Kacou told Reuters in Abidjan.



He said&nbsp;the&nbsp;service&nbsp;will&nbsp;support independent labels in digital distribution who are looking for a wider network.



&#8220;Finding a producer on the continent and distributing cultural works is a real challenge for many talents, most of whom do not receive fair remuneration for their musical works,&#8221; Kacou said.



(Reporting by Loucoumane Coulibaly; Writing by Bate Felix; Editing by Josie Kao)

In this photo illustration, Universal Music Group (UMG) logo

Global brands are taking note of Africa’s music and talent

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107091954-1658396983875-gettyimages-1239259022-GERMANY_ECB_WATCHERS.jpeg" alt="" class="wp-image-418628" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107091954-1658396983875-gettyimages-1239259022-GERMANY_ECB_WATCHERS.jpeg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107091954-1658396983875-gettyimages-1239259022-GERMANY_ECB_WATCHERS-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107091954-1658396983875-gettyimages-1239259022-GERMANY_ECB_WATCHERS-160x90.jpeg 160w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>The European Central Bank is increasing interest rates for the first time in 11 years. But in Italy, political turmoil is back. Bloomberg | Bloomberg | Getty Images</figcaption></figure>



The European Central Bank on Thursday increased interest rates for the first time in 11 years in an attempt to cool rampant inflation in the euro zone.



The ECB, the central bank of the 19 nations that share the euro currency, surprised markets by pushing its benchmark rate up by 50 basis points, bringing its deposit rate to zero. Economists had expected a smaller hike of 25 basis points.



“The Governing Council judged that it is appropriate to take a larger first step on its policy rate normalisation path than signalled at its previous meeting,” the ECB said in a statement Thursday.



The Frankfurt institution had kept rates at historic lows, in negative territory since 2014, as it dealt with the region’s sovereign debt crisis and the coronavirus pandemic.



The euro rose to a session high on news of the more aggressive rate hike, to trade at $1.0257. The yield on the 10-year Italian bond also jumped on the news, extending gains after reacting to the resignation of Prime Minister Mario Draghi earlier on Thursday.



The ECB also said that this move in interest rates “will support the return of inflation to the Governing Council’s medium-term target by strengthening the anchoring of inflation expectations and by ensuring that demand conditions adjust to deliver its inflation target in the medium term.” The central bank’s inflation target is 2%.



The ECB had previously signaled it would be increasing rates in July and September as consumer prices keep surging, but it was unclear whether it would go as far as bringing rates back to zero. The ECB’s deposit rate is now 0%, the main refinancing operations rate is 0.5% and the marginal lending facility is at 0.75%.



<h2 class="wp-block-heading" id="h-surging-inflation"><a></a>Surging inflation</h2>



A first reading for inflation in June showed a record high of 8.6%. However, some investors are skeptical over the ECB’s actions as they predict a recession later this year. Back in June, ECB forecasts pointed to an inflation rate of 6.8% for the whole of this year, and 3.5% in 2023. In terms of growth, the central bank estimates a GDP rate of 2.1% for this year and the next.



One of the biggest uncertainties going forward is whether Russia will cut supplies of natural gas to Europe completely. Moscow has been accused of weaponizing fossil fuels as the EU slaps tough sanctions on the Kremlin for its unprovoked onslaught in Ukraine.



Natural gas flows have fallen by about 60% since June and a critical pipeline, Nord Stream 1, saw supplies resume Thursday after maintenance — albeit at a reduced capacity.



Europe’s Economics Commissioner Paolo Gentiloni has said that a full cut-off in supplies from Moscow, with Europe so dependent on Russia hydrocarbons, could push the euro zone into a recession this year, though this isn’t the EU’s base-case scenario currently.



<h2 class="wp-block-heading" id="h-anti-fragmentation-tool"><a></a>Anti-fragmentation tool</h2>



Meanwhile on Thursday, investors kept a keen eye on details regarding the ECB’s new anti-fragmentation tool, which is aimed at supporting those nations with lofty debt piles, like Italy.



The central bank called this new tool TPI (Transmission Protection Instrument). It can be activated to counter “unwarranted, disorderly market dynamics that pose a serious threat to the transmission of monetary policy across the euro area,” it said.



“The scale of TPI purchases depends on the severity of the risks facing policy transmission,” the ECB added, while stating that further details would be published at 2:45 p.m. London time Thursday.



Expectations point to some conditionality between implementing strict domestic reforms and qualifying for this new instrument. This becomes particularly important in the context of Italian politics, where snap elections are now expected to take place in the fall after Prime Minister Mario Draghi resigned Thursday morning.



A credible government that sticks to the targets agreed with the European Commission will be critical if it’s to benefit from the new tool.

107091954-1658396983875-gettyimages-1239259022-GERMANY_ECB_WATCHERS

European Central Bank raises rates by 50 basis points, its first hike in 11 years

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="728" height="485" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/CFUNBLQBTNMUXCL6VHQ4PDL2EM.jpg" alt="" class="wp-image-418577" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/CFUNBLQBTNMUXCL6VHQ4PDL2EM.jpg 728w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/CFUNBLQBTNMUXCL6VHQ4PDL2EM-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/CFUNBLQBTNMUXCL6VHQ4PDL2EM-135x90.jpg 135w" sizes="auto, (max-width: 728px) 100vw, 728px" /><figcaption>U.S. President Joe Biden attends a news conference at Waldorf Astoria in Jeddah, Saudi Arabia July 15, 2022. REUTERS/Evelyn Hockstein</figcaption></figure>



WASHINGTON, July 20(Reuters)&nbsp;&#8211;&nbsp;President Joe Biden announced on Wednesday that&nbsp;the United States will bring together leaders from across the African continent for a major summit in December&nbsp;in Washington to discuss pressing challenges from food security to climate change.



&#8220;The summit will demonstrate the United States’ enduring commitment to Africa, and will underscore the importance of U.S.-Africa relations and increased cooperation on shared global priorities,&#8221; Biden said in a statement.



The U.S.-Africa Leaders Summit, scheduled for&nbsp;Dec. 13-15,&nbsp;was announced simultaneously in virtual remarks by Vice President Kamala Harris to the U.S.-Africa Business Summit in Marrakech hosted by the Corporate Council on Africa and the kingdom of Morocco and attended by a U.S. delegation.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL8N2Z05OD&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



A senior administration official, discussing the U.S.-Africa summit plans on condition of anonymity, said about 50 African leaders are expected to join Biden for the Dec. 13-15 series of meetings.



It will come at the end of a year when Biden has engaged other regions of the world with trips to visit U.S. allies in Asia, Europe and the Middle East. Biden has yet to visit Africa since becoming president, and the summit will be his most comprehensive look at the complexities of the continent.



<h3 class="wp-block-heading" id="h-read-more-biden-to-lead-major-economies-in-push-for-more-urgent-action-on-climate">Read more: <a href="https://www.cnbcafrica.com/2022/biden-to-lead-major-economies-in-push-for-more-urgent-action-on-climate/">Biden to lead major economies in push for more urgent action on climate</a></h3>



A backbeat of Biden&#8217;s diplomatic efforts thus far has been to promote Western democracies as a counterweight to China, but the official said the U.S.-Africa summit was not all about Beijing.



&#8220;We are not asking our African partners to choose,&#8221; the official told Reuters. &#8220;We believe the United States offers a better model, but we are not asking our African partners to choose.&#8221;



The U.S. Agency for International Development announced on Monday that it is providing nearly $1.3 billion in aid to the Horn of Africa nations of Ethiopia, Kenya and Somalia to help stave off mass starvation and deaths in the drought-stricken region.



Biden said the summit will work toward new economic engagement, promote democracy and human rights, advance peace and security, and address challenges such as food security and climate change as well as the pandemic.



The president believes that U.S. collaboration with leaders from African governments, civil society, the private sector and the African diaspora will help tackle some of the challenges, the official said.



(Reporting by Steve Holland; Editing by Leslie Adler)

U.S. President Biden visits Saudi Arabia

Biden announces U.S.-Africa summit for mid-December

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107065564-1653323443353-gettyimages-1234879264-GERMANY_GOVERNMENT_ECONOMIC_POLICY.jpeg" alt="" class="wp-image-418513" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107065564-1653323443353-gettyimages-1234879264-GERMANY_GOVERNMENT_ECONOMIC_POLICY.jpeg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107065564-1653323443353-gettyimages-1234879264-GERMANY_GOVERNMENT_ECONOMIC_POLICY-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107065564-1653323443353-gettyimages-1234879264-GERMANY_GOVERNMENT_ECONOMIC_POLICY-160x90.jpeg 160w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>Managing Director of the International Monetary Fund (IMF) Kristalina Georgieva speaks during a press conference as she meets with economic and financial organizations in Berlin at the German chancellery on August 26, 2021 in Berlin, Germany. (Photo by &#8211; Pool/Getty Images) Clemens Bilan | Getty Images</figcaption></figure>



Global interest rates will likely keep rising until 2023 when heated prices will begin to cool in response to the actions from central banks, according to Kristalina Georgieva, managing director of the International Monetary Fund.



Commodity prices, such as oil, may have leveled out and started sliding in recent months, but Georgieva said that they will do so in response to recession risks and not necessarily because inflation has been tamed.



“Central banks are stepping up to control inflation, it’s a priority. They have to to keep going until it’s clear that inflation expectations remain firmly anchored,” Georgieva told CNBC at the G-20 meeting in Bali on Friday.



“At the moment we still see inflation going up; we have to throw some cold water on it.



Pandemic-led disruptions to supply chains have created bottlenecks while the war in Ukraine has exacerbated these shocks. The result has been a surge in prices of goods including key staples like food, fertilizer and energy.



While food price inflation was already in motion before the pandemic and war, the two events have only added to the issue. Global food prices reached an all-time high between March and April this year, according to the World Bank. The World Bank’s Food Commodity Price Index for March-April rose 15% over the previous two months and was more than 80% higher than two years ago.



The Food and Agriculture Organization told the G-20 Friday that the global malnourished will increase by 7.6 million this year, and rise again by 19 million in 2023.



Oil prices have levelled out and starting sliding, falling from a high of $120 a barrel in early June to under $100 a barrel this week.



<h3 class="wp-block-heading" id="h-read-more-imf-s-georgieva-says-chad-ethiopia-zambia-creditor-committees-to-meet-soon">Read more: <a href="https://www.cnbcafrica.com/2022/imfs-georgieva-says-chad-ethiopia-zambia-creditor-committees-to-meet-soon/">IMF’s Georgieva says Chad, Ethiopia, Zambia creditor committees to meet soon</a></h3>



Yet, consumer inflation in the U.S. registered a 40-year high of 9.1% last month, a condition described by Treasury Secretary Janet Yellen at the G-20 as “unacceptably high”.



While much data used to determine inflation has a lag, Georgieva told CNBC that all the signs indicated that inflation has not yet been reined in.



She added that it is paramount that inflation is controlled otherwise incomes will be eroded, hitting hardest in the poorest parts of the world.



Reflecting lessons learned from past economic crises, Yellen told the G-20 on Friday that it was crucial for governments to establish and maintain a “playbook” of policy responses which would “minimize the duration and severity of recessions” and “mitigate adverse economic consequences on firms and individuals.”



Elaborating on Indonesia’s “playbook,” Finance Minister Sri Mulyani Indrawati said at the G-20 on Friday that controlling demand was key at this juncture as fiscal and monetary easing measures executed at the start of the Covid-19 pandemic had restored demand but not supply.



Indonesia for example lifted its 3% fiscal deficit cap — for three years — in order to inject stimulus in the economy countering “extraordinary” conditions imposed by the pandemic, she said.



“We have to admit that demand has been boosted by countercyclical policy,” she said.



“Two years ago, we tried to rescue the economy from both supply and demand collapse because of the pandemic.” Sri Mulyani said however, since then the recovery in&nbsp;demand&nbsp;has outstripped that of supply.&nbsp;

107065564-1653323443353-gettyimages-1234879264-GERMANY_GOVERNMENT_ECONOMIC_POLICY

Inflation will likely be tamed next year when rate hikes start to work, IMF chief says

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107088556-1657780943947-gettyimages-1241870255-Chinas_Total_Import_And_Export_Value_of_Goods_Trade_Growth.jpeg" alt="" class="wp-image-418486" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107088556-1657780943947-gettyimages-1241870255-Chinas_Total_Import_And_Export_Value_of_Goods_Trade_Growth.jpeg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107088556-1657780943947-gettyimages-1241870255-Chinas_Total_Import_And_Export_Value_of_Goods_Trade_Growth-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107088556-1657780943947-gettyimages-1241870255-Chinas_Total_Import_And_Export_Value_of_Goods_Trade_Growth-160x90.jpeg 160w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>While China’s exports surged by more than expected in June, imports climbed far less than anticipated. Workers pictured here disinfect a container ship terminal in Qingdao on July 13, 2022. Future Publishing | Future Publishing | Getty Images</figcaption></figure>



BEIJING — China eked out GDP growth of 0.4% in the second quarter from a year ago, missing expectations as the economy struggled to shake off the impact of Covid controls.



Analysts polled by Reuters had forecast growth of 1% in the second quarter.



Industrial production in June also missed expectations, rising by 3.9% from a year ago, versus the 4.1% forecast.



However, retail sales in June rose by 3.1%, recovering from a prior slump and beating expectations for no growth from the prior year. Major e-commerce companies held a promotional shopping festival in the middle of last month.



Retail sales in June saw a boost from spending across many categories including autos, cosmetics and medicine. But catering, furniture and construction materials saw a decline. Within retail sales, online sales of physical goods grew by 8.3% from a year ago in June, slower than the 14% growth the prior month.



Fixed asset investment for the first half of the year came in above expectations, up 6.1% versus 6% predicted.



Overall fixed asset investment picked up on a monthly basis, rising by 0.95% in June from May to an undisclosed figure. While investment in infrastructure and manufacturing maintained a similar or better pace of growth from May to June, that in real estate worsened. Investment in real estate in the first half of the year fell by 5.4% from a year ago, worse than the 4% decline in the first five months of the year.



Unemployment across China’s 31 largest cities fell from pre-pandemic highs to 5.8% in June, but that for the age 16 to 24 category rose further to 19.3%.



The statistics bureau described the latest economic results as “hard-earned achievements” but warned about the “lingering” impact of Covid and “shrinking demand” at home. The bureau also noted the rising “risk of stagflation in the world economy” and tightening monetary policy overseas.



At a press conference Friday, statistics bureau spokesperson Fu Linghui said economic indicators in the second quarter halted a downward trend. He described the impact of Covid as “short-lived,” and emphasized how China’s inflation is far below that of the U.S. and Europe. Fu added that there are “challenges” to achieving the full-year economic targets.



In the second quarter, mainland China faced its worst Covid outbreak since the height of the pandemic in early 2020. Strict stay home orders hit the metropolis of Shanghai for about two months, while travel restrictions contributed to supply chain disruptions.



By early June, Shanghai, Beijing and other parts of China were on their way to resuming normal business activity. In the last few weeks, the central government has cut quarantine times and eased some Covid prevention measures.



But different parts of China have had to reinstate Covid controls as new cases spike.



As of Monday, Nomura said regions that account for 25.5% of China’s GDP were under some form of lockdown or heightened control. That’s up from 14.9% a week earlier.



Major investment banks have repeatedly cut their full-year China GDP targets due to the impact of Covid controls. Among firms tracked by CNBC, the median forecast was 3.4% as of late June.



The official GDP target of “around 5.5%” was announced in early March.



“China’s economy is no doubt bottoming. But it is still in the midst of its recovery,” said Bruce Pang, chief economist and head of research, Greater China, JLL.



He said he expects policymakers to maintain their easing stance, for a moderate recovery in the second half of the year.

107088556-1657780943947-gettyimages-1241870255-Chinas_Total_Import_And_Export_Value_of_Goods_Trade_Growth

China’s GDP growth misses expectations in the second quarter

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="585" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107081500-1656374337447-gettyimages-1401803922-img_3139_73d062ca-076c-4531-86d9-44cf6d7190f0-820x585.jpeg" alt="" class="wp-image-418422" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107081500-1656374337447-gettyimages-1401803922-img_3139_73d062ca-076c-4531-86d9-44cf6d7190f0-820x585.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107081500-1656374337447-gettyimages-1401803922-img_3139_73d062ca-076c-4531-86d9-44cf6d7190f0-300x214.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107081500-1656374337447-gettyimages-1401803922-img_3139_73d062ca-076c-4531-86d9-44cf6d7190f0-126x90.jpeg 126w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107081500-1656374337447-gettyimages-1401803922-img_3139_73d062ca-076c-4531-86d9-44cf6d7190f0-768x547.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107081500-1656374337447-gettyimages-1401803922-img_3139_73d062ca-076c-4531-86d9-44cf6d7190f0-1536x1095.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107081500-1656374337447-gettyimages-1401803922-img_3139_73d062ca-076c-4531-86d9-44cf6d7190f0-scaled.jpeg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>Photo: via CNBC</figcaption></figure>



Shoppers paid sharply higher prices for a variety of goods in June as inflation kept its hold on a slowing U.S. economy, the Bureau of Labor Statistics reported Wednesday.



The consumer price index, a broad measure of everyday goods and services, soared 9.1% from a year ago, above the 8.8% Dow Jones estimate. That marked another month of the fastest pace for inflation going back to December 1981.



Excluding volatile food and energy prices, so-called core CPI increased 5.9%, compared with the 5.7% estimate.



On a monthly basis, headline CPI rose 1.3% and core CPI was up 0.7%, compared to respective estimates of 1.1% and 0.5%.



Taken together, the numbers seemed to counter the narrative that inflation may be peaking, as the gains were based across a variety of categories.



“CPI delivered another shock, and as painful as June’s higher number is, equally as bad is the broadening sources of inflation,” said Robert Frick, corporate economist at Navy Federal Credit Union. “Though CPI’s spike is led by energy and food prices, which are largely global problems, prices continue to mount for domestic goods and services, from shelter to autos to apparel.”



<h2 class="wp-block-heading" id="h-up-across-the-board"><a></a>Up across the board</h2>



Energy prices surged 7.5% on the month and were up 41.6% on a 12-month basis. The food index increased 1%, while shelter costs, which make up about one-third of the CPI rose 0.6% for the month and were up 5.6% annually. This was the sixth straight month that food at home rose at least 1%.



Rental costs rose 0.8% in June, the largest monthly increase since April 1986, according to the BLS.



Stock market futures slumped following the data while government bond yields surged.



Much of inflation rise came from gasoline prices, which increased 11.2% on the month and just shy of 60% for the 12-month period. Electricity costs rose 1.7% and 13.7%, respectively. New and used vehicle prices posted respective gains of 0.7% and 1.6%.



Medical care costs increased 0.7% on the month, propelled by a 1.9% increase in dental services, the largest monthly change ever recorded for that sector in data that goes back to 1995.



Airline fares were one of the few areas seeing a decline, falling 1.8% in June though still up 34.1% from a year ago. The meat, poultry, fish and eggs category also fell 0.4% for the month but is up 11.7% on an annual basis.



The increases marked another tough month for consumers, who have been suffering through soaring prices for everything from airline tickets to used cars to bacon and eggs.



<h2 class="wp-block-heading" id="h-real-incomes-fall-further"><a></a>Real incomes fall further</h2>



For workers, the numbers meant another hit to the wallet, as inflation-adjusted incomes, based on average hourly earnings, fell 1% for the month and are down 3.6% from a year ago, according to a separate BLS release.



Policymakers have struggled to come up with answer to a situation that is rooted in multiple factors, including clogged supply chains, outsized demand for goods over services, and trillions of dollars in&nbsp;<a href="https://www.cnbc.com/coronavirus/">Covid</a>-related stimulus spending that has made consumers both flush with cash and confronted with the highest prices since the early days of the Reagan administration.



Federal Reserve officials have instituted a series of interest rate increases that have taken benchmark short-term borrowing costs up by 1.5 percentage points. The central bank is expected to continue hiking until inflation comes closer to its 2% longer-run target rate.



The inflation reading could push the Fed into an even more aggressive position.



Traders upped their bets on the pace of interest rate increases ahead. While a 0.75 percentage point hike is still considered most likely at the July 26-27 meeting, a full percentage point move now has a 37% chance of happening, according to the CME Group’s FedWatch tool.



White House officials have blamed the uptick in prices on Russia’s invasion of Ukraine, though inflation was already moving aggressively higher before that attack in February. President Joe Biden has called on gas station owners to lower prices.



The administration and leading Democrats also have blamed what they call greedy corporations for using the pandemic as an excuse to raise prices. Corporate profits, however, have increased just 1.3% in aggregate since the second quarter of 2021, when inflation took hold.



However, there is some reason to think the July inflation numbers will cool.



Gasoline prices have come down from their June peak, with a gallon of regular falling to $4.64, a 4.7% drop for the month, according to Energy Information Administration data.



The S&amp;P GSCI commodities index, a broad-based measure of prices for multiple goods, has fallen 7.3% in July, though it remains up 17.2% for the year. That has come as wheat futures have fallen 8% since July 1, while soybeans are down 6% and corn is off 6.6% during the same period.



<h2 class="wp-block-heading" id="h-view-from-the-trucking-industry"><a></a>View from the trucking industry</h2>



“I see a light at the end of the tunnel,” said Brian Antonellis, senior vice president of fleet operations for Fleet Advantage, a leasing and asset management company for the trucking industry based in Fort Lauderdale, Florida.



Antonellis expects production capacity to ramp up gradually, helping to create a more competitive environment for an industry that has felt the strain of rising fuel prices, a historically tight labor market and the supply chain issues that have hampered the ability to get products to shelves.



“For probably 10 to 15 years before the pandemic, the industry fell into a stable routine where costs up across the board somewhere between 1 to 3 percent a year. It was easy to budget, it was easy to forecast, it was easy to build into rates,” he said. “The challenge we face today is it’s not that 1-3 percent anymore, it’s 10 to 20 percent depending on what cost bucket you’re talking about.”



Still, he said trucking companies are managing to get through with pricing power and creative financing.



“I do think people honestly are not trying to overcharge the customer,” Antonellis said. “They’re not being predatory about it. But they are trying to find that fine line. What do we pass forward? How do we look at the costs coming in?”



With the U.S. economic picture getting increasingly cloudy, he acknowledged that the industry is not “recession-proof.”



“There are going to be challenges,” Antonellis said. “I don’t think it’s all negative. I do think there will be challenges for the next six months. But I do think we’re on an upswing.”

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Inflation rose 9.1% in June, even more than expected, as price pressures intensify

LONDON — The U.K.’s ruling Conservative Party has begun its race to find its next leader, and the country’s next prime minister, with eight candidates now in the running for the top job.



The candidates all had to win the initial backing of at least 20 of their fellow Conservative lawmakers in order to proceed to the first round of voting which takes place Wednesday.



In order to whittle the number of candidates down to just two, more votes will now take place – beginning Wednesday – with the 358 Conservative MPs asked to choose their favorite candidate to take over the party.



Any candidate receiving less than 30 votes from his or her fellow MPs will be eliminated in the first round of voting. Then in the second round, the candidates with the fewest votes are eliminated. These rounds of voting continue until two candidates remain, which is expected to happen by the end of this week.



When two candidates remain, all the members of the Conservative Party (some 200,000 people) are asked to vote by postal ballot on their favorite candidate. The winner is expected to be announced on Sept. 5.



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107087892-1657690092507-gettyimages-1241854442-220712_sunak_speech_16.jpeg" alt="" class="wp-image-418414" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107087892-1657690092507-gettyimages-1241854442-220712_sunak_speech_16.jpeg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107087892-1657690092507-gettyimages-1241854442-220712_sunak_speech_16-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107087892-1657690092507-gettyimages-1241854442-220712_sunak_speech_16-160x90.jpeg 160w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>Rishi Sunak makes a speech to launch his bid to be leader of the Conservative Party on July 12, 2022 in London, England. The former Chancellor was the second high-profile minister to resign from Boris Johnson’s cabinet last week setting in motion the events that saw Johnson step down as Conservative Party Leader. Carl Court | Getty Images News | Getty Images</figcaption></figure>



The eight candidates include well-known faces, such as former Finance Minister Rishi Sunak — one of the favorites to win — and Foreign Secretary Liz Truss and new Finance Minister Nadhim Zahawi, as well as those with less high-profiles such as Tom Tugendhat, Suella Braverman and Kemi Badenoch.



Former Health Minister Jeremy Hunt is also in the race, as well as Penny Mordaunt, international trade minister, another of the favorites who’s popular with grassroots party activists. Sajid Javid, former health secretary, withdrew from the leadership race on Tuesday.



Showing some division among Tory MPs and those among the more grassroots Conservative Party members and activists, Penny&nbsp;Mordaunt, a former defense secretary, topped a poll of Tory party members this week on who should be the next leader, with 20% of the vote.



Ex-local government minister Kemi Badenoch was seen with 19% of the vote, followed by Rishi Sunak on 12%, according to the poll of over 800 Tory party members on Tuesday by website Conservative Home.



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107045260-gettyimages-1239761345-wlodarczyk-britishf220405_npoYc.jpeg" alt="" class="wp-image-418415" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107045260-gettyimages-1239761345-wlodarczyk-britishf220405_npoYc.jpeg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107045260-gettyimages-1239761345-wlodarczyk-britishf220405_npoYc-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107045260-gettyimages-1239761345-wlodarczyk-britishf220405_npoYc-160x90.jpeg 160w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>“If Putin succeeds there will be untold further misery across Europe and terrible consequences across the globe,” said U.K. Foreign Secretary Liz Truss. Mateusz Wlodarczyk | Nurphoto | Getty Images</figcaption></figure>



Tuesday night, the eight candidates had 12 minutes each to try to convince their fellow MPs why they should be the next leader of the party and the country. Several promised to cut taxes and unite the party after the spectacular fall of Boris Johnson, who remains as prime minister but only in a caretaker role while his replacement is found.



Summing up the economic implications of the candidates expected to proceed to at least a second round of voting, Daiwa Capital Markets said that “at the time of writing, former Chancellor Rishi Sunak looked odds-on to make it to the second round. There he is most likely to face a challenger from the populist right wing — most likely Foreign Secretary Liz Truss or Trade Minister Penny Mordaunt.”



“While Sunak has argued against any further near-term loosening of fiscal policy, Truss, Mordaunt and several others have argued for unfunded tax cuts, which would arguably be inflationary and would likely lead to more monetary tightening than would be the case under a Sunak premiership,” Daiwa said in a note Tuesday.



<h2 class="wp-block-heading" id="h-wide-open-race"><a></a>Wide-open race</h2>



The leadership contest has come about after Johnson resigned as party leader last week after months of controversy over his conduct while in office. His government has been plagued by scandals over parties during Covid-19 lockdowns and several party officials have been hit with sleaze allegations.



The final straw for many MPs who had previously supported Johnson, despite his less than conventional style of leadership, was his appointment of a deputy chief whip (responsible for party discipline) who had previous sexual misconduct allegations made against him of which Johnson was aware. That led to a wave of resignations with ministers and officials saying Johnson no longer commanded their confidence.



Describing Johnson’s departure as a “Bjexit,” Ian Bremmer, president of Eurasia Group, commented this week that “near term, U.K. policy is paralyzed by the caretaker government’s lack of a mandate (whether Johnson-led or under a new temporary prime minister” and that economic, foreign and defense policy are “essentially in stasis until there’s new leadership in the fall.”



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107085539-16571947812022-07-07t114857z_676551886_rc2z6v949ewi_rtrmadp_0_britain-politics.jpeg" alt="" class="wp-image-418416" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107085539-16571947812022-07-07t114857z_676551886_rc2z6v949ewi_rtrmadp_0_britain-politics.jpeg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107085539-16571947812022-07-07t114857z_676551886_rc2z6v949ewi_rtrmadp_0_britain-politics-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107085539-16571947812022-07-07t114857z_676551886_rc2z6v949ewi_rtrmadp_0_britain-politics-160x90.jpeg 160w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>British Prime Minister Boris Johnson makes a statement at Downing Street in London, Britain, July 7, 2022.  Henry Nicholls | Reuters</figcaption></figure>



“It’s a wide open race for the fall &#8230; but either way, Johnson’s two most important foreign policy initiatives—on Europe and on Ukraine — aren’t going to change. On the former, with Brexit and euroskepticism already firmly in place for the Conservative Party, there’s no lane for a softer Europe policy, even on the contentious Northern Ireland issue, among premiership competitors,” Bremmer noted on Monday.



European leaders, and particularly France’s President Emmanuel Macron, are happy to see the back of Johnson and will have less dysfunctional personal diplomacy with his successor, but the overarching U.K.-EU relationship will remain significantly strained, Bremmer added.



“That leaves plenty of uncertainty domestically— on fiscal easing and corporate tax policy for example. But I don’t see fireworks over who leads the United Kingdom driving much drama outside of old Blighty.”

107085539-16571947812022-07-07t114857z_676551886_rc2z6v949ewi_rtrmadp_0_britain-politics

The race to replace Boris Johnson is wide open, and laying bare divisions in the Conservative Party

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/102526990-465676950.jpg" alt="" class="wp-image-418392" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/102526990-465676950.jpg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/102526990-465676950-300x169.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/102526990-465676950-160x90.jpg 160w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>A financial trader monitors data on computer screens as a desktop television shows euro currency banknotes at the Frankfurt Stock Exchange in Frankfurt, Germany. Martin Leissl | Bloomberg | Getty Images</figcaption></figure>



The euro hovered close to parity with the U.S. dollar on Tuesday, as the euro zone’s energy supply crisis and economic woes continue to depress the common currency.



The euro was 0.3% lower to trade around $1.0005 at 10:20 a.m. London time on Tuesday morning.



Fears of a recession have grown in recent weeks due to rising uncertainty over the bloc’s energy supply, with Russia threatening to further reduce gas flows to Germany and the broader continent.



Russia temporarily suspended gas deliveries via the Nord Stream 1 pipeline on Monday for annual summer maintenance works.



The scheduled 10-day suspension of gas flows has stoked fears of a permanent cut to supplies, potentially derailing the region’s winter supply preparations and exacerbating a gas crisis.



The prospect of a starker economic slowdown has also cast doubt over whether the European Central Bank will be able to tighten monetary policy aggressively enough to rein in record-high inflation without deepening the economic pain.



“It is a key and obvious psychological level which is very much under threat here,” Jeremy Stretch, head of G-10 FX strategy at CIBC Capital Market, told CNBC’s “Street Signs Europe” on Tuesday.



Stretch said the prospect of the euro falling below this level was a reflection of burgeoning recession fears across the euro zone. It comes amid growing concerns about the prospect of a permanent cut to Russian gas supplies and the ECB’s slower pace of monetary policy tightening when compared to other major central banks.



“The ECB is in a very, very difficult position. You could argue that the ECB has been rather late to the party both in terms of ending their bond purchases but also considering monetary policy tightening,” Stretch said.



He added while the ECB “clearly missed a trick” at its last meeting, inflation expectations over the medium term had retreated toward the central bank’s target threshold.



“That is one sign that perhaps over the medium to longer run those inflation expectations are not necessarily becoming materially deanchored, but clearly from an ECB policy signaling perspective … the need to act and to act expeditiously is clear,” Stretch said.



Graham Secker, chief European equity strategist at Morgan Stanley, said the weakness of the euro could provide a boost for European companies ahead of the forthcoming second-quarter earnings season.



“Twelve months ago, the euro was above $1.20 and now we are obviously very close to parity so there is a pretty significant tailwind to earnings currently, but I view that as a positive offset against some of the other negative factors that are brewing,” Secker told CNBC’s “Street Signs Europe.”



“Right now, our expectation is that the second-quarter earnings season probably will end up with a net beat,” he added.

102526990-465676950

Euro teeters on the brink of parity with the U.S. dollar on recession fears

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/104410219-AP_17034561978611r.jpg" alt="" class="wp-image-418388" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/104410219-AP_17034561978611r.jpg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/104410219-AP_17034561978611r-300x169.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/104410219-AP_17034561978611r-160x90.jpg 160w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>President Donald Trump talks with Tesla and SpaceX CEO Elon Musk at Trump Tower last February. Evan Vucci | AP</figcaption></figure>



Tesla and SpaceX CEO Elon Musk said Monday that he thinks former President Donald Trump should, “hang up his hat &amp; sail into the sunset.”



Writing on Twitter, where Musk has more than 100 million followers, the celebrity CEO said: “I don’t hate the man, but it’s time for Trump to hang up his hat &amp; sail into the sunset. Dems should also call off the attack – don’t make it so that Trump’s only way to survive is to regain the Presidency.”



A bipartisan House select committee is conducting public hearings to present initial findings from a yearlong investigation into the Jan. 6, 2021 riot at the U.S. Capitol by a violent mob of Trump’s supporters. The panel’s next public hearing is scheduled for Tuesday morning.



Over the weekend, Trump called Elon Musk a “bulls&#8212; artist” claiming that Musk said he voted for Trump in previous conversations between the two men. But Musk tweeted to deny that claim and hit back at Trump on Monday evening.



The Tesla CEO previously said his first vote for a Republican was for Mayra Flores, the winner of a special election in South Texas in June.



Last month, Musk also revealed that he was “leaning” toward voting for Florida Gov. Ron DeSantis, should he run for president in 2024.



Musk’s comments about Trump came after a tense day for his businesses.



SpaceX, his reusable rocket company, conducted a ground test of a rocket booster that ended in an unexpected explosion in Boca Chica, Texas.



Musk also faced a legal challenge from Twitter on Monday, after seeking to terminate an earlier deal he struck to acquire the social network for $54.20 per share. Twitter says his basis for terminating the deal was “invalid and wrongful.”



Musk’s electric vehicle maker Tesla saw shares decline on Monday after Shanghai ramped up mass-testing for Covid following reports of two dozen new cases there. The testing raised fears of a resurgence and more lockdowns that could once again hamper Tesla’s factory operations in China.

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Elon Musk says it’s time for Trump to ‘sail into the sunset’

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107086062-1657270998093-gettyimages-630590200-93905900.jpeg" alt="" class="wp-image-418345" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107086062-1657270998093-gettyimages-630590200-93905900.jpeg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107086062-1657270998093-gettyimages-630590200-93905900-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107086062-1657270998093-gettyimages-630590200-93905900-160x90.jpeg 160w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>This 2016 photo shows then-Japanese Prime Minister Shinzo Abe at Joint Base Pearl Harbor Hickam’s Kilo Pier in Honolulu, Hawaii. Kent Nishimura | Getty Images</figcaption></figure>



Shinzo Abe, the former prime minister of Japan, died Friday after being shot while delivering a speech.



The 67-year-old, the country’s longest-serving prime minister, was shot while campaigning on behalf of the governing Liberal Democratic Party&nbsp;in the city of Nara, near Kyoto.



Gunshots were heard at around 11.30 a.m. local time, NBC reported, and Abe was taken to Nara Medical University Hospital’s emergency room.



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107086161-16572828492022-07-08t103922z_1278253707_rc2m7v9ezv07_rtrmadp_0_japan-abe.jpeg" alt="" class="wp-image-418354" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107086161-16572828492022-07-08t103922z_1278253707_rc2m7v9ezv07_rtrmadp_0_japan-abe.jpeg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107086161-16572828492022-07-08t103922z_1278253707_rc2m7v9ezv07_rtrmadp_0_japan-abe-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107086161-16572828492022-07-08t103922z_1278253707_rc2m7v9ezv07_rtrmadp_0_japan-abe-160x90.jpeg 160w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>A man, believed to have shot former Japanese Prime Minister Shinzo Abe, is tackled by police officers in Nara, western Japan July 8, 2022 in this photo taken by The Asahi Shimbun.  Asahi Shimbun | Reuters</figcaption></figure>



“When he was brought to the hospital he was in a state of cardiopulmonary arrest,” Dr. Hidetada Fukushima, who operated on Abe, said at a news conference. “They tried to resuscitate him but at 17:03 he was pronounced dead.”&nbsp;



“He had gun wounds in two locations and died of heart failure from heavily damaged arteries,” the doctor said.



One person has been apprehended in relation to the shooting, NBC reported, citing officials.



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107086122-1657279225955-gettyimages-1241772234-AFP_32E28FZ.jpeg" alt="" class="wp-image-418355" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107086122-1657279225955-gettyimages-1241772234-AFP_32E28FZ.jpeg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107086122-1657279225955-gettyimages-1241772234-AFP_32E28FZ-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107086122-1657279225955-gettyimages-1241772234-AFP_32E28FZ-160x90.jpeg 160w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>Pedestrians are silhouetted against a large public video screen showing an image of former Japanese prime minister Shinzo Abe in the Akihabara district of Tokyo on July 8, 2022, after he was shot and killed in the city of Nara. Toshifumi Kitamura | AFP | Getty Images</figcaption></figure>



After the gunfire was heard, a man was tackled by several people while the weapon lay on the street, according to a video that was verified by NBC.



Abe was not campaigning for a parliamentary seat himself, but was supporting the LDP ahead of elections for the country’s upper house of parliament Sunday. It is not clear whether the elections will go ahead as planned.



Current Prime Minister Fumio Kishida said the attack was “a despicable and barbaric act that took place in the midst of an election, which is the foundation of democracy,” adding that it was still being investigated.



The incident has sent shock waves through Japan, a country where gun violence is extremely rare. Gun rules are very strict in the country; handguns are banned and anyone who wants to own an air rifle or shotgun must undergo extensive training and checks.



Abe resigned as prime minister in August 2020, after serving two terms, due to his worsening health.



The former prime minister was known for his efforts to revive Japan’s economic growth through a range of stimulus policies which became known as “Abenomics.” The aim was to boost productivity, reform Japan’s corporate culture and bring down the country’s debt over the long term, although analysts have said it has had mixed results for the world’s third-largest economy.



<h2 class="wp-block-heading" id="h-international-leaders-respond"><a></a>International leaders respond</h2>



International leaders paid their respects to Abe following news of his death.



Indian Prime Minister Narendra Modi called Abe a “towering global statesman, an outstanding leader, and a remarkable administrator,” in a tweet.



In a subsequent post, Modi said Abe “made an immense contribution to elevating India-Japan relations.” The Indian leader said the country would hold a day of national mourning on July 9.



European Commission President Ursula von der Leyen called Abe a “wonderful person, great democrat and champion of the multilateral world order.”



Before the death of Abe was confirmed, Rahm Emanuel, the U.S. ambassador to Japan, said he was “saddened and shocked” by the news of the shooting.



“Abe-san has been an outstanding leader of Japan and unwavering ally of the U.S,” Rahm tweeted.



Abe has been widely credited with boosting Japan’s presence on the world stage.



He maintained relations with former U.S. President Donald Trump and even negotiated an initial trade agreement in 2019.



In 2016, he hosted Barack Obama, who was U.S. president at the time, at Hiroshima. Obama became the first U.S. president to visit there since the atomic bombings by America in 1945.



In October 2018, Abe met with Chinese President Xi Jinping, becoming the first Japanese prime minister to visit Beijing since 2011. For several decades, Japan and China have had tense and fragile relations.



Abe’s visit aimed to boost China-Japan relations. More recently however, he had been an increasingly vocal critic of China, particularly on the issue of Taiwan, which Beijing sees as a renegade province that must be returned to the mainland. “A Taiwan emergency is a Japanese emergency,” Abe said last year, suggesting that Japan and the U.S. should not stand by if China attacked Taiwan.



Abe had also been credited with being a key figure in the formation of “the Quad,” an informal security alignment between Australia, India, Japan and the United States.

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International

Bank of England launches biggest interest rate hike in 27 years, predicts lengthy recession

Gold Fields CEO: Shareholder buy-in for Yamana takeover is still ‘work in progress’

OPEC secretary general says Russia’s membership in OPEC+ is vital for success of agreement

Putin’s new gas squeeze condemns Europe to recession and a hard winter of rationing

IMF says not holding active discussions on potential new SDR issue

U.S. Treasury yields edge higher ahead of key Fed decision

Markets face what could be the most important week of summer with Fed, earnings and economic data

Global brands are taking note of Africa’s music and talent

European Central Bank raises rates by 50 basis points, its first hike in 11 years

Biden announces U.S.-Africa summit for mid-December

Inflation will likely be tamed next year when rate hikes start to work, IMF chief says

China’s GDP growth misses expectations in the second quarter

Inflation rose 9.1% in June, even more than expected, as price pressures intensify

The race to replace Boris Johnson is wide open, and laying bare divisions in the Conservative Party

Euro teeters on the brink of parity with the U.S. dollar on recession fears

Elon Musk says it’s time for Trump to ‘sail into the sunset’

Japan’s former PM Shinzo Abe assassinated at campaign event

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Advertise With Us

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