Take Two: BoE holds interest rates as inflation falls to target; Japan exports rise
- 24 June 2024 (3 min read)
What do you need to know?
The Bank of England (BoE) kept interest rates on hold at 5.25% despite UK inflation slowing to its 2% target in May for the first time in nearly three years, after a reading of 2.3% in April. However, minutes of the BoE’s meeting showed some policymakers saw their vote as “finely balanced” – we expect it to cut rates in August and November. Elsewhere, Switzerland cut interest rates for the second time this year while the Reserve Bank of Australia held rates at a 12-year high after debating whether they should be raised.
Around the world
Japan’s exports rose 13.5% in May from a year earlier to ¥8.3trn, as the weaker yen made Japanese products more attractive to overseas buyers. The pace of growth was the fastest since November 2022, driven by US demand for cars and sales of chip-making machinery to China, while imports rose 9.5% to ¥9.5trn. Japan’s inflation rate rose to 2.8% in May year-on-year from 2.5% in April, though the ‘core-core’ rate, closely watched by the Bank of Japan, fell to 2.1% from 2.4%. Meanwhile Eurozone inflation was confirmed at 2.6% in May, up from 2.4% in April and unchanged from the previous estimate.
Figure in focus: 28%
Only 28% of nations, including Kuwait, Nigeria, Bangladesh, Mozambique and Tanzania, are actively transitioning towards a more balanced energy system, according to the World Economic Forum (WEF). Meanwhile 107 of the 120 countries measured by the WEF’s Energy Transition Index have shown progress over the past decade. Average scores in the index, which measures countries on their current energy performance and their readiness for the transition, increased by 6% since 2015 but saw slower growth over the past three years as momentum has faltered amid increasing global uncertainty.
Words of wisdom
NATO Innovation Fund: A €1bn venture capital fund backed by 24 NATO allies, that will invest in science and technologies helping to help protect infrastructure, enable the climate and energy transition, and ensure resilient supply chains. The NATO Innovation Fund announced its first investments last week, in four companies across artificial intelligence, robotics, materials and manufacturing. Launched in 2022 shortly after the start of the Russia-Ukraine war, the fund also provides tech entrepreneurs with access to commercial and government market opportunities, with the aim of strengthening the resilience, security and defence of NATO member countries.
What’s coming up?
Monday sees Germany publish its closely-watched Ifo Business Climate index, while Canada follows on Tuesday with its latest inflation numbers. On Thursday, the US issues a final estimate for first quarter (Q1) GDP growth – the previous estimate was 1.3%, annualised. Several Eurozone indicators are announced on the same day, including the latest Consumer Confidence, as well as Industrial and Economic Sentiment, measures. On Friday, the UK reports its own final estimate for Q1 growth and Japan issues its unemployment numbers for May.
Disclaimer
This website is published by AXA Investment Managers Australia Ltd (ABN 47 107 346 841 AFSL 273320) (“AXA IM Australia”) and is intended only for professional investors, sophisticated investors and wholesale clients as defined in the Corporations Act 2001 (Cth).
This publication is for informational purposes only and does not constitute investment research or financial analysis relating to transactions in financial instruments, nor does it constitute on the part of AXA Investment Managers or its affiliated companies an offer to buy or sell any investments, products or services, and should not be considered as solicitation or investment, legal or tax advice, a recommendation for an investment strategy or a personalized recommendation to buy or sell securities.
Market commentary on the website has been prepared for general informational purposes by the authors, who are part of AXA Investment Managers. This market commentary reflects the views of the authors, and statements in it may differ from the views of others in AXA Investment Managers.
Due to its simplification, this publication is partial and opinions, estimates and forecasts herein are subjective and subject to change without notice. There is no guarantee forecasts made will come to pass. Data, figures, declarations, analysis, predictions and other information in this publication is provided based on our state of knowledge at the time of creation of this publication. Whilst every care is taken, no representation or warranty (including liability towards third parties), express or implied, is made as to the accuracy, reliability or completeness of the information contained herein. Reliance upon information in this material is at the sole discretion of the recipient. This material does not contain sufficient information to support an investment decision.
All investment involves risk , including the loss of capital. The value of investments and the income from them can fluctuate and investors may not get back the amount originally invested.