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BOV Market Watch - Week ending 5th November 2021
05 Nov 2021

Fed announces plans to begin scaling back asset purchases. In a widely expected move, the US Federal Reserve (Fed) announced on Wednesday that it will start rolling back its unprecedented Covid-19 stimulus programme later this month. This marks the Fed's first major pull back since the programme was launched in March 2020. As the pandemic brought the US economy to a virtual halt and hammered the employment market, the Fed froze interest rates at near zero and began buying 120 billion dollars of Treasury and mortgage-backed securities each month. "It is time to taper, we think, because the economy has made substantial progress towards our goals," Fed Chairman Jerome Powell told reporters during Wednesday's press conference. The programme will probably wrap entirely by June 2022. But for now, interest rates will remain close to zero.

Bank of England leaves interest rates unchanged. Separately, the Bank of England surprised analysts as it backed away from an immediate rise in interest rates, leaving the benchmark at the historic low of 0.1 percent even as it published its highest inflation forecast for a decade, predicting it would reach five percent in the spring of next year. Seven members of the Monetary Policy Committee voted to leave the key interest rate unchanged at 0.10 percent, while two others sought a 15 basis point rate hike, the bank said in a statement on Thursday. The bank’s Monetary Policy Committee said that higher interest rates would be needed “over coming months”. But the level of urgency was scaled down compared with governor Andrew Bailey’s comments during October that the committee “will have to act” to restrain inflation.

Eurozone producer prices inflation hits 16 percent in September. Producer price inflation in the eurozone increased in September, data from the EU’s statistics office Eurostat showed on Thursday. Producer price inflation rose to 16.0 percent in September from 13.4 percent in August. Economists had forecast an annual rate of 15.2 percent. Excluding volatile items such as food, energy and tobacco, producer price inflation rose to 8.1 percent in September from 7.4 percent in the previous month. Energy prices shot up by 40.7 percent from last year. On a monthly basis, producer prices rose by 2.7 percent in September, following a 1.1 percent increase in the preceding month. Economists had forecast a rise of 2.2 percent.

UK house prices jump 0.9 percent in October – Halifax. The average house price in Britain reached a record high of £270,027 in October, according to an index compiled by mortgage lender Halifax. The average property value grew by 0.9 percent during the review month – an increase of more than £2,500, Halifax said. On an annual basis, house price inflation accelerated to 8.1 percent, from 7.4 percent in September. Halifax said it is the first time that the average house price topped £270,000. Earlier in the week, Nationwide said that the average UK house price had hit a new record for its index of £250,311. Wales remains the strongest performer across the UK, with annual house price inflation of 12.9 percent, according to the Halifax’s index.

India’s services sector logs strongest growth in more than ten years. India's service sector grew at the strongest pace in ten-and-a-half years in October, underpinned by robust output and new business, survey data from IHS Markit showed on Wednesday. The services Purchasing Managers' Index rose more than expected to 58.4 in October from 55.2 in September. Economists had forecast the index to rise to 55.7. A reading above 50.0 indicates expansion in the sector. The overall private sector economy expanded at a sharper rate, as growth quickened among both manufacturers and service providers. The composite output index rose to 58.7 in October from 55.3 in the previous month.

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Bank of Valletta p.l.c. is a public limited company regulated by the MFSA and is licensed to carry out the business of banking and investment services in terms of the Banking Act (Cap. 371 of the Laws of Malta) and the Investment Services Act (Cap.370. of the Laws of Malta).