The Bank of England is right to hold off on raising interest rates as the pound falls, says an investment director
According to Julian Howard, Chief Investment Officer of Multi Asset Solutions at GAM Investments, despite the fall in the pound, the UK central bank should not be in a rush to raise interest rates.
“I don’t think the Bank of England is going to strengthen the pound,” Howard told CNBC’s “Squawk Box Europe” on Tuesday.
“I prefer to frame this as a global phenomenon and I think the Bank of England should stop before it raises rates further,” he said.
He also said that talk of the UK becoming an emerging market was “a bit premature”.
“Some have even said we’ve become a Mediterranean country, but without the weather – I think that’s too harsh,” Howard said.
“I think in the medium-term perspective [deregulation and tax cuts] could have been very useful, but the market decided to ignore it,” he told CNBC.
– Hannah Ward-Glenton
Stocks on the move: Nexi up 6%, Vitrolife down 9%
Nexi shares led the Stoxx 600 in early trade after the Italian payments group published a new business plan that forecast it would generate 2.8 billion euros ($2.7 billion) of excess cash for M&A and share buybacks between 2023 and 2025. It gained 6% in value.
At the bottom of the European blue chip index, the Swedish IVF company Vitrolife fell by more than 9%.
CNBC Pro: Where Dan Niles puts his money
“We made money today. We’re up in August. We’re ready for the year,” fund manager Dan Niles told CNBC.
As major stocks remain in the red this year, an investment veteran shares his take on this volatile market.
Pro subscribers can read more.
– Xavier Ong
Better to be ‘aggressive’ against high inflation, says Fed chief
US inflation is “unacceptably high” and uncertainties make monetary policy decisions “irrelevant,” Cleveland Fed President Loretta Mester said in a speech at the Massachusetts Institute of Technology.
“When there is uncertainty, it may be better for policymakers to act more aggressively,” he said. “Aggressive and preventive measures can prevent the worst outcomes from actually happening.”
He said he would be “very cautious” in evaluating inflation data.
“I should see a couple of months of decline in readings month over month,” he said. “Wishful thinking cannot replace convincing evidence.”
– Jihye Lee
The World Bank lowered its growth forecasts for the East Asia and Pacific region
In its latest report released on Tuesday, the World Bank cut its full-year growth forecast for the East Asia and Pacific region to 3.2% for 2022 from 5% forecast in April.
“The slowdown in growth is mainly due to China,” the organization said, also lowering its 2022 forecast for the country to 2.8% from 5%. The World Bank expects China to grow by 4.5% in 2023.
Average inflation is expected to exceed 5% this year, an upward revision from the 3% previously forecast in April, the report said.
– Jihye Lee
CNBC Pro: Analysts once again like Nvidia, Citi gives it almost 100% preference
Analysts are once again bullish on Nvidia after the semiconductor giant fell out of favor amid geopolitical tensions and a slowdown in the chip sector.
Strong demand for PC gaming, as well as cloud adoption in data centers, will be tailwinds for Nvidia, Citi and JPMorgan said last week.
So how much did they each favor Nvidia stock? CNBC Pro subscribers can read more here.
– Weizhen Tan
European markets: Here are the opening calls
European stocks are expected to open in negative territory on Wednesday as investors react to the latest US inflation data.
UK’s FTSE is expected to open 47 points lower at 7,341, Germany’s DAX down 86 points at 13,106, France’s CAC 40 down 28 points and Italy’s FTSE MIB down 132 points at 22,010, according to IG data.
Global markets retreated after a higher-than-expected US consumer price index report for August, the Bureau of Labor Statistics said on Tuesday. will decrease by 0.1% compared to the month.
Core CPI, which excludes volatile food and energy costs, rose 0.6% from July and 6.3% from August 2021.
August inflation figures are expected in the UK and eurozone industrial production for July will be published.
– Holly Elliott