Eurozone inflation climbed to another new record in July, and stronger-than-expected economic growth in the second quarter was unable to coax any optimism from analysts about the future of business activity in the trading bloc.

“The much better-than-anticipated increase in Eurozone GDP in Q2 will be by far the best quarterly growth rate for a while,” wrote Andrew Kenningham, chief Europe economist at Capital Economics. “Indeed, news that inflation was once again even higher than anticipated only underlines that the economy is heading for a very difficult period. We expect a recession to begin later this year.”

Bert Colijn, senior economist for the Eurozone at ING, said: “The acceleration in economic growth is mainly due to reopening effects and masks underlying weakness due to high inflation and manufacturing problems. Expect the economy to contract once the Covid-19 rebound effects are played out.” (LiveSquawk - Continue Reading)

Billionaire investor Bill Ackman on Thursday said he expected inflation to come down soon, but not to the level of 2% unless the U.S. Federal Reserve maintained "materially higher" interest rates for an extended period.

Ackman's comments come after the Fed announced a 75-basis-point rate increase in interest rates on Wednesday. That coupled with earlier actions have now jacked the overnight interest rate from near zero to a level between 2.25% and 2.50%.

Chairman Jerome Powell said that he could now allow the central bank to begin to slow the pace of rate increases, depending on inflation. However, he cautioned that an "another unusually large rate increase could be appropriate" when the Fed next meets if inflation does not begin to slow.

In a thread of tweets, Ackman dismissed the Fed's stance on interest rates as "extremely accommodative", and said higher rates are required to kill inflation, which is currently hovering around 9%. (Reuters - Continue Reading)

Russia and Saudi Arabia reaffirmed their commitment to the OPEC+ agreement and a stable oil market after a meeting between Deputy Prime Minister Alexander Novak and Energy Minister Prince Abdulaziz bin Salman. 

The two nations, which lead the oil-producers’ alliance, “are firmly committed to the goal of the OPEC+ agreement on preserving market stability and restoring the balance of supply and demand,” according to a statement posted on the Russian government website after the meeting in Riyadh. 

The first direct talks between the two ministers since June came just days before the Organization of Petroleum Exporting Countries and its allies will gather to determine oil production policy for September. The meeting on Aug. 3 will decide whether the group heeds US calls to supply more crude to the global market. (Bloomberg - Continue Reading)