On Thursday, the European Central Bank is widely expected to raise its key interest rates by 25 basis points for a second time this year, taking the deposit rate to 2.50%, as concerns over persistent inflation continue to mount.

The ECB's Governing Council is unlikely to disappoint current market expectations, having increasingly signalled the prospect of further tightening over the past six weeks.

At its 23 July meeting, the key deposit rate was left unchanged, with policymakers saying they were closely monitoring the "intensity and duration of the [energy] shock" stemming from the ongoing US-Iran conflict in the Middle East, particularly around the Strait of Hormuz.

At the time, Brent crude was trading in the mid-to-high USD 90s per barrel, while euro area headline inflation had eased to 2.8% y/y in June from 3.2% in May. At the start of the new week, Brent is nearing USD 100 per barrel. Core inflation, which excludes energy, food, alcohol and tobacco, stood at around 2.4%. (LS - Continue Reading)

German Chancellor Friedrich Merz called for hundreds of billions of euros in cuts to the European Commission's proposed long-term budget on Wednesday, arguing that the plan was unaffordable at a time of domestic spending restraint.

Germany, Denmark, the Netherlands, Austria, Finland and Sweden said in August that the Commission's proposed budget of nearly €2 trillion ($2.33 trillion) for 2028 to 2034 should be reduced "in a balanced manner" with all areas of spending contributing ⁠to cuts.

"Europe needs both realism and reform," Merz said after meeting European Council President Antonio Costa in Berlin, noting that the Commission's proposals for the next multiannual financial framework envisage a 60% rise over the current seven-year budget period. (RTRS – Continue Reading)

The Bank of Japan will continue to raise its benchmark interest rate to ensure that the price trend doesn’t exceed 2%, board member Kazuyuki Masu said, in comments that support widespread expectations that the bank will raise borrowing costs next week.

“The Bank will continue to raise the policy interest rate” given a prevailing price trend very close to 2% and financial conditions that remain accommodative, Masu said Thursday in a speech to business leaders in Fukui, in western Japan. “What is most vital from now on is to ensure that the underlying inflation rate does not significantly exceed 2%.” (BBG – Continue Reading)

President Trump used his keynote speech at the first night of the Republican midterm convention to make an unusual promise: if his party keeps control of Congress after November, he will give every American adult a $5,000 “dividend.” The president offered few details on how he would pay for these dividends or how they would work.

Trump’s speech caps a day in which Republican speakers sang his praises and touted his policy achievements, even as his approval ratings have steadily declined since the start of his second term.

Republicans are hoping the convention will energize voters ahead of the November election, and speakers painted Democrats as too extreme for Americans. In one of the most surprising moments of the convention so far, Democratic Sen. John Fetterman appeared in a video message to praise a bipartisan effort to support the steel industry. (WSJ – Continue Reading)