Investment Institute
Weekly Market Update

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.

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