Today’s Stock Exchanges, July 18th. Weak markets, weighs on China. Visco assures: “Inflation will drop sooner than expected”
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MILAN – A weak day is still announced for the equity markets, which are being weighed down by the slowdown of the Chinese economy. A little more than a week before the new ECB board which in all likelihood will raise rates again by 25 points – and one wonders how far the peak is – the Italian governor Ignazio Visco spoke on Bloomberg television, speaking from the G20 which is underway in India, and said inflation could fall faster than the institute forecast last month, as falling energy costs continue to affect a wider range of prices. “We have seen a substantial reduction in energy prices – he observed – and we must expect that this will also manifest itself in underlying inflation in the coming months, certainly by the end of the year”. Always a supporter of prudence in rate hikes, Visco said that “we must remain balanced” between the “risk of doing too much” and “too little” to fight inflation. He then explained that it is not necessary to take the Eurozone into a recession to avoid it. His “impression” is that we can speed up the process which – according to official ECB estimates – will bring inflation to 2% only by the end of 2025.
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Visco: “Inflation will drop rapidly”
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Visco: “We don’t need a recession”
Tokyo Stock Exchange climbs 0.32%
Tokyo stocks closed higher buoyed by gains in banking and chip-related stocks, which tracked US stocks. The Nikkei index rose by 0.32% to 32,493.89 points. Chip-making equipment giant Tokyo Electron provided the most support to the Nikkei, adding 25 points to the index up 1.24%. He had previously earned as much as 3%.
Contrasted price lists in Asia, China is bad
Asian stocks are mixed with Chinese stocks in the red following disappointing data releases on second-quarter growth in China, which continues to lose momentum, and profit-taking by investors. In Tokyo, the Nikkei index rose by 0.20%. In Hong Kong, the Hang Seng index lost 1.96% and the Shanghai composite index fell 0.15%. Seoul also fell, leaving 0.46% on the ground.
Visco: “Inflation will drop rapidly”
Inflation has gone from 10 to 5% “but it will drop again because the effects of the reduction in the price of energy will begin to be reflected, therefore we will see a further reduction. My impression is that the reduction will be faster than expected”. This was stated by the governor of the Bank of Italy Ignazio Visco in an interview with Bloomberg TV on the occasion of the G20 meeting in Gandhinagar, India.
Visco: “We don’t need a recession”
On rate hikes in the ECB “there is a risk of ‘doing too much’: we must be careful, because we could go too far with respect to our objectives”. This was stated by the governor of the Bank of Italy Ignazio Visco in an interview with Bloomberg TV on the sidelines of the G20 in progress in India. Visco recalls how the ECB has already reduced the amount of interventions: “We have moved from increases from 75 points to 25” and in the fight against inflation “I think we are following the right path” but “the answer on the duration in which we must keeping rates in tight territory is ‘not for too long’.” “I don’t think we need to have a recession” before we stop the rally, he adds. For Visco, the right approach is to evaluate each time on the basis of the data: “We are doing a lot of quantitative analyses, and I don’t agree with those who say that we have made many mistakes in evaluating and reacting” to the jump in inflation . “The wrong estimates – he recalls – did not take into account the explosion in energy prices due to the unexpected attack” on Ukraine. In general, Visco concludes, “I don’t think the decline in inflation is too slow” for a rethinking of the rate hike strategy: “we must be prudent in our decisions” he concludes.
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