2025-08-22 09:54
Base rate seen unchanged at 6.5% Median forecast sees one 25-bp rate cut this year Analysts split over room for easing this year Reuters Hungary central bank rate forecasts: Reuters Hungary average inflation forecasts: BUDAPEST, Aug 22 (Reuters) - Hungary's central bank is expected to leave its base rate steady at 6.5% for the 11th consecutive month on Tuesday despite a sputtering recovery, as inflation exceeds the bank's 2% to 4% tolerance band even though price growth slowed last month. All 21 analysts surveyed between August 18 and 22 projected that the National Bank of Hungary would leave its base rate unchanged at 6.5% at its meeting. The median projection still sees a 25-basis-point rate cut by the end of this year, although analysts were divided over the room for policy easing. Sign up here. "We still do not expect any rate cuts this year, as the Monetary Council remains focused on tackling persistently high inflation expectations," ING analyst Peter Virovacz said, adding that the only game changer would be if geopolitical tensions eased as the result of a ceasefire between Russia and Ukraine. The bank's governor, Mihaly Varga, reiterated in a statement on Friday that with inflation risks still pointing upwards, the bank would "place special emphasis on cautious and patient monetary policy and an anchoring of inflation expectations". The bank left its base rate on hold at 6.5% in July. The NBH, which predicts average inflation at 4.7% this year, expects to reach its 3% inflation target only in early 2027, projecting mostly upside risks to inflation from tariffs, food and services, and downside risks to Hungary's economic growth, which it forecasts at a mere 0.8% this year. Hungary's headline inflation slowed to 4.3% in July from 4.6% in June but exceeded analysts' median forecast for 4.1%, as energy and food prices stayed high. July core inflation slowed to 4.0% year-on-year from 4.4% in June. "Although lower inflation argues for lower interest rates, heightened external uncertainties provide a reason for monetary policy caution. In our view, policy rates across the CEE-4 are likely to fall considerably further, but the timing and speed of rate cuts remain uncertain," Goldman Sachs analysts said in a note, projecting 50 bps easing for Hungary this year. The bank also forecasts rate cuts in Poland and the Czech Republic before the end of the year. "We expect that stronger exchange rates – combined with milder external inflationary forces – will weigh on inflation during the remainder of 2025 and into 2026," the analysts added. https://www.reuters.com/markets/europe/hungary-leave-base-rate-hold-65-again-despite-sputtering-economy-2025-08-22/
2025-08-22 09:12
Euro, sterling touch two-week low ahead of Powell speech Powell's tone may sway markets as traders trim rate cut bets Odds of 25 basis point cut in September at 69% German GDP contracts 0.3% q/q in Q2, revised from 0.1% MUMBAI, Aug 22 (Reuters) - The U.S. dollar hovered near a two-week high against a basket of other major currencies on Friday as investors scaled back rate cut bets ahead of Federal Reserve Chair Jerome Powell's speech at the Jackson Hole symposium. The euro and sterling touched their weakest levels versus the dollar since early August and were last steady at $1.1160 and $1.3413, respectively. Sign up here. The dollar index edged up 0.1% to 98.72, on course for a 0.9% rise on the week to snap a two-week losing streak. While indications of U.S. labour market weakness had bolstered hopes of an reduction in borrowing costs next month, expectations have been tempered by economic data flashing inflationary risks and cautious comments from Fed policymakers. Traders are currently pricing in , opens new tab just under a 70% chance of a 25 basis point rate cut in September, down from 75% on Thursday, CME's FedWatch tool showed. "The dollar has been reflecting the risk that (Powell) could stick to his guns and become more cautious," said Jane Foley, head of FX strategy at Rabobank. Fed officials on Thursday appeared lukewarm to the idea of a rate cut next month, setting the stage for Powell's speech at 10 a.m. EDT (1400 GMT) at the annual Jackson Hole conference in Wyoming. Chicago Fed president Austan Goolsbee acknowledged the upcoming meeting is "live" and could bring a change in interest rate policy, although he noted mixed economic data and unexpectedly high inflation data gave him pause about the prospect of an imminent easing. The 2-year U.S. Treasury yield, sensitive to interest rate expectations, nudged up to 3.80%, adding to a 5-basis-point rise in the previous session. Bond prices move inversely to yields. Data showed Germany's economy shrank by 0.3% in the second quarter from the first as demand from the U.S. faded following months of accelerated buying in anticipation of U.S. tariffs. "While financial markets seem to have grown numb to tariff announcements, let’s not forget that their adverse effects on economies will gradually unfold over time," Carsten Brzeski, global head of macro at ING Research, said in a note. U.S. tariffs and a stronger euro exchange rate against multiple currencies make it hard to see how the German economy would recover from a "seemingly never-ending stagnation" in the second half of the year, the note said. The single currency is up 12% so far this year versus the dollar, benefiting from a decline in the U.S. currency. Analysts at BofA Global Research said that although they saw modest near-term upside potential for the dollar going into Powell's speech, they continued to hold an overall bearish outlook amid rising stagflation risks for the U.S. economy. The yen weakened 0.16% against the dollar but Japanese 30-year government bond yields hit new highs and 10-year yields touched a 17-year high after core inflation data kept expectations of a Bank of Japan interest rate hike in the coming months alive. The Swedish crown and Norwegian crown were down about 0.2% each in the face of a firmer dollar. https://www.reuters.com/world/africa/dollar-firms-traders-pare-rate-cut-bets-ahead-powell-speech-2025-08-22/
2025-08-22 09:10
WARSAW, Aug 22 (Reuters) - Poland's Finance Ministry said on Friday it was not working on a previously floated idea of taxing interest on banks' required reserves, as banks' shares tumbled following an announcement of plans to hike the corporate income tax they pay. Warsaw's WIG Banks index (.BKNI) , opens new tab fell about 8% in morning trade on Friday after the ministry said Poland planned to raise the corporate income tax levied on banks to 30% in 2026, from the current 19%, to finance increased defence spending. Sign up here. The rate would be lowered to 26% in 2027 and further to 23% in subsequent years, the ministry said. In June, Finance Minister Andrzej Domanski said the ministry was working on a new tax which could target interest on required reserves held in the central bank, potentially bringing in 1.5 billion-2.0 billion zlotys ($408 million-$544 million). However, the ministry said in a post on X on Friday that it was "not currently working on the previously considered solution regarding the taxation of mandatory reserves held at the National Bank of Poland". Erste Securities analyst Lukasz Janczak said that plan would have had a less severe impact on banks' profits than the increase in corporate income tax, which was announced by the Finance Ministry on Thursday. It said the changes to corporate income tax for banks would increase revenues by about 6.5 billion zlotys in 2026. ($1 = 3.6759 zlotys) https://www.reuters.com/business/finance/poland-is-not-working-tax-interest-banks-required-reserves-ministry-says-2025-08-22/
2025-08-22 08:02
Ukraine stepping up attacks on Russian energy infrastructure Unecha pumping station key part of Europe-bound Druzhba pipeline Russian regional governor says Unecha site catches fire as result of Ukrainian missile, drone attacks Hungary says Russian oil flows via Druzhba pipeline halted KYIV/BUDAPEST, Aug 22 (Reuters) - Ukraine's military again struck the Unecha oil pumping station, a critical part of Russia's Europe-bound Druzhba oil pipeline, the commander of Ukraine's unmanned systems forces said late on Thursday, and Hungary said deliveries had been halted. Russia and Ukraine have stepped up attacks on each other's energy infrastructure over the past few weeks with Kyiv damaging several Russian refineries in an effort to reduce revenues financing Russia's war in Ukraine, disrupt its energy exports and create fuel shortages inside Russia. Sign up here. For its part, Russia has fired rockets and drones at Ukraine’s gas infrastructure, reducing Kyiv's ability to import gas and provide heating to its population and fuel for the military. The Druzhba pipeline ships oil from Russia to Hungary and Slovakia, as well as from Kazakhstan to Germany. Ukraine has repeatedly attacked the pipeline's facilities this month, causing a few days of supply disruption. Hungarian Foreign Minister Peter Szijjarto, meanwhile, said crude oil deliveries from Russia to Hungary via the Druzhba link had been halted after an attack on the pipeline located near the Russia-Belarus border. "This is another attack against our energy security," Szijjarto wrote on Facebook. Robert Brovdi, commander of Ukraine's unmanned systems forces, posted a video on Telegram messenger showing a large fire at a facility with numerous fuel tanks. Reuters could not confirm the location of the infrastructure in the video. Russian regional governor Alexander Bogomaz, whose Bryansk region borders both Ukraine and Belarus in the far west of Russia, said on Friday that an energy facility at Unecha had caught fire as a result of Ukrainian missile and drone attacks, adding that the blaze has been extinguished. "As a result of repelling a combined attack carried out by HIMARS MLRS missiles and unmanned aerial vehicles, a fire broke out at a fuel infrastructure facility in the Unecha district," Bogomaz said on Telegram. Unlike most European Union countries, Slovakia and neighbouring Hungary remain dependent on Russian energy and receive most of their crude oil through the Druzhba pipeline that runs through Belarus and Ukraine. Almost daily Ukrainian drone attacks on oil refineries and pipelines have caused fuel shortages in a number of Russian regions. Russia, meanwhile, has intensified its own attacks on Ukrainian energy infrastructure in spite of efforts by U.S. President Donald Trump to negotiate an end to the conflict. https://www.reuters.com/business/energy/ukraine-says-it-struck-russias-unecha-oil-pumping-station-thursday-2025-08-22/
2025-08-22 07:44
BEIJING/HOUSTON Aug 22 (Reuters) - The sharp jump in China's imports of rare earth ore from the United States in July was probably the final customs accounting of shipments from U.S. supplier MP Materials (MP.N) , opens new tab. Data on Wednesday from the General Administration of Customs showed imports of rare earths ore from the U.S. surged to 4,719 metric tons in July after falling to zero in June, sparking market speculation over the source of the shipments. Sign up here. MP Materials, which owns the only U.S. rare earth mine has long sent ore to China for its minority shareholder Shenghe Resources (600392.SS) , opens new tab to process. But MP said in April that it had stopped shipping the critical minerals to China as the U.S. and China clashed over import tariffs before ceasing them altogether in July after announcing the U.S. Department of Defence had invested in the company to effectively become the biggest shareholder. MP told Reuters on Thursday that its final exports were sent in the second quarter and "shipments over water, warehousing and other factors can contribute to reporting delays." The jump coincided with a recovery in China's exports of rare earth magnets, key to electric vehicles, wind turbines and defence sectors. China's rare earth magnet exports to the U.S. jumped by 75.5% from the month before to 619 tons, 4.8% higher than the same month in 2024, the customs data showed. https://www.reuters.com/world/china/chinas-imports-us-rare-earth-ore-surge-july-2025-08-22/
2025-08-22 07:19
Aug 22 (Reuters) - European shares edged lower on Friday as cautious traders awaited Federal Reserve Chair Jerome Powell's speech for clues on the policy outlook. The pan-European STOXX 600 index (.STOXX) , opens new tab was down 0.1% as of 0702 GMT, but still set for a third consecutive weekly gain. Sign up here. Most regional bourses were mixed, with Germany's blue-chip DAX (.GDAXI) , opens new tab falling 0.2%. The German economy contracted by 0.3% in the second quarter of 2025 more than initially expected, the statistics office said, with industrial production performing worse than assumed. Investors geared up for Powell's speech at the annual Jackson Hole conference after Fed officials appeared lukewarm to the idea of a rate reduction next month. The European Union pushed for reduced U.S. tariffs on certain sectors after locking in a trade deal. The EU said it would work to ensure lower tariffs on car exports applied retroactively from August 1 while continuing to press for a preferential levy on wine and spirits. Dulux paints maker AkzoNobel (AKZO.AS) , opens new tab rose 4.3% after activist investor Cevian Capital took a 3% stake, according to a a filing by Dutch market regulator AFM. https://www.reuters.com/sustainability/sustainable-finance-reporting/european-shares-edge-lower-ahead-powells-speech-2025-08-22/
