2024-06-20 11:22

By David Milliken and Suban Abdulla LONDON, June 20 (Reuters) - The Bank of England kept its main interest rate unchanged at a 16-year high of 5.25% on Thursday ahead of a July 4 election, but some policymakers said their decision not to cut rates was now "finely balanced". The BoE's Monetary Policy Committee voted 7-2 to keep rates on hold, in line with economists' expectations in a Reuters poll. Deputy Governor Dave Ramsden and external MPC member Swati Dhingra remained the only policymakers to support a cut to 5%. BoE Governor Andrew Bailey said in a statement alongside the decision that it was "good news" that the latest inflation data had shown inflation was back at its 2% target, but that it was too soon to cut rates. "We need to be sure that inflation will stay low and that's why we've decided to hold rates at 5.25% for now," he said. Bailey's statement differed from last month, when he said he was "optimistic" that data was moving in the right direction for a rate cut. The BoE vote follows a long-trailed decision by the European Central Bank earlier this month to start to cut rates, while financial markets do not expect the U.S. Federal Reserve to cut until late this year. Markets on Thursday viewed a BoE rate cut as unlikely before September or November, although a Reuters poll of economists published last week showed most expected a rate cut on Aug. 1 after the BoE's next rate decision. Any cut is likely to be too late for Prime Minister Rishi Sunak, whose Conservative Party is around 20 points behind the opposition Labour Party in the pre-election polls. While Sunak has sought credit for the fall in inflation since he took office in October 2022, when it was at a 41-year high of 11.1%, Labour blames high mortgage rates on economic mismanagement by the Conservatives' previous leader, Liz Truss. The BoE said the upcoming election had no impact on its decision. The BoE expects inflation to rise above target as the effect of past energy price falls drops out of annual inflation data, and repeated its May forecast for inflation to be around 2.5% in the second half of 2024. In a sign the central bank may be getting closer to cutting rates, the BoE policy minutes said the decision to keep rates on hold had been "finely balanced" for some MPC members. The BoE said indicators of inflation persistence - chiefly wage growth and services inflation - had moderated since its May meeting but remained high. The MPC members whose views on a rate cut were "finely balanced" placed less weight on higher-than-expected May services inflation than others. They viewed the higher-than-expected reading as reflecting a nearly 10% rise in Britain's minimum wage and annual indexed rises in prices that reflected past inflation - factors they did not expect to have as big an upward effect on future inflation. But for other MPC members, the high services price inflation and the fact that wage growth had been faster than standard economic models had predicted reinforced their view that it was too soon to cut rates. Services price inflation has fallen less than the BoE expected at its May meeting - only declining to 5.7% rather than 5.3% - and private-sector wage growth is almost twice the rate the BoE judges as compatible with 2% inflation. Since the start of the election campaign the BoE has been in a self-imposed period of silence, cancelling public events. Before that, BoE Chief Economist Huw Pill described an excessive focus on a June rate cut as "ill advised" but both he and Deputy Governor Ben Broadbent - who steps down at the end of this month - said a rate cut over the summer was possible. The BoE began to raise rates in December 2021, earlier than other major central banks, and they reached their current peak in August 2023. (([email protected] New Tab, opens new tab)) Keywords: BRITAIN BOE/ Sign up here. https://www.reuters.com/markets/europe/bank-england-keeps-rates-525-ahead-uk-election-2024-06-20/

2024-06-20 11:10

LONDON, June 20 (Reuters) - The pound and UK bond yields dipped on Thursday after the Bank of England held interest rates at a 16-year high of 5.25%, but some policymakers said their decision not to cut was now "finely balanced". Data on Wednesday showed British inflation fell to 2% in May, hitting the BoE's target for the first time since 2021, but policymakers remain concerned about underlying price pressures, including strong price growth in the services sector. The pound was last down 0.26% on Thursday at $1.2685, from $1.2702 before the decision. It touched a one-month low of $1.2658 on Friday. The euro rose slightly against the pound and was last up 0.1% at 84.56 pence. It dropped to a two-year low against sterling on Friday after French President Emmanuel Macron's decision to call snap elections rocked markets, but has since recovered somewhat. The UK's 10-year bond yield, which moves inversely to the price , fell and was last down 2 basis points at 4.044%. UK stocks gained slightly, with the FTSE 100 (.FTSE) New Tab, opens new tab up 0.4%, compared with a 0.1% daily gain earlier on. Sign up here. https://www.reuters.com/markets/currencies/pound-holds-steady-ahead-bank-england-rate-decision-2024-06-20/

2024-06-20 11:07

Putin on tour to North Korea and Vietnam Putin says Novatek plans new LNG projects in Vietnam Zarubezhneft gets investment license for offshore block HANOI/MOSCOW, June 20 (Reuters) - Russian President Vladimir Putin said during a visit to Vietnam on Thursday that Russia was keen to partner with the southeast Asian country in energy and security. Russia, a major energy, natural resources and nuclear power, pivoted to Asia after the West imposed sanctions on Moscow for the conflict in Ukraine. A day after signing a mutual defence agreement with North Korea, Putin said that Moscow and Hanoi were interested in building what he called a reliable security architecture in the Asia-Pacific region. "We will also increase the efficiency of cooperation on these projects in the energy and gas sectors in order to create favorable conditions for the work of our companies," Putin said. The Russian leader made the comments in a televised news briefing with Vietnamese President To Lam. Putin said separately at the meeting with Vietnamese Prime Minister Pham Minh Chinh that Russia was ready to set up long-term supplies of LNG to the country, according to RIA Novosti news wire. Russia has long cooperated with Vietnam in the oil and gas sector with the state-run company Zarubezhneft being at the forefront of that business. Vietsovpetro, a joint venture (JV) 49%-owned by Zarubezhneft and the rest by Vietnamese state oil firm PetroVietnam, will produce 250 million barrels of crude oil from Vietnam's offshore fields by Friday, Vietnam's government said late on Tuesday. The JV, which has reported revenue of $88 billion since its formation in 1981, has, however, been facing shrinking oil reserves at its fields, the statement said. According to the Kremlin, Zarubezhneft has also acquired an investment license for development of offshore hydrocarbon block 11-2, while Russia's largest LNG producer Novatek (NVTK.MM) New Tab, opens new tab and PetroVietnam signed a memorandum of understanding and cooperation. Putin wrote in an opinion piece published on Wednesday in the newspaper of Vietnam's Communist Party that Novatek "plans to launch liquefied natural gas (LNG) projects in Vietnam", without elaborating. Moscow-based BCS brokerage said in a note that Novatek is unlikely to announce a new project in Vietnam in the next three to five years as it would focus on its domestic projects in the Arctic. Sign up here. https://www.reuters.com/world/putin-says-russia-is-keen-partner-with-vietnam-energy-security-2024-06-20/

2024-06-20 10:52

June 20 (Reuters) - The heatwave gripping northern India has killed nearly 200 homeless people in New Delhi over the last week, a group dedicated to helping the homeless said on Thursday, as the country grapples with record high summer temperatures. As many as 52 bodies were brought to hospitals in the past two days, the Times of India reported on Thursday, adding that most of them were poor people who lived and worked in the open. A total of 192 homeless people died in New Delhi between June 11 and June 19, according to government figures shared by non-profit organisation Centre for Holistic Development, higher than in previous years. "The poorest bear the cost of such climate change. Most of these people live below flyovers and out in the open and have no protection against the heat. These are mostly heatwave deaths," Sunil Kumar Aledia, who runs CHD, told Reuters. India has recorded more than 40,000 suspected heatstroke cases this summer and at least 110 confirmed deaths between March 1 and June 18, when northwest and eastern India recorded more than twice the usual number of heatwave days. "A prolonged summer should be classified as a natural disaster," The Hindu newspaper said in an editorial on Thursday, pointing to water shortages and record power demand. The health ministry ordered federal and state institutions to ensure immediate attention to patients, while hospitals were directed to make more beds available. The weather office has forecast above normal temperatures for this month as well, and Delhi saw its warmest night in over 50 years on Wednesday, with a minimum temperature of 35.2 degrees Celsius (95 degrees Fahrenheit), data from the weather department showed. Temperatures, however, dropped nearly 6 degrees to 37 degrees Celcius (98.6 F) on Thursday in New Delhi after rain brought respite from the heat, weather department data showed. Sign up here. https://www.reuters.com/world/india/heatwave-kills-dozens-indias-capital-reports-times-india-2024-06-20/

2024-06-20 10:51

BELGRADE, June 20 (Reuters) - People braving scorching temperatures sought relief in Belgrade's Ada Ciganlija lake, fountains and cafes on Thursday while the Serbian government ordered employers to protect outdoor workers from the heatwave. Meteorologists forecast temperatures of around 40 degrees Celsius (104 Fahrenheit) throughout Serbia this week as winds from North Africa pushed a hot and dry front across the Balkans. Health authorities and meteorologists declared a "red" weather alert and advised people not to venture outside. Belgrade's emergency service said its doctors intervened more than 100 times overnight, mainly treating people with heart and chronic conditions. The Ministry of Labour and Employment told employers to organise outdoor work in such a way to avoid heavy physical labour and direct exposure to sun. "I believe this is all due to climate change causing such temperatures," said 23-year-old student Vojislav Sumenkovic. In neighbouring Montenegro, where health authorities also warned people to shelter out of the sun until late afternoon, tens of thousands of tourists flocked to Adriatic beaches, including the Ada Bojana resort on the border with Albania. "It (heat) is kind of challenging, but we are in the water, on the beach," said Kolya, 35, a tourist from Germany. In Greece on Wednesday, firefighters fought wildfires near Athens that forced dozens to flee their homes, and authorities said they believed the flames were the result of arson as well as hot, dry conditions. Sign up here. https://www.reuters.com/business/environment/people-serbia-montenegro-advised-shelter-indoors-heatwave-2024-06-20/

2024-06-20 10:32

MUMBAI, June 20 (Reuters) - The Indian rupee fell to a record low on Thursday, pressured by likely outflows and strong dollar demand from local importers. The currency declined to a lifetime low of 83.6650 against the U.S. dollar in the latter half of the trading session and ended at a record closing low of 83.6525. It had closed at 83.4550 in the previous session. A stronger dollar, along with weakness in the Chinese yuan, also hurt the rupee, traders said. Its decline below the previous all-time low of 83.5750 triggered stop-losses, exacerbating the fall, a trader at a foreign bank said. The rupee has been hovering around record lows for weeks despite strong growth in the Indian economy, pressured by equity outflows and importers' dollar demand. "Corporate outflows have been further adding to rupee weakness. Bond inflows are expected to provide some relief in the coming week," Kunal Sodhani, vice president at Shinhan Bank, said. While foreigners have sold a net of $2.6 billion of local equities so far in 2024, inflows into the debt markets have been strong at $7.5 billion ahead of India's inclusion in the JPMorgan Emerging Market bond index at the end of June. India's central bank, however, has held the rupee in a tight band, preventing sharp appreciation amid inflows and tempering depreciation during times of outflows. That support was largely absent on Thursday, allowing the currency to fall, three traders said. "Some offers (on USD/INR) were present from state-run banks but they were not aggressive," a second foreign exchange trader at a foreign bank said. The rupee's weakness was in sync with Asian currencies. The offshore Chinese yuan was down 0.1% at 7.28, its weakest level since November 2023. The dollar index was up 0.2% at 105.4 while U.S. bond yields ticked higher. The Indian currency's record low won't "be a matter of concern till it is holding above 83.80," Sajal Gupta, executive director and head of forex and commodities at Nuvama Institutional said. Any further depreciation is expected to be "quite gradual", Gupta said. Sign up here. https://www.reuters.com/markets/currencies/rupee-hits-record-low-hurt-by-likely-outflows-importer-dollar-demand-2024-06-20/