The Bank of England is right to wait for interest rate increases when the pound falls, says investment director
The Bank of England should not rush to raise interest rates, according to Julian Howard, Lead Investment Director for Multi Asset Solutions at GAM Investments, despite the pound falling.
“I don’t think it’s the Bank of England’s job to prop up the pound,” Howard told CNBC’s “Squawk Box Europe” on Tuesday.
“I prefer to frame this as a global phenomenon and I think the Bank of England should wait before raising rates further,” he said.
He also said that talk of the UK becoming an emerging market is “a bit premature”.
“Some even said we’re becoming a Mediterranean country, but without the weather – I think that’s too harsh,” Howard said.
– I think in the medium term [deregulation and tax cuts] can be very useful, but the market has decided to ignore it,” he told CNBC.
Shares on the way: Nexi up 6%, Vitrolife down 9%
Shares Nexi gained 6% in early trade to lead the Stoxx 600 after the Italian payments group published its new business plan, forecasting 2.8 billion euros ($2.7 billion) in excess cash generation between 2023 and 2025 for M&A and buybacks of shares.
At the bottom of the European blue chip index, the Swedish IVF company Vitrolife fell more than 9%.
CNBC Pro: Here’s where Dan Niles puts his money
“We made money today. We’re up in August. We’re set for the year,” fund manager Dan Niles told CNBC.
With major stock markets still deep in the red this year, the investing veteran shares what he’s buying in this volatile market.
Pro subscribers can read more.
— Zavier Ong
The Fed’s Master says it is better to act “aggressively” against high inflation
U.S. inflation is “unacceptably high” and uncertainty makes monetary policy decisions “not trivial,” Cleveland Fed President Loretta Mester said in prepared remarks at the Massachusetts Institute of Technology.
“When there is uncertainty, it may be better for policymakers to act more aggressively,” she said. “Aggressive and preventive action can prevent the worst outcomes from actually occurring.”
She said she will be “very cautious” when assessing inflation data.
“I would need to see several months of declines in the readings from month to month,” she said. “Wishful thinking cannot be a substitute for compelling evidence.”
– Jihye Lee
The World Bank cuts growth forecasts for East Asia and the Pacific region
The World Bank has cut its 2022 full-year growth forecast for East Asia and the Pacific to 3.2% from its April forecast of 5%, it said in its latest report released on Tuesday.
“The slowing growth is mainly due to China,” it said, adding that the organization also cut its 2022 forecasts for the nation to 2.8% from 5%. The World Bank expects China to grow by 4.5% in 2023.
The report said median headline inflation is expected to exceed 5% this year, an upward revision from the 3% previously estimated in April.
– Jihye Lee
CNBC Pro: Analysts like Nvidia once again, with Citi giving it nearly 100% upside
Analysts are once again turning bullish on Nvidia, after the semiconductor giant lost favor due to geopolitical tensions and a slowdown in the chip sector.
Citi and JPMorgan both said last week that solid demand in PC gaming, as well as cloud adoption in data centers, were set to be tailwinds for Nvidia.
So how much upside did they each give Nvidia stock? CNBC Pro subscribers can read more here.
— Weizhen Tan
European markets: Here are the opening calls
European stocks are expected to open in negative territory on Wednesday as investors react to the latest US inflation data.
Britain’s FTSE index is expected to open 47 points lower at 7,341, Germany’s DAX 86 points lower at 13,106, France’s CAC 40 down 28 points and Italy’s FTSE MIB 132 points lower at 22,010, according to data from IG.
Global markets have pulled back after a higher-than-expected U.S. consumer price index report for August showed prices rose 0.1% for the month and 8.3% annually in August, the Bureau of Labor Statistics reported on Tuesday, defying economists’ expectations for headline inflation. will fall 0.1% month-on-month.
The core CPI, which excludes volatile food and energy costs, rose 0.6% from July and 6.3% from August 2021.
UK inflation figures for August are out, and Eurozone industrial production for July will be published.