<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/08/107091224-1658291324652-gettyimages-1398315006-vcg111383372885.jpeg" alt="" class="wp-image-419344" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/08/107091224-1658291324652-gettyimages-1398315006-vcg111383372885.jpeg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/107091224-1658291324652-gettyimages-1398315006-vcg111383372885-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/107091224-1658291324652-gettyimages-1398315006-vcg111383372885-160x90.jpeg 160w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>A man looks at his smartphone as he walks past the People’s Bank of China building on May 20, 2022 in Beijing. Jiang Qiming | China News Service | Getty Images</figcaption></figure>



China trimmed its key lending rates again on Monday, one week after it cut two interest rates in a surprise move.



The moves are seen as an attempt to revive credit demand and fire up the economy hurt by extended Covid lockdowns and property debt problems.



The People’s Bank of China cut its five-year loan prime rate by 15 basis points to 4.30% from 4.45%, and lowered its one-year loan prime rate by 5 basis points to 3.65%.



Most new loans in China are based on the one-year LPR.



Last week, the Chinese central bank lowered the rate of one-year medium-term lending facility (MLF) loans to some financial institutions by 10 basis points. It also cut the the seven-day reverse repo rate by 10 basis points to 2%.



Positive reactions to last week’s rate changes were short-lived, said analysts such as Navigate Commodities managing director Atilla Widnell.



“Fresh monetary easing/stimulus was seen as futile as ‘flogging a dead horse,’ given that China’s economy desperately needs consumers back on the streets spending money,” he said in a note.



In relation to the latest round of cuts, David Chao, global market strategist for Asia Pacific (ex-Japan) at Invesco said it hinted at the seriousness of the property market downturn.



However, he conceded that these cuts won’t be enough to increase liquidity.



“It sends a strong message that policymakers are willing to take more forceful actions to stabilize the ailing market,” he said in a note.



“Though the LPR cut may provide&nbsp;near-term relief, easing liquidity alone is unlikely to&nbsp;lead to a turnaround to the property market.”



He added that lower mortgage rates haven’t&nbsp;translated into&nbsp;higher property sales so far, “due to the lack of confidence in&nbsp;large&nbsp;developers and&nbsp;the&nbsp;presales&nbsp;model.”



Chao said he doesn’t expect these to be last of the monetary policy fixes to come from the Chinese authorities, especially when “central and local governments have the financial tools to provide an excess of 3 trillion yuan to boost the property sector.”



While today’s rate cuts won’t be a game changer, they are for now an encouraging sign, said asset manager Joshua Crabb, who is head of Asia Pacific equities at Robeco.



A more positive move would be for China to open up through changes to its Covid-19 policies, as that would be the repair the economy needs, he said.



“For now, it’s a positive sign in the right direction … but I think people are looking for something bigger in order to get a bit more excited about the market,” Crabb told CNBC’s “Squawk Box Asia” on Monday.



While the rate cuts will have “zero impact” on the current trajectory of both the economy and the property sector, China’s slowdown has been inevitable, ACY Securities Chief Economist Clifford Bennett said.



The pandemic and China’s economic reset were a coincidence, he added.



Last week, several economists downgraded their forecasts for China’s growth. Goldman Sachs lowered its 2022 full-year forecast to 3.0% from 3.3% growth, while Nomura cut its full-year growth projections to 2.8% from 3.3%.



“If you will, Covid-19 has masked a far more fundamental and permanent shift in the nature of the China economy. From boom growth period, agrarian, to consumer society,” Bennett said.



“As impressive as all that be, the rapid and far easier growth pace of the past is at an end.”



But even at 2% GDP growth, China would remain a powerhouse as economies in Europe and the U.S. slow, Bennet said.



—&nbsp;Correction: This story has been updated to remove a quote about rate cuts that was wrongly attributed to Joshua Crabb from Robeco.

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China trims lending rates again, one week after surprise cuts in key rates

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/04/106999520-16419153682022-01-11t153007z_1471999278_rc23xr9k3c5b_rtrmadp_0_usa-fed-senate-powell-820x547.jpeg" alt="" class="wp-image-416636" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/04/106999520-16419153682022-01-11t153007z_1471999278_rc23xr9k3c5b_rtrmadp_0_usa-fed-senate-powell-820x547.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/04/106999520-16419153682022-01-11t153007z_1471999278_rc23xr9k3c5b_rtrmadp_0_usa-fed-senate-powell-300x200.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/04/106999520-16419153682022-01-11t153007z_1471999278_rc23xr9k3c5b_rtrmadp_0_usa-fed-senate-powell-135x90.jpeg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2022/04/106999520-16419153682022-01-11t153007z_1471999278_rc23xr9k3c5b_rtrmadp_0_usa-fed-senate-powell-768x512.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/04/106999520-16419153682022-01-11t153007z_1471999278_rc23xr9k3c5b_rtrmadp_0_usa-fed-senate-powell-1536x1025.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/04/106999520-16419153682022-01-11t153007z_1471999278_rc23xr9k3c5b_rtrmadp_0_usa-fed-senate-powell-scaled.jpeg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>Powell says taming inflation ‘absolutely essential,’ and a 50 basis point hike possible for May</figcaption></figure>



Federal Reserve officials at their July meeting indicated they likely would not consider pulling back on interest rate hikes until inflation came down substantially, according to minutes from the session released Wednesday.



During a meeting in which the central bank approved a 0.75 percentage point rate hike, policymakers expressed resolve to bring down inflation that is running well above the Fed’s desired 2% level.



They did not provide specific guidance for future increases and said they would be watching data closely before making that decision. Market pricing is for a half-point rate hike at the September meeting, though that remains a close call.



Meeting participants noted that the 2.25%-2.50% range for the federal funds rate was around the “neutral” level that is neither supportive nor restrictive on activity. Some officials said a restrictive stance likely will be appropriate, indicating more rate hikes to come.



“With inflation remaining well above the Committee’s objective, participants judged that moving to a restrictive stance of policy was required to meet the Committee’s legislative mandate to promote maximum employment and price stability,” the minutes said.



The document also reflected the idea that once the Fed gets comfortable with its policy stance and sees it having an impact on inflation, it could start to take its foot off the policy brake. That notion has helped push stocks into a strong summer rally.



“Participants judged that, as the stance of monetary policy tightened further, it likely would become appropriate at some point to slow the pace of policy rate increases while assessing the effects of cumulative policy adjustments on economic activity and inflation,” the minutes said.



However, the summary also stated that some participants said “it likely would be appropriate to maintain that level for some time to ensure that inflation was firmly on a path back to 2 percent.”



Officials noted that future rate decisions would be based on incoming data. But they also said there were few signs that inflation was abating, and the minutes repeatedly stressed the Fed’s resolve to bring down inflation.



They further noted that it likely would “take some time” before policy kicked in enough to have a meaningful impact.



The consumer price index was flat for July but was up 8.5% from a year ago. A separate measure the Fed follows, the personal consumption expenditures price index, rose 1% in June and was up 6.8% year over year.



Policymakers worried that any signs of wavering from the Fed would make the situation worse.



“Participants judged that a significant risk facing the Committee was that elevated inflation could become entrenched if the public began to question the Committee’s resolve to adjust the stance of policy sufficiently,” the minutes said. “If this risk materialized, it would complicate the task of returning inflation to 2 percent and could raise substantially the economic costs of doing so.”



Though the Fed took the unprecedented steps of hiking three-quarters of a point at successive meetings, markets have been in rally mode lately on hopes that the central bank might soften the pace of increases heading into the fall.



Since the recent bottom in mid-June, the Dow Jones Industrial Average is up more than 14%.



The minutes noted that some members worried the Fed could overdo it with rate hikes, underscoring the importance of not being tied to forward guidance on moves and instead following the data.

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Fed sees interest rate hikes continuing until inflation eases substantially, minutes show

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/08/107094137-1658856244649-gettyimages-1242123750-68053336.jpeg" alt="" class="wp-image-419256" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/08/107094137-1658856244649-gettyimages-1242123750-68053336.jpeg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/107094137-1658856244649-gettyimages-1242123750-68053336-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/107094137-1658856244649-gettyimages-1242123750-68053336-160x90.jpeg 160w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>Liz Truss and Rushi Sunak during The Sun’s Showdown: The Fight for No10, the latest head-to-head debate for the Conservative Party leader candidates. The next prime minister will be forced to confront a historic cost of living crisis as food and energy prices soar and real income shrinks. Dominic Lipinski | Pa Images | Getty Images</figcaption></figure>



LONDON — U.K. inflation rose to another 40-year high in July as spiraling food and energy prices continued to intensify the country’s historic squeeze on households.



The consumer price index rose 10.1% annually, according to estimates published by the Office for National Statistics on Wednesday, above a Reuters consensus forecast of 9.8% and up from 9.4% in June.



Core inflation, which excludes energy, food, alcohol and tobacco, came in at 6.2% in the year to July 2022, rising from 5.8% in June and ahead of projections of 5.9%.



Rising food prices made the largest upward contribution to annual inflation rates between June and July, the ONS said in its report.



The ONS repeated that its indicative modelled consumer price inflation estimates “suggest that the CPI rate would last have been higher around 1982, where estimates range from nearly 11% in January down to approximately 6.5% in December.”



The&nbsp;Bank of England&nbsp;has implemented six consecutive hikes to interest rates as it looks to rein in inflation, and earlier this month&nbsp;launched its largest single increase since 1995&nbsp;while projecting that the U.K. will enter its longest recession since the global financial crisis in the fourth quarter of the year.



The Bank expects inflation to top out at 13.3% in October. Conservative Party leadership candidates Liz Truss and Rishi Sunak, one of whom will succeed Boris Johnson as prime minister on Sept. 5 after a poll of party members, are under increasing pressure to offer radical solutions to the country’s historic cost-of-living crisis.



The latest forecasts suggest the U.K.’s energy price cap could rise to £4,266 ($5,170) annually early next year from its current £1,971, with many households already choosing between heating and eating. The cap is expected to rise to more than £3,000 in October following the next review.



Real wages in the U.K. fell by an annual 3%&nbsp;in the second quarter of 2022, according to ONS data published Tuesday, the sharpest decline on record.



Despite average pay excluding bonuses increasing by 4.7%, the cost of living is far outpacing wage growth and squeezing household incomes.



“Today’s inflation figures serve as a further reminder to many UK households that they are facing a period of considerable financial hardship,” said Dan Howe, head of investment trusts at Janus Henderson.



“Consumers are already grappling with rising energy costs and surging household prices, all compounded by a lack of decisive action at the political level. Amid talks of strikes and energy blackouts, there is no doubt that tough decisions lie ahead of U.K. families.”



Richard Carter, head of fixed interest research at Quilter Cheviot, predicted that the Bank of England will likely respond at its next monetary policy meeting with yet another 50 basis point interest rate hike in a bid to combat inflation, and said there is no doubt that the cost-of-living crisis is going to get worse before it gets better.



“As such, there will no doubt be a lot of pressure on the next Prime Minister to help soften the blow and the Bank of England will continue to have a very difficult job on its hands,” he added.

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UK inflation hits new 40-year high of 10.1% as food and energy price surge continues

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/08/107104804-1660680828602-bid3-820x547.jpg" alt="" class="wp-image-419252" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/08/107104804-1660680828602-bid3-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/107104804-1660680828602-bid3-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/107104804-1660680828602-bid3-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/107104804-1660680828602-bid3-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/107104804-1660680828602-bid3-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/107104804-1660680828602-bid3-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>Photo: via CNBC</figcaption></figure>



After more than a year of debate over costs, taxes, tax credits and regulations, President&nbsp;Joe Biden&nbsp;finally signed his sweeping tax, health and climate bill&nbsp;into law — albeit a significantly reduced version of the $1.75 trillion&nbsp;Build Back Better plan&nbsp;he was pushing for last year.



The president signed the newly renamed Inflation Reduction Act into law flanked by Senate Majority Leader Chuck Schumer, D-N.Y.; Sen. Joe Manchin, D-W. Va.; and Reps. Jim Clyburn, D-S.C. and Kathy Castor, D-Fl.



“With this law, the American people won and the special interests lost,” Biden said in remarks before he signed the bill.



The new law includes a $369 billion investment in climate and energy policies, $64 billion to extend a policy under the Affordable Care Act to reduce health insurance costs, and a 15% corporate minimum tax aimed at companies that earn more than $1 billion a year.



The $437 billion spending package is expected to raise $737 billion in revenue over the next decade, the biggest share coming from reductions in drug prices for Medicare recipients and tax hikes on corporations. Roughly $124 billion is expected to come from increased IRS enforcement, meaning tougher and more frequent audits for the wealthy. It’s projected to reduce the deficit by more than $300 billion over a decade.



To get a deal done, Biden had to give up some of his favorite pieces of his original&nbsp;Build Back Better&nbsp;bill, including universal child care and tax cuts for the middle class. Manchin, a conservative Democrat,&nbsp;was also a late Democratic holdout until&nbsp;he and Schumer&nbsp;struck a deal moving the bill forward earlier this month.



Freshman Sen. Kyrsten Sinema, D-Ariz., held up passage in the evenly divided Senate at the last minute over a provision that would have closed the so-called carried interest loophole that allows private equity managers and hedge fund executives to pay significantly lower tax rates than most taxpayers.



While introducing the president, Schumer thanked Manchin along with House Speaker Nancy Pelosi, D-Calif., and the White House staff “who gave it their all to finishing this bill.”



The bill narrowly passed the U.S. Senate 51-50 on Aug. 7 with no Republican votes. Vice President Kamala Harris cast the tiebreaking vote, giving Democrats a win.



The U.S. House passed the bill Friday by a&nbsp;220-207 margin.



In remarks, Biden noted that every Republican in Congress voted against the measure.



“Let’s be clear. In this historic moment, Democrats sided with the American people and every single Republican in the Congress sided with a special interest in this vote,” he said. “Every single one.”

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Biden signs Inflation Reduction Act into law, setting 15% minimum corporate tax rate

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="556" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/08/GettyImages-1242534232-820x556.jpg" alt="" class="wp-image-419208" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/08/GettyImages-1242534232-820x556.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/GettyImages-1242534232-300x203.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/GettyImages-1242534232-133x90.jpg 133w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/GettyImages-1242534232-768x521.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/GettyImages-1242534232-1536x1042.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/GettyImages-1242534232-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>ODESSA REGION, UKRAINE &#8211; AUGUST 16: The Lebanese-flagged bulk carrier Brave Commander grain ship carrying humanitarian food aid cargo of wheat for Ethiopia, departs from Yuzhne in Odessa region, Ukraine, on August 16, 2022. Turkiye, the UN, Russia, and Ukraine signed a deal on July 22 to reopen three Ukrainian ports &#8212; Odessa, Chernomorsk, and Yuzhny &#8212; for grain that has been stuck for months because of the ongoing Russia-Ukraine war, which is now in its sixth month. (Photo by Vladimir Shtanko/Anadolu Agency via Getty Images)</figcaption></figure>



KYIV/ISTANBUL, Aug 16 (Reuters)&nbsp;&#8211;&nbsp;The ship Brave Commander has left the Ukrainian port of Pivdennyi, carrying the first cargo of humanitarian food aid bound for Africa from Ukraine since Russia&#8217;s invasion, Refinitiv Eikon data showed on Tuesday.



Ukraine&#8217;s grain exports have slumped since the start of the war because of the closure of its Black Sea ports, driving up global food prices and sparking fears of shortages in Africa and the Middle East.



Moscow calls its action in Ukraine a &#8220;special military operation&#8221;.



Three Black Sea ports were unblocked last month under a deal between Moscow and Kyiv, brokered by the United Nations and Turkey, making it possible to send hundreds of thousands of tonnes of Ukrainian grain to buyers.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL1N2ZH0AX&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



The Brave Commander, carrying 23,000 tonnes of wheat, left for Djibouti with supplies destined for consumers in Ethiopia, Ukraine&#8217;s infrastructure ministry said.



&#8220;The ministry and the United Nations are working on ways to increase food supplies for the socially vulnerable sections of the African population,&#8221; it said in a statement.



World Food Programme (WFP) Executive Director David Beasley said the most important step in combating hunger globally is the opening of Ukraine&#8217;s Black Sea ports.



&#8220;It will take more than grain ships out of Ukraine to stop world hunger, but with Ukrainian grain back on global markets we have a chance to stop this global food crisis from spiraling even further,&#8221; he said in a statement.



The WFP&#8217;s deputy emergency co-ordinator in Ukraine, Marianne Ward, told Reuters the ship was expected to reach its destination in two weeks and the humanitarian agency had procured 60,000 metric tonnes of wheat thus far.



Further cargoes are likely to deliver food aid to countries in the Middle East and Horn of Africa, she said, adding that WFP was looking at all options to transport food out of Ukraine.



<h2 class="wp-block-heading" id="h-food-crisis">FOOD CRISIS</h2>



&#8220;While we totally focused on the Odesa ports because that is most efficient and can get out the most tonnage, we are still pursuing taking commodities out through alternative routes,&#8221;



Despite the latest developments, the world still faces an unprecedented food crisis, the WFP said, adding that up to 50 million people in 45 countries are on the edge of famine.



Ukraine can export 3 million tonnes of grain from its ports in September and be able in the future to export 4 million tonnes a month, said Deputy Infrastructure Minister Yuriy Vaskov.



He said that Ukraine had received applications for 30 ships to come to Ukraine in the next two weeks to export grain while the total export volume so far was about 600,000 tonnes.



Turkey&#8217;s defence ministry said that five ships, including the Brave Commander, left Ukrainian ports on Tuesday carrying corn and wheat, three from Chornomorsk and two from Pivdennyi. That lifts the total number of ships to leave under the deal to 21.



Four more ships bound for Ukraine were to be inspected on Tuesday by the joint co-ordination centre set up in Istanbul by Russia, Turkey, Ukraine and the United Nations.



Despite the unblocking of ports, Ukraine&#8217;s grain exports are down 46% year on year at 2.65 million tonnes so far in the 2022/23 season, the agriculture ministry said this week.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL1N2ZR0EE&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



Ukraine exported 948,000 tonnes of grain in the first half of August, down from 1.88 million tonnes in the same period a year earlier.



(Reporting by Daren Butler in Istanbul and Pavel Polityuk in KyivAdditional reporting by Andrea Shalal in Kyiv and Wendell Roelf in Cape TownEditing by Clarence Fernandez, Jason Neely and David Goodman)

The Lebanese-flagged bulk carrier Brave Commander grain ship departs from Yuzhne in Odessa

First post-blockade food aid ship leaves Ukraine for Africa

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/08/106584291-1592554812639gettyimages-1220873030.jpg" alt="" class="wp-image-419140" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/08/106584291-1592554812639gettyimages-1220873030.jpg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/106584291-1592554812639gettyimages-1220873030-300x169.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/106584291-1592554812639gettyimages-1220873030-160x90.jpg 160w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>Shoppers walk through the rain on Oxford Street in London. Tolga Akmen/AFP/Getty Images</figcaption></figure>



The U.K. economy contracted in the second quarter of 2022, as the country’s cost-of-living crisis hit home.



Official figures published Thursday showed that gross domestic product (GDP) shrank by 0.1% quarter on quarter in the second three months of the year, less than the 0.3% contraction expected by analysts.



It comes after GDP expanded by 0.8% in the first quarter of the year.



Last week, the Bank of England warned that it expects the U.K. economy to enter its longest recession since the global financial crisis in the fourth quarter. Inflation, meanwhile, is projected to peak above 13% in October.



Monthly estimates showed that GDP fell 0.6% in June, less than the 1.3% consensus forecast, but down from a revised 0.4% expansion in May.



“U.K. growth is stagnating as the economy faces challenges from a severe real income squeeze amid elevated inflation and higher interest rates,” said Hussain Mehdi, macro and investment strategist at HSBC Asset Management.



“In this backdrop, it will be difficult to dodge recession, especially with upside risks to energy prices heading into the winter.”



Despite the macroeconomic headwinds, however, HSBC backs large-cap U.K. equities to continue to outperform this year given “exposure to commodity, value and defensive names.”



The Office for National Statistics, which publishes the growth figures, said the contraction was largely driven by a fall in services output, with the largest drag coming from health and social work activities, reflecting a decline in Covid-19 activities.



It noted that there was a 0.2% fall in household consumption in the second quarter, offset by a positive contribution from net trade.



This is a developing news story and will be updated shortly.

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U.K. economy contracts in the second quarter as cost-of-living crisis bites

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/08/107074440-1654900545495-gettyimages-1241224834-775823847-820x461.jpeg" alt="" class="wp-image-419086" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/08/107074440-1654900545495-gettyimages-1241224834-775823847-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/107074440-1654900545495-gettyimages-1241224834-775823847-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/107074440-1654900545495-gettyimages-1241224834-775823847-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/107074440-1654900545495-gettyimages-1241224834-775823847-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/107074440-1654900545495-gettyimages-1241224834-775823847-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/107074440-1654900545495-gettyimages-1241224834-775823847.jpeg 1920w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>People shop at a grocery store on June 10, 2022 in New York City. Spencer Platt | Getty Images</figcaption></figure>



Prices that consumers pay for a variety of goods and services rose 8.5% in July from a year ago, a slowing pace from the previous month due largely to a drop in gasoline prices.



On a monthly basis, prices were flat as energy prices broadly declined 4.6% and gasoline fell 7.7%. That offset a 1.1% monthly gain in food prices and a 0.5% increase in shelter costs.



Economists surveyed by Dow Jones were expecting headline CPI to increase 8.7% on an annual basis and 0.2% monthly.



Excluding volatile food and energy prices, so-called core CPI rose 5.9% annually and 0.3% monthly, compared to respective estimates of 6.1% and 0.5%.



Even with the lower-than-expected numbers, inflation pressures remained strong.



The jump in the food index put the 12-month increase to 10.9%, the fastest pace since May 1979. Even with the monthly drop in the energy index, electricity prices rose 1.6% and were up 15.2% from a year ago. The energy index rose 32.9% from a year ago.



Used vehicle prices posted a 0.4% monthly decline, while apparel prices also fell, easing 0.1%, and transportation services were off 0.5% as airline fares fell 1.8% for the month and 7.8% from a year ago.



Markets reacted positively to the report, with futures tied to the Dow Jones Industrial Average up more than 400 points and government bond yields down sharply.



Shelter costs, which make up about one-third of the CPI weighting, continued to rise and are up 5.7% from a year ago.



The numbers indicate that inflation pressures are easing somewhat but still remain near their highest levels since the early 1980s.



Clogged supply chains, outsized demand for goods over services, and trillions of dollars in pandemic-related fiscal and monetary stimulus have combined to create an environment of high prices and slow economic growth that has bedeviled policymakers.



The July drop in gas prices has provide some hope after prices at the pump rose past $5 a gallon. But gasoline was still up 44% from a year ago and fuel oil has increased 75.6% on an annual basis, despite an 11% decline in July.



Federal Reserve officials are using a recipe of interest rate increases and related monetary policy tightening in hopes of beating back inflation numbers running well ahead of their 2% long-run target. The central bank has hiked benchmark borrowing rates by 2.25 percentage points so far in 2022, and officials have provided strong indications that more increases are coming.



There was some good news earlier this week when a New York Fed survey indicated that consumers have pared back inflation expectations for the future. But for now, the soaring cost of living remains a problem.



While inflation has been accelerating, gross domestic product declined for the first two quarters of 2022. The combination of slow growth and rising prices is associated with stagflation, while the two straight quarters of negative GDP meets a widely held definition of recession.



Wednesday’s inflation numbers could take some heat off the Fed.



Recent commentary from policymakers has pointed toward a third consecutive 0.75 percentage point interest rate hike at the September meeting. Following the CPI report, market pricing reversed, with traders now anticipating a better chance of a lesser 0.5 percentage point move.



This is breaking news. Please check back here for updates.

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U.S. Consumer prices rose 8.5% in July, less than expected as inflation pressures ease

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/08/107094075-1658859701150-shop2.jpg" alt="" class="wp-image-419078" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/08/107094075-1658859701150-shop2.jpg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/107094075-1658859701150-shop2-300x169.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/107094075-1658859701150-shop2-160x90.jpg 160w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>People shop in a supermarket as inflation affected consumer prices in New York City, June 10, 2022. Andrew Kelly | Reuters</figcaption></figure>



Inflation may finally be cooling, thanks to falling gasoline prices and fading supply chain issues.



Economists expect July’s consumer price index rose 0.2%, down from 1.3% in June, according to Dow Jones. Year-over-year, the pace of consumer inflation in July is expected to fall to 8.7%, down from June’s 9.1%.



CPI is reported at 8:30 a.m ET Wednesday, and is expected to show that inflation has finally peaked. Investors are also closely watching the report for clues as to how aggressive the Federal Reserve might be in raising interest rates to fight rising prices.



“You have about four drivers of inflation right now. You have commodity prices. That’s going away. You have supply chain issues. That’s going away, but you’re still left with housing and the labor market, and that’s going to show up in services inflation,” said Aneta Markowska, chief economist at Jefferies. “You still have a problem with services inflation, and that’s driven by shortages in housing and labor. That’s not going away any time soon, until the Fed manages to destroy demand and that hasn’t happened.”



Excluding energy and food, CPI is expected to rise by 0.5% in July as rents and services prices rose, but that is down from 0.7% in June. Core CPI is still expected to be higher than June on a year-over-year basis, gaining 6.1% from June’s 5.9%.



“Everyone is primed for reasonably good news, so it’s got to be good news. If it’s not as good as people think, it’s going to be unusually bad news,” said Mark Zandi, chief economist at Moody’s Analytics.



Zandi said he expects headline inflation to rise just 0.1%. “That would put year-over-year at 8.7%, uncomfortably high, painfully high but moving in the right direction. I think the 9.1% inflation rate we suffered in June will be the peak&#8230;a lot of this depends on oil prices,” he said.



<h3 class="wp-block-heading" id="h-inflation-expectations-falling">Inflation expectations falling</h3>



The report comes as both consumer and market expectations for inflation are falling. A survey from the New York Federal Reserve this week showed that consumers expected inflation to run at a 6.2% pace over the next year and a 3.2% annual rate for the next three years. That is a big decline from the respective 6.8% and 3.6% results in a June survey.



“That’s one of the most positive aspects of the inflation situation — inflation expectations have come in. Consumer expectations have come in, not surprising with lower gasoline prices,” said Zandi. “But more important, bond market expectations have come back in&#8230;They’re back within spitting distance of the Fed’s target. That’s a really good sign.”



Bond market metrics for inflation, such as the 10-year breakeven, show that investors see a slower pace of inflation than they did just a couple of months ago. According to Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets, the 10-year breakeven is now 2.50%, down from a high of 3.07% earlier this year.



That means that market participants now expect a rate of inflation that averages 2.50% annually over the next 10 years. Lyngen said the risks around the July CPI tilt toward an even lower number than expected.



“There’s just too many wild cards for us to have a particularly strong opinion, other than to say this is consistent with peak inflation and will be traded as such,” he said.



<h2 class="wp-block-heading"><a></a>Oil is the wild card</h2>



One wild card is oil and, while it has been falling lately, market views diverge on what will happen later in the year. The price is highly dependent on geopolitical events and how much the global economy slows. August has seen some of the lowest prices for oil since Russia’s invasion of Ukraine, with West Texas Intermediate crude futures trading at around $90 Tuesday, well off the March near $130 per barrel.



In June, the CPI energy index rose 7.5%, with gasoline alone rising 11.2%.



Gasoline prices fell through the month of July and are down about 20% from the June 14 peak of $5.01 per gallon. The average national price for a gallon of unleaded was $4.03 per gallon Tuesday, according to AAA.



Housing costs are expected to have continued to rise in July. In June, the rent index rose 0.8%, the largest monthly increase since April 1986.



“That’s not coming in. That will remain persistently high, at least through next year. We may see the worst acceleration of housing costs by the end of the year,” said Zandi.



Zandi said that dual improvement in supply and cooling of demand mean rents could eventually moderate.



“One reason is because demand is hurt. People can’t pay these rents&#8230;.and the other is supply. Multifamily construction is strong,” the economist said. “That will show up in housing CPI, but it won’t be until next year,” he said. “That will add about a half a point to inflation going forward for the foreseeable future. We have inflation settling at 2.5% on CPI, in spring of 2024. But a half point of that is housing.”



Markowska said consumers got a break in July travel costs, which have fallen from the highest pace of the spring and summer. In July, she expects the CPI airfare index to decline by 7.7% month-over-month, taking 0.1% from core CPI.



So far, Markowska said car prices do not seem to be coming down. “We seem to have extremely low inventory levels. I’m not looking for big gains there. Used car prices, they’ve been up two months in a row. I think they post another increase this month and new car prices will be up as well,” she said. She added prices do seem to be stabilizing. “I think a lot of folks were expecting we would reverse some of the price gains.”



She said supply chain issues have been easing. “You see that pretty clearly in a lot of indicators — ISM indices, prices paid are declining, delivery times are shortening. Traffic on the Pacific is below levels we saw last year. We’re actually in a peak shipping period as well. Everything seems to be moving in the right direction,” she said.



Economists say it is important the Federal Reserve sees inflation abating. But this is just one report, and the Fed will also be looking at the next jobs report for August and the August CPI before it raises interest rates again in September.



Lyngen said all of those numbers will decide whether the Fed hikes 50 basis points, as had been expected before Friday’s strong jobs report, or 75 basis points, in line with the June and July increases. The economy added 528,000 jobs in July, double what economists had forecast. A basis point equals 0.01 of a percentage point.

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Critical inflation report could show price increases have eased

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/08/107101615-1660106659836-gettyimages-1241133028-CHINA_FOOD_MARKET.jpeg" alt="" class="wp-image-419074" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/08/107101615-1660106659836-gettyimages-1241133028-CHINA_FOOD_MARKET.jpeg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/107101615-1660106659836-gettyimages-1241133028-CHINA_FOOD_MARKET-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/107101615-1660106659836-gettyimages-1241133028-CHINA_FOOD_MARKET-160x90.jpeg 160w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>Customers buying pork at a food market in Shanghai, China. Prices of pork, a food staple in China, rose by 20.2% in July 2022 compared to a year ago, official data showed. Qilai Shen | Bloomberg | Getty Images</figcaption></figure>



BEIJING — China’s consumer price index hit a two-year high in July as pork prices rebounded, according to official data released Wednesday.



Prices of pork, a food staple in China, rose by 20.2% in July from a year ago. It marked the first increase since September 2020, according to official data accessed through Wind Information.



In fact, pork prices posted their largest month-on-month surge on record — up by 25.6%, the data showed.



Farmers’ reluctance to sell — in hopes of getting higher prices in the future&nbsp;— contributed to July’s pork price surge, said Bian Shuyang, agricultural products analyst at Nanhua Futures, in a statement.



Looking ahead, Bian expects it will be difficult for pork prices to surpass July’s levels.



Two Chinese holidays in September and October will help support consumer demand for pork, Bian said.



According to the analyst, live hog producers are now operating at a profit, an indication of more supply to come.



Pork prices have swung wildly over the last three years as hog farmers have had to battle deadly disease and many new producers.



Fresh fruit and vegetable prices also jumped in July, up by 16.9% and 12.9% from a year ago, respectively, according to the National Bureau of Statistics.



<h2 class="wp-block-heading" id="h-ex-food-price-slump"><a></a>Ex-food price slump</h2>



While food prices rose, Wednesday’s inflation data continued to reflect lackluster demand in China’s economy.



The headline consumer price index rose by 2.7% in July, missing expectations for a 2.9% increase, according to analysts polled by Reuters.



“Non-food prices actually declined in July [by 0.1%] from their June level, which reflects weak demand,” Zhiwei Zhang, president and chief economist, Pinpoint Asset Management, said in a note.



“The Covid outbreaks in many cities and the lack of further policy stimulus may have led to weaker growth in July,” he said.



Despite the summer holidays, the tourism price component only rose by 0.5% in July from a year ago.



Covid outbreaks in the last few weeks have disrupted vacations with cancelled flights and venue closures in tourist spots ranging from Hainan island to the Tibetan plateau.



China’s CPI print for last month was still the highest since July 2020, when the index also rose by 2.7%, according to Wind data.



China’s inflation data has run far below that of the U.S., which is set to release its consumer price index data overnight. Economists polled by Dow Jones expect the U.S. consumer price index to rise by 8.7% in July from a year ago, down from 9.1% in June.



Wednesday’s data showed China’s producer prices continued to moderate, also coming in below expectations.



The 4.2% year-on-year increase reported for July missed the Reuters’ poll forecast of 4.8% growth.



“Falling PPI inflation also points to limited potential upside to CPI inflation” in China, Nomura’s chief China Economist Ting Lu said in a note.



— CNBC’s Patti Domm contributed to this report.

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China consumer prices hit a two-year high

LONDON — The&nbsp;<a href="https://www.cnbc.com/bank-of-england/">Bank of England</a>&nbsp;on Thursday hiked interest rates by 50 basis points, its largest single increase since 1995, and projected the U.K.’s longest recession since the global financial crisis.



The sixth consecutive increase takes borrowing costs to 1.75% and marks the first half-point hike since the bank was made independent from the British government in 1997.



The Monetary Policy Committee voted by a majority of 8-1 in favor of the historic half-point rise, and cited climbing inflationary pressures in the U.K. and the rest of Europe since its previous meeting in May.



“That largely reflects a near doubling in wholesale gas prices since May, owing to Russia’s restriction of gas supplies to Europe and the risk of further curbs,” the MPC said in its accompanying statement.



“As this feeds through to retail energy prices, it will exacerbate the fall in real incomes for UK households and further increase UK CPI inflation in the near term.”



Britain’s energy regulator, Ofgem, increased the energy price cap by 54% from April to accommodate soaring global costs, but is expected to rise by a greater degree in October, with annual household energy bills&nbsp;<a href="https://www.cornwall-insight.com/press/price-cap-to-remain-significantly-above-3000-a-year-until-at-least-2024/" target="_blank" rel="noreferrer noopener">predicted</a>&nbsp;to surpass £3,600 ($4,396).



The bank now expects headline inflation to peak at 13.3% in October and to remain at elevated levels throughout much of 2023, before falling to its 2% target in 2025.



The MPC noted that the labor market remains tight, with domestic cost and price pressures elevated, adding that there is a risk that a “longer period of externally generated price inflation will lead to more enduring domestic price and wage pressures.”



“The labour market has remained tight, with the unemployment rate at 3.8% in the three months to May and vacancies at historically high levels,” the MPC said. “As a result, and consistent with the latest Agents’ survey, underlying nominal wage growth is expected to be higher than in the May Report over the first half of the forecast period.”



<a href="https://www.cnbc.com/quotes/GBP=">Sterling</a>&nbsp;was down over 0.5% against the dollar following the bank’s announcement, trading at around $1.209, while the&nbsp;<a href="https://www.cnbc.com/quotes/.FTSE">FTSE 100</a>&nbsp;index climbed 0.5%.



<h3 class="wp-block-heading" id="h-cost-of-living-crisis">Cost-of-living crisis</h3>



In a news conference following the announcement, Bank of England Governor Andrew Bailey said the shock of&nbsp;<a href="https://www.cnbc.com/2022/08/04/russia-ukraine-live-updates.html">Russia’s war in Ukraine</a>&nbsp;is now the largest contributor to U.K. inflation “by some way.”



“There is an economic cost to the war, but I have to be clear, it will not deflect us from setting monetary policy to bring inflation back to the 2% target,” he added.



Markets had broadly priced in the more aggressive approach at the August meeting, after&nbsp;<a href="https://www.cnbc.com/2022/07/20/uk-inflation-hits-new-40-year-high-of-9point4percent-as-cost-of-living-crisis-deepens.html">U.K. inflation hit a new 40-year high of 9.4% in June</a>&nbsp;as food and energy prices continued to surge, deepening the country’s historic cost-of-living crisis.



Bailey vowed last month that there would be “no ifs or buts” in the central bank’s commitment to returning inflation toward its 2% target.



Analysts had been keen to assess the bank&#8217;s language, particularly its previous commitment to act &#8220;forcefully&#8221; on inflation, and the MPC retained that language in Thursday&#8217;s report.



&#8220;I recognize the significant impact this will have, and how difficult the cost-of-living challenge will continue to be for many people in the United Kingdom,&#8221; Bailey said.



&#8220;Inflation hits the least well-off hardest, but if we don&#8217;t act to prevent inflation becoming persistent, the consequences later will be worse, and that will require larger increases in interest rates.&#8221;



The bank said that it intends to start active government bond sales worth approximately £10 billion ($12.1 billion) per quarter from September, subject to a final green light from policymakers.



<h2 class="wp-block-heading"><a></a>Recession incoming</h2>



The bank issued a dire outlook for economic growth, suggesting that the latest gas price rise has led to another &#8220;significant deterioration&#8221; in the outlook for activity in the U.K. and the rest of Europe.



The MPC now projects that the U.K. will enter recession from the fourth quarter of 2022, and that the recession will last five quarters as real household post-tax income falls sharply in 2022 and 2023 and consumption begins to contract.



&#8220;Growth thereafter is very weak by historic standards. The contraction in output and weak growth outlook beyond that predominantly reflect the significant adverse impact of the sharp rises in global energy and tradable goods prices on U.K. household real incomes,&#8221; the MPC said in its monetary policy report.



The forecast warns of a peak-to-trough fall in output of 2.1%, with the economy beginning to shrink in the fourth quarter of 2022 and contracting throughout 2023.



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/08/107056415-1651740731891-gettyimages-1240456389-UK_BOE.jpeg" alt="" class="wp-image-418998" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/08/107056415-1651740731891-gettyimages-1240456389-UK_BOE.jpeg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/107056415-1651740731891-gettyimages-1240456389-UK_BOE-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/107056415-1651740731891-gettyimages-1240456389-UK_BOE-160x90.jpeg 160w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>BOE Governor Andrew Bailey has warned the Bank is walking a “narrow path” between growth and inflation. Bloomberg | Bloomberg | Getty Images</figcaption></figure>



Luke Bartholomew, senior economist at Abrdn, said the bank&#8217;s forecasts make clear just how difficult the U.K.&#8217;s economic picture is compared with other major countries.



&#8220;The Bank is simultaneously forecasting a long recession starting later this year and an even higher peak in inflation. This is a toxic economic combination, which would be difficult for the central bank to navigate at the best of times, let alone when it is increasingly being dragged into the political spotlight,&#8221; he said.



Liz Truss, the favorite to win the Conservative Party leadership contest and succeed Boris Johnson as prime minister, is reportedly considering a review of the Bank of England&#8217;s inflation mandate and the extent of its independence from the central government.



&#8220;With inflation now expected to stick around for longer, it is hard to see how the Bank can pivot towards supporting the economy any time sooner. As such, investors should expect further interest rate increases from here even as markets and the economy struggle,&#8221; Bartholomew added.

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Bank of England launches biggest interest rate hike in 27 years, predicts lengthy recession

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="554" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/08/DWZGTMGIKJI6PEJDJRYIQMRDYU-820x554.jpg" alt="" class="wp-image-418882" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/08/DWZGTMGIKJI6PEJDJRYIQMRDYU-820x554.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/DWZGTMGIKJI6PEJDJRYIQMRDYU-300x203.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/DWZGTMGIKJI6PEJDJRYIQMRDYU-133x90.jpg 133w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/DWZGTMGIKJI6PEJDJRYIQMRDYU-768x518.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/DWZGTMGIKJI6PEJDJRYIQMRDYU.jpg 960w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>Visitors to the Yamana Gold mining company booth speak with representatives during the Prospectors and Developers Association of Canada (PDAC) annual convention in Toronto, Ontario, Canada March 4, 2019. REUTERS/Chris Helgren</figcaption></figure>



KALGOORLIE, Australia, Aug 2 (Reuters)&nbsp;&#8211;&nbsp;Gold Fields&nbsp;GFIJ.J&nbsp;Chief Executive Chris Griffith said on Tuesday that convincing the company&#8217;s shareholders to back its takeover offer for Canada&#8217;s Yamana Gold&nbsp;YRI.TO&nbsp;was still a &#8220;work in progress&#8221;.



The South Africa listed miner, with assets in Australia, Africa and South America, announced plans in May to acquire Yamana in an all-share deal valuing the Canada-listed miner at $6.7 billion on May 31.



But shares of Gold Fields plunged after news of the proposed takeover. Last month the miner promised higher dividends and a Toronto Stock Exchange (TSX) listing to sweeten its takeover offer.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL1N2YS0CB&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



The market has started to understand the strategy and the timing of the deal, but is still miffed with the premium the company offered to pay, Griffith told reporters at a mining conference in Kalgoorlie, Australia.



&#8220;We are trying to get them to see the massive upside that exists in this deal. So work in progress is probably the best way to describe it,&#8221; he said when asked if investors and shareholders were on board with the deal.



Gold Fields shareholders will vote on the deal in the second week of October.



Griffith said the company has held a couple of road shows in recent weeks to &#8220;educate&#8221; shareholders.



Redwheel, one of the 10 biggest investors in Gold Fields, publicly told the miner to cancel the takeover, which it described as an expensive error with no guarantee of growth and profitability.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL8N2XX3FQ&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



Gold Fields&#8217; shares tumbled 25% in the first few days after the details of the deal and the premium it was paying emerged. But the shares have made a comeback since, Griffith said.



When asked if the deal terms would be changed if there&#8217;s pushback from shareholders, Griffith said: &#8220;The deal structure has been locked in. We don&#8217;t foresee that we will change the deal structure. But I do say that never say never.&#8221;



(Reporting by Praveen Menon; Editing by Muralikumar Anantharaman)

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Gold Fields CEO: Shareholder buy-in for Yamana takeover is still ‘work in progress’

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="517" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/02/GNZ4EKIZHBJMHAHGTKTLUHIQ54-820x517.jpg" alt="" class="wp-image-415106" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/02/GNZ4EKIZHBJMHAHGTKTLUHIQ54-820x517.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/02/GNZ4EKIZHBJMHAHGTKTLUHIQ54-300x189.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/02/GNZ4EKIZHBJMHAHGTKTLUHIQ54-143x90.jpg 143w, https://cms.cnbcafrica.com/wp-content/uploads/2022/02/GNZ4EKIZHBJMHAHGTKTLUHIQ54-768x484.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/02/GNZ4EKIZHBJMHAHGTKTLUHIQ54.jpg 1200w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>A 3D-printed oil pump jack is seen in front of displayed OPEC logo in this illustration picture, April 14, 2020. REUTERS/Dado Ruvic/File Photo</figcaption></figure>



July 31 (Reuters)&nbsp;&#8211;&nbsp;OPEC&#8217;s new secretary general said that Russia&#8217;s membership in OPEC+ is vital for the success of the agreement, Kuwait&#8217;s Alrai newspaper reported on Sunday, quoting an exclusive interview with Haitham al-Ghais.



He said OPEC is not in competition with Russia, calling it &#8220;a big, main and highly influential player in the world energy map&#8221;, Alrai reported.



OPEC+ is an alliance of the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia.



Al-Ghais, Kuwait&#8217;s former OPEC governor, will head his first OPEC+ meeting on Aug. 3, in which the group will consider keeping oil output unchanged for September, despite calls from the United States for more supply.



Although, a modest output increase is also likely to be discussed, eight sources told Reuters last week.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL8N2Z94QT&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



AL-Ghais told Alrai that &#8220;OPEC doesn&#8217;t control oil prices, but it practices what is called tuning the markets in terms of supply and demand,&#8221; describing the current state of the oil market as &#8220;very volatile and turbulent.&#8221;



He added of the recent hikes in oil prices: &#8220;As for me, I still stress that the recent rise in oil prices is not only related to the developments between Russia and Ukraine.



&#8220;All the data confirm that prices began to rise gradually and cumulatively, and before the outbreak of the Russian-Ukrainian developments, due to the prevailing perception in the markets that there is a shortage of spare production capacity, which has become confined to a few and limited countries,&#8221; al-Ghais said.



Oil&nbsp;LCOc1&nbsp;has soared in 2022 to its highest since 2008, climbing above $139 a barrel in March, after the United States and Europe imposed sanctions on Russia over its invasion of Ukraine. Prices have since eased to around $108, as soaring inflation and higher interest rates raise fears of a recession that would erode demand.



Replying to a question about the factors that will affect oil prices by the end of the year, al-Ghais said: &#8220;In my view, the most important factor will be the continued lack of investments in the field of drilling, exploration and production.&#8221;



&#8220;This will push prices in an upward direction, but we cannot determine the level they will reach.&#8221;



(Reporting by Moataz Mohamed and Nayera Abdallah; editing by Philippa Fletcher and Sandra Maler)

GNZ4EKIZHBJMHAHGTKTLUHIQ54

OPEC secretary general says Russia’s membership in OPEC+ is vital for success of agreement

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107058125-16521097772022-05-09t151547z_832530222_rc2k3u9582mq_rtrmadp_0_ukraine-crisis-austria-gas.jpeg" alt="" class="wp-image-418752" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107058125-16521097772022-05-09t151547z_832530222_rc2k3u9582mq_rtrmadp_0_ukraine-crisis-austria-gas.jpeg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107058125-16521097772022-05-09t151547z_832530222_rc2k3u9582mq_rtrmadp_0_ukraine-crisis-austria-gas-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107058125-16521097772022-05-09t151547z_832530222_rc2k3u9582mq_rtrmadp_0_ukraine-crisis-austria-gas-160x90.jpeg 160w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>Europe has previously received around 45% of its annual gas supplies from Russia. Leonhard Foeger | Reuters</figcaption></figure>



Europe’s descent into an economic contraction looks to have been confirmed with Russia squeezing natural gas supplies to the bloc and heavy industry facing tough rationing in the coming months.



Just days after Europeans breathed a sigh of relief as Russian gas giant Gazprom announced that it would resume supplies through the Nord Stream 1 pipeline, it then announced Monday that flows would be reduced yet again.



The announcement, with Gazprom saying it would be for maintenance of a turbine along the pipeline, was greeted with incredulity and condemnation in Europe.



Ukraine’s President Volodymyr Zelenskyy said the move — which will see flows to Germany fall to 20% of its capacity from an already low level of 40% — was tantamount to a “gas war” with Europe. Germany’s Economy Minister Robert Habeck said the excuse that maintenance was the reason for the supply cut was a “farce.”



It puts Europe in a tricky situation as it contends with rampant inflation, the war in Ukraine and an already troubled supply chain following the Covid-19 pandemic.



Germany, the region’s largest economy and traditional growth driver, has a particular reason to worry. It’s largely reliant on Russian gas and is sliding toward a recession. The government is particularly worried about how it will keep the lights on over winter: Habeck said Monday evening that “we have a serious situation. It is time for everyone to understand that,” during an interview with broadcaster ARD.



He also said that Germany must reduce its gas consumption, noting “we’re working on that.” He said that in a scenario of low supplies, gas for industries will be reduced before private residences or critical infrastructure such as hospitals.



“Of course it’s a big concern, which I also share, that this can happen. Then certain production chains in Germany or Europe would simply no longer be manufactured. We have to avoid that with all the strength we have,”&nbsp;he said.&nbsp;



<h2 class="wp-block-heading" id="h-reliance-on-russia"><a></a>Reliance on Russia</h2>



With Russia under a raft of international sanctions in response to its war on Ukraine, gas is one weapon it can use against Europe.&nbsp;



The region has previously received around 45% of its annual supplies from Russia and while it desperately tries to seek alternatives, such as U.S. liquefied natural gas, it cannot replace its Russian hydrocarbons fast enough.



Unless the situation dramatically changes, analysts are predicting a difficult winter ahead for the continent.



“High energy costs are pushing Western Europe toward recession,” S&amp;P Global Market Intelligence said in a report Sunday. 



“Our July forecast already incorporates mild second-quarter contractions in real GDP in the UK, Italy, Spain, and the Netherlands. With inflation surprising on the upside, the central banks are stepping up the pace of monetary policy tightening. While a rebound in tourism and consumer services might give the region a slight lift in the summer quarter, another setback is likely in the fourth quarter given unreliable energy supplies,” it added.



<h2 class="wp-block-heading"><a></a>‘Clear-cut’ recession</h2>



Exceptionally high natural gas and electricity prices will damage industrial competitiveness in Germany and other manufacturing centers. S&amp;P warned the destructive Russia-Ukraine war will likely drag on through 2022, deflating consumer and business confidence across Europe.&nbsp;



It noted that euro zone real GDP growth is projected to slow from 5.4% in 2021 to 2.5% in 2022 and 1.2% in 2023, before improving to 2.0% in 2024.



EU governments agreed Tuesday to ration natural gas in the coming winter in a bid to insulate themselves from further supply cuts by Russia with the bloc’s energy ministers approving a draft European law aimed at lowering demand for gas by 15% through the fall and into next spring.



Whether the gas savings can be achieved remains to be seen and there has been dissent among EU members about the rationing of gas use.&nbsp;



“Cutting consumption can only do so much. Fundamentally, there is huge demand for natural gas and especially liquid natural gas (LNG) in Europe. Rationing, which will especially impact energy intensive industries like car makers, chemical companies and cryptocurrency mining, can’t be ruled out,” Simon Tucker, global head of energy, utilities and resources at Infosys Consulting, said in emailed comments Tuesday.



“EU countries and the UK must do all they can to replenish gas stores before the cold kicks in – this means looking at every way possible to reduce energy use and improve supply. We’re already seeing a large increase in shipments of LNG from the Middle East and North America. But countries need to accelerate the modernisation of their own infrastructure. Mass deployment of low-carbon, domestic energy alternatives like mini nuclear reactors and community renewables is not just a ‘nice to have’, it’s an imperative if we are to come out of this crisis stronger.”



With such a program of infrastructure modernization likely to take time, Europe is likely to feel more economic pain in the near term.



The possibility of a recession in Europe now seems “clear-cut,” Citi economists and strategists said in a note Tuesday, with Russia’s decision to cut gas flows again likely to have “the consequence of pushing Europe into a deeper recession.”



“As plans for energy rationing for winter get agreed upon, we expect that tighter financial conditions in Europe will induce a much worse reaction in the real economy, given the stance in savings, household leverage and corporate balance sheets. Winter is knocking on Europe’s door,” Citi concluded.



There is, of course, the chance that Russia could again turn up the taps on its gas flows to Europe once the supposed maintenance of this turbine on the Nord Stream 1 pipeline is completed.



“It’s a bit confusing as to whether this will be a short restriction of supply while the repaired turbine makes its way back online or whether the paperwork will never quite be resolved, and we live with only 20% supplies for a considerable time,” Deutsche Bank analysts led by Jim Reid said in a note Tuesday, adding that Russia was likely looking for clearer guarantees on future sanctions exemptions for maintenance of NS1 and related issues.&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;&nbsp;



“This will likely be hard to achieve and the Russians will know this.&nbsp;So it appears like Russian politics will be in control here for now,” they said.



The strategists believed that with the pipeline flowing at 40% capacity Germany could make it through the winter even if some light rationing was needed. “At 20% you would likely need some notable rationing unless they cut gas exports which would be a very delicate thing to do politically,” they said.&nbsp;&nbsp; &nbsp;&nbsp;



In the meantime,&nbsp;the potentially enforced 15% reduction that all EU member states have just agreed upon could be hard to enforce in reality. “Expect lots of carve-outs and compromises to appear if a plan that can progress is agreed,” they said.

107058125-16521097772022-05-09t151547z_832530222_rc2k3u9582mq_rtrmadp_0_ukraine-crisis-austria-gas

Putin’s new gas squeeze condemns Europe to recession and a hard winter of rationing

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2021/08/GettyImages-1233035258-820x547.jpg" alt="" class="wp-image-411043" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2021/08/GettyImages-1233035258-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2021/08/GettyImages-1233035258-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2021/08/GettyImages-1233035258-120x80.jpg 120w, https://cms.cnbcafrica.com/wp-content/uploads/2021/08/GettyImages-1233035258-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2021/08/GettyImages-1233035258-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2021/08/GettyImages-1233035258-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>UKRAINE &#8211; 2021/05/21: In this photo illustration the International Monetary Fund (IMF) logo is seen on a smartphone screen. (Photo Illustration by Pavlo Gonchar/SOPA Images/LightRocket via Getty Images)</figcaption></figure>



WASHINGTON, July 26 (Reuters)&nbsp;&#8211;&nbsp;A&nbsp;new issue of International Monetary Fund Special Drawing Rights reserves is among options that could be considered to aid countries struggling with spillovers from the Ukraine war but there are no active discussions on the matter, IMF officials said on Tuesday.



&#8220;There has been no discussion at the IMF of a further SDR allocation,&#8221; an IMF spokesperson said in an emailed statement. &#8220;Despite recent developments and high global uncertainty, it would be premature to conclude that the long-term global need for reserves has changed significantly.&#8221;



The statement was issued after IMF chief economist Pierre-Olivier Gourinchas told a news conference that a new SDR allocation was&nbsp;&#8220;part of a menu of options that the fund is exploring currently&#8221;&nbsp;to aid countries dealing with crises prompted by high food and energy costs.



The IMF in August 2021 created and issued $650 billion in SDR assets to member countries to aid their recovery from the COVID-19 pandemic, and the spokesperson said most still hold these assets as reserves.



More than 45 progressive U.S. lawmakers led by Senator Elizabeth Warren and Representative Pramila Jayapal, both Democrats, earlier this month urged President Joe Biden and U.S. Treasury Secretary Janet Yellen <a href="https://progressives.house.gov/_cache/files/f/3/f3aa15fe-cca2-40da-a68b-937e3d8646f9/15748EFE144F03BA67ADE35DF1A98155.7-12-22-jayapal-warren-sdr-issuance-letter.pdf" target="_blank" rel="noreferrer noopener">to support</a> a new SDR allocation of at least $650 million to avoid famine and a destabilizing debt crisis in developing countries.



<h3 class="wp-block-heading" id="h-read-more-imf-s-board-to-review-kenya-s-performance-in-mid-july-239-mln-at-stake">Read more: <a href="https://www.cnbcafrica.com/2022/imfs-board-to-review-kenyas-performance-in-mid-july-239-mln-at-stake/">IMF’s board to review Kenya’s performance in mid-July, $239 mln at stake</a></h3>



The SDR issue of that size last year did not require legislative approval in the United States, the IMF&#8217;s controlling shareholder.



Gourinchas said an SDR allocation is &#8220;not a panacea&#8221; for difficulties facing developing countries and there are limitations on how it could help countries.



Another complicating factor is that Russia, as an IMF member, would receive an allocation, which would draw some political opposition given its invasion of Ukraine.



The IMF spokesperson said the Fund is currently focusing on channeling SDRs from wealthier members to those in need of additional reserve assets.



This includes scaling up lending of the reserves through the existing Poverty Reduction and Growth Trust and establishing the new Resilience and Sustainability Trust to include vulnerable middle income countries. The IMF hopes to begin lending from the new trust in October.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL1N2YV1GQ&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



(Reporting by David Lawder; Editing by Mark Porter and Marguerita Choy)

In this photo illustration the International Monetary Fund (

IMF says not holding active discussions on potential new SDR issue

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107088192-1657728004585-GettyImages-1197381795-820x461.jpg" alt="" class="wp-image-418745" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107088192-1657728004585-GettyImages-1197381795-820x461.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107088192-1657728004585-GettyImages-1197381795-300x169.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107088192-1657728004585-GettyImages-1197381795-160x90.jpg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107088192-1657728004585-GettyImages-1197381795-768x432.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107088192-1657728004585-GettyImages-1197381795-1536x864.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107088192-1657728004585-GettyImages-1197381795.jpg 1600w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>Image: via CNBC</figcaption></figure>



U.S. Treasury yields pushed higher on Wednesday as investors geared up for a key policy decision from the Federal Reserve.



The yield on the benchmark 10-year Treasury note rose 1 basis point to 2.8068% by 1:30 a.m. ET, while the yield on the 30-year Treasury bond moved 2 basis points higher to 3.0284%. Yields move inversely to prices and a basis point is equal to 0.01%.



Much of this week’s focus will center on the U.S. Federal Reserve’s two-day policy meeting, which began on Tuesday. Economists are broadly expecting a 75 basis point hike to interest rates.



The Fed is attempting to curb inflation while navigating a backdrop of slowing growth, as evidenced by weaker-than-expected data last week on business activity and jobs.



In earnings news Wednesday, Boeing&nbsp;and Shopify are expected to release their quarterly results before the bell, while&nbsp;Qualcomm,&nbsp;Ford&nbsp;and&nbsp;Meta Platforms&nbsp;will report at the end of the day.



On the economic front, durable goods figures for June are out at 8:30 a.m. ET, while pending home sales for the same month are out at 10 a.m. ET.



— CNBC’s Holly Ellyatt and Tanaya Macheel contributed to this report.

107088192-1657728004585-GettyImages-1197381795

U.S. Treasury yields edge higher ahead of key Fed decision

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107081177-16563461242022-06-27t160407z_1933862849_rc2e0v9ukpi3_rtrmadp_0_usa-stocks.jpeg" alt="" class="wp-image-418705" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107081177-16563461242022-06-27t160407z_1933862849_rc2e0v9ukpi3_rtrmadp_0_usa-stocks.jpeg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107081177-16563461242022-06-27t160407z_1933862849_rc2e0v9ukpi3_rtrmadp_0_usa-stocks-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107081177-16563461242022-06-27t160407z_1933862849_rc2e0v9ukpi3_rtrmadp_0_usa-stocks-160x90.jpeg 160w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>A trader works on the floor of the New York Stock Exchange (NYSE), June 27, 2022. Brendan McDermid | Reuters</figcaption></figure>



There’s a head-spinning amount of news for markets to navigate in the week ahead, the biggest of which will be the Federal Reserve’s midweek meeting.



The two largest U.S. companies —&nbsp;Microsoft&nbsp;and&nbsp;Apple&nbsp;— report Tuesday and Thursday, respectively. Google parent&nbsp;Alphabet&nbsp;releases results Tuesday, and Amazon reports Thursday.&nbsp;Meta Platforms, formerly Facebook, reports Wednesday. In all, more than a third of the S&amp;P 500 companies are reporting.



On top of that are several hefty economic reports, which should add fuel to the debate on whether the economy is heading toward, or is already in, a recession.



“Next week, I think, is going to be the most important week of the summer between the economic reports coming out, with respect to GDP, the employment cost index and the Fed meeting — and the 175 S&amp;P 500 companies reporting earnings,” said Leo Grohowski, chief investment officer at BNY Mellon Wealth Management.



Second-quarter gross domestic product is expected Thursday. The Fed’s preferred personal consumption expenditures inflation data comes out Friday morning, as does the employment cost index. Home prices and new home sales are reported Tuesday and consumer sentiment is released Friday.



“I think what those bigger companies say about the outlook will be more important than the earnings they post. &#8230; When you combine that with the statistical reports, which will be backward looking, I think it’s going to be a volatile and important week,” Grohowski said.



The run-up to the Fed’s meeting on Tuesday and Wednesday has already proven to be dramatic, with traders at one point convinced&nbsp;a full point rate hike was coming. But Fed officials pushed back on that view, and economists widely expect a second three-quarter point hike to follow the one last month.



“Obviously a 75 basis point hike is baked in the cake for next week,” said Grohowski. “I think the question is what happens in September. If the Fed is continuing to stay too tight for too long, we will need to increase our probability of recession, which currently stands at 60% over the next 12 months.” A basis point equals 0.01%.



The Fed’s rate hiking is the most aggressive in decades, and the July meeting comes as investors are trying to determine whether the central bank’s tighter policies have already or will trigger a recession. That makes the economic reports in the week ahead all the more important.



<h2 class="wp-block-heading" id="h-gdp-report"><a></a>GDP report</h2>



Topping the list is that second-quarter GDP, expected to be negative by many forecasters. A contraction would be the second in a row on top of the 1.6% decline in the first quarter. Two negative quarters in a row, when confirming declines in other data, is viewed as the sign of a recession.



The widely watched&nbsp;Atlanta Fed GDP Now&nbsp;was tracking at a decline of 1.6% for the second quarter. According to Dow Jones, a consensus forecast of economists expects a 0.3% increase.



“Who knows? We could get a back-of-the-envelope recession with the next GDP report. There’s a 50/50 chance the GDP report is negative,” Grohowski said. “It’s the simple definition of two down quarters in a row.” He added, however, that would not mean an official recession would be declared by the National Bureau of Economic Research, which&nbsp;considers a number of factors.



Diane Swonk, chief economist at KPMG, expects to see a decline of 1.9%, but added it is not yet a recession because unemployment would need to rise as well, by as much as a half percent.



“That’s two negative quarters in a row, and a lot of people are going to say ‘recession, recession, recession,’ but it’s not a recession yet,” she said. “The consumer slowed quite a bit during the quarter. Trade remains a huge problem and inventories were drained instead of built. What’s interesting is those inventories were drained without a lot of discounting. My suspicion is inventories were ordered at even higher prices.”



Stocks in the past week were higher. The&nbsp;S&amp;P 500&nbsp;ended the week with a 2.6% gain, and the&nbsp;Nasdaq&nbsp;was up 3.3% as earnings bolstered sentiment.



“We’re really shifting gears in terms of what’s going to be important next week versus this week,” said Art Hogan, chief market strategist at National Securities. “We really had an economic data that was largely ignored. Next week, it will probably equal the attention we pay to the household names that are reporting.”



<h2 class="wp-block-heading"><a></a>Better-than-expected earnings?</h2>



Companies continued to surprise on the upside in the past week, with 75.5% of the S&amp;P 500 earnings better than expected, according to I/B/E/S data from Refinitiv. Even more impressive is that the growth rate of earnings for the second quarter continued to grow.



As of Friday morning, S&amp;P 500 earnings were expected to grow by 6.2%, based on actual reports and estimates, up from 5.6% a week earlier.



“We have kind of a perfect storm of inputs, pretty deep economic reports across the board, with things that have become important, like consumer confidence and new home sales,” said Hogan “For me, the real tell will be whether the attitude of investors continues to be that the earnings season is better than feared.”



While stocks gained in the past week, bond yields continued to slide, as traders worried about the potential for recession. The benchmark&nbsp;10-year Treasury yield&nbsp;fell to 2.76% Friday, after weaker PMIs in Europe and the U.S. sent a chilling warning on the economy. Yields move opposite price.



“I do think the market is pivoting,” said Grohowski. “I do think our concerns at least are quickly shifting from persistent inflation to concerns over recession.”



The potential for volatility is high, with markets focused on the Fed, earnings and recession worries. Fed Chair Jerome Powell could also create some waves, if he is more hawkish than expected.



“There are a lot of signs out there about slowing economic growth that will bring down inflation. Hopefully, the Fed doesn’t stay too tight for too long,” said Grohowski. “The chance of a policy error by the Fed continues to increase because we continue to get signs of a rapidly cooling — not just cooling — economy.”

107081177-16563461242022-06-27t160407z_1933862849_rc2e0v9ukpi3_rtrmadp_0_usa-stocks

Markets face what could be the most important week of summer with Fed, earnings and economic data

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/GettyImages-1233279123-820x547.jpg" alt="" class="wp-image-418652" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/GettyImages-1233279123-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/GettyImages-1233279123-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/GettyImages-1233279123-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/GettyImages-1233279123-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/GettyImages-1233279123-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/GettyImages-1233279123-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>UKRAINE &#8211; 2021/06/04: In this photo illustration, Universal Music Group (UMG) logo is seen on a smartphone and pc screen. (Photo Illustration by Pavlo Gonchar/SOPA Images/LightRocket via Getty Images)</figcaption></figure>



ABIDJAN, Ivory Coast, July 22 (Reuters)&nbsp;&#8211;&nbsp;Global media and music brands are racing to claim a stake in Africa&#8217;s music market&nbsp;as&nbsp;internet and smartphone penetration&nbsp;popularize artists and genres far beyond Africa&#8217;s borders.



Companies are taking note of global interest, with&nbsp;Universal Music Group&nbsp;UMG.ASlaunching Virgin Music Africa Label &amp; Artist Servicesin June for&nbsp;independent African labels and artists.&nbsp;The service will digitise&nbsp;out-of-print music catalogues to tap into the growing market for the sounds and chart-toppers of the continent.



Music streaming platforms including Spotify&nbsp;SPOT.N, Apple Music and Boomplay are also&nbsp;entering&nbsp;the market with dedicated and expanded offerings and services.



The interest from global companies is coming as African artists headline festivals and concerts such as, Afro Nation in Portugal and Africolor in France and genres including Afrobeat, Rhumba and Amapiano are topping charts.



Franck-Alcide Kacou, managing director of Universal Music Africa and the&nbsp;new Virgin Music Africa Label, said it has over 15,000 music titles, 50 partner labels and around 100 artists from 25 countries.



The artists include&nbsp;Senegal&#8217;s&nbsp;M&#8217;balax maestro Youssou Ndour, Congo&#8217;s Lokua Kanza, Magic System from Ivory Coast and Cabo Snoop from Angola.



Kacou added that the service will digitize and distribute African music currently in vinyl, cassette or CD formats to reach today&#8217;s younger audience.



&#8220;It&#8217;s a real opportunity for countries that are also experiencing this digital transformation to integrate all this heritage into the cultural offer that is made on platforms,&#8221; Kacou told Reuters in Abidjan.



He said&nbsp;the&nbsp;service&nbsp;will&nbsp;support independent labels in digital distribution who are looking for a wider network.



&#8220;Finding a producer on the continent and distributing cultural works is a real challenge for many talents, most of whom do not receive fair remuneration for their musical works,&#8221; Kacou said.



(Reporting by Loucoumane Coulibaly; Writing by Bate Felix; Editing by Josie Kao)

International

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Putin’s new gas squeeze condemns Europe to recession and a hard winter of rationing

IMF says not holding active discussions on potential new SDR issue

U.S. Treasury yields edge higher ahead of key Fed decision

Markets face what could be the most important week of summer with Fed, earnings and economic data

Global brands are taking note of Africa’s music and talent

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International

China trims lending rates again, one week after surprise cuts in key rates

Fed sees interest rate hikes continuing until inflation eases substantially, minutes show

UK inflation hits new 40-year high of 10.1% as food and energy price surge continues

Biden signs Inflation Reduction Act into law, setting 15% minimum corporate tax rate

First post-blockade food aid ship leaves Ukraine for Africa

U.K. economy contracts in the second quarter as cost-of-living crisis bites

U.S. Consumer prices rose 8.5% in July, less than expected as inflation pressures ease

Critical inflation report could show price increases have eased

China consumer prices hit a two-year high

Bank of England launches biggest interest rate hike in 27 years, predicts lengthy recession

Gold Fields CEO: Shareholder buy-in for Yamana takeover is still ‘work in progress’

OPEC secretary general says Russia’s membership in OPEC+ is vital for success of agreement

Putin’s new gas squeeze condemns Europe to recession and a hard winter of rationing

IMF says not holding active discussions on potential new SDR issue

U.S. Treasury yields edge higher ahead of key Fed decision

Markets face what could be the most important week of summer with Fed, earnings and economic data

Global brands are taking note of Africa’s music and talent

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