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ECB Base Rate Cut and Moscow Exchange Indicators Decline. Financial Market Review for October 17
ECB Base Rate and Moscow Exchange Index Cuts. Financial Market Review for October 17
The European Central Bank (ECB) cut its benchmark interest rate to 3.4% from 3.65% as the eurozone continues to cope with an economic downturn and plans measures to reduce inflation. Russia's central bank plans to discuss a further hike in its benchmark interest rate at a meeting on October 25.
The Chinese yuan exchange rate rose on the Moscow Exchange during the trading session on Thursday. By 19:00 Moscow time, the Chinese yuan exchange rate was 13.55 rubles, which is 2 kopecks higher than the previous closing level.
The official exchange rate of the US dollar against the ruble, announced by the Bank of Russia on October 18, fell by 0.11 rubles, amounting to 97.15 rubles.
The official exchange rate of the euro against the ruble, announced by the Bank of Russia on October 18, fell by 0.33 rubles, amounting to 105.76 rubles.
The Central Bank of Russia calculates the official exchange rate based on reporting data from credit institutions and the results of interbank conversion transactions on the over-the-counter foreign exchange market.
The decision on interest rates that the Central Bank of the Russian Federation will make at the board meeting on October 25 has not been made in advance. Elvira Nabiullina said this at a press conference on Thursday.
"We will make a decision on key interest rates on Friday. And, of course, we will take into account how the newly published data will affect our forecasts in order to make reasonable decisions on key rates. Of course, given the current inflation, the dynamics of inflation expectations, the rate of growth of loans, external factors, etc., many of the factors taken into account when raising the key interest rate last September have been confirmed. But again, the decision was not predetermined. "We will consider all factors next week," he said.
On the global currency market, the dollar index against six major currencies DXY rose and at 20:30 Moscow time was about 103.8 points.
The European Central Bank (ECB) decided to cut its benchmark interest rate from 3.65% to 3.4% at its meeting on Thursday, the regulator said. The decision coincided with analysts' forecasts.
ECB President Christine Lagarde told a news conference after Thursday's meeting that the European Central Bank expects euro zone inflation to recover to its 2% target on a sustainable basis during 2025.
Previous forecasts had suggested inflation would only recover to 2% at the end of next year.
Lagarde said the risk of rising inflation in the eurozone is a geopolitical risk that could lead to a sharp increase in wages and corporate profits, as well as jumps in energy prices and transport costs. Meanwhile, downside risks remain due to tight monetary policy and slowing global growth.
Lagarde noted that the latest statistics show a slowdown in economic growth in the eurozone. This is particularly reflected in the fall of the eurozone PMI below the 50 mark, which separates growth from recession.
At the press conference, several journalists asked Lagarde about the possibility of cutting interest rates at the next meeting or several meetings in a row, but she was adamant that the ECB's decisions depend on incoming statistical data and that the regulator does not have a predetermined trajectory. . . , I repeated. About the change in tariffs.
The trading session on the Moscow Exchange ended with a decline in the main indicators. The Moscow Exchange Index closed at 2,765 points, down 0.6%. The RTS Index fell 0.5% and closed at 896 points. The main US stock indices showed growth in the first half of trading hours. By 20:30 Moscow time, the Dow Jones Industrial Index rose by 0.4%, the S&P 500 by about 0.3%, and the Nasdaq 100 by 0.6%.
Oil prices were little changed on Thursday evening. By 20:30 Moscow time, the price of a Brent crude futures contract on London's ICE Futures Exchange was about $74 a barrel. At that time, the price of a WTI crude futures contract traded on the New York Mercantile Exchange was about $70 a barrel.
U.S. commercial crude oil inventories fell 2.2 million barrels in a week to 420.5 million barrels as of Oct. 11, 2024, according to the Energy Department. The current inventory level is 5% below the five-year average for this time of year. Gasoline inventories fell 2.2 million barrels to 212.7 million barrels. Commercial distillate inventories fell 3.53 million barrels to 114.98 million barrels.