The world's major investment banks downgrade global economic growth forecast

Fears the Fed's aggressive monetary tightening could stifle growth

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Spot gold prices turned higher as the U.S. dollar index weakened sharply. Global supply chain stress resurfaced in April amid growing fears that aggressive monetary tightening by the Federal Reserve could stifle growth and be bearish for the dollar. U.S. housing data for April, released overnight, was abysmal, adding to fears that the U.S. economy could slow. Federal Reserve Chairman Jerome Powell reinforced his hawkish stance a day earlier, saying U.S. monetary authorities would push interest rates as high as needed to stem a spike in inflation.

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Minutes of the ECB's April 14 meeting showed policymakers at the meeting generally expressed concern over the spread of inflation and supported continued policy normalization. With inflation soaring to a record 7.4 percent, the European Central Bank's April meeting confirmed it was ready to end its bond-buying program in the third quarter, but otherwise avoided any other commitments, including on interest rates. , Some members believe that it is necessary to pay attention to not undue delay in action. In addition, some members worry that if the Governing Council does not send a signal to speed up the policy normalization process, inflation expectations will continue to rise. In the five weeks since the April meeting, the attitude of the top ECB policymakers has shifted sharply, so the minutes of the meeting are of a retrospective nature. Almost all the European Central Banks that have publicly expressed their opinions now support a July rate hike, which will be the first time the European Central Bank has raised interest rates in more than 10 years.

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The United Nations on Wednesday slashed its forecast for global economic growth this year to 3.1 percent from 4 percent, noting that the Russia-Ukrainian conflict has sparked a rise in global food and commodity prices and fueled inflationary pressures that have disrupted the global economy from the coronavirus pandemic. fragile recovery. The UN's downgrades to growth prospects for countries are wide-ranging and include some of the world's largest economies, such as the United States and the European Union, as well as most other developed and developing countries. The United Nations said in the "World Economic Situation and Prospects" report that the conflict between Russia and Ukraine has not only dealt a heavy blow to the economies of Ukraine and Russia, but also affected the economies of the two countries' Central Asian and European neighbors.

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U.S. Treasury Secretary Yellen said on May 18 that while food and energy costs will eventually come down, much of the world is likely to be hit by stagflation, the coexistence of high inflation and slow economic growth, which will pose a serious challenge to the global economy . Yellen blamed the Russian-Ukrainian conflict as the main reason for the surge in commodity prices. It is understood that Yellen's warning came as U.S. gasoline prices hit new highs. This week, the average price of regular gasoline in California hit $6 a gallon for the first time. JPMorgan noted that the rest of the U.S. will soon reach that level.

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The UK government announces new sanctions on the Russian aviation industry, Aeroflot, Rossiya and Ural will not be able to sell their profitable unused landing slots at UK airports . The British government said the move would cost Russian airlines around £50 million.

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The British Health and Safety Agency issued a communiqué on the 18th local time, saying that there were two more cases of human infection of monkeypox in the country, and a total of 9 cases have been confirmed. The U.S. Centers for Disease Control and Prevention confirmed the first case of monkeypox in the United States this year. The World Health Organization said that night that more cases of monkeypox were likely in the UK.

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On the 19th local time, Italian Prime Minister Draghi said in a Senate report on the situation in Russia and Ukraine that the country is expected to get rid of its dependence on Russian natural gas in the second half of 2024, and the initial effect will be seen as early as the end of this year. Draghi said Italy moved quickly to diversify its suppliers and increase the supply of natural gas needed as a transition fuel, while also increasing renewable energy production. Italy will remove administrative restrictions on renewable energy with "maximum determination" and remove barriers to investment.

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Credit Suisse suffered a second downgrade this week, putting further pressure on the beleaguered Swiss banking giant. The bank has been under fire for a series of losses and scandals. Fitch on Thursday downgraded Credit Suisse's long-term issuer default rating to "BBB+" from "A-". Earlier this week, S&P downgraded Credit Suisse's credit rating to BBB from BBB+; "The downgrade reflects Fitch's view that Credit Suisse's operating profitability is weaker than its peers, underscoring the group's difficult market environment. Execution risk in the restructuring process under the current circumstances, and indicates the challenges the bank faces in strengthening performance and risk governance over the next 24 months." Fitch revised Credit Suisse's rating outlook from "negative" to "stable", saying the bank The downgraded rating now has "sufficient headroom to withstand a period of reduced profitability, provided the group maintains its franchise".

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Most ECB policymakers are said to be prepared to support at least two rate hikes of 25 basis points each this year, with some citing a possibility of three hikes to return to China, financial news group MNI-Market News said, citing ECB sources. Sexual interest rate. Although some officials played down the idea of ​​ECB Governing Council member Nott downplaying the idea of ​​raising interest rates by 50 basis points, the possibility has also attracted the attention of members. There is still some time before the July meeting, when a 25 basis point hike is all but certain. After that, another crisis is likely, but the ECB will begin to face the challenge of further tightening later in the year as recession risks begin, given that household consumption will be heavily affected by higher energy prices and cost pressures Appear.