The bad news of world inflation continues, the European Central Bank will raise interest rates imminently

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The European Parliament has failed to reach agreement on overhauling the EU carbon market. The European Parliament has voted on a series of changes to a European Commission proposal aimed at strengthening the EU's main climate policy tool, the Emissions Trading System. The Greens and Socialists think the amendment undercuts the reforms, while the Conservatives think it aims too high. MPs from Socialist, Green and Conservative groups unexpectedly refused to approve a revised report in the final vote. The report, which was supposed to determine the position of parliament in negotiations with governments on the final form of the reforms, will now be sent back to the environment committee.

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Market expectations that the ECB will end net asset purchases in June and hint at a first rate hike in July appears to be a realistic scenario. However, given that inflation has been trending well above all expectations for several months, we think a first rate hike as early as June would be appropriate. The longer the current high inflation persists and the longer monetary policy fails to address it, the harder it will be for the ECB to make the necessary policy shift by raising interest rates.

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The euro zone's economy grew faster than expected in early 2022, with GDP growing by 0.6% in the first quarter, higher than the 0.3% forecast announced last month. But consumption fell 0.7% amid ongoing lockdowns, Eurostat said on Wednesday, despite a 0.6% rise in employment, as the euro zone faces two conflicting forces, with the easing of pandemic restrictions coupled with the outbreak of the Russian-Ukrainian war. Households and businesses are facing soaring prices, while service sector demand is strong, and the tourism industry is bracing itself for the peak summer season.

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OPEC Secretary-General Mohammad Barkindo said that all but 2-3 members have reached their limits in terms of oil production. He further elaborated on a speech he gave at a conference held by RBC Capital Markets in New York on Tuesday; the world needs to accept the harsh fact that this is a global challenge and that industry memory is under-invested and needs urgent To turn this around, the multiple global crises in energy, climate and geopolitics require comprehensive and sustainable solutions.

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Spot gold rebounded from lows, as the U.S. dollar index rose and fell, both of which fell into shock mode. Investors await the upcoming U.S. inflation data for further insights into the prospect of a rate hike by the Federal Reserve. U.S. Treasury Secretary Janet Yellen said inflation was unacceptably high. The World Bank is calling on policymakers to work to boost food and energy production and avoid import and export restrictions that could lead to further price spikes.

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The World Bank on Tuesday lowered its forecast for global economic growth in 2022 to 2.9 percent from 4.1 percent in January. Governor David Malpass said the risks of stagflation and the Russian-Ukrainian war have been hitting growth, and a recession will be unavoidable for many countries. At the same time, while global inflation is expected to moderate next year, inflation is likely to remain above target in many economies.

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While many still expect consumer spending to remain resilient, combined with job gains will bring the U.S. out of recession. But concerns are growing that the U.S. economy could slip into a recession as soaring inflation dampens the outlook for corporate profits. The U.S. economy isn't making much progress out of recession after an unexpected contraction in the first quarter. Two consecutive quarters of negative growth in an economy are often seen as a recession.

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The OECD released its economic report on Wednesday that the world economy will pay a "heavy price" for the Russia-Ukraine conflict, including slower growth, higher inflation and potential long-term damage to supply chains. The OECD warned that the cost of the war "could be even higher" and described a range of risks, from a sudden cut of Russian supplies to Europe to the fragility of financial markets.