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Czech central bank seen hiking by 50 bps, strong minority expect bigger move – Reuters poll

PRAGUE (Reuters) – The Czech National Bank is expected to deliver another hefty rate hike on Nov. 4 and keep tightening at this year’s last policy meeting in December, a Reuters poll showed on Monday.

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Czech central bank seen hiking by 50 bps, strong minority expect bigger move - Reuters poll
© Reuters. FILE PHOTO: The Czech National Bank is seen in central Prague, Czech Republic, August 3, 2017. REUTERS/David W Cerny

PRAGUE (Reuters) – The Czech National Bank is expected to deliver another hefty rate hike on Nov. 4 and keep tightening at this year’s last policy meeting in December, a Reuters poll showed on Monday.

The central bank shocked the market in September with a 75- basis-point hike, its biggest since 1997, a move to anchor inflationary expectations spurred by rapid price growth.

Seven analysts in the poll predicted the key two-week repo rate would rise by 50 basis points to 2.00% on Thursday, while the other five saw a 75-basis-point hike, which would bring the main rate to the pre-COVID level of 2.25%.

Vice-Governor Tomas Nidetzky has told Reuters that he expected the board to debate these two options on Thursday, while board member Tomas Holub was quoted as saying that another bigger-than-standard rise was needed.

Five analysts forecast the main rate to end 2021 at 2.25%, three saw it at 2.75% and one at 2.50%.

Policymakers around central Europe have turned to rate hikes to battle rapidly rising inflation fed by global supply snags and rising energy costs, as well as by rebounding consumer demand and tight labour markets pushing up wages.

In September, the Czech consumer price index (CPI) jumped to a fresh 13-year high of 4.9% in annual terms, more than double the central bank’s target of 2%, and far beyond its one-percentage point tolerance band.

The central bank’s board will have the quarterly update to the staff macroeconomic forecast available when all seven members convene on Thursday.

After their decision, which will be released on 2:30 p.m. (1330 GMT), Governor Jiri Rusnok is due to comment at a press conference at 3:45 p.m. (1445 GMT), where he will also present the economic outlook.

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Economy

Oil Prices Fall amid Protests in China

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Oil prices decline

Oil prices fell on Monday amid a general decline in investor appetite for risk amid information about the ongoing protests in China against vested restrictions.

The cost of January futures on Brent crude oil on London’s ICE Futures exchange was $81.31 per barrel on Monday, down $2.32 (2.77%) from the close of the previous session. At the close of trading on Friday, those contracts fell $1.71 per barrel to $83.63.

Oil prices decline – what’s going on in the market?

The price of WTI futures for January crude fell by $2.31 (3.03%) to $73.97 per barrel in electronic trading on the New York Mercantile Exchange (NYMEX). By closing of previous trades, the cost of these contracts decreased by $1.66 (2.1%) to $76.28 per barrel. Brent and WTI gained 4.6% and 4.8%, respectively, last week.

According to Bloomberg, protests were held in cities across the country, including the capital Beijing, as well as Shanghai, Xinjiang, and Wuhan, which was originally the epicenter of the COVID-19 spread.

That contributes to a stronger U.S. dollar, which reduces the attractiveness of investments in crude, and also raises the possibility of even more significant tightening of restrictions by Chinese authorities, the agency said.

“The outlook for the oil market remains unfavorable and the events of this weekend in China do not add to the positive,” notes Warren Patterson, who is in charge of commodities strategy at ING Groep NV in Singapore.

According to the forecast of analytical company Kpler, oil demand in China in the fourth quarter will decrease to 15.11 million barrels per day (bpd) compared to 15.82 million bpd a year earlier.

Earlier we reported that Russia will ban the sale of its oil to countries that have imposed a price ceiling.

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Economy

Oil Russia ban news: Russia will ban the sale of its oil to countries that have imposed a price ceiling

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oil Russia ban

Will Russia sell oil to Europe? The administration of President Vladimir Putin is preparing an order prohibiting Russian companies and any trader from buying Russian oil to sell raw materials to countries and companies that have imposed a price ceiling on Moscow. Bloomberg news agency wrote this, citing a report from sources.

“The Kremlin is preparing a presidential decree banning Russian companies and any traders buying national oil from selling it to anyone who participates in the price ceiling,” the publication wrote.

According to the newspaper’s interlocutors, this would prohibit any mention of the price ceiling in contracts for Russian crude, as well as transferring it to countries that have joined the price ceiling for the natural resource.

In the first half of September, the press service of the US Treasury Department said that the USA, together with its allies from G7 (Great Britain, Germany, Italy, Canada, France and Japan) and the European Union (EU) would impose a ban on marine transportation of Russian oil on December 5 and oil products – on February 5.

Earlier we reported that EU negotiations on limiting the prices of Russian oil reached a deadlock today.

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Economy

EU talks on restrictions on Russian crude oil prices today stalled

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russian crude oil price today

Negotiations between the European Union countries about the “ceiling” of Russian crude oil prices today reached an impasse; Bloomberg reported, according to its sources.

Representatives of the bloc cannot reach an agreement on the ceiling price of Russian oil. According to the agency, the proposed European Commission limit of $65-70 per barrel, Poland and the Baltic countries believe “too generous,” while Greece and Malta, which is actively engaged in transporting fuel, do not want the limit to fall below $ 70. Recall that the Russian response to the oil price cap was negative. The Russian government has officially said that it will only sell oil at market prices.

“We are looking for ways to make this solution work and we are trying to find a common ground to implement it in a perfectly pragmatic and efficient way, while avoiding that it may cause excessive inconvenience to the European Union,” said German Chancellor Olaf Scholz.

Earlier, we reported that the SEC fined Goldman Sachs $4 million for non-compliance with ESG fund principles.

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