European Central Bank President Lagarde tried to strengthen the promise of ultra-loose monetary policy on Thursday, but failed to convince the market. Investors continue to expect the central bank to raise interest rates as early as next year. Lagarde’s economic assessment no longer describes the sharp rise in inflation as a “temporary” phenomenon, and admits that the rising period of inflation may last longer than initially expected. In the following prepared speech, she clearly intends to suppress it. The market expects the central bank to raise interest rates before the end of 2022.

According to people familiar with the matter, European Central Bank policymakers expect the inflation rate to exceed the 2% target next year, but they are divided on whether they will remain at this level in 2023. The debate surrounding this issue is very important for the European Central Bank's forward guidance. People familiar with the matter, who declined to be named because the relevant discussions have not been made public, said that European Central Bank chief economist Philip Lane insisted at the policy meeting on Thursday that consumer price increases will fall below the target after 2022, and that core price pressures will not Will be s trong enough. People familiar with the matter also revealed that a small number of people refuted that the inflation rate may exceed the target and mentioned the risk of the second-round effect.

On Thursday, the U.S. Treasury yield curve partially inverted from 20 to 30 years, a sign that investors expect the central bank to tighten monetary policy will lead to a slowdown in economic growth and inflation. With the end of the ultra-loose monetary policies implemented by various countries since the outbreak of the epidemic in early 2020, the yield curve of government bonds around the world has been flattening recently. The euro zone's yield curve flattened further on Thursday, as the European Central Bank’s policy decision kept investors’ expectations of raising interest rates starting next year intact.

Due to supply chain turmoil and the increase in Covid-19 cases, which inhibited spending and investment, the slowdown in US economic growth in the third quarter exceeded expectations and fell to the lowest level since the economy began to recover from the epidemic. The U.S. Department of Commerce’s preliminary estimates on Thursday showed that the third quarter's GDP grew at an annual rate of 2%, which was lower than the 6.7% growth rate in the second quarter. The economic slowdown reflects a sharp slowdown in personal consumption. After a surge of 12% in the second quarter, personal consumption grew by only 1.6% in the third quarter. Transportation bottlenecks, rising prices, and the spread of the delta strain of the coronavirus have all put pressure on spending on goods and services.

With only one week before the next production meeting, OPEC+ expects that the global oil market supply will become more tight this quarter. According to a person familiar with the OPEC+ Joint Technical Committee’s estimates, global oil inventories are expected to fall by 1.1 million barrels per day on average in the fourth quarter. The estimate made at the committee’s meeting early last month was an inventory reduction of 670,000 barrels per day. Data show that fuel demand will rise slightly, and crude oil supply from countries other than OPEC will be slightly lower than expected. By the end of this year, crude oil inventories in advanced economies will be 158 million barrels lower than the average level, a larger gap than the 106 million barrels predicted a month ago.

According to the draft statement prepared for this weekend’s Group of Twenty (G-20) summit seen by Bloomberg News, G-20 leaders are prepared to pledge to stop funding foreign coal-fired power plant projects, but they are critical to controlling global temperature. There are still disagreements on the climate goals and timeline issues. The 11-page document shows that there is no consensus on the key deliverable targets. The draft, dated Thursday, is still to be negotiated by diplomats in Rome in preparation for the weekend’s G-20 summit.

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