Every Monday, the Mint Insights section offers key data releases and events to watch out for for the week. Headline inflation numbers for May will be released this week in India. The central banks of the US and UK are scheduled to hold meetings to review their monetary policies. Representatives of India and the EU will also meet in Brussels to resume talks on strengthening a free trade agreement. The final two positions for the FIFA World Cup, to be held later this year, will be decided this week. Here are the important things to pay attention to:
India Inflation
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Key Indian inflation data for May will be released on Monday evening. Analysts predict that May’s inflation figure will be lower than April’s eight-year high of 7.8%, due to high fundamentals. Last year, inflation rose from 4.2% in April to 6.3% in May.
However, it will remain significantly above the upper threshold of the RBI’s inflation tolerance of 6% for the fifth consecutive month due to high food and fuel prices. A Mint poll of 24 economists put the estimate at 7.1%.
With inflation soaring, May saw measures both monetary and fiscal. The central bank reversed its longstanding policy, while the Center cut fuel excise taxes among other steps. However, the full impact of these measures is unlikely to happen before June.
Earlier this week, the RBI forecast inflation to average above 6% this quarter and next.
India-EU FTA
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India and the European Union will formally resume talks in Brussels on Friday to fortify a free trade agreement, which has been in place since 2013. Trade and Industry Minister Piyush Goyal The purpose of the FTA will be to provide market access and opportunities. for exporters in India. Both India and the EU have said they hope to conclude the agreement by 2024. Under the FTA, India wants the EU to conclude agreements on investment protection and geographical indications. Tariffs and data protection are among the key areas of contention in the negotiations as India seeks to be recognized as a ‘data safe’ country. India’s exports to 27 member countries hit a record high of $65 billion in 2021-22, up 57% from 2020-21. India has recently signed FTAs with Australia and the UAE, while the FTA with the UK proposed by Diwali will be signed this year.
Fed meeting
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The US Federal Reserve, at its last meeting in May, agreed to raise its benchmark interest rate by 50 basis points (bps). This is the biggest move since 2000, setting the stage for accelerating monetary policy tightening. In March, the rate increased by 25 bps, the first increase in more than three years. Another 50 bps gain is on the cards when the Fed makes its next policy announcement on Wednesday.
The Fed in its final statement said it was “very attentive to inflation risks”. Annual headline inflation remained at 8.3% in May. There is a long way to go for the Fed from here to reducing inflation to its long-term target of 2%. Although members noted strong household spending, business investment and job gains, they acknowledged that overall economic activity declined in the third quarter. Given the hardships from the Ukraine war- Russia still exists, worries about the Fed are far from over.
BoE meet
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This weekend, the Bank of England (BoE) is likely to raise interest rates for the fifth time since it started raising rates last December. The UK is currently facing record high inflation, which hit a 40-year high of 9% in April. Economists expect UK inflation to be the highest among G7 countries until 2024. The country has not only seen a rise in fuel prices like the rest of Europe, but also an increase in fuel prices. increase in the overall price of goods and services such as North America.
The BoE is circling between curbing inflation and avoiding a recession. The BoE expects output to fall 1% in the final quarter of 2022 as inflation is also likely to cross double digits. According to forecasts by the Organization for Economic Cooperation and Development, in 2023 there may be no GDP growth, making the UK the major economy hardest hit by the Ukraine-Russia war.
FIFA Qualifiers
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The final two qualifying matches for football’s flagship event, the 2022 FIFA World Cup, will take place this week at Qatar’s Ahmad Bin Ali Stadium. The matches will take place within the knockout stages of the ongoing Intercontinental World Cup, where teams from confederations in different continents compete for places in the World Cup. So far, 30 countries have qualified for the 32-nation event that will take place later this year, from November 21 to December 18, in Qatar.
The last two slots will be filled this week: on Monday, Australia will play Peru for a spot in Group D and on Tuesday, Costa Rica will play New Zealand for a spot in the tournament’s Group E. main.
Football fans in India can watch both matches at 11:30pm.
According to FIFA, the stadium features innovative cooling technology to provide an “exciting experience for the teams and fans” in the heat of Qatar at this time of year.
