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Bank of England Surprisingly Left Rate Unchanged

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The Bank of England surprisingly left its widely expected rate unchanged.

The nine-member monetary committee led by Governor Mark Carney voted 8-1 to keep the rate at 0.5 percent on Thursday.

Economists had predicted the Bank of England will loosen monetary policy to aid the economy against possible effects of Brexit, while investors had priced in more than 80 percent chance the interest rate would be lowered.

While the decision is expected to shock the financial markets, the bank said “the precise size and nature of any stimulatory measures will be announced during the August forecast and inflation report.”

“Most members of the committee expect monetary policy to be loosened in August,” officials said, according to the minutes of their July 13 meeting. “The committee discussed various easing options and combinations thereof. The exact extent of any additional stimulus measures will be based on the committee’s updated forecast, and their composition will take account of any interactions with the financial system.”

The pound rose 2 percent to 1.3476 against the US dollar after the statement was released, its highest in two weeks.

 

 

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

Economy

Nigeria Faces Fuel Crisis with Petrol Costs Surging to N978/Litre

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Petrol - Investors King

Nigeria is grappling with a severe fuel crisis as the landing cost of Premium Motor Spirit (PMS), commonly known as petrol, has skyrocketed to N978 per litre.

This surge, driven by a depreciating naira and rising international costs, has led to widespread fuel shortages and long queues at filling stations across the country.

The latest figures reveal that the landing cost—which includes the international price, shipping, insurance, and other charges—has increased from N720 per litre in October 2023.

This escalation is attributed to the naira’s depreciation, which hit a three-month low of N1,530 per dollar on the parallel market this week, exacerbating the already dire economic situation.

“The rising landing cost of petrol is a result of the escalating foreign exchange (FX) crisis. There are market interventions through subsidies, as most Nigerians cannot afford the market price for petrol,” a senior executive in the downstream sector explained.

Despite the federal government’s denial of an ongoing subsidy, a report from the finance minister, Wale Edun, projected that fuel subsidies could cost about N5.4 trillion in 2024, up from N3.6 trillion in 2023.

The fuel scarcity has led to black market prices soaring between N1,000 and N1,100 per litre, while some retail outlets in Abuja, Nasarawa, and Niger have hiked pump prices to N900 per litre.

Motorists have been forced to spend hours in queues, further straining their daily lives.

NNPC Limited attributed the current fuel queues to recent thunderstorms and logistical challenges disrupting activities at fuel-loading jetties.

The company assured stakeholders that it is working to resolve the situation and clear the queues.

“We have no problem covering our gasoline payments. This is just money for normal business and not a desperate act,” said Mele Kyari, the group’s general manager.

He also mentioned that NNPC is considering securing a $2 billion loan using crude oil pre-payments as collateral to support its business activities.

Aisha Mohammed, an energy analyst at the Lagos-based Centre for Development Studies, noted, “The government is partially subsidizing the commodity for political, social, and economic reasons. While economically sound, the social and political costs are significant.”

Market analysts have called for a review of dollar-based fee collections to reduce petrol costs. “We must resist the dollarization of the Nigerian economy. There are some fee collections in dollars that are also pushing up the landing cost of petrol,” a source said.

The Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) confirmed that NNPC is addressing the supply issues, but warned that the queues might persist for days, especially in locations far from major depots.

“Once they start loading, it takes some days to clear the queues. And don’t forget that filling stations in Abuja get products from Lagos, Oghara, Warri, Port Harcourt, or Calabar, and that takes more than three days turn-around time to accomplish,” said PETROAN president Billy Gillis-Harry.

He said there is a need for collaboration between the government, NNPC, and downstream operators to find a lasting solution to the fuel scarcity.

“We need a clearly defined council with grassroots knowledge of the business to project and address problems based on empirical evidence,” he stated.

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Economy

Egyptian Inflation Eases Despite Bread Price Hike

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Egyptian pound

Egyptian inflation eased for the fourth consecutive month in June despite a historic increase in the cost of subsidized bread that feeds a significant portion of the population.

Consumer prices in urban areas rose at an annual rate of 27.5%, down from 28.1% in May, according to the state statistics agency CAPMAS.

On a month-to-month basis, prices grew by 1.6%.

This latest deceleration comes after authorities implemented a 300% hike in the price of subsidized bread on June 1, the first such move since the 1970s.

Although some economists had anticipated an inflationary surge, the impact on overall inflation was minimal due to the relatively small weight of bread in the consumer price index, explained Mohamed Abu Basha, head of research at EFG Hermes.

Food and beverage prices, the largest component of Egypt’s inflation basket, increased by 31.9% year-on-year, compared to 31% in May, and rose 2.6% on a monthly basis.

Despite the ongoing challenges, the rate of inflation has been slowing for eight of the past nine months, even after a significant devaluation of the Egyptian pound in 2024, which saw the currency plummet almost 40% against the dollar.

The reduced inflation rate reflects how the lower value of the pound on the now-stabilized local black market had already been factored into retail pricing strategies.

Also, the country’s central bank maintained its interest rates at an all-time high in May, citing expectations for a significant decline in inflation during the first half of 2025.

Further subsidy reductions are anticipated as Egypt continues its economic reforms following a $57 billion bailout from the United Arab Emirates, the International Monetary Fund, and other international supporters.

Cairo-based EFG Hermes is among the institutions predicting a continued cooling of consumer costs throughout the remainder of the year.

Abu Basha noted that the gradual elimination of fuel subsidies and potential increases in power tariffs are expected to have a relatively minor effect on overall inflation.

However, recent shortages in domestic gas supplies, which caused temporary shutdowns at some fertilizer plants and contributed to widespread power cuts, remain a potential wildcard.

Despite the inflation slowdown, the Egyptian central bank is unlikely to reduce interest rates when it meets next week.

The IMF recently affirmed its agreement with Egypt that maintaining a tight monetary policy is crucial in the short term to bring inflation closer to the central bank’s target.

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Businesses Struggle as Petrol Scarcity Hits Major Nigerian Cities

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The pervasive impact of a severe petrol scarcity has thrown businesses across major Nigerian cities into disarray as long queues have started showing up at petrol stations.

In bustling urban centers like Lagos, Abuja, and Port Harcourt, scenes of frustrated commuters and distressed business owners paint a stark picture of the toll exacted by the ongoing fuel crisis.

Many petrol stations have either completely run out of fuel or are rationing limited supplies, forcing consumers to endure hours-long waits or turn to black market sellers who command prices as high as N1,000 per litre.

For Uche Adams, a Lagos-based trader, the petrol shortage has brought his business to a standstill for days.

“I have been out of business for two days because I have not been able to buy petrol,” lamented Adams, reflecting the widespread impact on small businesses reliant on transportation and generator power amidst erratic electricity supply.

The situation is equally dire in Abuja, where Adamu Abdullahi, operating a barber’s shop in Kubwa, described how the scarcity has slashed his operating hours and inflated his overhead costs.

“I have only operated for five hours today due to fuel scarcity. I can’t buy at any filling station and black marketers are selling higher than N1,000 per litre,” Abdullahi disclosed.

Behind the scenes, private depot owners in Lagos have exacerbated the crisis by hiking petrol prices from N630 to N720 per litre, citing logistical challenges and market dynamics.

This spike in prices at the source has cascaded down to consumers, with filling stations adjusting their rates upwards, compounding the financial strain on businesses and households alike.

The Nigerian National Petroleum Corporation (NNPC) has attributed the fuel scarcity to disruptions in ship-to-ship transfers during adverse weather conditions, which have hampered product deliveries to filling stations.

Olufemi Soneye, NNPC’s chief corporate communications officer, acknowledged the logistical hurdles exacerbated by recent thunderstorms and flooding on truck routes, hindering the smooth flow of petrol supply.

“Weather disruptions have affected berthing at jetties, truck load-outs, and transportation of products, compounding station supply logistics,” stated Soneye.

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