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US Inflation Eases, Providing Fresh Hope for Federal Reserve’s Interest Rate Strategy

US Inflation Cools Significantly, Offering Promising Outlook for Federal Reserve’s Actions
Deceleration of Inflation in US Raises Hopes for Conclusion of Aggressive Interest Rate Rise



Inflation - Investors King

Inflationary pressures have shown signs of easing, offering renewed optimism for the Federal Reserve’s interest rate strategy.

The latest data released by the Bureau of Labor Statistics indicates a significant slowdown in inflation, suggesting that the central bank’s aggressive measures to curb rising prices are bearing fruit.

The consumer price index (CPI), a key indicator of inflation, rose by a modest 3% last month compared to the previous year. This marks a notable deceleration from the levels observed earlier and brings hope that the surge in prices may finally be losing steam.

Also, the month-on-month increase of 0.2% from May further reinforces this positive trend.

While the core measure of inflation, which excludes food and energy prices, still remains elevated at 4.8% compared to a year ago, it is worth noting that this figure is the lowest since late 2021. Although it surpasses the Federal Reserve’s target, the gradual moderation suggests that the central bank’s efforts to rein in inflationary pressures are yielding results.

The market reacted swiftly to the news, with Treasury yields plummeting, indicating reduced concerns over future price hikes. Stock futures experienced a surge, reflecting increased investor confidence, and the dollar weakened as expectations of aggressive monetary tightening diminished.

The chances of an additional interest rate increase after the current month slipped to below 50%, reflecting a shift in market sentiment.

This report underscores the progress made in curbing inflation since it peaked a year ago. The combination of a series of interest rate hikes and a moderation in demand has played a crucial role in alleviating price pressures.

While inflation remains above the Federal Reserve’s target, policymakers are cautiously optimistic that they may soon be able to conclude the most aggressive interest-rate hikes witnessed in decades.

The slowdown in inflation can be partly attributed to the comparison with June 2022, when energy prices skyrocketed due to geopolitical tensions. Looking ahead, upcoming year-over-year readings are expected to be compared to relatively lower figures, suggesting further easing in inflationary pressures.

While a rate hike during this month’s meeting was signaled as likely by several Fed officials, they will closely analyze forthcoming data on producer prices, inflation expectations, and retail sales before making a final decision.

The central bank will remain vigilant, keeping a close eye on various economic indicators and the trajectory of inflation to ensure a balanced approach to monetary policy.

Overall, the easing of inflation in the United States provides fresh hope that the Federal Reserve’s proactive measures are starting to pay off. As the economy continues to recover and price pressures moderate, the central bank can cautiously steer its interest rate strategy to maintain stability and sustainable growth in the long run.

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

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August 2023 Witnesses Highest Revenue Allocation of the Year – N1.1 Trillion Shared

The driving force behind this boost in revenue can be attributed to foreign exchange gains that have contributed significantly to the government’s income stream.



Revenue - Investors King

The Federation Account Allocation Committee (FAAC) unveiled its allocation of N1.1 trillion to the three tiers of government for the month of August 2023, Investors King reports.

This substantial increase was detailed in a communiqué following the committee’s latest meeting. August allocation was the highest so far with an increase of N133.99 billion when compared to the N966.11 billion shared in July 2023.

The driving force behind this boost in revenue can be attributed to foreign exchange gains that have contributed significantly to the government’s income stream.

Breaking down the N1.1 trillion total distributable revenue, the statement reveals that it consists of distributable statutory revenue amounting to N357.4 billion, distributable Value Added Tax revenue totaling N321.94 billion, Electronic Money Transfer Levy revenue at N14.10 billion, Exchange Difference revenue of N229.57 billion, and an augmentation of NN177.09 billion.

Of this impressive sum, the Federal Government is set to receive N431.25 billion, while the State governments will be allocated N361.19 billion, and the local government Councils will obtain N266.54 billion.

However, it’s essential to note that the total revenue available for August stood at N1.48 trillion, marking a 14% or 0.26 trillion decrease from the preceding month’s figure of N1.74 trillion.

The FAAC communiqué further underscores that various deductions were made, including N58.76 billion for the cost of collection, N254.05 billion for total transfers and refunds, and N71 billion allocated to savings. Additionally, the Excess Crude Account maintained a balance of $473,754.57.

The statement elaborated, “Gross statutory revenue of N891.934 billion was received for the month of August 2023. This was lower than the N1,150.424 billion received in July 2023 by N258.490 billion. The gross revenue available from the Value Added Tax was N345.727 billion. This was higher than the N298.789 billion available in July 2023 by N46.938 billion.”

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Zambia’s Finance Minister Faces Dual Challenge in Upcoming Budget Address



Zambian economy

As Zambia’s Finance Minister, Situmbeko Musokotwane, prepares to present the nation’s budget, he finds himself at a pivotal crossroads.

The second-largest copper producer in Africa is grappling with two pressing concerns: debt sustainability and soaring living costs.

Debt Restructuring Dilemma: Musokotwane’s foremost challenge is finalizing the $6.3 billion debt-restructuring deal with official creditors, led by China and France.

Delays have hindered disbursements from the International Monetary Fund (IMF) and left private creditors in limbo.

To reassure investors, a memorandum of understanding with the official creditor committee is urgently needed.

President Hakainde Hichilema emphasizes the importance of sealing these transactions to signal closure on this tumultuous chapter.

Plummeting Tax Revenue: The key copper-mining industry, which accounts for 70% of Zambia’s export earnings, is in turmoil.

First-half mining company taxes and mineral royalty collections have nosedived, adding to economic woes.

This, in turn, has depreciated the local currency, exacerbating imported inflation, particularly in fuel prices.

Rising Food Inflation: Musokotwane faces mounting political pressure to combat soaring living costs, with annual inflation reaching an 18-month high of 12%. Corn meal prices, a staple in Zambia, have surged by a staggering 67% in the past year.

Neighboring countries’ demand for corn has led to smuggling and further price spikes, raising concerns about food security.

Currency Woes: The kwacha’s value has been a barometer for the nation’s economic health. It depreciated by 16% since June 22, the worst performance among African currencies, reflecting the ongoing debt-restructuring uncertainty.

In his budget address, Musokotwane faces the daunting task of striking a balance between debt management, economic stability, and alleviating the burden on Zambia’s citizens.

The international community will keenly watch to see if his fiscal measures can steer the nation toward a path of recovery and prosperity.

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IMF Urges Sub-Saharan African Nations to Eliminate Tax Exemptions for Fiscal Health



IMF global - Investors King

Sub-Saharan African countries have been advised by the International Monetary Fund (IMF) to tackle their fiscal deficits by focusing on eliminating tax exemptions and bolstering domestic revenue rather than resorting to fiscal expenditure cuts, which could hamper economic growth.

The IMF conveyed this recommendation in a paper titled ‘How to avoid a debt crisis in Sub-Saharan Africa.’

The IMF’s paper emphasizes that Sub-Saharan African nations should reconsider their overreliance on expenditure cuts as a primary means of reducing fiscal deficits. Instead, they should place greater emphasis on revenue-generating measures such as eliminating tax exemptions and modernizing tax filing and payment systems.

According to the IMF, mobilizing domestic revenue is a more growth-friendly approach, particularly in countries with low initial tax levels.

The paper highlights success stories in The Gambia, Rwanda, Senegal, and Uganda, where substantial revenue increases were achieved through a combination of revenue administration and tax policy reforms.

The IMF also pointed out that enhancing the participation of women in the labor force could significantly boost Gross Domestic Product (GDP) in developing countries.

The IMF estimates that raising the rate of female labor force participation by 5.9 percentage points, which aligns with the average reduction in the participation gap observed in the top 5% of countries during 2014-19, could potentially increase GDP by approximately 8% in emerging and developing economies.

In a world grappling with the weakest medium-term growth outlook in over three decades, bridging the gender gap in labor force participation emerges as a vital reform that policymakers can implement to stimulate economic revival.

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