ECB keeps rates unchanged for July
Following an increase in June, which marked the first rate hike in three years, the European Central Bank (ECB) held rates steady as expected on July 23, although the market is already anticipating another rate hike in September. Renewed conflict in the Middle East has largely erased any hope of a moderation in energy costs, raising concerns that inflation could remain above the target for longer.
ECB president Christine Lagarde also noted that the full effects of the energy shock are yet to play out. The ECB had previously hinted at further rate hikes this year, but with softer inflation, wage growth, economic activity and inflation expectations since the June meeting have reduced the urgency for another move. The ECB also stated that it stands ready to adjust its interest rates to ensure that inflation stabilises at 2% medium term target.
US first-time jobless claims fall to lowest levels since 1969
The number of filings for first-time unemployment benefits unexpectedly declined by 22,000 to an estimated 187,000, well below economists’ expectations of 212,000. This marked the largest decline in three months and is the lowest seasonally adjusted reading in almost 57 years.
Economists noted, however, that part of the decline may have been driven by seasonal factors to the temporary summer shutdown. Although hiring activity fell during the month of June, continuing claims fell to a six-week low of 1.796 million, suggesting that unemployed are still finding jobs. Together with the 4.2% unemployment rate recorded in June, the data reflects a low-hire, low-fire labour market, as this signals that businesses are retaining their workers and that the labour market conditions remain resilient.
UK’s inflation cools for the month of June
On July 22, the Office for National Statistics (ONS) reported that UK inflation cooled down to 2.6% year-on-year, its lowest level since March 2025. The Consumer Price Index (CPI) fell beyond expectations, with economists having forecast inflation to ease to 2.7% from 2.8% in May. The lower inflation reading has boosted Prime Minister Andy Burnham’s plans to reduce the cost of living as he has pledged to bring down the cost of living to increase households’ disposable income. The decline was mainly driven by a drop in petrol prices, lower food and clothing costs, the ONS said. However, this could be short-lived as re-escalating tensions in the Middle East has pushed oil prices back.
This article does not constitute legal and/or financial advice and is being issued for information purposes only by Bank of Valletta p.l.c., 58, Zachary Street, Valletta. Bank of Valletta is a public limited company regulated by the MFSA and is licensed to carry out the business of banking and investment services in terms of the Banking Act (Cap.371 of the Laws of Malta) and the Investment Services Act (Cap.370 of the Laws of Malta).
