The war between Russia and Ukraine continues to affect raw materials

Posted on May 18, 2022 In Europe, the new macroeconomic forecasts of the European Commission proposed the most negative scenario in the event of a total cut in the supply of natural gas from Russia, which would lead the Eurozone to a situation in which the inflation would skyrocket above 9% and economic growth would be nil. On raw materials, pressure from EU foreign ministers has failed to prevent Hungary from lifting its veto on the proposed Russian oil embargo. They also raise the price of cereals (wheat and corn) due to the reduction in supply. In addition to the lower world production and supply caused by the war between Russia and Ukraine, considered the breadbasket of Europe, there is now a ban on wheat exports imposed by India. According to the market consensus, the ECB would make three 25bp increases in the deposit rate at the meetings in July, September and December 2022, bringing it to levels of 0.25%. In the United Kingdom, Michael Saunders, a member of the Bank of England, stated that Brexit may have increased the current level of inflation (8.3%) but that it will not be a cause of persistent high inflation over time in the British economy. In the United States, the former chairman of the Federal Reserve during the 2008 crisis, Ben Bernankem, commented that the institution was wrong to delay its response to high levels of inflation after the coronavirus pandemic. In the foreign exchange market during yesterday’s session, the price of the EUR/USD pair moved in a range of 1.0389-1.0444, to end up closing the session in European time at levels of 1.0425. The interest rate on the 10-year US bond fell to 2.89%, while the euro closed practically flat against the British pound, at levels of 0.8492. The community currency appreciated against the Japanese yen and the Swiss franc, to 134.53 and 1.0451 respectively, at the close of the session. INFORMATIONTitleThe war between Russia and Ukraine continues to affect raw materialsDescriptionIn Europe, the new macroeconomic forecasts of the European Commission proposed the most negative scenario in the event of a total cut in the supply of natural gas from Russia, which would lead the Eurozone to a situation in which inflation would skyrocket above 9% and economic growth would be nil. Author GLOBALCAJA