Akintunde Oyedokun
Research Analyst
Oil prices ended Thursday nearly unchanged as forecasts of ample supply balanced rising expectations of a Federal Reserve rate cut. Brent crude dipped 0.15% to $73.41, and WTI crude dropped 0.38% to $70.02. The IEA forecasted a well-supplied market despite slightly increasing its demand outlook, while OPEC reduced its 2024 demand growth projection. U.S. inflation data raised hopes for a Fed rate cut, supporting energy demand, while Chinese crude imports grew 14% in November, and U.S. fuel inventories rose more than expected.
ECB Cuts Rates for Fourth Time in 2024, Signals Further Easing
The European Central Bank (ECB) reduced its deposit rate to 3.0% from 3.25%, marking the fourth rate cut this year, as inflation nears target and the eurozone economy remains weak. Previously at 4.0% in June, rates could see further cuts as the ECB removed language about maintaining “restrictive” borrowing costs.
The lending rate was also lowered to 3.15% for weekly loans and 3.40% for overnight lending. The ECB announced the end of bond purchases under the Pandemic Emergency Purchase Programme this month.
Brazil’s Central Bank Hikes Rates By 100 Basis Points, Signals Further Increases
Brazil’s central bank raised interest rates by 100 basis points to 12.25%, with plans for similar hikes in the next two meetings. This move, reflecting a commitment to tackle inflation, could push rates to 14.25% by March, the highest in over eight years. The decision follows concerns over inflation, a weak currency, and the government’s fiscal policies, which have strained confidence in debt management. Despite a leadership transition in January, the central bank remains determined to curb rising inflation expectations.
South African Inflation Expectations Drop, Sparking Rate Cut Speculation
A recent survey shows South African analysts, business leaders, and trade unions have reduced their inflation forecasts for 2024-2026 to 4.6%, 4.5%, and 4.6%, respectively, aligning with the central bank’s target range. This marks the lowest inflation expectations in over three years and may encourage the South African Reserve Bank to accelerate its rate-cutting cycle. Recent inflation data, showing a dip to 2.9% in November, adds to the likelihood of a larger interest rate cut in January.
Tinubu Seeks German Investment in Nigeria’s Energy, Solid Minerals Sectors
President Bola Tinubu has called on German investors to focus on Nigeria’s energy and solid minerals sectors, stressing the government’s commitment to improving business conditions by eliminating barriers and boosting security. He highlighted the importance of harnessing Nigeria’s energy potential, particularly in alternative energy, and emphasized the role of natural resources like lithium in industrialization. Minister of Solid Minerals Development, Dele Alake, encouraged German companies to explore Nigeria’s critical minerals for energy transition, citing opportunities under the President’s Renewed Hope Agenda.
