“A New Prime Minister for the UK…”

Rishi Sunak has become the United Kingdom’s third prime minister in two months and pledged to lead the country out of an economic crisis and rebuild trust in politics

New PM Rishi Sunak pledges to lead Britain out of economic crisis

Rishi Sunak became Britain’s third prime minister in two months on Tuesday and pledged to lead the country out of a profound economic crisis and rebuild trust in politics.

Sunak quickly reappointed Jeremy Hunt as his finance minister in a move designed to calm markets that had balked at his predecessor’s debt-fuelled economic plans.

The former hedge fund boss said he would unite the country and was expected to name a cabinet drawn from all wings of the party to end infighting and abrupt policy changes that have horrified investors and alarmed international allies.

Speaking outside his official Downing Street residence, Sunak praised the ambition of his predecessor Liz Truss to reignite economic growth but acknowledged mistakes had been made.

“I have been elected as leader of my party and your prime minister, in part to fix them,” said Sunak, who broke with the tradition of standing beside his family and cheering political supporters.

“I understand, too, that I have work to do to restore trust, after all that has happened. All I can say is that I am not daunted. I know the high office I have accepted, and I hope to live up to its demands.”

Sunak said difficult decisions lay ahead, as he looks to cut public spending. Hunt, who Truss appointed to calm markets, roiled by her dash for growth, has been preparing a new budget alongside borrowing and growth forecasts due out on Monday, and repeated his warning on Tuesday that “it is going to be tough”.

ECB raises interest rates again, trims bank subsidies

The European Central Bank raised interest rates again on Thursday and signalled it was keen to start shrinking its bloated balance sheet, taking another big step in tightening policy to fight off a historic surge in inflation.

Worried that rapid price growth is becoming entrenched, the ECB is raising borrowing costs at the fastest pace on record, with further hikes almost certain as unwinding a decade’s worth of stimulus will take it well into next year and beyond.

In a series of complex moves, the central bank for the 19 countries that use the euro raised its deposit rate by 75 basis points to 1.5%, as expected, taking the total increase to 2 percentage points over three meetings. Until July, ECB rates had been in negative territory for eight years.

The ECB also cut a key subsidy to banks but made no hint about plans to start winding down its bond holdings after hoovering up trillions of euros of debt issued by euro zone governments since 2015.

“The Governing Council took today’s decision, and expects to raise interest rates further, to ensure the timely return of inflation to its 2% medium-term inflation target,” the ECB said in a statement.

Markets expect the deposit rate to hit 2% in December, then peak at around 3% some time in 2023, although the excessively volatile outlook makes this timeline prone to changes.

While inflation is high and broadening, the overall picture may be more balanced than in the past as spot energy prices are falling, a looming recession will dampen price pressures, and there are no signs of a wage-price spiral.

World is in its ‘first truly global energy crisis’

Tightening markets for liquefied natural gas (LNG) worldwide and major oil producers cutting supply have put the world in the middle of “the first truly global energy crisis”, the head of the International Energy Agency (IEA) said on Tuesday.

Rising imports of LNG to Europe amid the Ukraine crisis and a potential rebound in Chinese appetite for the fuel will tighten the market as only 20 billion cubic meters of new LNG capacity will come to market next year, IEA Executive Director Fatih Birol said during the Singapore International Energy Week.

At the same time the recent decision by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, to cut 2 million barrels per day (bpd) of output is a “risky” decision as the IEA sees global oil demand growth of close to 2 million bpd this year, Birol said.

“(It is) especially risky as several economies around the world are on the brink of a recession, if that we are talking about the global recession…I found this decision really unfortunate,” he said.

Soaring global prices across a number of energy sources, including oil, natural gas and coal, are hammering consumers at the same time they are already dealing with rising food and services inflation. The high prices and possibility of rationing are potentially hazardous to European consumers as they prepare to enter the Northern Hemisphere winter.

Europe may make it through this winter, though somewhat battered, if the weather remains mild, Birol said.

“Unless we will have an extremely cold and long winter, unless there will be any surprises in terms of what we have seen, for example Nordstream pipeline explosion, Europe should go through this winter with some economic and social bruises,” he added.

Oil prices rise on weaker dollar, supply worries

Oil prices edged higher on Tuesday, rebounding from an early fall of more than $1 a barrel, on a lift from a weaker dollar and supply concerns highlighted by Saudi Arabia’s energy minister.

Brent crude futures LCOc1 rose 26 cents to settle at $93.52 per barrel, while U.S. West Texas Intermediate CLc1 crude futures rose by 74 cents to $85.32.

Both benchmarks rose and fell by $1 during the session.

The U.S. dollar index .DXY fell during afternoon trade, making greenback-denominated oil less expensive for other currency holders and helping to push prices higher.

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