Aurelia Butler

JERUSALEM (Reuters) – The Bank of Israel is expected to leave short-term interest rates unchanged this week, its 13th such decision in a row, though some analysts believe it should cut rates to halt the shekel that stands at a 26-year high versus the dollar.All 16 economists polled by Reuters believe the central bank’s monetary policy committee (MPC) will keep the benchmark rate at an all-time low of 0.1% when the decision is announced on Monday at 4 p.m. (1400 GMT).Before the last meeting on Oct. 7, analysts had widely believed the next change would be a hike as early as 2022 on the heels of rising inflation and a rapid economic rebound amid a widespread COVID-19 vaccine roll-out. One MPC members voted to raise rates to 0.25% at that meeting.Since then, the shekel has gained as much as 7% versus the dollar to late 1995 levels and is the top performing emerging currency since the pandemic began, while inflation in October and third-quarter GDP growth were lower than expected. Analysts said a key focus on Monday’s meeting would be how to deal with the shekel since the bank’s plan to buy $30 billion of foreign currency ended in late October, although there has been some intervention since. Despite anger from exporters, policymakers have appeared to let the shekel strengthen since it lowers import prices and helps to contain inflation.”There are many reasons for the bank to reduce interest rates, in light of the surge in the shekel, the moderation of inflation, the fear of the renewal of the corona virus and more. But it is likely to leave it unchanged mainly because of other central banks” starting to raise rates, Amir Kahanovich, chief economist for the Excellence Investment House, said.Israel’s inflation rate eased to 2.3% in October from an eight-year high of 2.5% in September to remain within the government’s 1-3% annual target. Based on bond yields, the rate is expected to hit 2.8% in the next 12 months, although economists on average predict 1.8%.The economy grew an annualised 2.4% in the third quarter over the prior three months, well below expectations of 6%. Both the government and central bank forecast 7% growth in 2021.This week’s meeting is the first for former U.S. Federal Reserve senior economist Naomi Feldman, who has succeeded Reuben Gronau. More

With its glass ceiling and oak panelled galleries, Daunt Books on Marylebone High Street is among the prettiest shops in London. This festive season, however, the Edwardian surroundings are a little less elegant than usual. Between the aisles and above the shelves in some parts of the store sit cardboard boxes and piles of unarranged books.Like booksellers across the UK, Daunt is worried that the crunch in global supply chains will leave it unable to meet customer demand in the run-up to Christmas. To reduce the chance of shortages, it has ordered far more stock than usual. The chain’s storerooms are almost full, and it has nowhere else to put the inventory.Rose Cole, general manager, warned its supplies of some titles could still start to run low by the end of this month. “More titles won’t come in on time,” she said. “It’s going to [get] progressively worse.”She is right to be concerned. Further up the supply chain, bottlenecks have been developing for months. Fabrice Holler, chief operating officer of CPI Books, the biggest printing house in Europe, said there was “very heavy pressure on the system”.The problems begin near the top of the chain, where supplies of raw materials are tight. The paper industry has been in decline for years, not least because digitisation of books, and a wide range of other media, forced mills to close.Figures from commodity data provider Fastmarkets show the sector in Europe has lost 1.3m tonnes, or about 20 per cent, of its capacity in so-called mechanical grinding, a primary production technique, in the past five years.During the pandemic, demand for the raw material unexpectedly surged. The boom in ecommerce left retailers scrambling for cardboard, while book sales rose as people under lockdown restrictions began reading again. Lars Lundin, chief executive of Holmen, one of Europe’s largest producers of paper for books, said it was still meeting its supply agreements but acknowledged the Stockholm-based group was taking longer to deliver paper than earlier in the year.Such delays are causing problems for printers. CPI, which accounts for about 40 per cent of the trade printing market in Europe, said the difficulty in securing supplies meant it now took the company three weeks to produce books — much longer than the usual seven days.Expenses had also risen sharply over the past six to 12 months, Holler said: paper by about 20 to 30 per cent, energy about 25 per cent and transport, glue and plastic wrapping as much as 15 per cent.“We have to pass on the increases where we can,” he said, adding that the printing company had raised prices for publishers by an average of 5 per cent.Demand for paper had been so strong, Holler said, that CPI also had to put caps on sales to some clients. Amazon had been particularly aggressive in building inventories in both packaging and books, he added.Hold-ups in paper mills and print factories are just the start. Publishers also need to contend with the same shortages of containers, logjams in ports and lack of lorry drivers that have afflicted a wide range of consumer industries.Factories in the UK can print regular black and white texts, yet the country lacks facilities for colour publications, which need to be imported. As a result, the risk of shortages is most acute in genres such as children’s, cookery and gardening, according to publishers and retailers: titles that tend to be popular gifts for Christmas.To reduce the chance of shortages, Daunt Books has ordered far more stock than usual, resulting in storage problems for piles of boxed-up books © Billy BarracloughDelays to shipments are “getting worse by the day”, said Karina Stevens, head of operations at children’s publisher Nosy Crow. Delivery times from Hong Kong had approximately doubled from the typical five or six weeks, she added.Smaller publishers in particular lack the bargaining clout to secure space on ships. Larger companies, especially those with higher value stock, can pay more for the slots.Recently a ship had unloaded a container full of Nosy Crow products bound for Southampton in Singapore, Stevens said. “They literally just offloaded our container at the port in Singapore. We had to wait for the next ship, which was a week later.”“We’ve tried to pull dates forward, and have allowed more time. But there’s a limit to what we can do . . . There are still things such as port closures happening at the last minute that you can’t plan for.”Andrew Franklin, co-founder of Profile Books, publisher of authors including Francis Fukuyama and Jonathan Dimbleby, said: “We’ve got some big titles going through at the moment. Will we be able to keep them in print? We don’t know.”Already book launches and signings have had to be postponed. Brexit-related complications had made exports, as well as imports, problematic, Franklin said. “It used to take us a day and a half to get our books into Ireland. It’s currently taking between six and 10 days.”The rush from retailers such as Daunt to order well in advance has boosted publishers’ sales in recent months: at London-listed Bloomsbury, for example, first-half revenues surged 29 per cent year-on-year to a record £101m.However, given the difficulty of balancing supply and demand, publishers warned that retailers were likely to return more unsold books than usual after the festive season. “We’re seeing big gaps in what has been ordered [by retailers] and what has been selling through,” Franklin added.Consumers, meanwhile, are being urged to place orders now if they want to ensure they land their chosen titles in time for Christmas.Cole said none of Daunt’s customers had so far encountered unexpected shortages. But she added: “If you ask me the same question in a month’s time, it’ll be different.” More

Will ECB minutes shed light on when the central bank will raise interest rates?How long do European Central Bank rate-setters expect to keep buying bonds and when might they raise interest rates from their ultra-low levels? More light is due to be shed on these crucial questions when the minutes of last month’s ECB policy meeting are published on Thursday.Investors are likely to scour the minutes for any clues on how the debate is shaping up between ECB policymakers over the big decisions they are preparing to make at their next policy meeting on December 16.Most investors expect the ECB to say next month that its flagship €1.85tn bond-buying programme, which it launched last year in response to the pandemic, will come to an end in March 2022. However, the central bank is widely expected to step up its longer standing asset purchase programme at the same time to limit any sell-off in bond markets. Having committed not to raise rates before it stops buying bonds at the point of issuance, next month’s decision will send a vital signal on the timing of the first rate rise. Especially as investors are betting the ECB could raise rates by early 2023 in response to higher than expected inflation caused by surging energy prices and supply chain bottlenecks.“In the medium term we think there is enough upward pressure on inflation for the ECB’s own forecasts to be at or above its 2 per cent target in the medium term, so it will be able to declare mission accomplished and raise rates,” said Carsten Brzeski, head of macro research at ING. Martin ArnoldHow will UK and eurozone business activity fare?A key survey of UK business activity due on Tuesday will provide a snapshot of how the economy has fared in recent weeks. The IHS Markit purchasing managers’ index unexpectedly showed improved growth momentum in October and while analysts expect a deceleration in November, a positive surprise might feed into expectations on whether the Bank of England will increase interest rates in December. Economists polled by Reuters forecast the preliminary PMI reading for services to fall to 58.5 in November from 59.1 in the previous month. Sandra Horsfield, economist at Investec, said that she has pencilled in “a slight moderation” in the composite index, which averages services and manufacturing, in November as she expects that “the manufacturing sector continued to be constrained by supply chain shortages, while ongoing staff shortages may have hampered output growth in both the manufacturing and service sectors.” She added that price pressures “are also likely to be a key theme of the report.”A more downbeat reading is expected for eurozone PMI as businesses not only face surging costs and ongoing supply chain disruptions, like those in the UK, but also rising coronavirus infections that led many countries to reintroduce new restrictions.As a result, analysts forecast the eurozone PMI index for services to decline to 53.6 in November, down from 54.6 in October and the lowest since April. The same figure for Germany, where the rise in infections is particularly sharp, is expected to tumble to 51.5. Valentina RomeiWill PCE inflation data add to the case for a US interest rate rise? Earlier this month, blockbuster consumer price data showed that US inflation rose in September at its fastest rate in 30 years. But the Federal Reserve’s preferred measure of inflation — the personal consumption expenditures price index — for October will be released on Wednesday, and markets will be watching for further signs of price pressures.Evidence of such pressures has already driven market speculation that the US central bank may be forced to raise borrowing costs faster than anticipated. The Fed earlier this month announced that it would begin slowing its pandemic-era quantitative easing programme, but investor attention quickly turned to the possibility of interest rate rises. The market is currently pricing in a roughly 80 per cent chance of three quarter-point interest rate increases by the end of 2022, with better-than 50 per cent odds that the first hike will come as soon as June, according to CME Group’s FedWatch tool. A month ago the chances of three rate hikes by December were roughly 25 per cent. PCE data reflects changes in household expenditures. A subsection of the data known as core PCE, which discounts the effects of the volatile food and energy sectors, is particularly closely watched. Analysts at TD Securities said they expect the PCE data to show that prices rose strongly, though at a slower pace than the CPI index. They estimate that the year-over-year change is likely to have risen to 4.1 per cent from 3.6 per cent. They also expect the report to show consumers beginning to spend down excess savings, which means nominal spending will outpace income and the savings rate could drop below its pre-Covid level. Kate Duguid More