Morning Update

Yesterday, the World Resources Institute published a report which indicated that global deforestation accelerated in 2022 – despite multilateral pledges to turn the tide. Over the course of last year some 10 million acres of land was deforested – the equivalent to 11 football pitches each minute. This is estimated to have produced around 2.7 gigatons of carbon dioxide emissions, which to put it in some perspective is roughly the equivalent to the CO2 emissions of the world’s most populous country, India. (India took over China as the worlds largest population this April, according to UN projections).

During COP 26 in Glasgow, 145 states agreed to reverse global deforestation by 2030, though this now appears to be an increasingly difficult target given that deforestation accelerated by 10% between 2021 and 2022.

The report noted however that since Luiz Inácio Lula da Silva presidency, deforestation amongst the Brazil’s rainforest declined around 10% in May. Given that Brazil is home to just under half of the world’s rainforest, their policies and protections are seen as pivotal in controlling global deforestation. Recently, the European Union also put stricter controls in place for trade in oil, cattle, wood, coffee, cocoa, rubber, and soy which it is hoped will help address some of the problems with deforestation.

At 14:30 this afternoon, Powell, Bailey, Ueda and Lagarde will speak at the ECB’s Symposium in Sintra, Portugal. The respective governors are expected to provide some further guidance on their central banks’ monetary policy as economies around the world continue to grapple with elevated inflation and concerns surrounding growth.

Yesterday, ECB policy markers tried to quell market expectations that Frankfurt may cut rates during H1 2024. Such hawkish sentiments also involved policy markers indicating that the ECB could conduct another 25bps rate hike in September (after their expected 25bps hike forecast in July). September’s policy decision is still subject to debate however, with for example the ECB’s Lane indicating that while Frankfurt needs to continue to tighten, September’s decision is uncertain.

Earlier this week, Lagarde stated that the ECB had made “significant progress” in bringing down inflation but “could not declare victory”.