- Central bankers meet at Jackson Hole provided little new information on the usual topics of monetary policy and QE tapering. Instead the speeches focused on warning against dismantling post crisis financial rules that President Trump blamed for stifling U.S growth. In Jackson Hole, the Fed chair Janet Yellen said that regulation rollback should be modest while Mario Draghi, the ECB chief, said loosening them now would be particularly dangerous amidst ultra-easy monetary policy. Also at the Jackson Hole, BoJ Governor Kuroda said that the recent pace of GDP growth in Japan is unsustainable and that the continuation of accommodative measures is warranted.
- In the US Hurricane Harvey, the strongest hurricane to hit the U.S since 2004 is causing significant rain and flooding in Texas – one of the key oil and gas producing regions in the US. If the storm does significant damage to the refineries in the region, the effects could ripple through to other parts of the country that rely heavily on the Gulf Coast for fuel supplies. Gasoline futures settled at a three-week high Friday as the storm approached. Looking at the damage done by this category 4 storm, the negative impact on the US economy could be as high as USD 40bn.
- As a sign of further progress on the implementation of VAT in the region, the UAE President issued the Federal decree-Law No 8 of 2017 for value-added tax yesterday. The law exempts or zero-rates public transport (including air travel), school fees, residential property sales and rents, and medical services from VAT. More detailed lists of which goods & services will be exempt or zero rated are expected in Q4 2017. Elsewhere in the region, Qatar’s Central Bank Governor Sheikh Abdullah bin Saud Al Thani says there’s no liquidity crisis in the Qatari banking system, noting that local banks have QAR 39.3bn in deposits at the central bank. Foreign currency reserves held by the Qatar central bank are 8 times larger than the local currency in circulation, and are dwarfed by the reserves held by the state of Qatar.
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Emirates NBD Research
