Argentina cenbank cuts key interest rate expects lower inflation

- A + A (June 23): The Philippine central bank increased its key interest rate for a second straight meeting and raised its inflation forecast, continuing a gradual pace of normalisation while it faces a slumping currency. Bangko Sentral ng Pilipinas raised the benchmark rate by 25 basis points to 2.5%, it said in a statement on Thursday (June 23), as forecast by 17 of 25 economists in a Bloomberg survey. The rest saw a half-point increase. The peso was 0.1% lower at 54.5 per dollar as of 3.06pm local time, holding near its weakest level since 2005. The benchmark stock gauge closed down 1.7% before the decision. BSP’s rate-hike cycle is picking up momentum as inflation accelerates at its quickest in more than three years. Many policymakers in Southeast Asia have been relatively slower than other global central banks, particularly the US Federal Reserve, in normalising rates as they focus on solidifying their economic recoveries from the pandemic. The … [Read more...] about Philippines raises key rate on inflation risks, peso slump

- A + A (June 23): Indonesia’s central bank held its policy rate at a record low again, opting to look through price shocks and currency weakness to continue supporting the economy. Bank Indonesia (BI) left the seven-day reverse repurchase rate unchanged at 3.5% on Thursday (June 23) as predicted by 24 of 33 economists surveyed by Bloomberg . The rest expected policymakers to kick off the monetary tightening cycle with a 25-basis-point hike. The move sets Indonesia apart from most of the region’s central banks, which have begun raising borrowing costs to counter surging inflation. While domestic price gains are set to breach BI’s 2%-4% target this year, the central bank has maintained that there’s no rush to tighten as state subsidies and higher reserve requirements are helping manage price pressures. Governor Perry Warjiyo on Thursday said inflation will continue to rise, but said it remains manageable. The monetary authority sees consumer prices returning to … [Read more...] about Bank Indonesia holds key rate as inflation seen manageable

Share to Twitter Share to Linkedin Topline The stock market rebounded strongly on Friday, posting its first positive week this month as recession fears subsided somewhat thanks to positive economic data suggesting that inflation may have peaked, while some experts expressed optimism about the health of the economy. Key Facts Stocks snapped a three-week losing streak on Friday: The Dow Jones Industrial Average rose 2.7%, over 800 points, while the S&P 500 jumped 3.1% and the tech-heavy Nasdaq Composite 3.3%. Markets got a boost after the latest consumer sentiment survey from the University of Michigan showed that inflation expectations eased slightly in June, rising 5.3% compared to a year ago—but lower than the 5.4% expected. Investors also cheered optimistic remarks about the economy from St. Louis Federal Reserve President James Bullard, who said that recession fears are “overblown” and consumer spending remains strong. Stocks … [Read more...] about Dow Jumps 800 Points, Stocks Snap Three-Week Losing Streak After Inflation Expectations Ease

Share to Twitter Share to Linkedin If you’ve pumped gas, bought groceries, traveled or dined out in recent months, you don’t need me to tell you that inflation is having a significant impact on your purchasing power. While many of today’s workers have never seen inflation this high during their lifetimes, most people in or nearing retirement age remember it well. In fact, I was just beginning my career as a wealth advisor the last time we experienced rates this high. Yet, the current rate of 8.3% pales in comparison to the rates we saw in the late 1970s and early 1980s. By 1980, inflation had topped 14%, and unemployment was over 7.5%, based on historical data from the Federal Reserve (Fed). While most economists do not expect broad inflation measures to reach double-digits, the current environment has been challenging for many individuals and families trying to find creative ways to make their budgets stretch further. Because the forces behind inflation are … [Read more...] about Debunking 6 Inflation Myths

Fed chair Jerome Powell Federal Reserve Chair Jerome Powell on Thursday downplayed the idea that government pandemic aid was the key factor fueling US inflation, instead blaming a confluence of global issues including the war in Ukraine. While stimulus spending was a factor, "a great deal of the price increases that you saw were a matter of supply being unable to meet demand" and "when demand hits fixed supply, what happens is prices go up," Powell told lawmakers. US inflation has surged to a 40-year high, picking up speed in recent months as the fallout from Russia's invasion of Ukraine has sent fuel and food prices soaring, with gas at more than $5 a gallon for the first time -- putting strain on American families. Opposition Republicans have blamed President Joe Biden's $1.9 trillion American Rescue Plan approved last year for the blistering price increases. But Powell, who was testifying Thursday before a House committee, and others have noted that inflation is a … [Read more...] about Fed chief Jerome Powell says pandemic aid not primary driver of US inflation

UOB: Room for Bank Negara to hike OPR by another 50bps before end-September - A + A KUALA LUMPUR (June 22): There is growing pressure on Bank Negara Malaysia to hike rates faster in the face of an aggressive US Federal Reserve, while there is widening consensus that global food and energy prices will continue to stay elevated for longer, with any potential supply shocks seen capable of driving prices and inflation even higher. In a note on Wednesday, UOB Global Economics and Market Research cautioned that the key takeaway is that "doing nothing or acting too slow" could sow seeds of more persistent and elevated inflation in the future, with more negative effects on demand and the economy. "Rate hikes would then also need to be sharper and more abrupt in that scenario. There may also be a need to act faster now in order to have sufficient policy buffers in preparation for the next recession (when it happens). A lagged policy response by BNM relative to peers … [Read more...] about Growing pressure on Bank Negara to hike rates faster

The 25-basis-point (bp) increase in the key interest rate of the Bangko Sentral ng Pilipinas (BSP) announced on Thursday that affirmed a gradual path to tightening of monetary policy was a disappointment to analysts who believe the BSP should be more aggressive. But Pantheon Macroeconomics said the next hike might not come until next year. Miguel Chanco, the United Kingdom-based research firm’s chief economist for emerging markets in Asia, said in a commentary that this week’s rate hike—a repeat of the Monetary Board (MB) decision in their meeting last May—was “a no-brainer.” Chanco said this was so, especially considering that BSP Governor and MB chair Benjamin Diokno had explicitly said that this month’s decision was likely a 25-bp increase in the interest rate on the central bank’s overnight borrowings from banks. “Not surprisingly, inflation remains front-and-center in the board’s mind, as it raised its inflation forecasts further to 5 percent and 4.2 percent for this year … [Read more...] about Contrarians see BSP pushing back next rate hike to 2023

- A + A (June 22): Federal Reserve Chair Jerome Powell said the Central Bank will keep raising interest rates to tame inflation and conceded that a US recession was “certainly a possibility”. “We anticipate that ongoing rate increases will be appropriate,” Powell said Wednesday in his semiannual testimony to the Senate Banking Committee. “Inflation has obviously surprised to the upside over the past year, and further surprises could be in store. We therefore will need to be nimble in responding to incoming data and the evolving outlook.” Powell’s remarks largely reiterated comments at a press conference last week after he and his colleagues on the Federal Open Market Committee raised their benchmark lending rate 75 basis points — the biggest increase since 1994 — to a range of 1.5% to 1.75%. While Powell told reporters last week that another 75 basis-point increase, or a 50 basis-point move, was on the table for the next meeting in late July, Wednesday’s text made … [Read more...] about Powell sees ongoing rate hikes, says recession a ‘possibility’

Share to Twitter Share to Linkedin Topline Stocks fell slightly on Wednesday as a growing number of major Wall Street firms warned that the likelihood of a recession has risen sharply, while Federal Reserve Chair Jerome Powell pledged that the central bank is “ strongly committed ” to raising rates until inflation moderates. Key Facts Markets finished lower in choppy trading: The Dow Jones Industrial Average fell 0.2%, less than 100 points, while the S&P 500 lost 0.1% and the tech-heavy Nasdaq Composite 0.2%. The Dow was down by as much as 400 points but stocks pared back losses following comments from Fed Chair Powell, who said the central bank is “determined to take the measures necessary to restore price stability” and that “ongoing rate increases will be appropriate.” Citigroup became the latest Wall Street bank to increase its recession odds, meanwhile, forecasting a 50% chance of a downturn as consumer demand “looks to be … [Read more...] about Stocks Fall After Powell Pledges More Big Rate Hikes To Combat Inflation

Representative image Dear Reader , The Panorama newsletter is sent to Moneycontrol Pro subscribers on market days. It offers easy access to stories published on Moneycontrol Pro and gives a little extra by setting out a context or an event or trend that investors should keep track of. Inflation is the topic of the moment, not just for central bankers, but also for households, markets, governments and corporates. In fact, companies have been taking innovative steps to tackle it. For India, inflation traditionally has a lot to do with energy prices, though food prices have also played their part. This time around too, fuel-led inflation has impacted the country, but at the same time high fuel prices and commodity prices along with logistic issues on account of the Russia-Ukraine war have resulted in fertiliser prices shooting up. The government has tried to absorb the impact of higher fertiliser costs by extending subsidies. Fertiliser subsidy during the year is … [Read more...] about Moneycontrol Pro Panorama | No quick fix for inflation