The Bank of New Zealand’s impending decision to hold interest rates at 5.5% for the second consecutive meeting marks a turning point in the country’s monetary policy outlook.
A second consecutive benign set of inflation prints adds to optimism that the Fed rate hike cycle is at an end and a soft landing is achievable for the US economy. We continue to have our concerns about the economic outlook, centred on the abrupt hard stop in credit growth, but the Fed will soon be in a position to be able to cut rates if a recession materialises
Industrial production retreated in May, but Japan’s economic outlook remains reasonably optimistic. While Tokyo inflation showed cost-push inflation persisting, tight labour conditions could signal supply-side price pressures materialising over the coming months
The Swiss National Bank raised its policy rate by 25 basis points as expected, while at the same time sending out a very hawkish signal. With the central bank expecting inflation to remain persistent for some time, another 25bp move is expected for September
The division of votes was 7 to 2 so two people were against the increase.
The continuation of inflation requires further escalation.
If there is evidence of more sustained pressures, then further tightening of monetary policy is needed.
The BoJ has unanimously decided to maintain its ultra-easing monetary policy as it is still looking for clearer signs of sustainable inflation growth. We believe higher-than-expected inflation, a continued solid economic recovery, and growing pressures from the weaker yen will eventually convince the bank to revise its YCC policy in July
The Energy Information Administration (EIA) estimates that US shale oil production could remain flat in July, with drilled but uncompleted wells (DUCs) inventory falling further in May. For metals, China’s surprise cut in short-term rates has been supportive of prices as Beijing appears to be taking measures to support economic growth