Markets are coping this morning with the world’s two biggest central banks taking interest rates in different directions, with the Fed holding yesterday and in no hurry to cut again, while the ECB cut overnight with more to come.
In our bonus deep dive interview, ANZ Senior Economist Catherine Birch digs into the detail behind Australia’s falling inflation rate and why ANZ Research is expecting a rate cut in February.
5 things to know in 5 minutes:
Global markets are mixed, but broadly steady after the Fed held rates yesterday and the ECB cut overnight. Federal Reserve Chair Jerome Powell said the FOMC was in no hurry to adjust its policy stance.
In contrast to the Fed, the European Central Bank cut interest rates as expected by 25 basis points to 2.75% overnight. ANZ Head of G3 Economics Brian Martin says growth and demand in Europe is weak, which is likely to push the ECB to cut the deposit rate to 1.5%.
ANZ’s Business Outlook survey showed confidence in New Zealand dropped 8 points in January as cost and wage expectations lifted. But ANZ Economist Henry Russell says the dip followed a surge in Q4 and headline confidence still remained relatively high.
Philippines GDP grew 5.2% in the fourth quarter of 2024, below consensus expectations for 5.5%. ANZ Economist Arindam Chakraborty says household spending was weak.
India’s Finance Minister will deliver the Government’s 2025 budget on Saturday. ANZ Economist Dhiraj Nim says a slowing economy has raised calls for fiscal expansion, but he expects the fiscal deficit to fall to 4.5% next year from 4.9% this year.
Cheers,
Bernard
PS: Catch you next week with reaction to tonight’s US PCE inflation data and what it could mean for US interest rates.
