All eyes this week will be on US consumer price inflation data, to see whether the market’s expectations of more than four extra Fed cuts can be justified. And the Bank of Japan holds, albeit with a surprise split vote.
In our Deep-Dive interview, ANZ Senior Rates Strategist Jack Chambers looks at why the US housing market isn’t getting as much stimulus from Fed rate cuts as you’d think.
5 things to know in 5 minutes:
This week’s news flow for markets is dominated by US personal consumption expenditure inflation data on Thursday night, and what it means for the Fed’s rate cutting cycle restarted last week.
Jack says there’s a risk a hot inflation number causes a big reaction on markets because markets expect more than the four extra cuts ANZ Research is forecasting.
In New Zealand, last week’s 0.9% contraction of GDP in the June quarter has thrown the cat amongst the pigeons for forecasts of what the Reserve Bank of New Zealand will do next. A 25 basis point cut had been seen as locked in. ANZ New Zealand Chief Economist Sharon Zollner says there are now two clear options: 25 basis points and 50 basis points.
Sharon says a 25 basis point cut would allow the Reserve Bank to signal more, but retain the option of not cutting too much if things change.
The Bank of Japan held its key interest rate on Friday, as expected, but there was a surprise split vote, says ANZ FX Strategist Felix Ryan.
Cheers,
Bernard.
PS: Catch you tomorrow with a look ahead to monthly inflation data for Australia due on Wednesday.
