Jerome Powell says the time has come to cut rates. They may eventually fall 200 basis points. The Kiwi dollar is rising against the Aussie despite a smaller interest rate premium. Japan is set to keep hiking. Inflation in Singapore was below forecasts.
In our bonus deep dive interview, ANZ Maddy Dunk looks at how an eventual fall in Australian interest rates might affect house prices differently in different cities, including a supply-constrained Sydney.
5 things to know:
Fed Chair Powell told fellow central bankers at Jackson Hole on Friday night the time had come to cut rates and he wouldn’t welcome a major cooling of the jobs market. ANZ Head of G3 Economics Brian Martin sees 200 bps of cuts to come in this easing cycle.
Brian says markets fully expect the Fed to cut at least 25 basis points when the FOMC next decides on September 18, although markets also see a 20% chance of 50 bps.
The Kiwi dollar has strengthened nearly two cents to 92 Aussie cents in the last week, despite the RBNZ’s rate premium over the RBA tightening. ANZ NZ Chief Economist Sharon Zollner points to dairy prices rising as iron ore prices fall.
Japanese inflation data on Friday was mixed. Headline annual inflation rose to 2.8% in July from 2.6% in June, but core inflation fell below 2% for the first time in almost two years. ANZ FX analyst Felix Ryan sees the BoJ continuing to hike.
Singapore’s annual CPI inflation rate fell more than expected in July to 2.5% from 2.9% in June. ANZ Head of Asia Research Khoon Goh still sees the Monetary Authority of Singapore holding until next year, but more weak data may bring an easing closer.
Cheers
Bernard
PS: Catch you tomorrow with a look-ahead to key Australian inflation data on Wednesday.
