US consumers increasingly fear Donald Trump’s tariffs will drive up inflation, which worried US markets on Friday. Trump reverses a plan to put tariffs on parcel imports. The Reserve Bank of India cuts rates. And China’s CPI inflation blipped up in January.
In our bonus deep dive interview, ANZ’s Head of Australian Economics Adam Boyton finds some surprising strength in private sector job creation.
5 things to know in 5 minutes:
The University of Michigan measure of consumer confidence taken on February 4 found one-year-ahead inflation expectations spiked by a full percentage point to 4.3% from 3.3% after Trump announced 25% tariffs on Mexico and Canada, which ANZ Group Chief Economist Richard Yetsenga says Trump can’t ignore.
Richard points to Trump’s decision over the weekend to reverse the application of a 10% tariff on all Chinese imports, including those previously imported by parcel by the likes of Temu under the ‘de minimus’ rule.
US jobs data for January showed the world’s largest economy generated about a quarter of a million jobs each month for the last three months, which will add to Fed caution about cutting rates again, says ANZ Economist Bansi Madhavani.
China’s annual CPI inflation rate blipped up surprisingly to a five-month high of 0.5% in January, but producer price deflation of 2.3% was more deflationary than expected. ANZ China Economist Vicky Xiao Zhou says China’s authorities are more worried about weak consumer spending than inflation.
The Reserve Bank of India cut its main repo rate by 25 basis points to 6.25%, as expected, but its commentary about having a neutral stance was not as dovish as markets had hoped for, says ANZ India Economist Dhiraj Nim.
Cheers,
Bernard
PS: Catch you tomorrow with more on how Trump’s tariffs are moving currencies and how China’s consumers felt and spent during the just finished Lunar New Year.
