Stronger US services activity is shrugged off as Fed rate cut hopes increase off the back of a cut by Bank of Canada, and expectations the ECB will also cut tonight. Australia’s economy hangs onto growth, boosted by stronger household consumption.
In our bonus deep dive interview, ANZ Senior Economist Catherine Birch highlights work Australia’s Fair Work Commission is undertaking on gender pay gaps.
5 things to know:
Global equity markets strengthened overnight as confidence grew that the Fed can cut rates this year. That was helped by the Bank of Canada cutting its key rate by 25 basis points to 4.75%, alongside expectations the ECB will cut tonight. US services sector activity expanded the most in nine months in May, but ANZ Economist Bansi Madhavani saw underlying weakness.
Australia’s GDP rose 0.1% in the March quarter and 1.1% annually, which was slower than in December. Private business investment and dwelling investment fell. ANZ Senior Economist Blair Chapman says unexpected strength in household consumption might grab the RBA’s attention.
The ECB is expected to cut its key policy rate by 25 basis points to 3.75% when it meets tonight. ANZ Head of G3 Economics Brian Martin says the ECB’s guidance about further cuts will be crucial.
The Philippines’ CPI rose 3.9% in the year to May, higher than April, but below forecasts for 4%, which is the top of the central bank’s target band. ANZ Economist Arindam Chakraborty says the short term risk is for higher inflation.
New Zealand’s merchandise terms of trade rose 5.1% in Q1 from Q4 of 2023. ANZ Agricultural Economist Susan Kilsby says the improvement was mainly due to falling import prices.
Cheers
Bernard
PS: Catch you tomorrow with the details and reaction to the ECB’s expected rate cut.
