US inflation comes in as expected - Fed rate hike expectations fall. Bank of Korea says more rate rises are likely. And ANZ Research downgrades its Australian house price forecasts.
In our deep-dive interview, ANZ Economist Aaron Luk explains how Australia’s unemployment rate has become less sensitive to growth in recent years.
5 things to know in 5 minutes:
US CPI inflation was 0.1% in July and core inflation 0.2% - in line with expectations. ANZ Economist Bansi Madhavani says it’s encouraging to see core price growth maintain a downward trend. Annual core inflation of 2.5% was the lowest since March 2021.
Bansi says market pricing for a September rate hike by the Fed eased from 50-50 to 40% after the data.
ANZ Research has downgraded its Australian capital city house price forecasts. ANZ Economist Maddy Dunk now sees pricing falling 4.3% in 2026, compared to the 2.1% fall forecast back in June.
Bank of Korea’s Deputy Governor says more rate hikes are likely as stronger growth pushes up inflation. ANZ Economist Krystal Tan says that fits with ANZ Research’s view that the BoK will deliver at least two more rate hikes - the question is whether they’ll start in August.
The appointment of Indonesia’s new central bank Governor after the sudden resignation of her predecessor appears to have calmed markets and eased pressure on the rupiah, Krystal says. However, there are two big tests coming up for Bank Indonesia.
Cheers,
Alex.
PS: Catch you tomorrow with the latest New Zealand inflation expectations.
