The Fed has held, as expected. China has lowered interest rates to cushion its domestic economy from the Liberation Day tariff shock. Those lower rates have unleashed extra funds going out of China and into Hong Kong, putting upward pressure on its currency peg with the US dolllar. And New Zealand jobs data was soft, despite a better than expected unemployment rate.
In our bonus Deep Dive interview, ANZ’s Senior Rates Strategist Jack Chambers explains how Australia’s A$4 trillion pension savings system is improving Australia’s current account deficit.
5 things to know in 5 minutes:
The US Federal Reserve’s Open Markets Committee (FOMC) has held its Fed Funds Rate in a range of 4.25% to 4.5%, which ANZ Head of G3 Economics Brian Martin says was as expected.
China has loosened monetary policy to soften the blow of 145% tariffs on its exports to the United States, says ANZ’s Chief Economist for Greater China Raymond Yeung.
Raymond says the timing wasn’t an accident, coming before officials from China and the United States meet this weekend in Geneva for trade talks.
Raymond says lower interest rates in China are increasing funds-flow into Hong Kong, which is putting upward pressure on the Hong Kong Dollar’s peg to the US dollar of 7.75 to 7.85.
New Zealand’s unemployment rate was unchanged at 5.1% in the March quarter, which was better than ANZ Research’s forecast of 5.3% and the Reserve Bank of New Zealand’s forecast of 5.2%. But ANZ Senior Economist Miles Workman says the data was softer than it appeared at first glance.
Cheers,
Bernard
PS: Catch you tomorrow with with more reaction and analysis on the Fed’s decision and comments this morning by Fed Chair Jerome Powell.
