Strong US CPI figures have pushed back expectations for a fully-priced rate cut by the Fed from July to November. US Treasury yields are up 20 basis points and US stocks fell. The Aussie and Kiwi dollars have fallen more than 1% this morning.
In our bonus deep dive interview, ANZ Chief Economist for Southeast Asia and India, Sanjay Mathur, has reviewed March PMI data for Asia’s main economies (ex-China), and says India’s exceptionalism showed through.
5 things to know:
Strong US CPI data forced a major reassessment of expectations for when the US Fed will start cutting interest rates. Both headline and core CPI rose 0.4% in March vs consensus expectations for both to rise 0.3%. ANZ Head of G3 Economics Brian Martin says the market may have over-reacted.
The Reserve Bank of New Zealand kept its Official Cash Rate on hold at 5.5% yesterday. ANZ NZ Chief Economist Sharon Zollner says her view is cuts won’t be on the table until 2025.
The Bank of Thailand also held its key rate at 2.5%, resisting a call from the country’s Prime Minister for a cut. ANZ Economist Krystal Tan says the BoT signalled it would take a data-dependent approach for when to cut rates.
ANZ Chief Economist for Greater China, Raymond Yeung, expects data out today to show China’s annual CPI inflation rate fell to 0.3% as the lunar new year effect diminishes. He sees PPI deflation of 3% due to an industrial price war.
Taiwan’s exports rose 19% in March from a year ago, versus a consensus expectation of 7.5%. ANZ Economist Bansi Madhavani cites strong demand for AI chips.
Cheers
Bernard
PS: Catch you tomorrow with reaction to the ECB’s rate decision - Brian says expectations are for rates to stay on hold in April, ahead of a June cut.
