UK CPI inflation hits 2%, but services inflation remains stubbornly high. All eyes are on the Bank of England tonight. Indonesia’s central bank is set to hold rates, while Bank of Japan board minutes show growing concern over the weak Yen.
In our bonus deep dive interview, ANZ Head of G3 Economics Brian Martin explains why ANZ has pared back its 2024 ECB rate cut expectations.
5 things to know:
British CPI inflation hit the 2% target mark in May. ANZ Economist Bansi Madhavani says traders focused on services inflation at 5.7%, well above the Bank of England staff estimate of 5.3%
Attention now turns to the Bank of England’s rates decision tonight. Bansi sees it held at 5.25%, but says the BoE faces a complicated task of communicating when it might move due to the British election.
Bank Indonesia also has a rate decision today. ANZ Economist Krystal Tan expects it to hold at 6.25%, although she is on the look out for chances of another surprise hike as seen in April.
The Bank of Japan’s April minutes showed concern that a weak Yen might push up inflation, requiring further tightening. ANZ FX Analyst Felix Ryan says the concern was stronger than the Governor’s post-meeting remarks. There was even talk of an ‘insurance’ hike to get ahead of further Yen weakening.
New Zealand Q1 GDP is due today. ANZ Economist Miles Workman is picking a 0.2% quarterly rise, the same as the Reserve Bank of New Zealand. He says services industry growth is the key to watch for any clues on the inflation outlook.
Cheers
Bernard
PS: Catch you tomorrow with the Bank of England’s rate decision and New Zealand’s Q1 GDP.
