Chinese CPI Hits 18-Month Low in March
As markets resumed their activities after the Easter break, the Chinese CPI inflation March report surprised analysts who didn’t expect consumer inflation would hit an 18-month low.
A report by the International Monetary Fund (IMF) published earlier today suggested that interest rates would likely fall back to levels seen before the coronavirus pandemic once inflation has been controlled. The IMF is expected to release its latest World Economic Outlook and Global Financial Stability Report later today.
China CPI inflation in March
The National Bureau of Statistics (NBS) in China announced that CPI inflation in March came in at 0.7%, on an annualised basis. The figure was lower than the 1% reading anticipated by market analysts. Economists speaking to CNBC said that “China’s March inflation report suggests that the Chinese economy is running a disinflation process, which points to a bigger room for monetary policy easing to boost demand.”
The country’s Producer Price index fell by 2.5% on a year-to-year basis, in line with economists’ expectations.
BoJ’s Ueda: Flexibility in monetary policy
The new Bank of Japan (BoJ) governor, Kazuo Ueda, stressed that he would flexibly guide the central bank’s monetary policy while communicating closely with the Japanese government. Ueda highlighted the elevated economic uncertainty and added that there was no immediate need to revise a joint statement between the government and the BOJ regarding the 2% inflation target.
The BoJ’s new head suggested it’s “very possible to reach sustainable price target as wage growth strengthens,” and added that positive signs are emerging in prices.
IMF: Prepare for low global economic growth
The World Bank and IMF spring meeting is already underway in Washington. In her remarks, the IMF’s head Kristalina Georgieva said, “with rising geopolitical tensions and still-high inflation, a robust recovery remains elusive.”
Georgieva suggested that global economic growth would remain around 3% over the next 5 years. If her projections come true, it would be the lowest global economic growth rate recorded in the last 33 years and well-below the 3.8% figure recorded in the last twenty years. The IMF forecasts 9 out of 10 advanced economies to post a decline in growth rate during this year. On the contrary, China and India will likely account for 50% of this year’s global economic growth.
Another topic of conversation related to the meeting will be the update of the World Bank’s mission statement as well as the strengthening of its lending capacity.
TDS: WTI could reach $90+ in H2 2023
Energy prices are taken into consideration by central banks when amending their monetary policies. Oil prices rose in the last few days as OPEC+ announced production cuts. A report published by TD Securities (TDS) on Monday showed that its economists are bullish on oil prices for the second half of the year. “Notwithstanding pending economic weakness in the Western world, we judge that the combination of OPEC+ cuts, low US petroleum complex inventory levels and the upcoming sharp increase in Chinese demand will send WTI into $90+ territory in the second half of the year, with Brent not far off the triple digit mark,” they wrote in their report.
The same TDS report noted that “crude oil continues to hold on to the strong gains made recently as the market focuses on the EIA data showing broad inventory draws and the unexpectedly large OPEC+ production cuts.”
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