US And China CPI Inflation Reports Take Centre Stage
The US and Chinese inflation reports on Thursday and Friday, respectively, are the sets of data that economists will likely be focusing on for the remainder of this week. Both economies struggled as high inflation figures and restrictive economic policies hurt consumer budgets.
In other news, the World Bank warned that the global economy is set to grow at its slowest pace (2.4%) since the pandemic. The World Bank’s chief economist, Intermit Gill, said that high interest rates and conflicts in various regions have played a significant role. However, he also noted that "at the end of 2024 we project that all advanced economies will have a per capita income that is higher than what they had before COVID."
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US CPI December 2023 Report
Economists will be expecting to scrutinise the US inflation data for the month of December as the US Bureau of Labour Statistics (BLS) is scheduled to release its monthly survey.
Analysts forecast that US CPI inflation rose to 0.2%, on an annualised basis, in the last month of 2023, while core CPI inflation is expected to come in at 3.8%, falling from November’s 4% figure.
An ING report said: “Core inflation is expected to drop below 4.0% (consensus and ING's call are 3.8%), but the December FOMC minutes showed there was a widespread optimistic view on the disinflation path and that is not supposed to change the picture dramatically. Our call remains for a first rate cut in May, and a gradual unwinding of March rate cut bets.”
China CPI December 2023 Report
Friday will be the day for an important inflation data release coming from China as the National Bureau of Statistics (NBS) will shed some light regarding the economy’s condition.
Market analysts suggest that December CPI inflation will likely be even lower than the –0.5% figure recorded in November as energy costs were lower. Nomura’s analysts have suggested that a lending rate cut by the People’s Bank of China (PBoC) could be a possibility in the upcoming meeting on January 21st.
Eurozone Growth And Interest Rate Cuts
In Europe, the ECB’s Vice President, Luis De Guindos, said that “the rapid pace of disinflation that we observed in 2023 is likely to slow down this year.” De Guindos noted that “incoming data indicate that future remains uncertain, prospects tilted to the downside,” adding that “soft indicators point to an economic contraction in December too, confirming the possibility of a technical recession in the second half of 2023 and weak prospects for the near term.”
Banque de France (BoF) Governor and European Central Bank (ECB) policymaker, François Villeroy de Galhau, said that the euro bloc’s central bank would cut rates this year as long as underlying fundamentals don't deliver any surprises. Villeroy noted that the ECB would not proceed with cutting rates until it made sure that inflation hovers around 2%.
Australia CPI Inflation Drops In November
In Australia, CPI inflation fell in November close to a two-year low with analysts suggesting that further interest rate rises wouldn’t be needed as the tight monetary policy of the Reserve Bank of Australia (RBA) seems to deliver positive results. Even more impressive was the core CPI figure that dropped to 4.6% from 5.3% recorded in October.
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