All Eyes On The Jackson Hole Symposium

Economists and market analysts are already focused on the Jackson Hole Symposium, the Federal Reserve annual meeting, which will take place on August 24-26 in Wyoming. On the other side of the Pacific, the Chinese central bank surprised investors on Monday by reducing some of its interest rates but not as much as it was anticipated.

China Cuts Interest Rates But Not As Much As Expected

The People's Bank of China (PBoC) announced its decision to cut its one-year loan prime rate on Monday, while leaving its five-year rate unchanged. Some market analysts were expecting a more radical change in the central bank’s monetary policy, so the decision was not in line with expectations. Data regarding economic activity in the country have shown that China’s economy struggles to get back on track since the beginning of the year as demand seems to falter. 

Economists at Capital Economics told CNBC reporters that the PBoC doesn’t seem willing to move forward with larger rate cuts, but they suggested that the Chinese government is likely to provide further fiscal support in order to stimulate the economy.

Kiwibank Analysts Forecast New Zealand Rate Cut In May 2024

A report published by Kiwibank suggested that the Reserve Bank of New Zealand (RBNZ) could start reducing its interest rates in May 2024. The report mentioned that “the OCR track however was more hawkish than we had hoped. We were surprised to see the entire track lifted out to 2026. ... the door is open to another interest rate hike. Firstly, the RBNZ want the full force of recent tightening to hit households in coming months. Thoughts of rate cuts were deliberately squashed, in order to keep wholesale rates, and therefore mortgage and other lending rates, high and dry. We still expect the next move to be a rate cut. And we expect a cut long before most commentators and the RBNZ themselves. We now pencil in the first cut in May next year.”

Nomura Revises China’s Economic Growth Forecast

Citing July’s weak financial data reports and warning of an ongoing “downward spiral,”, Nomura revised its economic growth forecast for China this year to 4.6% from its previous projection of 5.1%. However, Nomura’s growth forecast for 2024 remained unchanged at 3.9%.

Nomura’s economists wrote in their report: “In coming months, growth will face further pressure as the post-pandemic pent-up demand for travel runs its course.”

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