Our Scans · (FS.6.07) Inflation · Weekly Summary

• [New] The global economy remains resilient despite what's still quite high inflation which is now getting lower, sees Australian growth slowing to 1.5% in 2024 before picking up to 2.3% in 2025 as cost of living pressures through falling inflation wane, unemployment expected to rise to 4.3% in 2025. ABC listen
• [New] With inflation easing worldwide, central banks are expected to start cutting rates in the coming months, which could threaten major lenders' bottom lines. CityAM
• [New] The U.S. Federal Reserve on Wednesday held its benchmark interest rate steady at a 23-year high of 5.25-5.50 percent due to recent stubborn inflation, hinting that borrowing costs will remain at about the same level for a longer period. Kyodo News+
• [New] The RBI may reduce its benchmark repurchase rate by 50 basis points in the October-December period before pausing, due to rising inflation risks and the US Federal Reserve keeping rates steady. Economic Times
• [New] Headline inflation is expected to continue moderating towards target as energy and food prices have eased substantially, but persistent services price pressures will keep core inflation elevated at 3.3% in 2024 and 2.5% in 2025. The Guardian
• [New] High geopolitical tensions remain a significant near-term adverse risk, particularly if the evolving conflicts in the Middle East were to intensify and disrupt energy and financial markets, pushing up inflation and reducing growth. The Guardian
• [New] Inflation remains stubbornly above the Fed's target of 2 [percent], and mortgage rates will not fall significantly until the inflation rate consistently drops for multiple months in a row. Newsweek
• [New] Australia's sovereign wealth fund has been buying more domestic and overseas stocks, and adding to private debt bets, as it believes inflation could remain higher for longer in a stronger than expected global economy. Geelong Advertiser
• [New] The Bank of Canada kept interest rates steady at 5.0%, noting it was still too early to lower the policy interest rate even though recent inflation data suggested monetary policy was working largely as expected. Yahoo Finance
• [New] The US dollar fell on Wednesday after the US Federal Reserve signaled it is still leaning toward eventual reductions in borrowing costs, but repeated that it wants to gain greater confidence that inflation will continue to fall before cutting rates. Mint
• [New] Hefty new charges on some imported food products will come into effect, threatening to reduce consumer choice and push up prices not long after UK food inflation fell from double-digit rates. CNN
• [New] The Fed is expected to leave rates at high levels for longer in reaction to inflation data but interest rates will still be cut in 2024. Forbes
• [New] The International Monetary Fund (IMF) has once again lowered its growth projection for Bangladesh's economy, expecting it to grow by 5.7% in the current fiscal year due to various global and local challenges, including persistent inflation. AK & Partners
• [New] Financial markets have already pared back expectations about the scale and pace of interest rate cuts in 2024 in response to stickier than expected inflation. The Guardian
• [New] Inflation in the US is proving hard to tame and the US Federal Reserve is likely going to take a different route to the BoE and European Central Bank in cutting interest rates. Santander Asset Management Global
• [New] Recent commentary by the US Fed and the European Central Bank suggests that they will delay cutting interest rates due to higher inflation. businesslive
• [New] With US inflation rising to 3.5% in March (compared to 3.2% in February and 3.1% in January), the hopes of interest rate cuts have decreased. Mint
• [New] High inflation, energy prices and interest rates have mired the UK in economic stagnation in recent years but all three obstacles to growth have now either fallen away already or are expected to diminish in 2024. AOL
• Unexpectedly persistent US inflation could trigger an upward revision to US interest rate expectations and cause a US dollar appreciation. IMF eLibrary
• Monetary policy projections: With inflation projected to continue declining toward targets and longer-term inflation expectations remaining anchored, policy rates of central banks in major advanced economies are generally expected to start declining in the second half of 2024. IMF eLibrary
• In recent weeks, concern over the US economy and stickier-than-expected UK inflation has caused traders to slash their bets on rate cuts from the Bank of England. CityAM
• The S&P 500 has slid in recent weeks, roughly halving its year-to-date gain to 5% as stickier-than-expected inflation erodes the prospects for the Federal Reserve to cut rates in 2024. Economic Times

Last updated: 07 May 2024