Philippine Central Bank hikes rates by 50 basis points
Philippine Central Bank raised A 50 basis point hike in interest rates to 5.5%, in line with analysts’ forecasts in a Reuters poll and to take the key rate to the highest level in 14 years.
Bank of America Global Research’s ASEAN economist Mohd Faiz Nagutha said on CNBC’s “Squawk Box Asia” that the Banco Central ng Pilipinas (BSP) is likely to continue raising rates in early 2023 after the US Federal Reserve.
He said the central bank will continue to raise its benchmark interest rate to 6% or 50 basis points above the current rate.
China reopening ‘necessary’ to bring down US inflation: Siegel
Wharton School of Business professor Jeremy Siegel said on CNBC’s “Street Science Asia” that China’s economic reopening is late, but much needed to contain inflationary pressures in the US.
“For America, we import so much from China, if those supply chains are normalized, it will bring down inflation, so I applaud China’s move,” he said. “It is too late now, it should have happened earlier, but it is needed,” he said.
Siegel said he expects the US Federal Reserve to raise rates once again by 25 basis points at its February meeting.
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China’s November retail sales show significant contraction
China’s industrial production rose 2.2% in November after clocking a 5% increase in October, according to official data. That fell short of expectations for growth of 3.6% in a Reuters poll.
Retail sales fell 5.9% on an annual basis, beating a 3.7% drop in a Reuters survey and more than expected for a 0.5% decline last month.
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JP Morgan expects Asian markets to end the week on a cautious note after Fed hike
JPMorgan expects Asia-Pacific markets to end the week on a cautious note after the Federal Reserve raised interest rates by 50 basis points.
“Given the US market reaction following the FOMC meeting, we expect Asian markets to end the week with a more cautious tone,” Tai Hui, the firm’s Asia-Pacific chief market strategist, said in a note.
Tai said a weaker inflation print is needed before the Fed’s doldrums fade, while the region could be more optimistic on hopes of China’s reopening.
“The medium-term prospects of China’s economic reopening and resilience in Asia’s domestic demand could be a bright spot as the US and Europe face more growth challenges,” Tai said. “We will need more weak inflation data for the Fed to reduce its hawkishness.”
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South Korea’s revised trade data shows slightly lower trade deficit
South Korea’s revised trade data for November was flat, official data from the Bank of Korea showed.
Imports increased by 2.7% while exports declined by 14%, in line with the previous month’s reading, resulting in a trade deficit of $6.99 billion, slightly lower than the previous month’s reading of $7.01 billion.
Import prices rose by 14.2% compared to a year ago after seeing a 19.8% increase last month. Export value rose 8.6% in November compared to a year earlier after rising 13.7% in October.
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Japan’s trade data beat estimates, reporting a wider trade deficit than expected
Japan’s exports and imports rose more than expected on an annual basis for November, official data showed.
Exports rose 20% for the month, beating expectations of 19.8% in a Reuters survey. Imports increased by 30.3%, well above expectations of 27% in a Reuters poll.
This resulted in an expected trade deficit of 2.02 trillion yen ($14.91 billion), after posting 2.16 trillion yen ($15.96 billion) in the previous month.
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CNBC Pro: Missed the China reopening rally? Bank of America names global stocks to ride the second phase
According to Bank of America, investors will have a second opportunity to participate in the stock market rally after China announced the easing of COVID-19 restrictions.
The bank named more than 10 stocks after it found “green shoots of recovery in high-frequency data” that pointed to rising earnings of companies exporting to China.
CNBC Pro subscribers can read more here.
Australia unemployment rate in line with expectations
Australia’s unemployment rate for November stood at 3.5% on an annual basis, in line with Reuters poll expectations and flat from the previous month.
Official figures from the Australia Bureau of Statistics show that the labor participation rate also remains at 66.7%, and the employment to population ratio remains at 64.4%.
Monthly hours of work increased to 1.89 billion.
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Fed announces 50 point rate hike
The Fed announced that it would raise interest rates by 50 basis points, ending the pattern of 75 basis points hikes seen in recent months.
Prior to the move, the Fed had raised rates by 75 basis points in the previous four meetings. One basis point is equal to 0.01%.
A 50 basis point hike was widely expected ahead of the meeting.
This is the last policy decision expected from the central bank in 2022.
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Powell wants ‘much more evidence’ that inflation is coming down
Federal Reserve Chairman Jerome Powell said on Wednesday that recent positive signs of inflation are not enough for the central bank to reduce interest rate hikes.
“It takes more than enough evidence to believe that inflation is on a sustained downward trend,” Powell said during the news conference following their meeting.
The comments came as the Fed raised its benchmark rate by half a percentage point and indicated that at least three-quarters of a point in hikes were coming. The decision also comes a day after the November consumer price index reading was up just 0.1%, a sign that inflation may have peaked.
However, Powell noted that inflation remains a problem.
“Price pressures remain evident across a broad range of goods and services,” Powell said.