Sive Morten
Special Consultant to the FPA
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Fundamentals
EUR this week was under double impact of rising geopolitical tensions in Eastern Europe and hawkish statement of the Fed. While military tensions ease a bit, all eyes now stand on Fed steps. There are a lot of rumors suggesting that the Fed could act more aggressively in two directions - either to raise rates faster, not just for 25 b.p. but for 50 b.p. at once at some meetings. Second - increase the pace of quantitative tightening (QT), for faster withdrawal of bonds on the balance to open market. Both steps lead to the rising of the interest rates, support the US dollar and become a headwind to its rivals.
Next week also everybody will keep an eye on the NFP report that should provide data for January. This week's statistics were mixed. We've got positive GDP, but the Core PCE index has risen again and consumer sentiment has decreased. Inflation should remain in the focus at least for the 1st half of 2022.
Market overview
The euro fell to a one-month low on Tuesday as tensions between Russia and the West drew investors to the dollar, a day before the Federal Reserve is expected to reveal details on its plans to tighten monetary policy. Tensions remained high after NATO said on Monday it was putting forces on standby and reinforcing eastern Europe with more ships and fighter jets in response to Russia's troop build-up near its border. Western leaders stepped up preparations for any Russian military action while Moscow said it was watching with great concern after 8,500 U.S. troops were put on alert to deploy to Europe in the event of an escalation.
Deutsche Bank flagging a potentially hawkish surprise over the coming months, with as many as six or seven increases this year. But ING analysts say that if the Fed's balance sheet reduction does the heavy lifting of policy normalization, that could scale back forecasts for the number of rate hikes. Fed funds futures have fully priced in a quarter-point tightening for the Fed's March meeting, plus three more for 2022.
In its latest policy update, the Fed signaled it is likely to raise U.S. interest rates in March and reaffirmed plans to end its bond purchases that month before launching a significant reduction in its asset holdings. In the follow-up press conference, Powell warned that inflation remains above the Fed's long-run goal and supply chain issues may be more persistent than previously thought.
The Fed also said its policy-setting members had agreed on a set of principles for shrinking its balance sheet, set to start sometime after interest hikes begin. The Fed's balance sheet roughly doubled in size during the pandemic to nearly $9 trillion, as it snapped up bonds to help keep longer-term interest rates down to support the economy.
U.S. Treasury yields rose as the Fed issued its update. The U.S. Treasury 2-year yields hit their highest level since February 2020. The benchmark U.S. 10-year yield climbed to 1.8709% shortly after the Fed statement.
The balance sheet cut will be "significant," Fed chief Jerome Paull warned at a press conference. He added that the US economy has shown strength and no longer needs strong support from the Fed.
Goldman Sachs forecasts the total QT to be $2-2.5 trillion. In other words, half of the “printed” dollar supply will be withdrawn from the system. Moreover, the speed of these withdrawals will be significant - up to $ 100 billion per month or more, which will allow the process to be completed in two to three years, GS believes.
However, the Fed could start with modest transactions of up to $20 billion a month, and then increase it to $90 billion, ING predicts. According to him, the Fed's balance sheet will decrease to $6 trillion by the mid-2020s and will be equal to 20% of US GDP (against 36% of GDP now).
The Fed could raise rates four times this year and the same number next, according to ING. This will make the tightening cycle the sharpest since 2004, when the US Central Bank increased the cost of borrowing 16 times over a 2-year period.
As for the reduction of the balance sheet, it may even become unprecedented in history. Over the past 20 years, the Fed has carried out quantitative tightening only once, in 2017-19, totaling $700 billion. Now they have to withdraw a few times more.
Then the head of the Fed came under fire from former President Donald Trump, who accused Powell of incompetence and even considered firing him. This time, Powell is again in danger of being a scapegoat: the US economy is slowing, and Biden's ratings are updating lows (41%, according to a January Pew Research poll).
The fine line between taking action to contain inflation but not tightening policy too fast that it brings the recovery to a quick end, is exactly the line Fed chief Jerome Powell has to walk. Markets will be watching his every step.
The Fed also said it may be warranted to increase the federal funds rate "sooner or at a faster pace" than had been earlier anticipated. Chair Jerome Powell later stressed at a news conference that no decisions had been made, but in response to a question about whether the central bank would consider a 50-basis point hike, he did not rule it out.
he U.S. Federal Reserve has kicked off 2022 with a clear message: rates will rise to contain surging inflation. Other central banks have already started the rates liftoff, and even dovish ones are starting to unwind the stimulus unleashed to protect their economies from the COVID-19 pandemic. Here's a look at where policymakers stand on the path out of pandemic-era stimulus, in order of how hawkish they appear:
Deutsche Bank expects the Fed to raise interest rates at every meeting from March to June and then revert to a quarterly tightening cycle from September, amounting to five hikes this year. Nomura, meanwhile, predicts a 50-bps move in March.
While inflation is at a record high 5%, the ECB expects inflation to retreat and says a rate rise this year is unlikely. However, it has promised copious support via its long-running Asset Purchase Programme and signalled a very gradual exit from years of ultra-easy policy.
The dollar consolidated gains on Friday and posted its biggest weekly rise in seven months as markets priced in a year ahead of aggressive hikes in U.S. interest rates.
Money markets priced in a 28.5-basis-point interest rate hike in March and as many as 119.5 basis points in cumulative increases by year's end as the dollar steadily rose in a week highlighted by a more hawkish tone coming out of a Federal Reserve meeting.
U.S. labor costs increased strongly in the fourth quarter, but less than expected, the Labor Department said. The Employment Cost Index (ECI), the broadest measure of labor costs, rose 1.0% after increasing 1.3% in the prior quarter.
But the pace of change from the previous periods fell, and even as investors and many analysts continued penciling in more and faster Fed rate increases this year, some added a footnote. The slowdown in employment cost growth, for example, was a "big step in the right direction" for Fed officials who expect price trends to ease on their own, said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
That scenario, out of step with investors who expect five rate hikes this year and some forecasters who have gone as high as seven, shows the degree of uncertainty still in play around where the economy is heading and how the Fed will respond.
The U.S. Commerce Department reported that consumer spending fell in December, weakness that may have continued into January given the massive outbreak of new coronavirus cases. Consumer sentiment continued to decline at the start of the year, hitting the lowest point in a decade, according to the University of Michigan's closely watched gauge of American households' sentiment.
That could help with inflation, at least some of which has been driven by strong demand for goods during the pandemic, but the Fed may be treading a fine line between what's needed to temper prices and what would be an overreach.
The greenback is poised to gain further versus the euro and yen as the Fed raise rates but the European Central Bank and Bank of Japan likely stand pat. BOJ Governor Haruhiko Kuroda said Friday it was premature to raise the bank's rate targets
Persistently high inflation will haunt the world economy this year, according to a Reuters poll of economists who trimmed their global growth outlook on worries of slowing demand and the risk interest rates would rise faster than assumed so far. This represents a sea change from just three months ago, when most economists were siding with central bankers in their then-prevalent view that a surge in inflation, driven in part by pandemic-related supply bottlenecks, would be transitory.
In the latest quarterly Reuters surveys of over 500 economists taken throughout January, economists raised their 2022 inflation forecasts for most of the 46 economies covered. While price pressures are still expected to ease in 2023, the inflation outlook is much stickier than three months ago.
At the same time, economists downgraded their global growth forecasts. After expanding 5.8% last year, the world economy is expected to slow to 4.3% growth in 2022, down from 4.5% predicted in October, in part because of higher interest rates and costs of living. Growth is seen slowing further to 3.6% and 3.2% in 2023 and 2024, respectively.
COT Report
Speculators' net long bets on the U.S. dollar fell to a 21-week low in the latest week, according to calculations by Reuters and U.S. Commodity Futures Trading Commission data released on Friday. The value of the net long dollar position was $9.87 billion for the week ended Jan. 25, compared with a net long position of $12.59 billion for the prior week.
Meantime, EUR position has not changed too much, at least before the recent collapse, as data stands for the 25th of January. Next week, supposedly we should see a quite different picture. This week, we see that net short position has dropped for ~ 5-6K contracts on a background of open interest decreasing:
NEXT WEEK TO WATCH
#1 the USD NFP data
The Federal Reserve is clearly out to tame inflation and reckons a "historically tight" labour market gives it plenty of room to raise rates without hurting jobs growth.
January jobs data out Friday will likely confirm that view. Economists polled by Reuters forecast the U.S. economy created 238,000 new jobs versus 199,000 in December when employment rose less than expected due to worker shortages.
#2 BoE rate hike
At Thursday's Bank of England meeting, expect interest rates to rise to 0.5% from 0.25%, to curb inflation running at its highest in almost 30 years.
The big question - one many central banks are grappling with - is whether a series of rate hikes now can curb inflation before price pressures trigger higher wage demands, and feed into generally higher price pressures.
Watch out for comments from Governor Andrew Bailey about the strength of the labour market, wage growth, and his take on how fast inflationary pressures are building beyond supply chain disruptions and spiking energy prices.
#3 ECB meeting
The same contentious topic - inflation - is dividing European Central Bank officials. Euro-area inflation is at a record high 5% and January data, released Wednesday, could provide the hawks with fresh ammunition to press for a policy shift.
Comments from ECB President Christine Lagarde suggest inflation will drop back below its 2% target this year as pressures from high energy prices and supply bottlenecks ease. She may push back against market pricing for rate rises this year, which is out of sync with ECB messaging. The spillover from U.S. rate-hike bets is a potential headache for officials keen to avoid an unwanted tightening of monetary conditions.
So, Thursday's meeting could prove lively even if no immediate action is expected - the ECB has already outlined plans to wrap up its PEPP stimulus scheme.
#4 RBA rate decision
As rate-hiking campaigns gather pace in other big economies, central bank doves are becoming an endangered species down under.
The Reserve Bank of Australia meets Tuesday against the backdrop of the hottest consumer inflation since 2014 and strongest labour market since 2008, piling pressure on RBA Governor Philip Lowe to take action.
Lowe has insisted a 2022 rate rise is unlikely, but economists are split on whether the RBA will capitulate. Traders, though, have long wagered Lowe is behind the inflation curve, and are pricing a rate hike in May, followed by at least three more by year-end.
To be continued...
EUR this week was under double impact of rising geopolitical tensions in Eastern Europe and hawkish statement of the Fed. While military tensions ease a bit, all eyes now stand on Fed steps. There are a lot of rumors suggesting that the Fed could act more aggressively in two directions - either to raise rates faster, not just for 25 b.p. but for 50 b.p. at once at some meetings. Second - increase the pace of quantitative tightening (QT), for faster withdrawal of bonds on the balance to open market. Both steps lead to the rising of the interest rates, support the US dollar and become a headwind to its rivals.
Next week also everybody will keep an eye on the NFP report that should provide data for January. This week's statistics were mixed. We've got positive GDP, but the Core PCE index has risen again and consumer sentiment has decreased. Inflation should remain in the focus at least for the 1st half of 2022.
Market overview
The euro fell to a one-month low on Tuesday as tensions between Russia and the West drew investors to the dollar, a day before the Federal Reserve is expected to reveal details on its plans to tighten monetary policy. Tensions remained high after NATO said on Monday it was putting forces on standby and reinforcing eastern Europe with more ships and fighter jets in response to Russia's troop build-up near its border. Western leaders stepped up preparations for any Russian military action while Moscow said it was watching with great concern after 8,500 U.S. troops were put on alert to deploy to Europe in the event of an escalation.
Tensions have exposed the euro and Europe, especially regarding energy, but the dollar's strength has more to do with Fed policy tightening, said Alvise Marino, director of FX strategy at Credit Suisse. The market was pricing in one hike by the Fed in 2022. Now we're pricing four. That is ultimately the major driver of the dollar strength we've seen the past three months," he said. "This accelerated a bit on the back of weakness in the broader equity markets and risk appetites that you've seen in particular since last Wednesday," Marino said.
The dollar's strength indicates its role as the ultimate safe-haven currency, said Marshall Gittler, head of Investment Research at BDSwiss Holding Ltd. Currencies usually gain when rates are expected to go higher and fall when expectations of future rate hikes increase,Gittler said. "It's not just that (the dollar) rose during a risk-off period but also that it rose even as expectations for Fed tightening were pared back."
Deutsche Bank flagging a potentially hawkish surprise over the coming months, with as many as six or seven increases this year. But ING analysts say that if the Fed's balance sheet reduction does the heavy lifting of policy normalization, that could scale back forecasts for the number of rate hikes. Fed funds futures have fully priced in a quarter-point tightening for the Fed's March meeting, plus three more for 2022.
In its latest policy update, the Fed signaled it is likely to raise U.S. interest rates in March and reaffirmed plans to end its bond purchases that month before launching a significant reduction in its asset holdings. In the follow-up press conference, Powell warned that inflation remains above the Fed's long-run goal and supply chain issues may be more persistent than previously thought.
"The market took notice of the stress the Fed Chair put on the inflation side of the equation combined with his stressing of the tight labor market. This implies that the Fed could be comfortable with some reduction in the pace of overall economic growth," said Russell Price, chief economist at Ameriprise Financial Services.
The Fed also said its policy-setting members had agreed on a set of principles for shrinking its balance sheet, set to start sometime after interest hikes begin. The Fed's balance sheet roughly doubled in size during the pandemic to nearly $9 trillion, as it snapped up bonds to help keep longer-term interest rates down to support the economy.
U.S. Treasury yields rose as the Fed issued its update. The U.S. Treasury 2-year yields hit their highest level since February 2020. The benchmark U.S. 10-year yield climbed to 1.8709% shortly after the Fed statement.
Fed Chair Jerome Powell said the U.S. central bank will be open-minded as it adjusts monetary policy to keep persistently high inflation from becoming entrenched. While no decisions have been made, "we'll be humble and nimble," he said.
The balance sheet cut will be "significant," Fed chief Jerome Paull warned at a press conference. He added that the US economy has shown strength and no longer needs strong support from the Fed.
The Fed futures market has booked four increases in 2022. But given inflation, which accelerated to 7% for the first time since the early 1980s, it is possible that there will be more of them, or the first step - in March - will shift the cost of loans immediately by 50 bp. up, ING analysts write. As for the reduction of the balance sheet, it is likely to begin in the summer, the bank believes.
Goldman Sachs forecasts the total QT to be $2-2.5 trillion. In other words, half of the “printed” dollar supply will be withdrawn from the system. Moreover, the speed of these withdrawals will be significant - up to $ 100 billion per month or more, which will allow the process to be completed in two to three years, GS believes.
However, the Fed could start with modest transactions of up to $20 billion a month, and then increase it to $90 billion, ING predicts. According to him, the Fed's balance sheet will decrease to $6 trillion by the mid-2020s and will be equal to 20% of US GDP (against 36% of GDP now).
The question remains how decisively the Fed will act. The soft option is to simply wait until the securities purchased on the balance sheet expire. However, in this case, it will be impossible to reduce the balance sheet by more than $60-70 billion in most months, Nomura estimates. The hard scenario is the sale of assets from the Fed's balance sheet to the market.
The Fed could raise rates four times this year and the same number next, according to ING. This will make the tightening cycle the sharpest since 2004, when the US Central Bank increased the cost of borrowing 16 times over a 2-year period.
The result will be a strengthening of the dollar, which may continue throughout the current year, according to ING. The US currency index at the end of the Fed meeting has already updated its maximum for six months (97.2 points), and the yields of US government bonds jumped (1.69% on 5-year securities, 1.87% on 10-year ones).
As for the reduction of the balance sheet, it may even become unprecedented in history. Over the past 20 years, the Fed has carried out quantitative tightening only once, in 2017-19, totaling $700 billion. Now they have to withdraw a few times more.
Then the head of the Fed came under fire from former President Donald Trump, who accused Powell of incompetence and even considered firing him. This time, Powell is again in danger of being a scapegoat: the US economy is slowing, and Biden's ratings are updating lows (41%, according to a January Pew Research poll).
"The statement still leaves a lot of questions to be answered particularly when it comes to the balance sheet roll-off. There wasn't a whole lot of detail provided," said Russell Price, chief economist at Ameriprise Financial.
But Fed policy decisions by design result in a very slow-moving ship, said Peter Cramer, senior managing director at SLC Management. "The market’s rate expectations the last three months has been warp speed in the context of Fed decision-making," Cramer said. "The pace of which the Fed operates is measured in years and maybe quarters, but not months."
Lee Ferridge, head of macro strategy for North America at State Street Global Markets, said "the idea of the balance sheet reduction as now mentioned in the statement puts us on the table for June."
The fine line between taking action to contain inflation but not tightening policy too fast that it brings the recovery to a quick end, is exactly the line Fed chief Jerome Powell has to walk. Markets will be watching his every step.
The outlook for aggressive rate hikes has led to a major reset globally, said Ed Moya, senior market analyst at OANDA. You just don't know how far the Fed is going to go because we don’t know exactly when inflation will really peak," he said. While there is optimism that inflation will subside by midyear, it could get worse and lead to more aggressive Fed action, he said, adding, "you got a little bit more left in this dollar move."
The Fed also said it may be warranted to increase the federal funds rate "sooner or at a faster pace" than had been earlier anticipated. Chair Jerome Powell later stressed at a news conference that no decisions had been made, but in response to a question about whether the central bank would consider a 50-basis point hike, he did not rule it out.
"Our new base case for six hikes this year poses challenges to our bullish outlook for U.S. equities. However, it is not sufficient to derail it on a standalone basis if earnings growth remains strong, in our view," BNP Paribas analysts wrote in a note.
he U.S. Federal Reserve has kicked off 2022 with a clear message: rates will rise to contain surging inflation. Other central banks have already started the rates liftoff, and even dovish ones are starting to unwind the stimulus unleashed to protect their economies from the COVID-19 pandemic. Here's a look at where policymakers stand on the path out of pandemic-era stimulus, in order of how hawkish they appear:
Deutsche Bank expects the Fed to raise interest rates at every meeting from March to June and then revert to a quarterly tightening cycle from September, amounting to five hikes this year. Nomura, meanwhile, predicts a 50-bps move in March.
While inflation is at a record high 5%, the ECB expects inflation to retreat and says a rate rise this year is unlikely. However, it has promised copious support via its long-running Asset Purchase Programme and signalled a very gradual exit from years of ultra-easy policy.
The dollar consolidated gains on Friday and posted its biggest weekly rise in seven months as markets priced in a year ahead of aggressive hikes in U.S. interest rates.
Money markets priced in a 28.5-basis-point interest rate hike in March and as many as 119.5 basis points in cumulative increases by year's end as the dollar steadily rose in a week highlighted by a more hawkish tone coming out of a Federal Reserve meeting.
"I look for some consolidation, but nothing to say that the dollar's up move is over," said Marc Chandler, chief market strategist at Bannockburn Global Forex. The Employment Cost Index, which (Fed Chair Jerome) Powell has referred to specifically, was a bit softer than expected and has spurred some position adjusting ahead of the weekend," Chandler said.
U.S. labor costs increased strongly in the fourth quarter, but less than expected, the Labor Department said. The Employment Cost Index (ECI), the broadest measure of labor costs, rose 1.0% after increasing 1.3% in the prior quarter.
But the pace of change from the previous periods fell, and even as investors and many analysts continued penciling in more and faster Fed rate increases this year, some added a footnote. The slowdown in employment cost growth, for example, was a "big step in the right direction" for Fed officials who expect price trends to ease on their own, said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
Where Fed Chair Jerome Powell and other U.S. central bank officials have emphasized the risk that inflation may prove higher and require them to raise borrowing costs faster then expected, Shepherdson in recent forecasts sketched an opposing view: Of an economy that flatlines because of the coronavirus pandemic in the first three months of 2022, loses jobs in January and February, and produces inflation that is "falling sharply" by the second quarter, just as the Fed is presumably gearing up for its rate increases.
That scenario, out of step with investors who expect five rate hikes this year and some forecasters who have gone as high as seven, shows the degree of uncertainty still in play around where the economy is heading and how the Fed will respond.
The U.S. Commerce Department reported that consumer spending fell in December, weakness that may have continued into January given the massive outbreak of new coronavirus cases. Consumer sentiment continued to decline at the start of the year, hitting the lowest point in a decade, according to the University of Michigan's closely watched gauge of American households' sentiment.
Survey director Richard Curtin said the combination of Omicron, high inflation, and the steady dose of news about future Fed rate hikes could trigger a consumer backlash - a possible blow to economic growth on top of what's already coming through lowered government spending. The danger is that consumers may overreact to these tiny nudges," Curtin said.
That could help with inflation, at least some of which has been driven by strong demand for goods during the pandemic, but the Fed may be treading a fine line between what's needed to temper prices and what would be an overreach.
"Panic within the Fed's ranks has begun to set in. The challenge now is to tamp down inflation without allowing the flame on the overall economy to go out," wrote Diane Swonk, chief economist at Grant Thornton, a professional services firm. "There is no road map for doing this after inflation has surged."
Either way, said Minneapolis Fed President Neel Kashkari, it's a reason the U.S. central bank may not ultimately need to "slam on the brakes" with aggressive rate increases. Despite the seemingly hawkish positioning of the Fed, Kashkari told NPR on Friday that the aim is not to restrict the recovery but "let our foot off the accelerator just a little bit.
The greenback is poised to gain further versus the euro and yen as the Fed raise rates but the European Central Bank and Bank of Japan likely stand pat. BOJ Governor Haruhiko Kuroda said Friday it was premature to raise the bank's rate targets
A preliminary estimate next week of euro zone consumer prices in January is expected to lower the year-over-year rate toward 4.3% from 5.0%, allowing ECB President Christine Lagarde to keep the hawks at bay, Chandler said.
Persistently high inflation will haunt the world economy this year, according to a Reuters poll of economists who trimmed their global growth outlook on worries of slowing demand and the risk interest rates would rise faster than assumed so far. This represents a sea change from just three months ago, when most economists were siding with central bankers in their then-prevalent view that a surge in inflation, driven in part by pandemic-related supply bottlenecks, would be transitory.
In the latest quarterly Reuters surveys of over 500 economists taken throughout January, economists raised their 2022 inflation forecasts for most of the 46 economies covered. While price pressures are still expected to ease in 2023, the inflation outlook is much stickier than three months ago.
At the same time, economists downgraded their global growth forecasts. After expanding 5.8% last year, the world economy is expected to slow to 4.3% growth in 2022, down from 4.5% predicted in October, in part because of higher interest rates and costs of living. Growth is seen slowing further to 3.6% and 3.2% in 2023 and 2024, respectively.
COT Report
Speculators' net long bets on the U.S. dollar fell to a 21-week low in the latest week, according to calculations by Reuters and U.S. Commodity Futures Trading Commission data released on Friday. The value of the net long dollar position was $9.87 billion for the week ended Jan. 25, compared with a net long position of $12.59 billion for the prior week.
Meantime, EUR position has not changed too much, at least before the recent collapse, as data stands for the 25th of January. Next week, supposedly we should see a quite different picture. This week, we see that net short position has dropped for ~ 5-6K contracts on a background of open interest decreasing:
NEXT WEEK TO WATCH
#1 the USD NFP data
The Federal Reserve is clearly out to tame inflation and reckons a "historically tight" labour market gives it plenty of room to raise rates without hurting jobs growth.
January jobs data out Friday will likely confirm that view. Economists polled by Reuters forecast the U.S. economy created 238,000 new jobs versus 199,000 in December when employment rose less than expected due to worker shortages.
#2 BoE rate hike
At Thursday's Bank of England meeting, expect interest rates to rise to 0.5% from 0.25%, to curb inflation running at its highest in almost 30 years.
The big question - one many central banks are grappling with - is whether a series of rate hikes now can curb inflation before price pressures trigger higher wage demands, and feed into generally higher price pressures.
Watch out for comments from Governor Andrew Bailey about the strength of the labour market, wage growth, and his take on how fast inflationary pressures are building beyond supply chain disruptions and spiking energy prices.
#3 ECB meeting
The same contentious topic - inflation - is dividing European Central Bank officials. Euro-area inflation is at a record high 5% and January data, released Wednesday, could provide the hawks with fresh ammunition to press for a policy shift.
Comments from ECB President Christine Lagarde suggest inflation will drop back below its 2% target this year as pressures from high energy prices and supply bottlenecks ease. She may push back against market pricing for rate rises this year, which is out of sync with ECB messaging. The spillover from U.S. rate-hike bets is a potential headache for officials keen to avoid an unwanted tightening of monetary conditions.
So, Thursday's meeting could prove lively even if no immediate action is expected - the ECB has already outlined plans to wrap up its PEPP stimulus scheme.
#4 RBA rate decision
As rate-hiking campaigns gather pace in other big economies, central bank doves are becoming an endangered species down under.
The Reserve Bank of Australia meets Tuesday against the backdrop of the hottest consumer inflation since 2014 and strongest labour market since 2008, piling pressure on RBA Governor Philip Lowe to take action.
Lowe has insisted a 2022 rate rise is unlikely, but economists are split on whether the RBA will capitulate. Traders, though, have long wagered Lowe is behind the inflation curve, and are pricing a rate hike in May, followed by at least three more by year-end.
To be continued...