Economy
UK inflation expectations rise in August -Citi/YouGov
© Reuters. FILE PHOTO: People shop at Borough Market in London, Britain July 19, 2023. REUTERS/Anna Gordon/File Photo
LONDON (Reuters) -The British public’s expectations for inflation over the medium to long term, which are closely watched by the Bank of England, rose in August, a survey published on Friday showed.
Inflation expectations in five to 10 years’ time marginally rose to 3.3% from 3.2% in July, the survey by U.S. bank Citi and polling firm YouGov showed.
Public expectations for inflation in 12 months’ time increased to 4.4% from 4.3%.
The BoE is widely expected to raise interest rates for the 15th time in a row on Sept. 21 as it grapples with the highest rate of inflation among the world’s big rich economies.
Expectations for Bank of England policy tightening are now their lowest since June, following surveys this week showing a softening outlook for inflation and Governor Andrew Bailey’s comment that a peak in rates was now “much nearer”.
Rate futures at 1400 GMT showed a 69% chance of a quarter-point rate rise to 5.5% on Sept. 22 after the BoE’s next meeting, down from more than 80% early this week. The chances of a further rate rise to 5.75% stood at 46% by December and peak at 49% by February 2024, with investors expecting cuts in rates to begin in around a year’s time.
However, analysts believe two more hikes might be overkill and the BoE is more likely to deliver just one more. Investors are starting to prepare for this eventuality too.
Citi said it expects the data to continue to ease in the months ahead as headline inflation falls.
“However, these data re-affirm that upside risks around energy in particular over the coming winter could continue to pose challenges,” Citi economist Benjamin Nabarro wrote in a note to clients.
The data “remains consistent with the idea that weak growth alongside restrictive rates are now having the desired effect, with a growing proportion now expecting much lower long-term inflation, as well as some still expecting much higher.”
© Reuters. Russian Central Bank Governor Elvira Nabiullina attends a news conference in Moscow, Russia June 14, 2019. REUTERS/Shamil Zhumatov/File Photo
MOSCOW (Reuters) – Russia’s central bank will need two to three months to make sure that inflation is steadily declining before taking any decision on interest rate cuts, the bank’s governor Elvira Nabiullina told RBC media on Sunday.
The central bank raised its key interest rate by 100 basis points to 16% earlier in December, hiking for the fifth consecutive meeting in response to stubborn inflation, and suggested that its tightening cycle was nearly over.
Nabiullina said it was not yet clear when exactly the regulator would start cutting rates, however.
“We really need to make sure that inflation is steadily decreasing, that these are not one-off factors that can affect the rate of price growth in a particular month,” she said.
Nabiullina said the bank was taking into account a wide range of indicators but primarily those that “characterize the stability of inflation”.
“This will take two or three months or more – it depends on how much the wide range of indicators that characterize sustainable inflation declines,” she said.
The bank will next convene to set its benchmark rate on Feb. 16.
The governor also said the bank should have started monetary policy tightening earlier than in July, when it embarked on the rate-hiking cycle.
© Reuters. FILE PHOTO: Workers walk past an under-construction area with completed office towers in the background, in Shenzhen’s Qianhai new district, Guangdong province, China August 25, 2023. REUTERS/David Kirton/File Photo
SHANGHAI (Reuters) – China’s top planning body said on Saturday it had identified a second batch of public investment projects, including flood control and disaster relief programmes, under a bond issuance and investment plan announced in October to boost the economy.
With the latest tranche, China has now earmarked more than 800 billion yuan of its 1 trillion yuan ($140 billion) in additional government bond issuance in the fourth quarter, as it focuses on fiscal steps to shore up the flagging economy.
The National Development and Reform Commission (NDRC) said in a statement on Saturday it had identified 9,600 projects with planned investment of more than 560 billion yuan.
China’s economy, the world’s second largest, is struggling to regain its footing post-COVID-19 as policymakers grapple with tepid consumer demand, weak exports, falling foreign investment and a deepening real estate crisis.
The 1 trillion yuan in additional bond issuance will widen China’s 2023 budget deficit ratio to around 3.8 percent from 3 percent, the state-run Xinhua news agency has said.
“Construction of the projects will improve China’s flood control system, emergency response mechanism and disaster relief capabilities, and better protect people’s lives and property, so it is very significant,” the NDRC said.
The agency said it will coordinate with other government bodies to make sure that funds are allocated speedily for investment and that high standards of quality are maintained in project construction.
($1 = 7.1315 renminbi)
© Reuters. Russian Central Bank Governor Elvira Nabiullina attends a news conference in Moscow, Russia June 14, 2019. REUTERS/Shamil Zhumatov/File Photo
MOSCOW (Reuters) – Russia’s central bank will need two to three months to make sure that inflation is steadily declining before taking any decision on interest rate cuts, the bank’s governor Elvira Nabiullina told RBC media on Sunday.
The central bank raised its key interest rate by 100 basis points to 16% earlier in December, hiking for the fifth consecutive meeting in response to stubborn inflation, and suggested that its tightening cycle was nearly over.
Nabiullina said it was not yet clear when exactly the regulator would start cutting rates, however.
“We really need to make sure that inflation is steadily decreasing, that these are not one-off factors that can affect the rate of price growth in a particular month,” she said.
Nabiullina said the bank was taking into account a wide range of indicators but primarily those that “characterize the stability of inflation”.
“This will take two or three months or more – it depends on how much the wide range of indicators that characterize sustainable inflation declines,” she said.
The bank will next convene to set its benchmark rate on Feb. 16.
The governor also said the bank should have started monetary policy tightening earlier than in July, when it embarked on the rate-hiking cycle.
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