Focus On US CPI Inflation Report And Jerome Powell Remarks

July 11, 2024 8:34 am

The anticipated US CPI inflation June report and Jerome Powell’s speech before the Senate are among the top financial news. The Fed’s head said that easing the monetary policy too quick could harm the process and stressed that more data would be needed for further rate cuts to occur.

The Reserve Bank of New Zealand (RBNZ) kept interest rates on hold as expected by economists. However, the change of wording regarding inflation generated a debate whether the central bank could move forward with two rate cuts by the end of the year.

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US CPI Inflation June 2024 Report

The US CPI inflation report for the month of June is going to be expected by traders and economists who want to get more data regarding economic conditions in the US. Analysts suggest that headline CPI inflation could come in at 3.1% on an annualised basis, lower than May’s reading. Inflation excluding energy and food is expected to come in at 3.4%, matching the previous month’s figure. 

The report will come just two days after Jerome Powell told US senators that the Fed “remains committed to 2% inflation goal, keeping longer-term inflation expectations well-anchored.”

RBNZ Interest Rate Decision

The RBNZ governing board decided to keep the Official Cash Rate (OCR) steady at 5.50% for the eighth consecutive time after its monthly monetary policy meeting. The decision was in line with market expectations. In the aftermath of the RBNZ’s announcement, the New Zealand dollar lost ground against the US dollar and the Australian dollar.

The RBNZ’s post-meeting statement said that “the committee is confident that inflation will return to within its 1-3 percent target range over the second half of 2024.” RBNZ’s policymakers also noted that “monetary policy will need to remain restrictive. The extent of this restraint will be tempered over time consistent with the expected decline in inflation pressures.”

Jerome Powell Testimony In Senate

Jerome Powell appeared and testified before the Senate yesterday, sharing some interesting insights regarding monetary policy and economic growth in the US. The Fed’s chair was quoted saying that “policy rate cut is not appropriate until Fed gains greater confidence” that inflation heads towards the 2% target. The Fed’s leader also noted that “labour market conditions have cooled while remaining strong, not overheated,” stressed that the US economy is expanding at solid pace and vowed to “carefully assess incoming data, balance of risks, appropriate policy path in rate adjustments.”

China June CPI Misses Estimates

According to a report published on Wednesday morning, Chinese CPI inflation dropped by 0.2% on a month-to-month basis and rose by 0.2% on an annualised basis. Both figures missed expectations.

Economists speaking to Reuters said that the report indicated that domestic demand remains weak, adding that excess manufacturing capacity remains a worsening issue. The Chinese government has revealed a plan to boost investments in the manufacturing sector across the country; however, market analysts suggest that this approach could exacerbate the problem.

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