Strong US inflation backs smaller rate cut bets

Briefly in today’s #5in5withANZ podcast below

US inflation outpaces expectations, supporting bets for a 25 basis point cut by the Fed in November. Japan’s producer prices are stronger than expected. A manufacturing bounce in Singapore may lead its Monetary Authority to hold policy next week.

5 things to know in 5 minutes:

1. US headline CPI rose 0.2% in the month, and core inflation by 0.3%. Both were 0.1 percentage points higher than the consensus forecast. ANZ Head of G3 Economics Brian Martin says US disinflation looks to have stalled over summer, supporting bets that the Federal Reserve will opt for a 25 bps cut in November.
2. In Japan, goods producer prices were flat in September, against consensus expectations for a fall. The Bank of Japan focuses more on Services PPI. ANZ FX Analyst Felix Ryan says a spread has opened up between a stronger services PPI and the services component of Japan’s CPI, which has been easing.
3. Korea has a rate review today. ANZ Economist Krystal Tan , and the market, are expecting a 25 basis point cut to 3.25%. That would be the first cut since 2020, as the Bank of Korea joins the global easing trend.
4. Singapore has a monetary policy review on Monday. ANZ Head of Asia Research Khoon Goh says he does not expect the Monetary Authority of Singapore to start easing yet, even though core inflation is falling,
5. Khoon says a semiconductor-led bounce in manufacturing activity has spurred growth in Singapore during the second half of the year, which should keep the MAS on hold until at least early 2025.

In our bonus Deep Dive interview

ANZ FX Analyst Kausani Basak analyses how the Thai baht was the second strongest Asian currency in Q3, prompting the Bank of Thailand to intervene.

Cheers

Alex

PS: Bernard is away today on family leave. Catch you next week with some key China price data and an overview of its Finance Ministry’s stimulus briefing this weekend.