Deflation pressure abounds

28 October, 2015

Further evidence yesterday suggested that central bank hawks are likely to remain in the minority following weaker than expected data from both sides of the Atlantic with UK GDP and US consumer confidence that both disappointed. Overnight the Aussie has taken a nose dive following a much weaker than expected inflation release and once again we see the tumble in oil prices applying further deflationary pressure around the globe. The current inflation issue is causing a dilemma for central banks and making their job of setting monetary policy by looking two years down the line very difficult. For a number of months inflation had expected to pick up following the slump in commodity prices that commenced a year ago, however there’s been no indication of that just yet and as a result central banks remain welded to accommodative mode rather than tightening, as evidenced most recently by the ECB.

This is why today’s focus will be on the outlook for US inflation at this evening’s FOMC rate decision and in particular the emphasis they put on deflationary pressures from external factors. Depending on what they say later this could be the final nail in the coffin for any chance of a 2015 rate hike. Note also soon after the FOMC that the RBNZ is expected to keep rates on hold and maintain a very dovish tone.


Source link  
Fed Holds Rates for Now But...

Unsurprisingly, the Federal Reserve kept rates on hold following the end of its 2-day meeting on Wednesday. They did, however, indicate that...

UK Unemployment at 42 Year Low

UK unemployment fell to its lowest level since 1975, data on Wednesday revealed. Unemployment fell by 75K, bringing the unemployment...

US Equities at Record Levels

US equities closed at record levels on Wednesday, as improved risk-on sentiment returned to the markets and news that the US economy...


USD Stabilizes

Hurricane Irma has, reportedly, inflicted less damage on the US mainland than was originally predicted, thereby reducing the economic impact of the devastation it was expected to...

Markets on Edge

With the markets risk appetite dampened after North Korea’s most powerful nuclear test to date, USD and Global equities fell whilst Gold, Yen and Sovereign Bonds all rose....

Risk Appetite Returns

North Korea official news agency reported on Monday that leader Kim Jong Un will watch the actions of the United States for a while longer before making a decision to fire missiles at Guam...


US-Korean Tensions Rattle Markets

Markets were cautious on Wednesday, as safe-haven assets pushed higher after tensions grew between the US and North Korea. Markets are concerned...

Global Manufacturing Grows

Recent data releases have shown that global manufacturing saw an increase in July, further confirming global economic momentum has carried into H2...

All Eyes on Central Banks

Markets were, for the most part, little changed on Wednesday as traders waited for today’s Bank of Japan and ECB rate decisions. Earlier today...

  


Share: