Aurelia Butler

Reserve Bank of Australia (RBA) Governor Michele Bullock said there were signs that inflation might be difficult to suppress, particularly in services where it was proving to be sticky.She warned that the central bank was very alert to upside risks on inflation and, were it to remain higher than expected, the bank would have to respond with tighter monetary policy. More

BEIJING (Reuters) – China’s economy likely slowed in the third quarter, data is expected to show on Wednesday, weighed by persistently weak demand, although increased stimulus has improved the prospects Beijing might be able to hit its full-year growth target.The world’s second-largest economy faltered in the second quarter after a brief post-COVID recovery, dragged by a property downturn and huge debt due to a decades-long infrastructure binge.The government has in recent weeks unveiled a raft of measures, including more public works spending, interest rate cuts, property easing and efforts to shore up the private sector.Gross domestic product (GDP) likely grew 4.4% in July-September from a year earlier, according to economists polled by Reuters, slowing from the 6.3% pace in the second quarter.GDP data is due on Wednesday at 0200 GMT. Separate data on September activity is expected to show retail sales growth picking up but factory output slowing.While recent economic data has shown some signs of stabilising after a flurry of modest support measures, economists believe more is needed to shore up activity.Growth is forecast to pick up to 4.9% in the fourth quarter.China’s exports and imports have continued to decline, although at a slower pace. And while bank lending has jumped, persistent deflationary pressures underline the challenges policymakers face in trying to revive activity.Economists remain concerned about the crisis-hit property sector, employment and household income and weak confidence among some private firms.”Beijing may have also shifted to wait-and-see mode, as it assesses the impact of stimulus measures rolled out in the past few months,” said Ting Lu, chief China economist at Nomura, in a note. “We expect a triple dip towards year-end or early 2024, and Beijing may have to step up its efforts to stabilise growth again at that time.”On a quarterly basis, GDP is forecast to grow 1.0% in the third quarter, a slight pickup from 0.8% growth in April-June.Economic growth is seen hitting 5.0% this year, according to the poll, broadly in line Beijing’s full-year target, before slowing to 4.5% in 2024.The economy grew just 3% last year due to COVID curbs, badly missing the government’s official target.Economists polled by Reuters expect the central bank to keep banks’ reserve requirement ratio (RRR) – the amount of cash that banks must hold as reserves – and benchmark lending rates steady for the rest of the year.Beijing may also step up fiscal stimulus to get activity on a more solid footing, though analysts believe the benefits may not be seen until well into 2024.For its part, the central bank is constrained by how much it can ease monetary policy due to worries about adding pressure on the yuan, which has tumbled 5.7% this year.The central bank cut the RRR in September to boost liquidity and support the economic recovery, its second reduction this year. More

(Reuters) – Minneapolis Federal Reserve Bank President Neel Kashkari on Tuesday said it has taken much longer than expected for inflation to come down, and it is “still too high.” Kashkari, speaking at an event focused on the intersection of healthcare and the economy at the University of Minnesota, did not say whether he feels the Fed needs to raise rates any further, or provide new color on his outlook for the macro economy. More

(Reuters) – A look at the day ahead in Asian markets from Jamie McGeever, financial markets columnist.Asian financial markets brace for Chinese GDP figures on Wednesday, the key number in a batch of Chinese indicators to be released as investors also try to navigate a heavy flow of global economic, market and geopolitical cross currents.Wall Street closed flat to slightly lower on Tuesday, after forecast-busting U.S. retail sales data stoked expectations for another Fed rate hike by year-end and pushed Treasury bond yields sharply higher.This was set against some upbeat Q3 results from Wall Street giants like Bank of America, although chipmakers fell after the U.S. government said it planned to halt shipments of advanced artificial intelligence chips to China.On top of that, the Middle East crisis appeared to deepen significantly after Palestinian health authorities said an Israeli air strike on a hospital in Gaza killed around 500 people. Israel has denied conducting the attack. This comes on the eve of President Joe Biden’s planned visit to Israel on Wednesday.Short-dated U.S. bond yields on Tuesday surged to new historic peaks – the two-year yield near 4.25% and the five-year yield nudging 4.90%, levels last seen in 2006 and 2007, respectively.Blame bumper U.S. retail sales, which also sparked a spree of upward revisions to U.S. growth forecasts. The Atlanta Fed’s GDPNow model is now running at 5.4% annualized growth for Q3.Compare that with China.Annualized and year-on-year growth measures are different, but the general picture is still one of a booming U.S. and sluggish China – figures on Wednesday are expected to show a 4.4% annual rate of growth in the July-September period.That’s the median estimate in a Reuters poll of 60 economists, and would mark a notable slowdown from 6.3% in Q2. The poll’s range is 3.5% to 5.1%. Bear in mind that the government’s 2023 GDP goal is for growth of around 5%.Staying in China, the country’s largest private property developer Country Garden is lurching toward defaulting on its offshore debt if it is deemed not to have made a $15 million coupon payment on Tuesday.Non-payment of this tranche will trigger cross defaults in other bonds. With nearly $11 billion of offshore bonds and $6 billion of offshore loans, a Country Garden default would tee up one of China’s biggest corporate debt restructurings.The property sector has been a major drag on growth, driver of deflationary pressures, and trigger for the huge outflows from China’s stocks, bonds and currency this year.The U.S. dollar, meanwhile, is creeping higher against Asia’s two biggest currencies, pushing Japan’s yen and China’s yuan back down to key areas that their central banks are sure to be monitoring closely – 150.00 yen and September’s 16-year high above 7.34 yuan.Here are key developments that could provide more direction to markets on Wednesday:- China GDP (Q3)- China retail sales, investment, unemployment, industrial production (September)- U.S. President Biden visit to Israel (By Jamie McGeever; Editing by Josie Kao) More

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