BOC: Macklem: "Did Not Seriously Consider" Cutting By 50bp
Mar-12 15:04
Asked by MNI if the BOC considered cutting by 50bp, Gov Macklem says: "the short answer your question is, we did not seriously consider a cut of 50 basis points", and cautions that they will "proceed carefully" with any further rate changes.
- He suggests that (per MNI's preview) solid incoming data which otherwise might have caused a rate hold to be considered had to be weighed against a deteriorating future outlook: "what we see from the hard data so far still looks good. You can't see much of damage from the trade war and the hard data yet, but when you look at the survey data, it's pretty clear consumer confidence, business confidence, has been sharply affected, and we are expecting to see a pullback in household spending and business investment that's going to have an impact in the economy. And that's really why we decided to cut 25 basis points."
- "Monetary policy does need to be forward looking, but there is a lot of uncertainty. This is a very fluid situation. There is a lot of unpredictability in terms of what the US is going to do, and as we've outlined time and again, a trade war. Yes, it weakens growth, but it will also increase prices and inflation. We've got to be very careful to balance those two. So against that background, we did not want to get ahead of ourselves, and we're going to be assessing these things carefully. That's going to take some time, and our message really is that we will proceed carefully with any further changes to our policy rate."
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GERMANY: Poll Says Scholz Edged Merz In Debate As Campaign Enters Final Stretch
Feb-10 15:01
The televised head-to-head debate on 9 Feb between Chancellor Olaf Scholz and opposition leader Friedrich Merz delivered a narrow win for the incumbent according to a flash survey of viewers carried out afterwards. Thirty-seven per cent of respondents said that Scholz, from the centre-left Social Democrats (SPD), had won the debate. This compares to 34% for Merz, chancellor candidate for the conservative Christian Democratic Union (CDU). As such, the debate was an effective draw, with the remaining 29% saying there was nothing to choose between the two.
- Merz sought to downplay the importance of the 9 Feb debate, asking "Do they really have any influence on the elections at the end of the day?"
- The next debate, scheduled for 16 Feb, could prove more impactful. Rather than a head-to-head, it will see Scholz and Merz joined by the chancellor candidates from the environmentalist Greens and far-right Alternative for Germany (AfD), Robert Habeck and Alice Weidel respectively. The participation of the AfD in particular could see a more ill-tempered and fiery debate compared to last night's more sedate affair.
- With a significant portion of the 9 Feb debate spent on the topic of immigration, Merz reiterated his stance that the CDU would not work with the AfD in gov't. As JPM notes "The impression from last night’s debate is that both Scholz and Merz know that they will have to work together in future and have a duty to do so to keep the AfD out of power."
US OUTLOOK/OPINION: Unrounded Core CPI Estimates Centered On 0.3% M/M
Feb-10 14:41
- Due Wednesday at 0830ET, consensus sees core CPI inflation at a seasonally adjusted 0.3% M/M in January.
- The below unrounded estimates are firmly centered on that with a median 0.30% M/M or average 0.29% M/M, with a range of 0.22-0.37% M/M. It would be an acceleration from the 0.23% M/M in December, assuming no revisions in the annual update due to be released simultaneously.
- The limited early estimates for core PCE inflation at this stage average 0.29% M/M in January for a firmer acceleration from the 0.16% M/M in December.
- Whilst these estimates would see core CPI right on the cusp of rounding either to 3.1% or 3.2% Y/Y after the 3.24% Y/Y in December, well-known base effects would see a larger moderation in core PCE (from 2.79% to 2.58% Y/Y in the hypothetical case with no revisions).
USD: USDJPY is paring gains
Feb-10 14:38
- Worth keeping an aye on the USDJPY, Bond futures are extending gains, Yields are moving lower.
- The USDJPY saw another volatile overnight session, a function of the Dollar on US Tariffs risks, and had already printed a 151.16 low Overnight, although the initial support is still seen at 150.93 Low Feb 07.
- USDJPY is down to 151.65 at the time of typing.
