EM ASIA CREDIT: Results - Wipro (WPROIN, NR/A-/A-) - Beat

• The Fed decision later today marks the halfway point of the last full week for markets of 2024, at which the FOMC are expected to proceed with a further 25bps rate cut. The market is set to focus not on today's decision itself, but on the messaging and communication for the path of policy across 2025, via the policy statement, Powell's press conference and the dot plot.
• Ahead of the decision, the greenback is firmer, but only modestly so - with price action largely contained and recent ranges respected. The USD Index remains at the upper-end of the December range, making 107.19 the bull trigger, above which the USD eyes the best levels seen since the Presidential election at 108.071.
• Elsewhere, the EUR trades well, recovering a small part of recent weakness, aided higher by demand in the crosses: EUR/AUD has broken to a new monthly high and cleared resistance at the early November print of 1.6601. For now, 1.6648 is holding, but clearance of that mark will be the highest EUR/AUD print since August.
• GBP has slipped against most others as both core and services CPI came in modestly below expectations. As a result, markets have shrugged off the inline headline read, which should have little bearing on the thinking of the MPC.
• Outside of the Fed decision, US housing starts and building permits data are set to cross.

Eurozone November Final HICP was revised down a tenth from the rounded flash reading on an annual basis to 2.2%Y/Y from 2.3%Y/Y - unrounded this was a smaller -0.04 revision to 2.24% Y/Y (vs 2.28% flash, 2.00% prior). On a M/M basis, the rounded reading was unrevised at -0.3% M/M (unrounded -0.32% vs -0.28% flash, 0.34% in October) non-seasonally adjusted. 

• Core inflation (ex energy, food, alcohol & tobacco) was revised 2 hundredths lower versus flash at 2.72% Y/Y (2.74% flash and 2.69% prior) and -0.57% M/M (vs -0.6% flash, 0.25% in October).
• The final reading reaffirms the stickiness seen in the flash services inflation print, with services contribution only marginally lower at 1.74ppts (vs 1.77ppts in October) and the Y/Y figure falling to 3.92% Y/Y from 3.95% in October.
• The pace of decline in energy prices was marginally more than the flash estimate at -2.0% Y/Y (vs -1.9% flash, -4.6% Oct) with the sequential November revised lower to 0.5% M/M (vs 0.6% flash). The contribution to HICP Y/Y was -0.19ppts in November - the highest since July.
• "Non-energy industrial goods" (i.e. core goods) contribution increased slightly to 0.17ppts (vs 0.13ppts in October) - also the highest since July, with the Y/Y print just rounding down below flash to 0.6%Y/Y (0.65% Y/Y unrounded vs 0.7% flash, 0.50% prior).
• "Unprocessed foods" contribution fell to 0.10ppts whilst, "Processed foods, alcohol and tobacco" contribution remained unchanged at 0.43ppts.

Q: Once price stability has been restored, can Central Banks afford to look-through deviations from the target in either direction? 

A: Lane: “Our 2% target is not a continuous target, it’s a medium-term target. That means we can look through short-term fluctuations”.

• The monetary policy reaction will depend on the size, persistence and origin of the deviation from target.
• “There is some value in having a stable interest rate policy all else equal”.
• If there is a deviation, we then need to assess second round effects and decide whether to respond or ignore. Lane stresses again that the 2% target is symmetric.
• In a previous response, Lane notes that he thinks the Eurozone is “quite far away” from a recession, based on current data.