BOE: Greene: Put greater weight on inflation persistent scenario; no view change
Speaking to CNBC, these comments are all in line with her pre-existing view and keep her firmly out of the dovish camp.
- "In terms of my general outlook, the disinflationary process is continuing. I think the only question is how quickly it's continuing, and whether it has slowed or not. And so we produce scenarios in the November round one was a kind of inflation persistent scenario, and one was a weaker demand scenario, I put greater weight on the inflation, persistent scenario, and that continues to be the case even after the Budget."
- "It's also worth pointing out that there were different measures that will just directly bring inflation down, necessarily mechanically. One is rail fares also related to energy, and their energy prices are really important for people. Food and energy prices are things that stuff everyone has to buy. And so it's particularly salient on the energy front, though, it turns out people tend to notice petrol prices much more than utility prices, and this does a bit on both, but more in utility prices in terms of bringing inflation down, and therefore it might affect inflation expectations a bit less than you would otherwise expect. So if we strip out the one off stuff, then what is the underlying inflation story here in the UK, given that we if we look at unemployment, that's been moving up significantly, yeah, so the labour market has been weakening, and that's something that we've projected. So that's not a surprise. That's what you would expect, given that monetary policy has been restrictive, but it hasn't been weakening faster than we would have expected. So far, most of the weakening has happened in the form of fewer vacancies. More recently, we've seen unemployment ticking up, and that's what you would expect to see, there is a risk that we could have kind of non linearities, so that you have employment start to take up very slowly, and then all of a sudden, tick up very quickly."
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AUSSIE 10-YEAR TECHS: (Z5) Returns Lower
- RES 3: 95.982 - 76.4% retracement Sep’24 - Nov’24 downleg
- RES 2: 95.960 - High Apr 7 (cont.)
- RES 1: 95.900 - High Oct 17
- PRICE: 95.670 @ 16:16 GMT Oct 31
- SUP 1: 95.510 - Low Sep 3
- SUP 2: 95.415/95.300 - Low May 15 / Low Jan 14
- SUP 3: 95.275 - Low Nov 14 (cont) and a key support
Aussie 10-yr futures slipped lower Wednesday on the back of hotter-than-expected Australian inflation. This returned prices lower despite nascent signs of a technical recovery as recently as last week. The sustainability of the pullback will be dependent on prices holding above key short-term support at 95.510, the Sep 3 low. Near-term resistance remains 95.780, the Sep 12 high. A clear break of this level signals scope for a continuation higher and opens 95.960, the 76.4% retracement level for the Sep’24 - Nov’24 downleg.
AUSSIE 3-YEAR TECHS: (Z5) Struck by Strong CPI
- RES 3: 97.796 - 1.618 proj of the Sep 3 - 12 - 15 price swing
- RES 2: 96.780 - High Jun 26 (cont)
- RES 1: 96.700 - High Sep 12
- PRICE: 96.375 @ 16:13 GMT Oct 31
- SUP 1: 96.280 - Low May 15 (cont.)
- SUP 2: 95.900 - Low Jan 14 (cont.)
- SUP 3: 95.760 - Low 14 Nov ‘24
Having bounced well on the back of the mild US CPI print, Aussie 3-yr futures reversed course Wednesday on strong domestic inflation data containing RBA cut pricing through 2026. This keeps prices well below prior resistance at 96.615, the Sep 12 high, and refocuses attention on 96.280 as the next major support.
FED: Gov Waller: Still Advocating For A December Rate Cut
Gov Waller, one of the FOMC's more prominent doves, makes clear in an appearance on Fox Business that he supports a follow-up rate cut in December. He makes reference to Chair Powell's press conference comment that the Fed could skip a cut at the December meeting due in part to a lack of official government data during the federal shutdown (Powell: “what do you do if you are driving in the fog? You slow down").
- Waller says today: "Right now, we know that the labor market has been weak... We know inflation is going to come back down. Inflation expectations are anchored, and in that world, the standard of central bank wisdom is to look through it and proceed with worrying about the labor market. So in my view, we should just look at what the data is telling us and proceed on policy that way.... So this is why I'm still advocating that we cut policy rates in December, because that's what all the data is telling me to do. The fog might tell you to slow down. It doesn't tell you to pull over to the side of the road. You still have to go. You may want to be careful, but it doesn't mean to stop, and ... the right thing to do with policy is to continue cutting."
- This is of particular interest since he appeared to suggest he would have a more cautious outlook on further easing after cutting in October.
