INDIA: HSBC Expects 25bp RBI Rate Cuts In June And August
Apr-15 13:33
- HSBC expects an already accommodative RBI to deliver 25bp rate cuts at each of the June and August policy meetings, taking the repo rate to 5.5%. They also expect easy liquidity conditions to persist and help in the transmission of rate cuts.
- Today’s lower-than-expected March CPI inflation print can be attributed to a larger-than-expected fall in food prices, in their view. It left headline inflation below the RBI's 4% target for a second month running and looking ahead, HSBC expects prices to remain low, led by a good winter crop and weak domestic growth.
- On the activity front, HSBC notes that industrial output has lost some steam after two months of expansion. Looking ahead, they believe it is likely to face a trade uncertainty led drag. On their calculations, India's GDP growth could take a direct 0.5ppt tariff-led-hit in FY26.
- The indirect and second-order negative impact could also be meaningful, emanating from slower export volumes around the world, weaker global FDI flows, and the re-routing of exports hurting manufacturing.
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FED: March Economic Projections: Higher Inflation, Weaker Growth, Same Rates
Mar-14 21:28
The MNI Markets Team’s expectations for the updated Economic Projections in the March SEP are below.
- The unemployment rate is likely to rise slightly for 2025 alongside a downgrade in GDP growth, while the 2025 core and headline PCE inflation projections are set to rise again. Changes to later years will likely be limited, however.
- More detail on the shift in Fed funds rate medians is in our meeting preview - we will add more color next week.
FED: Market Pricing Nearly 3 2025 Cuts As Conditions Tighten
Mar-14 21:25
Amid rising government policy uncertainty, sentiment among businesses and consumers has fallen sharply since the start of the year, while equities and the dollar have reversed their post-election rise. Overall, financial conditions have tightened, even if stress is not yet mounting, e.g. no major widening of credit spreads (the accompanying chart shows the Fed’s financial conditions impulse index but only through January).
- Combined with growth fears, this has affected expectations for the Fed’s rate path, with around 18bp more cuts expected in 2025 compared with what was seen after the January FOMC. 65bp of cuts are priced for the year as a whole. 2025 cut pricing reached 71bp before the February inflation data and 76bp before the February payrolls report.
- A rate cut is seen with near zero probability for March’s meeting, but the first full cut is just about priced for June, with a second nearly priced by September.
- Chair Powell has no reason to endorse or refute these expectations – he’s likely to be happy with a press conference that ends with little discernable change in pricing.
CANADA'S CARNEY ANNOUNCES ELIMINATION OF THE CONSUMER CARBON TAX
Mar-14 21:17
- CANADA'S CARNEY ANNOUNCES ELIMINATION OF THE CONSUMER CARBON TAX
