MNI EXCLUSIVE: Pork Base Effects Add To China Disinflation Risks
Aug-09 08:50
MNI looks at the outlook for pork prices as China falls into deflation -- on MNI Policy MainWire now, for more details please contact sales@marketnews.com.
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RIKSBANK: Minutes: Slightly more hawkish but inflation remains key beyond Sep
Jul-10 08:42
- The overall tone of the Minutes had few surprises in our view, but probably leaned slightly more hawkishly than the statement and the MPR released on 29 June.
- All members seemed very on board with another hike in September - that's not really new - but 4/5 members pointed to upside risks in a way that the 20% probability of a hike beyond then in the forecasts didn't really emphasize so much. Every member of the Riksbank seems to be very data driven at present and the inflation prints ahead of the next meeting will be key.
- There was more discussion on SEK and how the weakness had surprised, whether the passthrough to inflation would be larger than the models for the main forecast would suggest.
- One thing that we would note is that the more dovish bias from the prior meeting from Breman and Floden seems to have dissipated (although they still remain opposed to larger than 25bp hikes). It now seems to us as though Bunge is the most dovish member after she noted that risks to inflation were relatively balanced - whereas most other members saw them to the upside.
- There was no real new information regarding the increased QT pace.
NETHERLANDS: Rutte Will Not Run For 5th Term After Gov't Falls, Ends 13Yrs As PM
Jul-10 08:38
Wires reporting comments from Dutch Prime Minister Mark Rutte stating that he will not run for a fifth term in office. This comes following the collapse of his coalition gov't on 7 July after fractious rows between governing parties regarding the country's immigration policies. Once snap elections are held it will bring an end to Rutte's 13 years as prime minister, the second longest current tenure for any EU leader behind only Hungary's Viktor Orban.
- The impact of the Rutte IV gov't collapse on Dutch politics could be significant. The Dutch electoral and political system lends itself to multi-party governing coalitions, which usually results in more moderate policy making by consensus. However, an end to the longest prime ministerial tenure in Dutch history will undoubtedly have a notable impact on the country's political environment.
- Moreover, opinion polling shows the populist agrarian Farmer-Citizen Movement (BBB) as on course to win a plurality of seats and therefore have the first opportunity to form a new gov't. Given the party's new status (only gaining prominence in 2022 due to protests by farmers against gov't emissions legislation), it is unclear who it could seek to work with.
- During the Rutte years, when by-and-large parties of the centre-left and centre-right would be drawn together to form coalitions. Following the next election, though, we could see coalitions of the right (BBB, Geert Wilders' Party for Freedom, JA21, Forum for Democracy) or of the left (Green Left, Party for the Animals, Socialist Party, Volt) formed resulting in a shift in policy direction.
RIKSBANK: Minutes: Thedéen: Overall risks to the upside
Jul-10 08:30
- "There are features in the development of inflation that do not look good and that for me are clear signs that the job of bringing down inflation to target is not finished. The last stretch of the marathon is still to come!"
- "As I currently see it, most indications are that the rate will have to be raised again in the autumn."
- "My assessment is that the inflation risks are overall on the upside and I therefore do not rule out that we may have to increase the policy rate more than is indicated in the rate path in the draft report. I said at the previous meeting that we should adopt a more open approach to our forthcoming decisions. This still applies, but the inflation risks are more on the upside at this meeting, which justifies today’s decision and the elevated rate path."
- "The development of the krona will therefore be an important factor - of several - in the design of monetary policy. However, there is no reason for the Riksbank to react to temporary movements in the exchange rate, but we need to deepen our understanding of the impact of the exchange rate on inflation."
