Egypt’s central bank, citing inflation, raises interest rates by 200 basis points


Macro Snapshot – Eurozone Tipping Towards Current Account Deficit; Australia has lowest unemployment rate since 1974

RIYADH: The eurozone recorded its first current account deficit in a decade in March while Australia hit its lowest unemployment rate since 1974 and Japan saw its exports rise 12.5% ​​year-on-year annual.

The euro zone is heading towards a current account deficit

The euro zone recorded its first current account deficit in a decade in March on a slight trade deficit and an outflow of secondary income, or transfers between residents and non-residents, data from the European Central Bank showed on Thursday.

The bloc of 19 countries sharing the euro recorded a current account deficit of 1.57 billion euros after a surplus of 15.73 billion euros a month earlier, according to adjusted figures.

In the 12 months to March, the current account surplus totaled 1.8% of the bloc’s gross domestic product, down from 2.6% in the previous 12 months.

Australia has lowest unemployment rate

Australia’s unemployment rate was at its lowest in nearly 50 years in April as businesses hired more full-time workers, a tightening labor market that will increase pressure for further interest rate hikes.

Figures from the Australian Bureau of Statistics showed Thursday that the jobless rate held steady at 3.9% in April, from a downwardly revised 3.9% in March, in line with market forecasts.

Employment missed forecasts with a rise of just 4,000, although this reflected a strong gain of 92,400 full-time jobs offset by a drop of 88,400 part-time jobs.

The fall in unemployment will be hailed by Prime Minister Scott Morrison who has made jobs the cry of his election campaign ahead of what is expected to be a close vote on Saturday.

It also strongly suggests that the Reserve Bank of Australia will raise interest rates again in June as it struggles to contain a surge in inflation to two-decade highs.

The central bank’s hike to 0.35% this month was the first since 2011 and markets believe it will rise to 0.60% at its June 7 policy meeting.

The inflationary tide is so strong globally that investors are betting rates will hit at least 2.5% by the end of the year, even if that threatens to cripple the economy.

So far, the labor market has resisted the pressure, with employment rising by 381,500 over the past 12 months. Underemployment has also fallen to its lowest level since 2008 and this rate is closely correlated to wages over time.

Philippines launches rate hikes

The Philippines’ central bank on Thursday raised interest rates for the first time since 2018, joining its counterparts around the world in a rush to stem mounting inflationary pressures that could derail the country’s economic recovery.

The central bank also said the strong economic recovery and labor market conditions in the first quarter offered the opportunity “to continue to roll back its pandemic-induced interventions”, signaling that further tightening could be expected.

The economy could grow even faster in the second quarter than the better-than-expected 8.3 percent annual pace in January-March, Bangko Sentral ng Pilipinas Governor Benjamin Diokno said.

China lowers lending benchmark

China is expected to cut its benchmark lending rates to its monthly peg on Friday, a second cut this year, a Reuters survey has shown, as it seeks to prop up credit demand to cushion an economic slowdown from COVID disruptions. -19.

The prime lending rate, which banks normally charge their best customers, is set on the 20th of each month, when 18 designated commercial banks submit their proposed rates to the People’s Bank of China.

Eighteen traders and analysts, or 64% of 28 participants, in the Reuters Snapshot poll predicted a reduction in either the LPR by one year or the duration by five years.

Among them, 12 respondents foresee a marginal drop of 5 basis points to the two tenors.

The remaining 10 participants estimate that the LPR will remain unchanged for the fourth consecutive month, in line with a stable borrowing cost of loans from the central bank’s Medium Term Lending Facility (MLF), which now serves as a guideline for lending. loan benchmark.

New Zealand plans deficit reduction

The New Zealand government pledged on Thursday to spend more than NZ$1 billion ($630 million) to help people cope with inflation that has hit three-decade highs in the Pacific nation .

The public deficit for the current fiscal year, which ends June 30, will be narrower than expected, but a return to surplus will take longer than expected, the government said in its annual budget announcement.

Heavy spending will be targeted on defense, infrastructure, including new schools, and the country’s health system, which will see more funding for drugs and, again, infrastructure.

“As the pandemic subsides, other challenges both long-term and more immediate have emerged. This budget responds to those challenges,” Prime Minister Jacinda Ardern said in a statement.

“COVID-19, climate change and the war in Ukraine have taught us that we need to build a more secure economy that protects New Zealand households from the external shocks we know are coming,” she added. . Ardern was not at the budget release as she currently has COVID.

Sri Lanka holds rates

The Central Bank of Sri Lanka kept its key lending and borrowing rates stable on Thursday after a massive 700 basis point hike at its previous meeting and reiterated the need for more fiscal measures and political stability in the economy.

The standing loan facility rate remained unchanged at 14.50% while the standing deposit facility rate remained stable at 13.50%.

“It is expected that the recent tightening of monetary conditions and stronger monetary policy communication will help anchor the public’s inflation expectations in the period ahead,” CBSL said in the statement.

Wages, however, are still lagging, at least according to the official measure which showed that annual growth rose only slightly in the first quarter to 2.4%, half the pace of inflation.

Japanese exports increase

Japan’s exports rose 12.5% ​​in April from a year earlier, posting a 14th consecutive month of increases, finance ministry data showed on Thursday.

The rise compared to a 13.8% increase expected by economists in a Reuters poll. It followed a 14.7% rise in March.

Imports rose 28.2%, against a median estimate of a 35.0% increase, as a weaker yen helped boost already rising global commodity prices, inflating import bills.

The trade balance ended at a deficit of 839.2 billion yen ($6.56 billion), against a median estimate of a deficit of 1.150 billion yen.

“The RBA has reverted to a more forward-looking approach to labor costs amid much higher inflation, building on key indications of the binding and projected pass-through of the still-tight labor market to wage outcomes,” said Taylor Nugent, an economist at NAB.

He sees the central bank climbing a quarter point at each of the next three monthly meetings.

Decline in annual inflation in Oman

Annual inflation in the Sultanate of Oman fell nearly 0.92 percentage points in April to its lowest level since September 2021, according to potentially revised data from the National Center for Statistics and Information.

The country’s annual consumer price index in March stood at 3.59% from 2.67% in April 2022, the data showed.

Oman’s consumer price level reached 2.46% in September 2021, where it started to rise until peaking at 4.35% in January 2022 and has since declined gradually, according to the data portal of the Oman. NCIS.

The main contributors to the drop in Oman’s CPI were transport and tobacco, which fell from 6.63 and 2.98 in March to 2.42 and -1.05 in April respectively.

However, there was a slight increase in the prices of fish and seafood, fruit, meat, bread and cereals and a few others.

(Contributed by Reuters)


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