Archive

HEW: Landing 25bp Across the Pond

• Dovish pricing defies resilience in the data. The US unemployment rate’s drop and wage growth’s rise should help the Fed land on a 25bp cut in September. Other central bank decisions have also reassuringly stopped skewing toward dovish surprises.
• Next week’s ECB decision is almost a foregone conclusion, with a widely expected 25bp deposit rate cut and more to the refi and lending rates as the corridor narrows. UK GDP and labour market data are the other highlights for us, along with US inflation.

By Philip Rush

Waller - The Time Has Come

In his speech, Governor Christopher J. Waller highlighted the current state of the U.S. economy and its implications for monetary policy, with a particular focus on recent labor market data. He noted continued moderation in the labor market and progress toward the Federal Open Market Committee's (FOMC) 2 percent inflation goal, suggesting a shift in focus toward employment risks. Waller emphasized a data-dependent approach, reinforcing that monetary policy should not overreact to individual data points. Given recent economic data, he believes it is time to begin lowering the target range for the federal funds rate, suggesting a series of rate cuts might be appropriate to support continued economic and job growth, provided inflation remains near target levels. He acknowledged the challenge in determining the appropriate pace of rate cuts and remained open to adjusting monetary policy swiftly based on new economic information.


Positivity: 80
Uncertainty: 60

Politics: The Far-Centre Will Fail

• Dismissing popular concerns alienates potential voters for some traditional and current parties of government. The resultant democratic deficit positions them as far-centre.
• Popular alternative views need careful respect, either triangulating their essence into the policy platform or an honest pitch for why an alternative path is superior.
• Parties that adapt can thrive. Those who keep dismissing ideas outside their perceived Overton window will suffer. Political fortunes can be evaluated through this lens.

By Philip Rush

Malaysia Policy Rate 3.0% (consensus 3.0%) in Sep-24

• Bank Negara Malaysia held the OPR at 3%, consistent with expectations, reflecting a supportive stance for growth amid moderate inflation and global trade recovery.
• Future interest rate policies will depend on the balance between downside risks such as weaker external demand and commodity production, and upside risks from the global tech upcycle and increased investment activity.
• It expects inflation to remain below 3%, with the outlook dependent on domestic policy measures regarding subsidies, price controls, and global commodity price movements.