China keeps key lending rates unchanged; Asia-Pacific markets mostly fall

Reserve Bank of Australia minutes showed the range of options being considered in December

The minutes from the December meeting of the Reserve Bank of Australia show that the central bank is considering several options for the decision on the cash rate, including a complete stop on the increase.

“The Board considered several options for the cash rate decision at its December meeting: a 50 basis point increase; a 25 basis point increase; or no change in the cash rate ,” said the minutes.

RBA board members also noted the importance of “moving steadily,” adding that the central bank will continue to consider a range of options for the coming year as well.

– Jihye Lee

China kept key lending rates unchanged

The People’s Bank of China kept one-year and five-year loan prime rates unchanged in December, according to an announcement.

The central bank maintained the one-year loan prime rate at 3.65% and the five-year loan prime rate at 4.30%, in line with expectations in a Reuters poll.

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The offshore and onshore Chinese yuan were relatively flat at 6.9808 and 6.9783 against the US dollar, respectively.

– Jihye Lee

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— Zavier Ong

The Bank of Japan is expected to hold rates steady

The Bank of Japan is expected to keep its interest rates steady at -0.10%, according to a survey of economists by Reuters.

The rate decision is expected after the central bank’s two-day monetary policy session ends on Tuesday.

Separately, the Japanese government and the BOJ reportedly intend to revise a statement that committed to a 2% inflation target at the earliest possible date, according to Kyodo News, citing government sources.

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Jihye Lee

The Fed is overdoing rate hikes, Evercore ISI says

The Federal Reserve is likely to exceed its rate hikes to curb inflation and could lead to a recession in the US economy, Ed Hyman of Evercore ISI wrote in a note on Sunday.

The Federal Funds rate is now 6.5% compared to a core PCE of 4.7% on the year and bond yields at 3.5%, Hyman wrote.

“And it’s not just the Fed tightening: ECB, BoE, Mexico, Switzerland, and Norway also tightened last week,” he said. “Perhaps more deeply, the money supply is contracting.”

In addition, the Evercore economic dispersion index is approaching recession territory along with other indicators such as company surveys, inflation data and layoff announcements. And, wage gains are starting to slow and high rents are showing early signs of letting up, signaling that inflation is likely running high.

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“In any event, 87 percent of American voters are worried about a recession,” Hyman said.

—Carmen Reinicke

The S&P 500 is headed for its worst December in four years

The S&P 500 has fallen more than 6% this month, as Wall Street struggles heading into the end of the year. That set it on track for its worst monthly performance since September. It was also the biggest decline in December since 2018, when it fell by 9.18%.

Stocks closed lower for the fourth day in a row

Recession fears and hopes of a year-end rally weighed on stocks on Monday, sending them to their fourth consecutive negative close.

The Dow Jones Industrial Average shed 163.85 points, or 0.50%, to close at 32,756.61. The S&P 500 fell 0.91% to 3,817.47, and the Nasdaq Composite shed 1.49% to 10,546.03 weighed by Amazon shares, which fell 3%.

—Carmen Reinicke


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