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RBI to Go Fast With Rate Hikes This Year, Slow the Next – Reuters Poll

Clayton Lee

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(C) Reuters. FILE PHOTO: A man walks behind the Reserve Bank of India (RBI) logo inside its headquarters in Mumbai, India, April 8, 2022. REUTERS/Francis Mascarenhas

By Arsh Tushar Mogre and Prerana Bhat

BENGALURU (Reuters) – The Reserve Bank of India will concentrate interest rate hikes over the coming months in a relatively short tightening cycle, according to a Reuters poll of economists who expect the repo rate to reach its terminal level early next year.

Following a surprise rate rise on May 4, several members of the Monetary Policy Committee called for more in upcoming meetings this year to control sticky price pressures, which hit an eight-year high last month.

That sentiment was echoed in a May 26-June 1 Reuters poll that predicted the central bank would raise its key policy rate by at least 100 basis points over the next four MPC meetings.

The RBI was expected to follow up its unscheduled 40 basis point repo rate hike in May to 4.40% with another move at the policy meeting on June 8 – a “no-brainer” according to governor Shaktikanta Das.

By how much was unclear as forecasts were split six ways, ranging between 25 and 75 basis points. That is only marginally changed from the seven-way split in a similar poll taken a month ago. [RBI/INT]

The repo rate was expected to reach its pre-pandemic level of 5.15% or higher next quarter, according to 41 of 47 respondents. It will end the year at 5.50%, the median showed, 110 basis points above where it is now and 19 of 47 saw it even higher.

“Most of the hikes will come this year and we expect this cycle to end in April next year…the urgency for more hikes will continue to diminish from Q4 (2022) onwards,” said Miguel Chanco, chief emerging Asia economist at Pantheon Macroeconomics.

Indeed, the predicted tightening path for next year was more subdued with only 40 basis points pencilled in the first half before a pause, poll medians showed.

“The RBI was very much behind the curve in terms of its thinking on inflation and what to do on interest rates. It still seems to me they have rose tinted glasses in terms of the future outlook of prices,” Chanco added.

While inflation looks set to remain elevated, reflecting high global energy and food costs, economic growth prospects have started to look bleak. GDP growth slowed to its weakest in a year last quarter on a year ago, the third consecutive slowdown.

This may lead the RBI – which had long prioritised growth over inflation, holding rates steady until abruptly raising them at an unscheduled meeting – to consider ending this tightening cycle less than a year after starting it.

When asked what the terminal repo rate would be, 14 of 26 economists said 6.00% or higher, while the rest pencilled in a lower rate. Forecasts ranged from 5.15-6.50%.

Nearly two-thirds of respondents, 17, said the terminal rate would be reached by end-Q2 2023, roughly in line with the median from the quarterly forecasts. Six said the second half of 2023, while only three said the cycle would go on until 2024.

But economists said much would depend on price pressures over the coming months.

Suvodeep Rakshit, senior economist at Kotak Institutional Equities, said if inflation were to remain in the 6%-7% range well into the current and next fiscal year, the terminal rate would have to be higher than he currently expects.

“We have to shift it (the terminal rate) higher, closer to where you’re seeing your one-year-ahead inflation pan out. It is not a number cast in stone, it will evolve along with the inflation trajectory.”

RBI to go fast with rate hikes this year, slow the next – Reuters poll

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Original Article: investing.com

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Philippines Q4 GDP Grows 7.2%, Faster Than Forecast

Clayton Lee

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Philippines Q4 GDP grows 7.2%, faster than forecast By Reuters

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Economy 23 minutes ago (Jan 25, 2023 09:16PM ET)

(C) Reuters. FILE PHOTO: Buildings are seen as vehicles pass through the financial district of Makati city, metro Manila, Philippines November 22, 2017. REUTERS/Romeo Ranoco

MANILA (Reuters) – The Philippine economy grew at an annual rate of 7.2% in the fourth quarter, the statistics agency said on Thursday, beating expectations.

Economists in a Reuters poll had expected gross domestic product (GDP) to rise 6.5% in the last three months of 2022 from a year earlier. Third quarter growth was 7.6%.

On a quarter-on-quarter basis, GDP came in at 2.4% in October-December, compared with expectations for a 1.5% rise and the previous quarter’s 2.9% growth.

For the full-year of 2022, growth was 7.6%, above the government’s target of 6.5 to 7.5%, and stronger than the previous year’s 5.7% expansion.

Philippines Q4 GDP grows 7.2%, faster than forecast

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Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

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South Korea Vows Support for Exporters As Economy Shrinks

Clayton Lee

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South Korean economy shrinks in Q4 for first time in 2-1/2 years By Reuters

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Economic Indicators 5 minutes ago (Jan 25, 2023 06:33PM ET)

(C) Reuters. FILE PHOTO: The skyline of central Seoul is seen during a foggy day in Seoul March 4, 2015. REUTERS/Kim Hong-Ji

SEOUL (Reuters) – South Korea’s economy contracted in the final quarter of 2022 for the first time in 2-1/2 years, as a post-pandemic spending spree faded and global trade tumbled, central bank estimates showed on Thursday.

Gross domestic product (GDP) shrank 0.4% in the October-December period from the previous quarter, the Bank of Korea estimated, after a 0.3% gain in the July-September quarter. Economists in a Reuters poll had expected a 0.3% fall.

Leading the first GDP decline since the second quarter of 2020 were losses of 5.8% in exports and 0.4% in private consumption, whereas government spending posted a sharp 3.2% increase, the central bank estimates showed.

Fourth-quarter 2022 GDP was 1.4% higher than a year earlier, compared with a 3.1% annual gain seen in the third quarter and the 1.5% forecast in the poll.

The central bank estimated that in 2022 the full-year value of the economy, Asia’s fourth-largest, had been 2.6% larger than in 2021, when it showed growth of 4.1%. The average growth in full-year GDP for 2017 to 2021 was 2.3% a year.

The central bank’s latest growth forecast for 2023 full-year GDP is 1.7%, but its warning this month that it might downgrade that outlook prompted investors to bet that its Jan. 13 interest rate rise had marked the end of a tightening cycle that began in August 2021.

South Koreans spent heavily on consumption after pandemic controls were removed by early 2022, but spending behaviour has since returned to more normal levels. This has occurred just as demand for South Korean exports has declined with the weakening of foreign economies subject to interest rate rises aimed at containing inflation.

South Korean economy shrinks in Q4 for first time in 2-1/2 years

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Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

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Musk Says China Rivals ‘work Hardest, Smartest’

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Musk says China rivals ‘work hardest, smartest’ By Reuters

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(C) Reuters. A Tesla supercharging station is seen in the early morning sun, in Kettleman City, California, U.S., January 25, 2023. REUTERS/Mike Blake
2/2

(Reuters) – Detroit? Nope. Germany? Nein. Elon Musk sees the toughest competition for Tesla (NASDAQ:TSLA) in China, home of the company he expects “most likely to be second” in electric vehicles.

China is Tesla Inc’s second-largest market – accounted for about two-thirds of all electric vehicles sales globally in 2022 – and the home of Tesla’s biggest plant.

It’s also a market that has embraced EVs and is replete with rivals competing on style and price, including Xpeng (NYSE:XPEV), Nio (NYSE:NIO) and BYD Co (OTC:BYDDF) Ltd.

Releasing financial results on Wednesday, Tesla said they showed recent deep price cuts were stimulating demand, and that the company is cutting costs with a view to growing through what Musk expects will be a recession this year.

Asked about Tesla’s competition, Musk responded that he respected car companies in China, calling it the most competitive market in the world. Musk did not identify any Chinese automakers by name.

“They work the hardest and they work the smartest,” he said. “And so we guess, there is probably some company out of China as the most likely to be second to Tesla.”

Tesla recently promoted China chief Tom Zhu to run U.S. factories and sales in North America and Europe, Reuters has reported.

“Our team is winning in China. And think we actually are able to attract the best talent in China. So hopefully that continues.”

Tesla has cut prices in response to growing competition and slowing demand in China, followed by cuts in the United States and other markets.

Musk has praised Chinese workers and competitors before.

In 2021, he called Chinese automakers the “most competitive in the world,” saying some of them are very good at software. He also said Chinese workers had been “burning the 3 a.m. oil” to keep Tesla’s factories running during COVID lockdowns last year.

Musk says China rivals ‘work hardest, smartest’

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(C) 2007-2023 Fusion Media Limited. All Rights Reserved.

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

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Source: investing.com

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