The Bank of Russia unexpectedly maintained its key interest rate at a record-high 21% , defying analysts’ expectations of another significant hike as inflation remains stubbornly elevated. The decision marks a shift toward a more measured approach in balancing economic growth and price stability. Key Details Inflation Concerns: Annual inflation climbed to 8.9% in November, well above the central bank’s 4% target , with inflation expectations reaching 13.9% in December. Policy Rationale: The central bank cited the significant tightening of monetary conditions after October’s 200-basis point hike as sufficient to resume disinflationary processes. Governor Elvira Nabiullina emphasized avoiding both economic overheating and severe slowdowns. Economic Overheating: Elevated government spending on the war in Ukraine and social programs, coupled with labor shortages and rising wages, have fueled strong domestic demand, exacerbating price pressures...
Asian share markets showed mixed performance on Monday, as China’s continued rally contrasted with a sharp drop in Japan's Nikkei. Geopolitical tensions in the Middle East and concerns over Japan’s interest rate policies weighed on investor sentiment.
China’s blue-chip CSI 300 Index climbed another 3.0%, adding to last week's impressive 16% surge, while the Shanghai Composite rose 4.4%, continuing its upward momentum. This extended rally was fueled by Beijing's aggressive stimulus measures, including mortgage rate cuts and liquidity support, designed to combat the country’s economic downturn.
Meanwhile, the Nikkei tumbled 4.1% amid investor uncertainty over new Prime Minister Shigeru Ishiba’s stance on monetary policy. While Ishiba had previously criticized the Bank of Japan’s (BOJ) easy policies, he adopted a more conciliatory tone over the weekend, stating that monetary policy must remain accommodative given the current state of Japan’s economy. This helped the yen nudge up 0.2% to ¥142.52 after its recent slide.
Despite the decline in Japan, China's rally helped lift MSCI's broadest index of Asia-Pacific shares outside Japan by 0.3%, bringing it to a seven-month high.
In currency markets, the dollar index remained flat at 100.41, while gold hit record highs of US$2,685 an ounce, driven by a softer dollar and lower bond yields. Oil prices also crept higher amid Middle East tensions, with Brent rising 61 cents to US$72.59 per barrel.
Looking ahead, markets will focus on key US economic data this week, including the payrolls report, which may determine whether the Federal Reserve delivers another 50-basis-point rate cut in November.
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