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...
Chinese stocks have experienced a dramatic turnaround, with the CSI 300 Index surging 6.5% on Monday, marking its largest single-day gain since 2015. This rally extends a nine-day streak, pushing the index into a bull market after recovering more than 20% from its lows in mid-September. The gains come after the index had lost over 45% of its value from a 2021 high through mid-September.
The rally follows significant government stimulus measures, including the easing of housing market rules in three of China’s largest cities, mortgage rate cuts, and liquidity support for the stock market. These actions, announced last week, also included interest rate cuts and freeing up cash for banks, signaling a comprehensive effort to revive the beaten-down market.
Investor sentiment has surged, with turnover on the Shanghai and Shenzhen stock exchanges exceeding one trillion yuan ($143 billion) within just 30 minutes of trading on Monday. Analysts are optimistic about the market’s momentum, with Charu Chanana, a global markets strategist at Saxo Markets, noting, “The pace of the turnaround is clearly reflective of how oversold the market was.”
Brokerages led the charge, with Citic Securities Co. reaching the 10% daily upside limit. Almost all component stocks of the CSI 300 were in the green, further fueling optimism that the market's rally could be sustainable, particularly as hedge funds shift their focus from US technology stocks to mining and materials firms.
David Chao, strategist at Invesco Asset Management, remarked, “The euphoric surge... could turn into something more concrete and sustainable because there appears to be a complete policy shift” that may finally address the challenges of the past three years.
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