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...
The Thai baht fell to a six-week low on Thursday, while most Asian currencies fluctuated in a narrow range and regional equities edged lower as traders adjusted their expectations for US Federal Reserve rate cuts and considered the impact of a potential second Trump presidency.
The baht dropped by 1% to 33.83 per US dollar, marking its lowest level since Sept 10, as the currency resumed trading after a holiday. Other regional currencies such as the Singapore dollar and Philippine peso gained 0.2%, while the South Korean won increased slightly by 0.1%.
The US dollar index, which tracks the currency against six rivals, remained close to a three-month high, buoyed by the perception that an outsized 50-basis-point rate cut from the Fed is now less likely. This sentiment was reinforced by rising treasury yields. Additionally, anticipation of a Trump victory in the US presidential election added to the dollar's strength, as his tax and tariff policies are considered inflationary, potentially keeping US rates high.
In Indonesia, the rupiah rose 0.2%, supported by investor confidence in the newly sworn-in cabinet, which includes Finance Minister Sri Mulyani Indrawati. However, equities in Jakarta slipped 0.4%.
In Malaysia, annual inflation came in slightly lower than expected at 1.8% in September. Analysts predict the Malaysian central bank will maintain its current policy stance through 2025, distinguishing it from other Emerging Asia central banks.
Meanwhile, Philippine equities and stock markets in Kuala Lumpur, Shanghai, and Bangkok fell between 0.2% and 0.9%, reflecting broader concerns over election anxiety in the US and changing monetary policy expectations. In contrast, Singaporean shares edged up 0.4%.
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