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...
Investors are turning to cash, India, China's markets, and Singapore dollars as they brace for the impact of the upcoming US presidential election on global financial flows. As Asia is highly sensitive to changes in US trade policies, many money managers are steering clear of risky bets and focusing on reducing exposure to vulnerable sectors, such as Japanese manufacturers and Hong Kong stocks.
Jon Withaar of Pictet Asset Management highlights China as a stable market with domestic drivers that may be less affected by global movements, while Nick Ferres of Vantage Point Asset Management is staying cautious, maintaining short positions on the yen and focusing on Japanese stocks. With Republican candidate Donald Trump currently leading in betting odds, investors anticipate inflationary pressures and rising interest rates under a potential Trump administration.
Meanwhile, India's strong domestic growth and limited exposure to global trade risks make its markets appealing. Similarly, the Singapore dollar is expected to perform well, given the city's monetary policies.
However, with the election outcome too close to predict, many investors are waiting for clarity before making significant moves, while emerging markets, particularly China and North Asia, remain strong investment areas, poised to perform well post-election.
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