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US CPI increases

Published September 13, 2019

Author : Brett Gordon

Market participants have lowered expectations for immediate aggressive rate cuts from central banks including the Reserve Bank of Australia and the Reserve Bank of New Zealand. This is a result of more signs of recent moves to de-escalate the US-China trade.

The Aussie has continued to rebound from yearly lows as this pause in tensions allows the RBA to hold on cutting further for now. Markets last week were pricing an October cut of 25bps with a 44% chance but now this has lowered to just 27% chance, most favouring a November cut instead.

The US Consumer Price Index for All Urban Consumers increased 0.1% in August on a seasonally adjusted basis after rising 0.3% in July, in a report from the US Bureau of Labor Statistics today. Over the last 12 months, the all items index increased 1.7% before seasonal adjustment.

Thursday`s  meeting of the ECB saw major shifts towards loosening monetary policy conditions. Firstly the interest rate on the deposit facility was decreased by 10 basis points to -0.50%. Followed by the interest rate on the main refinancing operations and the rate on the marginal lending facility remained unchanged at the current levels of 0.00% and 0.25% respectively.