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Reserve Bank of Australia minutes show a range of options was considered in December

Minutes from the Reserve Bank of Australia’s December meeting showed the central bank considered a number of options for its cash rate decision, including a complete halt to hikes.

“At the December meeting, the panel considered several options for deciding the cash rate: a 50 basis point increase, a 25 basis point increase, or no change in the cash rate,” the minutes said.

RBA board members also noted the importance of “acting consistently”, adding that the central bank will continue to consider a number of options for the year ahead.

– Jihe Lee

China keeps key lending rates unchanged

The People’s Bank of China kept the key interest rates for one-year and five-year loans unchanged in December, it said in a statement.

The central bank kept its key one-year lending rate at 3.65% and its five-year key lending rate at 4.30%, in line with expectations in a Reuters poll.

The offshore and onshore Chinese yuan were relatively flat at 6.9808 and 6.9783 against the US dollar, respectively.

– Jihe Lee

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What’s next for China after it rolled back a number of Covid-19 measures?

Market supporters are weighing the prospect of a recovery in the world’s second-largest economy and opening up opportunities for investors.

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— Zavier Ong

The Bank of Japan expects to keep interest rates steady

The Bank of Japan is expected to keep interest rates steady at -0.10%, according to a Reuters poll of economists.

The exchange rate decision is expected after the end of the Central Bank’s two-day monetary policy on Tuesday.

Separately, the Japanese government and the BOJ reportedly aim to revise a statement pledging to reach the 2% inflation target as soon as possible, Kyodo News reported, citing government sources.

Jihe Lee

Fed is overdoing rate hikes, says Evercore ISI

The Federal Reserve is likely overdoing its interest rate hikes to ease the squeeze and could eventually push the US economy into recession, Evercore ISI’s Ed Hyman wrote in a Sunday note.

The federal funds rate is now 6.5%, versus core PCE of 4.7% per year, and bond yields are 3.5%, Hyman wrote.

“And it’s not just Fed tightening. The ECB, BoE, Mexico, Switzerland and Norway also tightened last week,” he said. “Perhaps more deeply, the money supply is shrinking.”

In addition, Evercore’s Economic Diffusion Index is edging into recession territory along with other indicators such as company surveys, inflation data and layoff announcements. And wage growth has begun to slow and high rents are showing early signs of easing, signaling that inflation is likely to have run its course.

“In any case, 87 percent of American voters are concerned about the recession,” Hyman said.

– Carmen Reinike

The S&P 500 is headed for its worst December in four years

The S&P 500 is down more than 6% this month as Wall Street struggles toward the end of the year. That marks the worst monthly performance since September. It would also be its biggest December decline since 2018, when it slid 9.18%.

The stock closed lower for the fourth day in a row

Recession fears and dashed hopes for a year-end rally weighed on stocks on Monday, sending them to a fourth straight negative close.

The Dow Jones Industrial Average fell 163.85 points, or 0.50%, to close at 32,756.61. The S&P 500 fell 0.91% to 3,817.47 and the Nasdaq Composite lost 1.49% to 10,546.03, weighed down by Amazon shares, which fell 3 in %.

– Carmen Reinike

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