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MNI STATE OF PLAY: RBNZ Hikes 50bp, No Slowing Down in 2022

MNI (Perth)

The RBNZ's hawkish consideration of a 75bp hike stiffens the odds of another 50bp increase in its final meeting of the year in November.

MARKET NEWS TOP STORIES

MNI BRIEF: RBNZ Hikes 50bp, Continues To Tighten "At Pace"

The Reserve Bank of New Zealand considered a 50bp and 75bp hike as it acknowledged the inflationary threat from a weaker NZ dollar.

Political Risk

Key Mini-Budget Crunch Votes Could Not Take Place Until March Next Year

  • On voting timing for the UK's mini-budget, votes for large parts of the budget now may not take place until March 2023, according to the Telegraph. These parts include scrapping the corp tax rise as well as cutting the basic income tax rate earlier.
  • Scrapping rise in national insurance will go ahead on Tuesday next week, while stamp duty cut will be voted on at some point this autumn.
  • Source here: https://www.telegraph.co.uk/politics/2022/10/04/re...

US Administration Pushing Against OPEC+ Cuts

The US is pushing OPEC+ nations not to cut production ahead of reports that the group could announce deep cuts later today.

  • The Biden Administration has been under intense pressure to keep prices down at the pumps after record high prices this summer.
  • The US is arguing to OPEC+ that economic fundamentals do not support an output cut.
  • Sources suggest OPEC+ is working on cuts of over 1mn bpd – though the impact of them could be far less given the group has struggled to even come close to current targets.
  • Russia is reported to be in favor of cuts to support higher prices. It would also support Russia with signs it is struggling to find destinations for all of its crude flows – which would be exacerbated after the EU import ban.

Germany's Habeck Calls for Bloc Energy Buying

Europe should coordinate more to make the bloc a single energy buyer, German Economy Minister Robert Habeck said.

  • He also said the US should show more solidarity with European countries that supported its energy suppliers during periods of high prices.
  • The EU "should bundle its market power and orchestrate smart and synchronised buying behaviour by the member states so that they don't compete against each other and drive prices up further," he said.
  • "Some countries, including friendly countries, are raking it in," he said. "The U.S. turned to us when oil prices shot up, and in response national oil reserves were tapped in Europe. That kind of solidarity would be good for cutting gas prices."

No Price Cap on Russian Piped Flows: Hungary

Any new Russian oil price cap will not apply to piped shipments Hungary's Foreign Minister Peter Szijjarto said in a statement late on Tuesday.

  • Hungary is using an EU exemption to continue receiving Russian oil via the Druzhba pipeline. It claims it would not be able to afford to replace Russian piped flows.

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