MNI: PBOC Net Drains CNY48 Bln Via OMO Fri; Rates Unchanged

MNI: PBOC Sets Yuan Parity Lower At 7.1289 Fri; -0.35% Y/Y

CHINA PBOC CONDUCTS CNY2 BILLION VIA 7-DAY REVERSE REPOS FRI

CHINA SETS YUAN CENTRAL PARITY AT 7.1289 FRI VS 7.1305

MNI China Daily Summary: Thursday, July 4

MNI BRIEF: China Has Four Months To Negotiate EU EV Agreement

INDON/PHILIP Long-end Spreads Widen, Inflation Falls

EZ/UK Bond Supply Calendar: Belgium ORI Facility on Friday

Factory Orders Decline as Non-EU Orders Dip

RPT-MNI: Canada Sticks To Fiscal Anchors, Spends Chunk Of Windfall

MNI BRIEF: Poilievre Calls QE 'Scam' And Would Limit BOC Remit

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Credit Suisse: Expect 25bp hikes in May22 and Nov22

BOE
  • “The path of hikes in 2022 will depend on how Omicron develops over the winter in our view. We think Omicron is likely to slow growth over the next few months, along with other headwinds to growth such as tax rises, supply bottlenecks, high energy prices and some limited pass-through from the rate hike. Even if restrictions are avoided, the high prevalence of Omicron is likely to weigh on services spending recovery.”
  • “We expect the labour market to continue to tighten and wage pressures to persist. Even though inflation should fall from H2 2022, it is expected to remain above target throughout 2022. As a result we expect the BoE to hike rates twice in 2022- in May and November 2022 by 25bps each, such that the Bank Rate is at 0.75% by end 2022. Once rates reach 0.5%, this will coincide with the start of quantitative tightening with the BOE ending reinvestments of maturing QE assets (which we forecast will happen in May 2022). But if Omicron has a negligible impact on the economy, a 25bps hike in February 2022 cannot be ruled out.”
  • “Given the BoE’s decision to raise rates today and prioritize surging inflation rather than slowing growth, the risks lie towards more hikes in 2022 compared to our forecasts, rather than less”
  • “The aggregate impact of the rate hike on the economy is likely to be minimal. Rising interest rates could dampen consumer demand by raising the cost of servicing mortgage debt, consequently squeezing discretionary cash flows. However, the structure of mortgage debt has changed over the past few years. Most new mortgages are fixed rate, and they constitute about 80% of the stock. The impact of rate rises on consumer finances is likely to be slow to feed through and the consequent rise in household debt service should be limited and manageable. The rate hike is likely to have a less immediate, restrictive impact on consumer finances than before.”
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