MNI China Daily Summary: Wednesday, May 8

MNI BRIEF: BOJ To Allow Markets To Determine Long Rates-Ueda

MNI BRIEF: BOJ Would Adjust Rates Earlier If Necessary - Ueda

MNI BRIEF: China Attended DEPA Negotiations - MOFCOM

MNI: PBOC Net Injects CNY2 Bln Via OMO Weds; Rates Unchanged

MNI: PBOC Sets Yuan Parity Higher At 7.1016 Weds; -4.20% Y/Y

US MBA: REFIS +5% SA; PURCH INDEX +2% SA THRU MAY 3 WK

MNI: US MBA: MARKET COMPOSITE +2.6% SA THRU MAY 03 WK

Strongest Manufacturing IP Since April 2008

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

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

MNI: Growth Drag From Net Zero Carbon Goal Can Be Offset-OECD

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Haskel: Now the most hawkish MPC member?

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  • In an FT interview, Haskel has said that interest rate cuts "are a long way off", noting that although the fall in headline inflation was welcome, it is "not informative" about the persistence of underlying inflation.
  • Haskel continued to point to mismatches of skills with the FT paraphrasing him saying that "jobseekers could be in the wrong part of the country or have the wrong skills for the work on offer." He did however note that the labour market was "less badly impaired than we thought it was" and together with the fall in core goods prices and services inflation this drove his change of vote at the March MPC meeting to that for unchanged rates rather than another 25bp hike (as he voted for in February).
  • However, he remains concerned that wage growth is too high and only likely to ease slowly, and that these are a crucial factor driving inflation.
  • He noted that when inflation was at 11% he was in the "activist camp" but now "we are not in that world anymore... I'm very much in the gradualist camp."
  • Haskel's comments in our view seem more hawkish here than Mann's earlier in the week in her Bloomberg TV interview. We don't think either of them will be voting for cuts any time soon, but don't think that either Mann or Haskel's views will stop the MPC reaching quorum to cut Bank Rate.
  • The MNI Markets team continues to look for a 15% probability of a first cut in May, 35% in June, 40% in August and 10% probability cuts are delayed further.
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  • In an FT interview, Haskel has said that interest rate cuts "are a long way off", noting that although the fall in headline inflation was welcome, it is "not informative" about the persistence of underlying inflation.
  • Haskel continued to point to mismatches of skills with the FT paraphrasing him saying that "jobseekers could be in the wrong part of the country or have the wrong skills for the work on offer." He did however note that the labour market was "less badly impaired than we thought it was" and together with the fall in core goods prices and services inflation this drove his change of vote at the March MPC meeting to that for unchanged rates rather than another 25bp hike (as he voted for in February).
  • However, he remains concerned that wage growth is too high and only likely to ease slowly, and that these are a crucial factor driving inflation.
  • He noted that when inflation was at 11% he was in the "activist camp" but now "we are not in that world anymore... I'm very much in the gradualist camp."
  • Haskel's comments in our view seem more hawkish here than Mann's earlier in the week in her Bloomberg TV interview. We don't think either of them will be voting for cuts any time soon, but don't think that either Mann or Haskel's views will stop the MPC reaching quorum to cut Bank Rate.
  • The MNI Markets team continues to look for a 15% probability of a first cut in May, 35% in June, 40% in August and 10% probability cuts are delayed further.