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June 12th - Data from the Peoples Bank of China shows that loan interest rates remained low in May. The weighted average interest rate for newly issued corporate loans (domestic and foreign currencies) in May was approximately 3.0%, about 25 basis points lower than the same period last year. Data shows that since the second half of 2018, my country has lowered the reserve requirement ratio 18 times, providing sustained medium- and long-term liquidity to the market and playing a role in the banking system and financial markets. Compared to the high point since the beginning of this interest rate cut cycle in the second half of 2018, policy interest rates have been lowered 10 times, accumulating a reduction of 1.15 percentage points. Experts have stated that in recent years, measures such as rectifying banks irregular manual interest payment practices, guiding non-bank interbank demand deposit rates to follow policy interest rate adjustments, and supporting banks in stabilizing net interest margins have facilitated the transmission of interest rate policies. Overall, my countrys policy interest rates are effectively transmitted, and loan interest rates have remained stable with a slight downward trend, staying at a low level.On June 12, the Peoples Bank of China (PBOC) issued a notice soliciting public opinions on the "Administrative Measures for Large-Denomination Certificates of Deposit." The Measures, comprising 24 articles, specifically stipulate the scope of issuers and investors of large-denomination certificates of deposit, the elements of the certificates, issuance preparation, management of each stage of issuance and maturity, information disclosure, and supervision. Key revisions include: clarifying supervision requirements and measures. First, it clarifies that the pricing of all relevant business stages of large-denomination certificates of deposit should comply with the interest calculation and settlement rules issued by the PBOC and be included in self-regulatory management. Second, it clarifies that if an issuer fails to fulfill its information disclosure obligations as described in these Measures, or violates regulations regarding issuance, trading, transfer, early withdrawal, and redemption, the PBOC will impose penalties in accordance with the "Law of the Peoples Republic of China on the Peoples Bank of China" and other relevant laws and regulations. Third, it clarifies the responsibilities of the Interbank Funding Center and the Interbank Market Clearing House to summarize business information monthly and report it to the PBOC.On June 12, the Peoples Bank of China (PBOC) released a draft explanation of the "Measures for the Administration of Large-Denomination Certificates of Deposit (Draft for Public Comment)," which states that the "Measures" reserve policy space for the future development of large-denomination certificates of deposit. It adds the repurchase rate (DR) of bonds held by deposit-taking financial institutions or other rates recognized by the PBOC as a reference benchmark for the interest calculation of floating-rate certificates of deposit, thus enriching the pricing reference indicators for large-denomination certificates of deposit.The Hungarian forint rose 0.8% against the euro to 352.15, its highest level since September 2021.June 12th - Germanys economic recovery will be slower than expected due to the impact of the Iran war, but thanks to fiscal stimulus measures, the economy is expected to regain growth momentum in the coming years. The central bank stated that GDP is projected to grow by 0.5% in 2026, 0.8% in 2027, and 1.4% in 2028. This represents a downward revision of growth rates for this year and next compared to the forecast in December last year. GDP is expected to remain stable in the second quarter and grow slightly in the third quarter. The banks president stated, "The sharp rise in energy prices will weaken household purchasing power and consumer spending. However, economic activity will regain momentum during the forecast period ending in 2028." He added, "The recovery will benefit from lower energy prices, a stronger global economy, and, most importantly, strong fiscal stimulus."

The EUR/GBP exchange rate recovers above 0.8000 in advance of Eurozone inflation and UK gross domestic product

Alina Haynes

Mar 30, 2023 16:05

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The EUR/GBP pair extended its recovery above 0.88 during the Asian trading session. Anticipating that the European Central Bank (ECB) will continue to raise interest rates to combat persistent inflation, the cross has depreciated progressively. Friday will see the publication of preliminary Eurozone Harmonized Index of Consumer Prices (HICP) and Gross Domestic Product (GDP) (Q4) figures. Prior to the publication of these figures, it is anticipated that the asset will exhibit explosive activity.

 

It is anticipated that the preliminary Eurozone HICP will decelerate significantly from 8.5% to 7.3%. While it is anticipated that the core HICP will rise to 5.7% from 5.6% in the previous release. Weak energy prices are anticipated to have a significant impact on Eurozone inflation. In light of Christine Lagarde's prediction that inflation will remain elevated for an extended period of time, the European Central Bank (ECB) is expected to continue tightening monetary policy.

 

In the interim, banking tensions are subsiding as the absence of information regarding additional collateral damage has a positive impact on the market. Chief Economist Philip Lane stated on Wednesday that ECB interest rates must rise if banking tension has no or a "relatively limited" impact.

 

Investors avidly anticipate the United Kingdom's Gross Domestic Product (GDP) data. According to the consensus, the United Kingdom's growth in the fourth quarter of CY2022 remained unchanged. It is anticipated that the annual GDP will remain unchanged at 0.4%. It is expected that the British economy will undergo a severe recession as a result of high inflation and sluggish growth.

 

The Bank of England (BoE) policymakers appear confident that inflation will moderate in the near future and that the unexpected rise in February's inflation was a one-time anomaly; however, the absence of evidence raises doubts. If inflation persists, BoE Governor Andrew Bailey stated that additional rate increases would be announced. In contrast, Bank of America (BoA) analysts anticipate that the Bank of England (BoE) will not increase rates and will maintain current levels until 2024.


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