Kaohoon Morning Brief – 10 June 2022

1) China inflation in May grew 2.1%, in line with expectations

China inflation data for May was in line with expectations, coming in at 2.1% YoY, according to the Bureau of Statistics, vs 2.2% expected by Reuters Poll. Meanwhile, the Chinese producer price index for May jumped 6.4% YoY, also in line with the consensus of 6.4% growth.


2) US inflation for May forecast at 8.2%

The U.S. inflation data for May is scheduled to be released later today. The consensus indicates a 8.2% growth, which would be very close to a 8.3% growth in April amid rising energy costs due to tight supply.

“I don’t think we’re (going to) have a recession. Consumer spending is very strong. Investment spending is solid. I expect growth to slow down,” Treasury Secretary Jenet Yellen said.


3) ECB to hike policy rate by 25bps in July

The European Central Bank (ECB) confirmed its intention to hike interest rates by 25 basis points in the next policy meeting in July and expected an additional hike at the meeting in September this year.

Beyond September, the central bank said it anticipated a gradual but sustained path of further increases in interest rates would be appropriate.

The bank expected headline inflation at 2.1% by 2024, and core inflation at 2.3% in 2024 as well.

Furthermore, ECB noted that the depo rate will remain unchanged at -0.5%, while the central bank will end its bond buying on July 1, 2022.


4) Standard Chartered expects 3 rate hikes by BoT this year

Standard Chartered now expects three rate hikes by the Bank of Thailand this year, saying that there will be a front-loaded rate hike before a pause, followed by a gradual pace of hiking in 2023.

The bank expects high inflation will trigger the hikes along with a  wide rate gap with the U.S. and economic recovery.

Additionally, Standard Chartered raised its 2022 inflation forecast to 6.0% from 4.9%, adding that the high prices show no signs of easing in the near-term.