Katrina Ell, Senior Economist at Moody's Analytics, discusses Asia economic data. Garfield Reynolds, Bloomberg Chief Correspondent for Rates, talks about his view on APAC markets. Michael Heath, Bloomberg Eco-gov editor, covers Israel's debt rating and the latest on the war.
Inflation in developed countries is on a downtrend, shifting focus from rate hikes to anticipated rate cuts, with the timeline for rate cuts expected to begin in May in the US.
China faces the risk of deflation, highlighting the need for meaningful stimulus to stabilize domestic demand, especially in sectors like the property market, and addressing structural imbalances.
Deep dives
Inflation and Central Banks
The podcast discusses the current state of inflation and whether global central banks have successfully controlled it. The speaker highlights that inflation in most developed countries is on a downtrend and the focus has shifted from rate hikes to anticipated rate cuts. The timeline for rate cuts is expected to begin in May, starting with the US. In Australia, inflation is also decreasing, but rate cuts are not expected until September due to the inflation rate not being at the desired level. Overall, the speaker suggests that central banks are confident in their ability to handle inflation.
Risk of Deflation in China
The podcast explores the risk of deflation in China and the potential impact on the Chinese economy. It is noted that policymakers in China are not aggressively stimulating the economy and there is concern about the significant demand problem in the country. The speaker highlights the problems associated with deflation, such as decreased consumer spending and rising real rates. The need for meaningful stimulus to stabilize domestic demand is emphasized, especially in sectors like the property market. The risks of deflation in China are compared to Japan's experience and the importance of addressing structural imbalances is emphasized.
Israel's Credit Rating Downgrade
The podcast discusses the recent credit rating downgrade for Israel and its implications for the country's debt sales. The downgrade is attributed to the fiscal impact of the ongoing war and the potential weakening of political institutions. The longer the war continues, the more pressure it puts on the budget due to increased military expenditure and decreased tax revenues. While Israel relies heavily on domestic investors for bond sales, the need for buying debt overseas may increase if the war persists. The podcast also touches on the role of the central bank in supporting economic growth during the war and the impact on the currency. The potential effects on Israeli sovereign credit and credit default swaps are mentioned as well.
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Katrina Ell, Senior Economist at Moody's Analytics, joins the program to give her perspective on Asia economic data. Garfield Reynolds, Bloomberg Chief Correspondent for Rates joins to discuss his view on APAC markets. Michael Heath, Bloomberg Eco-gov editor joins to discuss Israel's debt rating and the latest on the war.