Australian Bond Exchange Weekly Newsletter
Friday 27 January 2023
- Inflation hits 7.8 per cent (Australia)
- The Fed funds rate stands at 4.33 per cent (US)
- The Euro zone annual inflation was 9.2 per cent (Euro)
- The CPI rose by 9.2 per cent in the 12 months to December 2022 (UK).
The high inflation registered recently has raised concern about the possibility of the Reserve Bank of Australia (RBA) lifting interest rates again to stop the rising costs of living (1). The RBA has lifted the cash rate by 3 percentage points since May 2022, in what has been the fastest tightening in a generation (2).
It seems like consumers are finally cutting back on spending, as inflation hits 7.8 per cent (3) over the twelve months to the December 2022 quarter. According to the Australian Bureau of Statistics (ABS)the increase was driven by Domestic holiday travel and accommodation (+13.3 per cent), electricity (+8.6 per cent), international holiday travel and accommodation (+7.6%) and new homes (+1.7%).
The Fed funds rate stands at 4.33 per cent (4) as of 26 January 2023. Meanwhile, the Consumer Prices Index (CPI) for all items fell 0.1 per cent (5) in December as gasoline decreased.
The Euro zone annual inflation was 9.2 per cent (6) in December 2022 down from 10.1 per cent(7) in November 2022. Meanwhile the interest rates in effect from 21 December 2022 stand at 2.50 per cent.
The CPI rose by 9.2 per cent (8) in the 12 months to December 2022, down from 9.3 per cent in November; while interest rates in the United Kingdom were raised to 3.5 per cent during the December meeting, making borrowing costs the highest they have been since 2008(9).
Disclaimer: The information and any advice provided in this newsletter has been prepared without considering your objectives, financial situation or needs. Because of that, you should, before acting on the advice, consider the appropriateness of the advice, having regard to those things. You should obtain the relevant appropriate document for any product mentioned and consider its contents before making any decision.
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Australian Bureau of Statistics. (2023, 01 25). Consumer Price Index, Australia. Australia. Retrieved from https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/consumer-price-index-australia/latest-release
Eurostat Statistics Explained. (n.d.). Inflation in the euro area. Retrieved from https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Inflation_in_the_euro_area#:~:text=Euro%20area%20annual%20inflation%20was,from%2010.1%20%25%20in%20November%202022.&text=The%20%EF%AC%81gures%20presented%20in%20this,of%20Consumer%20Prices
Financial Review. (2023, January 25). Surprise inflation to force Australia, NZ to lift rates. Retrieved from https://www.afr.com/markets/debt-markets/shock-inflation-will-force-australia-nz-central-banks-to-lift-rates-20230125-p5cfb3
Office for National Statistics. (n.d.). Inflation and price indices. Retrieved from https://www.ons.gov.uk/economy/inflationandpriceindices#:~:text=Consumer%20price%20inflation%2C%20UK%3A%20December%202022&text=The%20Consumer%20Prices%20Index%20including,down%20from%209.3%25%20in%20November.
The Guardian. (2023, January 25). Australia’s softening inflation unlikely to spell an end to interest rate hikes. Australia. Retrieved from https://www.theguardian.com/australia-news/2023/jan/25/australias-softening-inflation-unlikely-to-spell-an-end-to-interest-rate-hikes
Trading Economics. (2023, January 25). United States Fed Funds Rate. Retrieved from https://tradingeconomics.com/united-states/interest-rate#:~:text=interest%2Drate%20decisions.-,The%20Federal%20Reserve%20raised%20the%20fed%20funds%20rate%20by%2050bps,in%20line%20with%20market%20expectations.
Trading Economics. (n.d.). United Kingdom Interest Rate. Retrieved from https://tradingeconomics.com/united-kingdom/interest-rate#:~:text=Interest%20Rate%20in%20the%20United%20Kingdom%20is%20expected%20to%20be,macro%20models%20and%20analysts%20expectations.&text=In%20the%20United%20Kingdom%2C%20benchmark,Monetary%20Policy%20C
U.S. Bureau of Labor Statistics. (2023, January 25). Retrieved from https://www.bls.gov/cpi/