Mary Ogunyemi, FMVA
Research Analyst
Oil prices increased about 2% to a three-week high on Tuesday due to China’s monetary stimulus(which typically boosts demand for oil) and worries that ongoing conflicts in the Middle East could disrupt oil supply(making demand greater than supply).Brent futures rose by 1.7% to settle at 75.17 per barrel, while U.S. West Texas Intermediate (WTI) crude also increased by 1.7% to settle at 71.56.
Japan Holds Rate, Factory Activities Slips
The au Jibun Bank flash Japan manufacturing purchasing managers’ index (PMI) fell to 49.6 in September from 49.8 in August. The index stayed below the 50.0 threshold separating growth from contraction for a third straight month. The subindex for output slipped marginally in September from August while that for new orders shrank at a softer pace. The au Jibun Bank flash Japan composite PMI, which combines both manufacturing and service sector activity, stood at 52.5 in September, the third straight month of expansion. The Bank of Japan kept interest rates steady on Friday, as widely expected, after the central bank ended negative interest rates in March and hiked short-term rates to 0.25% in July.
Australia’s Central Bank Holds rates
Australia’s central bank on Tuesday reiterated that interest rate cuts were unlikely in the near term as it held policy steady, but softened its hawkish stance by saying monetary tightening was not discussed. Wrapping up its September policy meeting, the Reserve Bank of Australia (RBA) kept rates at a 12-year high of 4.35% and reiterated policy would have to be sufficiently restrictive to ensure inflation returned to target. However, The Australian dollar hit a nine-month high of $0.6869 but later retreated to $0.6820 on comments from Bullock( Central bank chief).
SARB Lowers Lending Rate to 8% as Inflation Falls Below 4.5%
The South African Reserve Bank (SARB) lowered its main lending rate to 8% from 8.25% in over 4 years, while headline inflation fell just below 4.5%, the middle of the central bank’s target range. The SARB had kept the repo rate unchanged at seven policy meetings in a row, before that it raised rates 10 times consecutively. The Apex bank reiterate that it thought progress bringing down inflation would be sustained, with inflation contained below the 4.5% midpoint of our range through to the end of the forecast horizon, in 2026.
Central Bank Raises Rate To 27.25% To Combat Rising Core Inflation
The Apex bank authorities hikes rate by 50bps to 27.25% in a bid to combat core inflation, making it the fourth rate hike for the year. This hawkish stance brings the cumulative rate hike for the year 850 basis points. The decision was driven by concerns about rising core inflation which peaked at 27.60% in August and a recent over 45% surged in fuel prices. The CBN emphasized the need for further interest rate hike due to negative real interest rate environment, where inflation exceeds monetary policy rate.
