Bank of Japan policy makers were likely encouraged by the 5.28% average wage increase secured by the country’s largest union at the end of last week. This is the biggest wage increase for the union in more than 30 years. Policy makers and the Governor have stressed that wage growth is a key consideration in their inflation outlook. The BoJ is meeting tomorrow but most economists expect rates to remain on hold, with an increase in the policy rate more likely in April. Other key central banks are meeting this week including Australia (hold), Brazil (50bp cut), UK (hold), Turkey (hold) and of course the Federal Reserve, where rates are expected to remain unchanged; the market focus will be on the Fed’s new economic projections and dot plot.
US economic data was mixed on Friday. The preliminary University of Michigan consumer sentiment index for March slipped slightly from February and was a little lower than expected at 76.5. The current conditions index was unchanged from February but the expectations component declined to 74.6 from 75.2 last month, probably due to higher petrol prices. Both short and long-term inflation expectations were unchanged at 3.0% and 2.9% respectively, with the latter still higher than the 10-year average before the pandemic.
US industrial production rose 0.1% m/m in February, a better-than-expected outcome although the January reading was revised lower. The decline in manufacturing output at the start of the year was attributed to disruptions on account of bad weather, and that partially reversed in February but output remains lower than at the end of 2023. The Empire State manufacturing index also fell sharply in March, reflecting lower new orders, shipments, and employment in New York state this month. The series is volatile.
Dubai property developers Nakheel and Meydan will be incorporated into Dubai Holding, according to an official statement over the weekend. The purpose of the consolidation is to create a larger, more efficient and more competitive entity that will support Dubai’s growth and diversification agenda, D33.
Today’s Economic Data and Events
14:00 Eurozone CPI (Feb, final) forecast 0.6% m/m and 2.6% y/y
14:00 Eurozone core CPI (Feb, final) forecast 3.1% y/y
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