Hilfe Daily Briefing

Australia: Rise in Q2 Headline Inflation to 4% and Labour Market Data Make Another 25-Basis Point Rate Rise Almost Certain in August

The expected Australian interest rate profile has been changing and becoming tighter in recent months, most notably in July. This has been happening worldwide as a result of the continued surge in oil and commodity prices and the robust global economy including most of the key economic blocs. In Australia, economic data over the last two weeks have made another rate hike a near certainty. Cash rates are expected to increase by 25 basis points to 6.0% in August, with further rises distinctly p...

Estonia: Economy Continues to Grow at Breakneck Pace, Lifting Inflation and Trade Deficit; President Ruutel May Be Re-Elected for Second Five-Year Term

Q1 has brought a further acceleration in GDP growth to 11.7% from 9.8% in 2005. Domestic demand is the main driving force, with consumer spending growing 14.3% and fixed investment nor far behind with a 12.8% gain. Employment grew by an exceptional 6.8%. Strong growth appears to continue in Q2, with industrial production and new orders were 8.5% up on the year in April-May and the consumer spending boom may even have gathered pace, with April-May retail sales volumes up by 19%. The unemployme...

South Africa: Producer Prices Surge 3% in June Alone, Making Rate Rise Next Week Certain, Possibly 100 Basis Points; Cpix Inflation More Subdued, but Still Heading Above 6% Next Year

A hefty rise in producer prices in June had been expected on the back of higher domestic fuel prices, which rose 6% in the month, but in the event the 3.0% monthly rise was much worse than expected. This was the biggest monthly rise since January 2002 and the highest annual rate since January 2003, triggering fears that pipeline inflation pressures are much higher than anticipated. CPIX inflation was more subdued in June, posting a 0.5% rise on the month, but base effects lifted the annual ra...

Brazil: Copom Minutes Suggest Cautious Stance Ahead If Volatility Persists in International Sphere; June and H1 Primary Surplus Fair; Measures for Exporters Outlined

In the minutes of its July meeting, the monetary policy committee (Copom) sounds a note of caution as regards future rate cuts in light of uncertainties in the international sphere that could have an adverse impact on its inflation outlook and management. This is prudent in the current global environment. But with inflation in retreat and projected to come below the 4.5% annual target for 2006, it seems probable that there will be a 25-basis point rate cut at the August meeting. The consolida...

Italy: Weak External Demand Undermines Business Confidence, World Cup Boosts Morale in Short Term; Reform Only Avenue to Growth; Budget Goes Ahead

The July business confidence indicator released this week surprised with a fall due largely to a worsening production outlook, although the optimism of previous months had probably been over-done - indeed, the ISAE release contains downward revisions of most readings since April. The revised figures are easier to reconcile with hard data showing Q2 industrial output lower than in Q1. A revision of the June sub-index concerning the production outlook and the disappointing July result confirm t...

Malaysia: Ministers Still See 6.0% Gdp Growth in 2006 but Other Forecasts 5.5% or Lower, Central Bank Mulls Rates Options for H2 but Inflation Remains Tame for Now

Top finance ministry officials have again been talking up the prospects of hitting Prime Minster Abdullah Ahmad Badawi's target of 6% GDP growth this year. Second finance minister Nor Mohamed accepted that there might be scope for reviewing the forecast at the time of the September budget. Before then the government is likely to confirm new infrastructure spending, though little of that is likely to take effect this year. It will also be hoping for further strong export figures like those in ...