Interest Rate Decisions from Argentina and India, Warnings from the BOE, and Morgan's Insights on China: What's Happening in Global Markets?
Central bank interest rates and economic policies worldwide are closely monitored topics in the markets. Recent interest rate decisions from countries such as Argentina, India, and Japan provide significant clues for economists and investors, while expectations regarding the economies of Russia, the UK, and China also shape the course of global economic dynamics.
Argentina and India's interest rate decisions The Central Bank of Argentina has decreased the benchmark interest rate from 35% to 32%. This reduction marks the eighth rate cut during Javier Milei's term, which began in December 2023. The bank explained its decision based on the "consolidation of expectations for lower inflation rates." Meanwhile, the Central Bank of India maintained the policy rate at 6.50%, aligning with market expectations.
Rising interest rate pressure in Japan In Japan, record increases in base wages indicate the beginning of a positive cycle in the economy. The Japanese Ministry of Labor reported a 2.8% rise in base wages for full-time workers. This development marks the highest increase rate since 1994, leading to increased pressure on the country's central bank to raise interest rates.
Russia's Central Bank and economic expectations The Eurasian Development Bank forecasts that the Central Bank of Russia may raise its interest rate from 21% to 23% in December. According to the bank's macroeconomic forecast for the 2025-2027 period, a tight monetary policy is needed due to high inflation risks and rising budget expenditures. EDB anticipates that a rate cut cycle may begin in the second half of 2025, provided there are no new economic shocks.
Another development regarding Russia's economic policies was Deputy Prime Minister Alexander Novak's prediction that global oil demand would increase by one million barrels per day in 2025. Novak stated that current oil prices reflect market balances and that they work with OPEC+ countries to ensure stability in the global oil market. It was announced that the next monitoring meeting of OPEC+ countries would be held on February 3, 2025.
Recent economic developments in the UK and China Megan Greene, a member of the Bank of England's Monetary Policy Committee, warned that mortgage interest rates would negatively impact consumer spending. Greene noted that, unlike consumer behaviors in the US, recovery in spending in the UK and Continental Europe would take time. Meanwhile, the Confederation of British Industry revised its growth forecast for 2025 from 1.9% to 1.6% following the new government's budget measures.
In China, Morgan Stanley (MS) analysts indicated that the Beijing government's efforts to reverse the deflationary trend in the economy have been insufficient. Laura Wang, chief strategist for Chinese equities, stated that due to persistently low corporate earnings over the quarters, they expect similar performance in the next two quarters. She emphasized that more meaningful incentive policies would be needed for the economy to revive.