Barring EUR (lower) and GBP (higher), other global currencies ended flat
Jahnavi Prabhakar,
Economist,
Bank of Baroda
Mumbai, January 19, 2024: Expectations of early rate cuts took a back seat as data sets (higher retail sales and sharp drop in Unemployment benefits) continue to signal strength in the US economy. In line with Fed, even ECB in its minutes had highlighted that it is premature to discuss policy easing. Separately, Japan’s inflation cooled off to 2.6% (lowest level since Jun’22) from 2.8% in Nov’23 with core inflation down to 2.3%. This data print comes ahead of BoJ’s policy meet which supports the Bank’s decision to wait before ending the negative rates. On domestic front, RBI’s monthly bulletin noted ‘potential output is picking up and actual output is running above it’ and this gap is moderate. Furthermore, government‘s push towards capex has started to crowd in private investment. On inflation, it noted Dec’23 print was due to unfavourable base and core inflation has moderated (lowest in more than 4-years.
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