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Russia's central bank maintained its key interest rate at 21.0%, with no significant changes to macroeconomic projections, despite some interpretations of a dovish shift. The bank remains cautious about inflation risks, recalling past premature rate pauses that led to inflationary pressures. Optimism surrounding potential peace in the region has temporarily strengthened the rouble, but forecasts suggest gradual increases in USD-RUB and EUR-RUB rates over the coming year.
US consumer inflation expectations have surged for the second consecutive month, raising concerns about potential inflationary pressures. Fed officials face a dilemma: if they lower interest rates in response to rising unemployment, high inflation expectations could exacerbate the situation. While market-based long-term inflation expectations have slightly declined, consumer sentiment suggests a growing belief that inflation may not be effectively controlled.
The US faces potential empty shelves due to prohibitive tariffs on Chinese imports, as the current administration's approach raises doubts about the dollar's safe-haven status. Analysts warn that a severe supply shock could occur if neither the US nor China concedes in their trade conflict, negatively impacting the US economy while benefiting others globally.
Gold prices have temporarily dipped below $3,300 per troy ounce following President Trump's reversal on tariffs and Fed Chair Powell's position. Despite this, demand for gold as a safe haven is expected to persist, especially with potential interest rate cuts on the horizon. Economic data from the US will be closely monitored, as signs of a slowdown could drive gold prices higher.
Kazakhstan's commitment to OPEC+ is under scrutiny as it consistently exceeds its production limits, raising concerns among other member countries. While the energy minister asserts cooperation, ongoing overproduction may provoke retaliatory increases from other nations, potentially destabilizing oil prices. The situation prompts questions about the benefits of Kazakhstan's OPEC+ membership, echoing past departures of Angola and Qatar without adverse effects on the organization.
Gold prices surged in the first quarter, driven by strong ETF inflows of 226 tons, as reported by Commerzbank. However, jewellery demand has declined due to rising prices, particularly affecting imports in India and China. The upcoming World Gold Council report is expected to highlight these trends, although central bank purchases may not reach previous high levels.
Brent oil prices have surged above $68 per barrel, the highest since early April, driven by hopes of easing US-China trade tensions and new US sanctions on Iran. OPEC+ is considering a significant production increase for June, which could negatively impact prices if realized. The market is closely watching upcoming production surveys for April, as any substantial rise could influence oil price dynamics.
China's official PMIs will be released next week, marking the first major data since the significant increase in US tariffs. While anecdotal evidence suggests factory closures and reduced hours, high-frequency data indicates robust steel production and stable car sales. The housing market, however, continues to struggle, showing a significant slowdown. The CNY remains stable against the USD, with potential for slight declines if political developments improve regarding tariffs.
Tokyo's inflation rate surged to 3.5% in April, surpassing analyst expectations, driven by a significant rise in rice prices, which are now 94% higher than last year. The previous year's reduction in school fees had a one-off effect that has now dissipated, leading to a rise in the core inflation rate from 1.1% to 2.0%. Despite this improved inflation outlook, uncertainties remain, particularly due to recent US tariff increases, suggesting that the Bank of Japan may delay interest rate hikes until July.
Russia's central bank (CBR) is expected to maintain its key interest rate at 21.0% during today's meeting, with analysts anticipating a dovish tone from Governor Elvira Nabiullina regarding future rate cuts. Inflation has eased, with recent data showing a decline to 7.1%, down from 14.1% at the end of last year, while economic indicators suggest a slowdown in growth. Despite optimism surrounding the rouble due to potential peace talks, forecasts indicate a gradual upward drift in USD/RUB and EUR/RUB exchange rates over the coming year.
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