Overnight the Reserve Bank of New Zealand held interest rates unchanged at 1.75% for the seventh straight meeting, adding in its interest rate statement that its easing policy will last for a while as there is still some uncertainty and monetary policy may be adjusted accordingly.
The central bank noted that there may be a need to raise interest rates sooner than expected, with inflation expectations revised upwards to reach midpoint of the target range set by the bank between 1-3% by the second quarter of 2018, and as a result the New Zealand dollar rose slightly following the decision.
The revision of inflation expectations may be due to the decline of the New Zealand dollar since the last meeting in August, and with the continuation of this decline will help inflation on the one hand and boost economic growth on the other. Now the expectations are that the bank will raise interest rates in the second quarter of 2019 rather than the third quarter.
In China, inflation data showed better-than-expected figures, with consumer prices accelerating and rising by 1.9% in October versus expectations of a 1.8% increase after rising by 1.6% in September.
Also, PPI beat expectations and rose by 6.9% in October after expectations for a slowdown to 6.6% from the September reading of 6.9%.
During the first three quarters of the year, China's economy grew stronger than expected with gross domestic product (GDP) rising by 6.9% due to strong government spending and an unexpected surge in exports, which was clearly reflected in the manufacturing and industrial sectors.
We will not go far from China, where the White House unveiled a large number of agreements with China reaching a total of 250 billion dollars as Trump sought to address the trade imbalance between the two countries.
The Chinese Minister of Commerce described these agreements as a miracle. On the other hand, American companies have expressed many concerns including unrestricted access to Chinese markets and the growing presence of the ruling Communist Party within foreign companies.
The European Commission announced its outlook for the Eurozone economy, which showed optimism, saying that the economy is on track to achieve the fastest pace of growth over the last 10 years, where GDP is expected to grow by 2.2% better than the previous forecast of 1.7%.
