Morning News & Views - Asia: A Summary of Select Global Markets Research

Research evidence excerpt

Morning News & Views - Asia: A Summary of Select Global Markets Research

erns over AI-boom induced inflationary pressures on the margin. We continue to expect core

PCE inflation to gradually moderate in H2 this year, supporting our expectation for the Fed to remain on hold. PPI data point to

0.2% m-o-m core PCE inflation in June. PCE-relevant PPI data were mixed, with financial service inflation softer than we had

expected, while healthcare and transportation service prices surprised to the upside.

Policy Watch - July BoC Recap

Ruchir Sharma - NSI

The BoC kept its policy rate steady at 2.25%, as widelyexpected. Governor Macklem did not signal the direction of the next move.

However, the Council reinstatedlanguage that the current policy rate remains appropriate to sustain the recovery and return

inflation to 2%, while dropping its earlier discussion of conditions that could warrant cuts or hikes. The statement and forecasts

were modestly hawkish than we expected in terms of growth outlook. Although the 2026 forecast was lowered due to the Q1 GDP

contraction, the BoC judged that growth is broadening and raised its 2027–28 forecasts. Overall, the updated outlook and Macklem’

s press conference suggest the Council remains somewhat tilted towards supporting growth while staying attentive to inflation risks.

This supports our call for the BoC to remain on hold through 2026, with rates near the lower end of the BoC’s neutral range

estimate.

HONG KONG / CHINA

China consumer - Retail sales sentiment marginally recovered in June

Jizhou Dong, CFA - NIHK / Summer Qian - NIHK

China’s total social retail sales increased by 1.0% y-y in June, slightly better than in May

Total social retail sales marginally improvedin June.