Australia's Inflation Jump in May Raises Chances of RBA Rate Hike

Australia's Inflation Jump in May Raises Chances of RBA Rate Hike By Hardika Singh

Australia's monthly inflation came in well above expectations in May, adding to a list of indicators suggesting price pressures remain stubbornly high and triggering a flood of economist forecasts for a further interest-rate hike in August. Meanwhile, a measure that looks at how consumers feel about the U.S. economy right now edged up to a three-month high. And Citigroup Chief Executive Jane Fraser is pursuing everything, all at once, in her quest to change her firm's direction. Read on for this news and more.

Top News RBA on Track to Hike Further After May Inflation Spike

Australia's monthly consumer-price index indicator rose 4.0% in the 12 months to May, up from 3.6% in April, according to data released by the Australian Bureau of Statistics on Wednesday. Economists had expected the CPI indicator to lift to 3.8%. Bond yields jumped on the report as traders factored in a 50% probability that the Reserve Bank of Australia will tighten the policy screws further after its next board meeting in August.

More on the RBA:

Glynn's Take: Full-Blooded Extension of RBA's Tightening Cycle Now on the Cards RBA Assistant Governor Says Vigilance Needed to Upside Inflation Risks Pro Take: Small Firms Keep the Labor Market Rolling

The number of U.S. job openings, which rose sharply in 2021, has been slowly drifting down as the Federal Reserve's interest-rate increases cooled the hot labor market. That's good news for Fed Chair Jerome Powell, who has pointed to the falling number of openings as a sign the job market is coming back into balance.

But the cooldown masks an unusual divergence between the smallest private-sector firms and everybody else.

U.S. Economy Consumer Confidence Dips Again, With Americans Anxious About the Economy

Consumer confidence fell slightly in June and reflected the ongoing uncertainty among Americans about the future of the economy. The consumer-confidence index slipped to 100.4 this month from a revised 101.3 in May, the Conference Board said Tuesday.

Economists polled by The Wall Street Journal had forecast the index to register 100 in June. ( MarketWatch )

Financial Regulation The Clock Is Ticking on Jane Fraser's Citigroup Turnaround

Jane Fraser has hit the midpoint of what the chief executive has called a critical year in her plan to fix Citi. If she's successful, Citi might be the biggest turnaround story in recent Wall Street history.

But skeptics are everywhere, in the auditorium at the bank's recent investor conference and upstairs in the offices of its headquarters. She's made progress, but more is needed. And soon.

Two decades of half-measures, strategic missteps and chronic underinvestment have led Citi, once the world's largest financial-services company, to this: a network that operates in 160 countries but badly lags behind its U.S. rivals in profitability and stock performance.

Forward Guidance Wednesday (all times ET)

10 a.m.: New home sales

4:30 p.m.: Fed Board releases annual bank stress test results

Thursday

8:30 a.m.: Initial jobless claims

8:30 a.m.: 3rd estimate GDP

8:30 a.m.: Durable-goods orders

10 a.m.: Pending home sales

11 a.m.: Fed Bank of Kansas City Survey of Tenth District Manufacturing

3 p.m.: IMF annual check-up of the U.S. economy concluding discussions and press conference with Managing Director Kristalina Georgieva

Research Ample Reason Seen for Bank of Canada to Be Cautious

One strong inflation report for Canada on its own doesn't throw in the air what might be the appropriate path for the Bank of Canada but does give a clear signal the country isn't out of the woods on inflation risk yet, Scotiabank's Derek Holt says. Holt continues to view the BoC's decision to cut rates earlier this month as a policy error, prematurely reacting to four months of soft core inflation. And he sees a strong case for staying on hold in July, key to which will be the next inflation report ahead of that policy meeting. - Robb Stewart

Basis Points The Fed shouldn't be considering cutting interest rates given the continued risk that inflation remains sticky or even moves higher, Fed governor Michelle Bowman said Tuesday. "We are still not yet at the point where it is appropriate to lower the policy rate," Bowman said, in a speech in London. Reducing rates too soon or too quickly could cause inflation to flare, she warned. - MarketWatch The Biden administration wants to keep gas prices stable ahead of the election by encouraging oil to flow into global markets. The effort has run square into another priority : being tough on adversaries Russia, Iran and Venezuela. The policy has led to softer-than-expected sanctions on major oil producers, according to diplomats, former government officials and energy-industry players briefed by current officials. - Anna Hirtenstein, Joe Wallace, Ian Talley and Costas Paris Betting on the latest economic report could be as simple as choosing "yes" or "no." The trading platform Interactive Brokers Group is launching contracts that allow customers to wager on future events related to the economy and climate. The contracts let users take yes-or-no positions on questions such as whether the consumer-price index will rise above a certain number or if the global temperature will reach a specific level. - Hannah Miao The federal government sent nearly $200 billion to U.S. schools in the past few years to help address Covid-era learning challenges. Now the first studies are out showing what the money accomplished -and hinting at what could happen when it goes away this fall. - Matt Barnum and Rosie Ettenheim A surprise spike in Canadian inflation last month throws up a possible hurdle for the central bank to offer up back-to-back rate cuts and is a fresh reminder of the price pressures consumers still face. The consumer-price index rose 2.9% in May from a year earlier , Statistics Canada said Tuesday, faster than the 2.6% advance economists had forecast and after inflation eased to 2.7% in April. - Robb M. Stewart German consumers joined businesses in offering a more pessimistic outlook , reflecting more uncertainty about the country's economic rebound. The forward-looking consumer-climate index for Germany, published Wednesday by research group GfK and the Nuremberg Institute for Market Decisions, forecast confidence to slip to minus 21.8 in July from minus 21.0 this month. - Ed Frankl French consumers are feeling less confident about their prospects amid surprise elections, a fresh headwind for the country's fragile economic recovery. A measure of confidence compiled by France's statistics agency fell to 89 in June from 90 in May, according to a survey released Wednesday. - Joshua Kirby Morocco's central bank cut its key interest rate Tuesday , making it the first north African central bank to lower borrowing rates, a sign of confidence that inflation in the country has been tamed. - Enes Morina The very traits that make lithium game changing for energy storage can pose overpowering challenges should the batteries ever catch fire. Incidents involving lithium-battery fires are becoming more common around the world, raising safety concerns. - Jiyoung Sohn About Us

WSJ Pro Central Banking brings you central banking news, analysis and insights from WSJ's global team of reporters and editors. This newsletter was compiled by markets reporter Hardika Singh in New York. Send your tips, suggestions and feedback to [[e-mail]].

This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

06-26-24 0715ET