What's up down under?
- Following higher than expected New Zealand inflation, Australian consumer prices also came in stronger than expected. This owes something to the weaker currency, but there was also upside surprise in the non-traded sector. The data would seem to rule out any further monetary easing.
- It would be difficult to read through from Antipodean inflation into global inflation at this stage. Around 70% of inflation in an advanced economy is due to domestic labour costs, and spare capacity in labour markets should preclude inflation pressures elsewhere in 2014.
- The Bank of Japan left policy unchanged as was of course expected. GDP estimate were revised down a fraction for this year (and do not meet the government's target), and CPI inflation excluding the impact of the consumption tax (but including the impact of the weaker yen) is still forecast sub 2%.
- UK labour market data is scheduled, and relevant to the relative strength of the UK economy and to the quality of the UK economic recovery). Consumer spending has been supported by record levels of employment hitherto.
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