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MNI RBA WATCH: Bullock Stresses Data, Switches To Neutral Tone

(MNI) Melbourne

RBA Governor Bullock stresses the importance of data for the cash rate's future path.

LATEST INSIGHT

MNI Bank Indonesia Preview – March 2024: IDR Needs Fed To Ease First

Bank Indonesia (BI) is unanimously expected to leave rates at 6.0% at its March 20 meeting given the persistence of a high level of “global uncertainty” and little new domestic information since the last decision.

MNI BCB Preview - March 2024: Focus On Potential Guidance Adjustment

All surveyed analysts believe that the Copom will continue the easing cycle with another 50bp cut, bringing the Selic rate down to 10.75%.

Political Risk

Foreign Min Calls For Using Profits From Russian Sovereign Assets To Fund Ukraine's Defence

  • Foreign Minister Radoslaw Sikorski told reporters after yesterday's summit with his colleagues from across the EU that the bloc has made a "political decision" to use the proceeds on frozen Russian sovereign assets to support Ukraine. Sikorski said that in his view, the money should be used now to help Ukraine fund its military expenses and repel the aggression rather then in the future for post-war reconstruction.
  • Former MPC member Lukasz Hardt told money.pl that Poland had a problem with demand-driven inflation even before the COVID-19 pandemic and the NBP should have started communicating readiness to raise interest rates back then. Hardt was appointed to the MPC by President Andrzej Duda for 2016-2022.
  • Poland's top military commander Wieslaw Kukula said that "to put it bluntly, Russia is preparing for a conflict with NATO, with full awareness that it is a defensive alliance." He flagged ongoing work on improving defence capabilities and building the ability to maintain military potential and readiness amid long-term pressures.

BER Releases Inflation Expectations Survey, ANC & MK Party Face Off In Court

  • The Bureau for Economic Research (BER) will release its quarterly inflation expectations survey at the top of the hour. These reports are one of the factors monitored by the South African Reserve Bank (SARB), which wants to anchor inflation expectations at the +4.5% Y/Y mid-point of its inflation target range. The latest CPI report will cross the wires tomorrow morning.
  • The African National Congress (ANC) and the uMkhonto weSizwe (MK) Party will cross sabres in the Electoral Court today after the current governing party accused the political newcomers led by ex-President Jacob Zuma of failing to comply with due relevant procedures, arguing that its registration with the Independent Electoral Commission (IEC) should be nullified.
  • US Deputy Treasury Secretary Wally Adeyemo returned from a visit to South Africa saying that it has left him "more bullish" on the local economy. In his view, if the country's leaders "are able to reduce those headwinds [i.e. energy and logistics problems), which they have the capacity to do, there's real opportunity for them to grow beyond expectations."
  • Israel has asked the International Court of Justice (ICJ) to refuse South Africa's request for new measures to prevent famine in Gaza, describing it as an attempt to "relitigate what the court has already decided and to have the Court micromanage the conduct of hostilities in Gaza."

Support For Biden Weak Amongst Democrats

A survey from Ipsos, released over the weekend, has provided more evidence that the winner of the 2024 presidential election will likely be determined by which party can more successful motivate turnout of their base, rather than explicit support for either candidate.

  • The survey finds that, while support for both Biden and Trump is weak within their respective parties, only 30% of registered Democrat voters - who intend to vote for Biden - are doing so because they support Biden as a candidate. 57% of Democrat voters intend to cast their ballot as a vote against Trump.
  • Ipsos notes: "2024 isn’t going to come down to Trump or Biden convincing Americans to change sides – it’s more a matter of convincing their existing base to actually vote."
  • Betting markets and pollsters continue to see Trump as the slight favourite. According to Smarkets, Trump has an implied probability of 48% of winning, compared to 35% for Biden.
  • RealClearPolitics' presidential election poll tracker currently shows Trump with a 1.7% advantage over Biden (47.2 - 45.5).

Figure 1: Reasons for Voter Support for Biden and Trump

Source: Ipsos

Voters Increasingly Concerned About Iran

A new survey from Gallup has found that whilst China and Russia are still named by most US voters as the US’ “greatest enemy,” “references to Iran have grown by seven points.”

  • Iran’s rise on the list reflects months of news coverage of Israel’s war with Hamas which has renewed focus on Iran’s role in financing a network of militant groups in the Middle East, including the Houthis in Yemen who have engaged in regular attacks on commercial shipping in the Red Sea.
  • Gallup notes: “China No. 1 Enemy for Republicans and Independents, Russia for Democrats. China is among the top two countries cited as the United States’ greatest enemy by all three partisan groups. It ranks first among Republicans (67%) and independents (40%) but is a distant second to Russia among Democrats (18%). Russia ranks second among independents and nearly ties for second with Iran among Republicans. Independents (11%) are far more likely than Republicans (1%) or Democrats (2%) to name the United States itself, putting the U.S. third on their list.”
  • The report also suggests that, along with softer support for Ukraine, US voters now consider the risk from Russia markedly lower than during 2023 - a voter perception which may impact Congress' ability to legislate new aid for Ukraine.

Figure 1: Americans' Perceptions of the United States' Greatest Enemy

Source: Gallup

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