The People’s Bank of China set their one- and five-year loan prime rates today. Despite there not having been any change to the Medium-term Lending Facility (MLF) rate this month the Bank cut the 5-year from 4.6% to 4.45%, leaving the 1-year unchanged at 3.7%. The 5-year LPR is the reference rate used for home mortgages in China. Lowering it is a policy move from the PBOC to assist in lowering home-loan borrowing costs and therefore prompt more economic activity. Lockdowns in China have strained economic growth in the country.

Also in central bank new s, President of the Federal Reserve Bank of Minneapolis Neel Kashkari spoke at the end of the US day. He admitted that because household finances are in some cases in better shape than before the pandemic, the Fed may end up needing to raise rates further to bring inflation under control. There is more in the bullets above.

From Japan we had April inflation data, with significant moves higher for CPI, most notably for the core-core measure, which is the closest to US core CPI:

National CPI excluding Food, Energy 0.8% y/y

  • expected -0.9%, prior was -0.7%

There is more in the bullets above.

Major FX moves here were not too large but showed some US dollar strength pretty much across the board. USD/JPY is back above 128.00. EUR, AUD, GBP, NZD are all a little lower against the USD while USD/CAD is little net changed at all.

usdyen 20 May 2022 wrap