KEY THEMES
U.S. equities ended yesterday’s session on a flattish note, after being down during the day. However, U.S. indices were able to recover their intraday losses after the Fed said that while the overall intension is to hike interest rate to counter inflation, the decisions of hiking will be made on a meeting-by-meeting basis. Meanwhile, Asian shares were mostly higher today as investors weighed geopolitical tensions vs. a slightly less than expected hawkish Fed. Moreover, Brent oil prices recovered some of its losses recorded in the past two trading sessions after Russian-backed rebels in eastern Ukraine accused Kyiv government forces on Thursday of shelling their territory with mortars.
Elsewhere, yesterday we published our MACROView note, summarizing the event of the CBE conference call, which took place last Thursday. In short our takeaways are:
o The CBE’s projection of growth comes above our expectations, as we see the rapid growth rate recorded in H1 FY22 was driven by the low base effect; thus, it will not be sustainable.
o In our view, the situation of NFAs at commercial banks cannot be unsustainable, and it will take its toll on the country access to external funding
o From the deputy’s narrative about the CBE’s monetary policy, we believe that the monetary policy will remain in its current stance as long as possible
o We also expect inflation expectations to remain well-anchored around the CBE’s target