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[Quick Facts]

1. Villeroy says the ECB won't raise rates again, excluding surprises.

2. Turkey's central bank hikes interest rate by 500 basis points to 40%.

3. Japan cut its economic outlook for the first time in 10 months.

4. OPEC+ is moving closer to a compromise with African oil producers on production levels for 2024.

5. Minutes show the ECB is open to another rate hike.

[News Details]

Villeroy says the ECB won't raise rates again, excluding surprises

"Excluding surprises, I don't think the ECB will raise rates again," said François Villeroy de Galhau, Governor of the Bank of France and a member of the European Central Bank (ECB) Governing Council, in a speech on Nov. 23. "A gradual reduction in rates will come one day, but we're not there yet," he said. He added that the ECB is committed to bringing inflation toward its 2% target by 2025.

Turkey's central bank hikes interest rate by 500 basis points to 40%

To fight inflation, Turkey's central bank raised its benchmark one-week repo rate by another 500 basis points to 40% on Thursday, a hike that was twice as high as the market expected. Turkey's central bank expects inflation to reach 65% by the end of this year and fall to 36% by the end of 2024.

This latest move marks that Turkey's central bank, led by Governor Hafize Gaye Erkan, has raised borrowing costs by 30 percentage points since Turkish President Recep Tayyip Erdogan was re-elected in May. With headline interest rates finally above the level of one-year inflation expectations, the Monetary Policy Committee said it would slow the pace of tightening from now on.

Turkey is struggling to reverse several years of soaring inflation and sharp currency depreciation - caused in large part by the Ankara government's stubbornly loose monetary policy.

Japan cut its economic outlook for the first time in 10 months

The Japanese government cut its economic outlook for the first time in 10 months on Nov. 22, local time, as weak domestic demand weighed on the economy.

In its latest monthly report, the Japanese government said that the economy "recently appears to be pausing in part" despite recovery at a moderate pace. The government also lowered its expectations for capital investment, noting in the report that "business investment seems to be pausing in its recovery," citing flat machinery orders and slowing global economic growth.

Meanwhile, real wages in Japan continued to fall year-on-year. Japan's Ministry of Health, Labor, and Welfare released preliminary statistics showing that after deducting price increases, Japan's real wage income in September fell 2.4% year-on-year for the 18th consecutive month.

Although Japan's nominal wages are currently showing growth momentum, it is weaker than price increases. Continued decline in real wages will inhibit household purchasing power, affecting consumption and slowing Japan's economic recovery.

OPEC+ is moving closer to a compromise with African oil producers on production levels for 2024

The OPEC+ meeting to be held on Nov. 30 has been changed to an online meeting. Nigerian delegates said they were unaware of divisions within OPEC+ and were satisfied with the results of an investigation into the country's production plans, while Angola said it did not intend to withdraw from OPEC+. In addition, sources said that OPEC+ is close to a compromise with African oil producers on production levels for 2024.

Minutes show the ECB is open to another rate hike

The European Central Bank released minutes of its meeting on Thursday, Nov. 23, local time. The minutes showed that policymakers agreed that they should raise interest rates again if necessary.

Participants noted that the Governing Council must be persistent and vigilant. Perseverance is key to bringing inflation down to 2% in the medium term, while vigilance means that the Governing Council must avoid overconfidence and complacency given that inflation may face new challenges before returning to the target level, despite it must assert the effectiveness of its measures and recognize the progress that has been made.

Despite weaker-than-expected economic growth, partly because downside risks had materialized, headline inflation has developed as expected. Most participants felt that they had taken sufficient measures to contain inflation in the coming years. However, some policymakers noted that inflation remained high and that longer-term inflation projections appeared to remain above the ECB Governing Council's target.

Turning to the assessment of monetary policy transmission, policymakers generally agreed that transmission had been stronger than expected in September. They emphasized that a large part of interest rate transmission remains unfinished and could dampen economic activity and inflation over the forecast period.

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