Across the Atlantic, U.K. inflation maintained at 3% in January as the cost of attractions such as zoos and gardens countered lower auto fuel and food prices. Consumer prices fell 0.5% from December, similar to statistics from a year earlier, and annual core inflation accelerated to 2.7% from 2.5%. The Bank of England (BOE) expects inflation to subside in 2018 as the effect of the sterling’s 2016 depreciation fades. Markets are pricing in about 3 interest rate hikes over the next 3 years from the BOE, with the first expected as early as May.
In Asia, the People’s Bank of China reported that the country faces “slight rising pressure” on inflation, which warrants the central bank’s close watch. Ongoing efforts to cut excessive industrial capacity and clean up the environment, coupled with resurgent commodity prices, are said to contribute to potential price increases. Although China’s consumer inflation gained steadily throughout 2017, it slowed in January and is expected to gain 2.3% in 2018, still well below the government’s target of 3%, whereas factory-gate inflation is expected to slow to 3.3% in 2018 from 6.3% last year.
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