One quirk of rising global inflation fears, however, was a 3% slide in oil on Wednesday, as traders bet that high consumer prices will sap growth and demand. A lower oil price, of course, is disinflationary, and base effects right now also mean that Brent crude is 17% cheaper today than it was a year ago.
Light at the end of the inflation tunnel? Minutes from the Fed's Jan. 31 to Feb. 1 policy meeting showed that most rate-setters voted to slow the pace of tightening. But in an interview with CNBC on Wednesday, St. Louis Fed chief James Bullard reiterated his view that rates must be raised to 5.25% to 5.50% to get inflation down this year. Central banks in Asia and elsewhere are getting caught in the Fed's - and the dollar's - slipstream.
The Bank of Korea is expected to leave interest rates on hold at 3.50% on Thursday, and leave it there for the rest of the year, according to a Reuters poll. Economists surveyed reckon the BOK's longest tightening cycle on record is over despite still high inflation. However, Korean policymakers may be forced to talk tough and say they stand ready to raise rates again. Anything other than that could lead the won to slip further from its two-month low against the dollar, which would only intensify domestic inflationary pressures and perhaps force the central bank to act again later in the year. Consumer price inflation in January was 5.20%, well over double the central bank's 2.00% target and unlikely to return there for at least another year, economists reckon. Meanwhile, inflation figures from Hong Kong and Singapore will also be released on Thursday, as well as Thai trade and Taiwanese industrial production data. Here are three key developments that could provide more direction to markets on Thursday: - South Korea interest rate decision - Fed's Bostic and Daly speak - U.S. Q4 GDP (second estimate) <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ South Korean economy & markets Brent oil - year-on-year change ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (By Jamie McGeever; Editing by Josie Kao)
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