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The findings highlight how the housing market, one of the biggest employers in a country of around 1.4 billion people, is likely to remain a stable contributor to growth in Asia's third-largest economy going forward. Relatively modest interest rate risk partly explains why all but one of 10 analysts who answered an additional question said the chances of a significant slowdown in the housing market over the coming year were low. Nine of 11 respondents said either an economic slowdown or rising rates would be the biggest challenge for first-time homebuyers. "While India ... has been quite resilient amidst global disturbances, the chances of a slowdown in India cannot be ruled out," said Anuj Puri, chairman of ANAROCK Property Consultants. (For other stories from the Reuters quarterly housing market polls:)Reporting by Milounee Purohit and Indradip Ghosh in Bengaluru Polling by Maneesh Kumar Editing by Hari Kishan, Ross Finley and Matthew LewisOur Standards: The Thomson Reuters Trust Principles.
The S&P Global India services purchasing managers' index (INPMIS=ECI) rose to 56.4 in November from 55.1 in October, beating the 55.4 estimate in a Reuters poll. It remained above the 50-mark separating growth from contraction for a 16th straight month, its longest stretch of expansion since October 2016. However, growth is widely expected to slow in the coming quarters as high-interest rates hamper economic activity. "Evidence of stubborn inflation may prompt further hikes to the policy rate at a time when global economic challenges could negatively impact on India's growth," added De Lima. Stronger expansion in services activity alongside better-than-expected manufacturing growth boosted the composite index to a three-month high of 56.7 in November from 55.5 in October.
Fourteen said the BoC would dial down its pace to 25 basis points. Of the large Canadian banks, Scotiabank, CIBC and National Bank expected a 50 basis point move with no further hikes afterward. RBC forecasts a 25 basis point hike and then a pause, while BMO expects 50 and then another 25 in early 2023. The Fed, by contrast, is expected to raise its federal funds rate to a minimum of 4.75%-5.00% early next year, with the risks around forecasts skewed toward a higher rate. "The latest BoC research on household vulnerability and flexible mortgage rates support the idea that the BoC terminal rate will end at least 50 basis points below the U.S. Federal Reserve," said Sebastien Lavoie, economist at Laurentian Bank.
Summary poll dataBENGALURU, Nov 30 (Reuters) - India's stock market, which rallied to a record high this week, is forecast to rise another 9% by the end of 2023 despite widespread expectations of a gradual slowdown in the economy, according to market experts polled by Reuters. The benchmark BSE Sensex Index (.BSESN) touched an all-time record high of 62,887.40 on Tuesday, surging more than 23% from this year's low of 50,921.22 hit on June 17. The Sensex was then forecast to rise to 68,000 by end-2023, for a total gain of around 9%. The Nifty 50 (.NSEI), which has also hit a record high, was forecast to gain 4.7% from Tuesday's close of 18,618.05 to 19,500 by mid-2023, and reach 20,500 by end-2023. But by most measures, the Indian market looks overbought.
Analysts cut their 12-month predictions compared with three months ago for most of the 17 global indexes covered in Reuters polls conducted between Nov. 14-29. The still mostly optimistic forecasts for stock markets to grind higher depend on mild recessions or none at all. Wall Street's benchmark S&P 500 index (.SPX) was predicted to end next year at 4,200, only about 6% higher than current levels. But the survey predicted relatively better performance for emerging market stock markets. Up only 4% year to date, Brazil's benchmark Bovespa stock index (.BVSP) was predicted to rally 13% by end-2023.
Analysts cut their 12-month predictions compared with three months ago for most of the 17 global indexes covered in Reuters polls conducted between Nov. 14-29. The still mostly optimistic forecasts for stock markets to grind higher depend on mild recessions or none at all. Wall Street's benchmark S&P 500 index (.SPX) was predicted to end next year at 4,200, only about 6% higher than current levels. But the survey predicted relatively better performance for emerging market stock markets. Up only 4% year to date, Brazil's benchmark Bovespa stock index (.BVSP) was predicted to rally 13% by end-2023.
Summary Data due at 1200 GMT on Wednesday, Nov. 30BENGALURU, Nov 28 (Reuters) - The Indian economy likely returned to a more normal 6.2% annual growth rate in July-September after double-digit expansion in the previous quarter, but weaker exports and investment will curb future activity, a Reuters poll showed. In April-June, Asia's third-largest economy showed explosive growth of 13.5% from a year earlier thanks mainly to the corresponding period in 2021 having been depressed by pandemic-control restrictions. The 6.2% annual growth forecast for latest quarter in a Nov. 22-28 Reuters poll of 43 economists was a tad lower than the RBI's 6.3% view. Meanwhile, the RBI raised its key policy interest rate to 5.9% from 4.0% in May and is widely expected to add another 60 basis points by the end of March. "Between December and February, the headwinds to growth may become more evident," said Deutsche Bank's Das.
House prices need to fall 25% from peak to trough in order to make them affordable, according to the median response to an additional question. (Reuters Poll - Canada housing market outlook: )That was in line with BoC Senior Deputy Governor Carolyn Rogers who said this week house prices needed to fall to restore balance to the housing market. A majority of property market experts said the risk of a crash in house prices was low. During the financial crisis, U.S. house prices crashed as much as around 40% but the Canadian market fell only 9% then. “In more ‘normal’ times before the pandemic, a 30% drop in house prices would be considered a crash.
House prices need to fall 25% from peak to trough in order to make them affordable, according to the median response to an additional question. Reuters Poll - Canada housing market outlookThat was in line with BoC Senior Deputy Governor Carolyn Rogers who said this week house prices needed to fall to restore balance to the housing market. A majority of property market experts said the risk of a crash in house prices was low. During the financial crisis, U.S. house prices crashed as much as around 40% but the Canadian market fell only 9% then. "In more 'normal' times before the pandemic, a 30% drop in house prices would be considered a crash.
U.S. consumer price inflation unexpectedly fell below 8% last month, bolstering already well-established market expectations the Fed would go for smaller rate hikes going forward after four consecutive 75-basis-point increases. Peak rate forecasts ranged between 4.25%-4.50% and 5.75%-6.00%. But 16 of 28 respondents to an additional question said the bigger risk was that rates would peak higher and later than they expect now, with another four saying higher and earlier. "While markets are focused on peak inflation, underlying inflation trends are persistent. This could force the Fed to keep raising the federal funds rate well into next year and beyond levels currently anticipated," said Philip Marey, senior U.S. strategist at Rabobank.
Register now for FREE unlimited access to Reuters.com RegisterResults in the poll are in line with interest rate futures pricing. A majority of economists in the Oct. 17-24 poll forecast another 50 basis point hike in December, taking the funds rate to 4.25%-4.50% by end-2022. The funds rate was expected to peak at 4.50%-4.75% or higher in Q1 2023, according to 49 of 80 economists. The Fed targets the personal consumption expenditures (PCE) index, but the survey suggests roughly half the current rate of inflation ought to be a turning point. CPI inflation was not expected to halve until Q2 2023, according to the poll, averaging 8.1%, 3.9% and 2.5% in 2022, 2023 and 2024, respectively.
The expected move at the BoC's next meeting would be the second consecutive reduction in the size of rate rises after a 100 basis point move in July and 75 basis points last month. Given more U.S. Federal Reserve rate rises are due in coming months, the BoC is likely to get the overnight rate, currently at 3.25%, even further above its 2-3% estimate of neutral, where the economy is neither stimulated nor restricted. So far the BoC has matched the 300 basis points of Fed rate rises since March. "We continue to assume the BoC will dial back the pace of rate hikes with a 50 basis point increase later this month," said Josh Nye, senior economist at RBC. Most economists forecast another slowdown in the size of rate rises to 25 basis points in December and January, taking the overnight rate to a peak of 4.25%.
But that is unlikely to push the Fed to switch its policy path anytime soon as Fed Chair Jerome Powell and other policymakers have remained blunt about the “pain” to come. The survey predicted that would be followed by 50 basis points in December to end the year at 4.25%-4.50%. The real policy mistake is not bringing inflation back down to 2%,” said Michael Gapen, chief U.S. economist at BofA Securities. All but two of 51 economists who replied to an additional question said the risks were skewed towards a higher terminal rate than they currently expected. “The only way the Fed can do that is to hike rates and keep policy restrictive until that is achieved.”(For other stories from the Reuters global economic poll:)
But that is unlikely to push the Fed to switch its policy path anytime soon as Fed Chair Jerome Powell and other policymakers have remained blunt about the “pain” to come. The survey predicted that would be followed by 50 basis points in December to end the year at 4.25%-4.50%. The real policy mistake is not bringing inflation back down to 2%,” said Michael Gapen, chief U.S. economist at BofA Securities. All but two of 51 economists who replied to an additional question said the risks were skewed towards a higher terminal rate than they currently expected. “The only way the Fed can do that is to hike rates and keep policy restrictive until that is achieved.”(For other stories from the Reuters global economic poll:)
The survey predicted that would be followed by 50 basis points in December to end the year at 4.25%-4.50%. All but two of 51 economists who replied to an additional question said the risks were skewed towards a higher terminal rate than they currently expected. "The short-run pain of recession would be better than the long-run pain of inflation expectations becoming unanchored." Also, unlike most major central banks, the Fed has backing from a strong currency and a relatively strong economy compared with its peers. "The only way the Fed can do that is to hike rates and keep policy restrictive until that is achieved."
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