Interest rates on move up again

<p>Kia ora,</p><p>Welcome to Thursday's Economy Watch where we follow the economic events and trends that affect New Zealand.</p><p>I'm David Chaston and this is the International edition from Interest.co.nz.</p><p>Today we lead with news interest rates are on the move up again.</p><p>The closely-watched <a href="https://www.federalreserve.gov/newsevents/pressreleases/monetary20210616a.htm" target="_blank"><strong>US Fed decision</strong></a> held all settings unchanged but there was change in their forward view. Overall, they now expect expect two rate increases by the end of 2023, an earlier date than previously indicated. Thirteen of 18 officials favoured at least one rate increase by the end of 2023, versus seven in March. Eleven officials saw at least two hikes by the end of that year. As telling, seven of them saw a move as early as 2022, up from four.</p><p>The US dollar rose on the release of these results. The UST 10yr bond yield also rose.</p><p>US <a href="https://www.census.gov/construction/nrc/pdf/newresconst.pdf" target="_blank"><strong>housing starts stayed high in May</strong></a> and the April data was revised up. Building permits as an indication of the future pipeline, also stayed high. But they <a href="https://www.nar.realtor/newsroom/once-in-a-generation-response-needed-to-address-housing-supply-crisis" target="_blank"><strong>now say</strong></a> much more housing will be required "after decades of underinvestment". And that means a huge surge in the demand for timber.</p><p>In Canada, their <a href="https://www150.statcan.gc.ca/n1/daily-quotidien/210616/dq210616a-eng.htm?HPA=1" target="_blank"><strong>May CPI inflation</strong></a> level came in higher than expected and is now running at 3.6% pa. That is its highest in ten years. Every component (and not just oil) contributed to this rise.</p><p>The growth of China's <a href="http://www.stats.gov.cn/tjsj/zxfb/202106/t20210616_1818428.html" target="_blank"><strong>industrial production</strong></a> is still high but is tailing off now and a