Macroeconomic Forecast Hong Kong

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We have bumped up our average consumer price inflation forecast for Hong Kong for 2010 to 2.5% from 1.8% previously, but we are comfortable sticking to our below-consensus end-year target of 1.8%. CPI came in at 1.3% y-o-y in December, and while base effects should mean annual CPI my rise over the coming months, falling money supply growth and declining asset prices will see price pressures decline in H210.