Filtered by Topic: Monetary Policy Use setting Monetary Policy
Fed’s focus will turn to policy loosening before long The Fed’s new policy statement provides the clearest hint yet that the 25bp rate hike today is likely to be the last. We expect economic weakness and a sharper-than-expected drop back in core inflation …
3rd May 2023
CNB still on pause, but cuts not far away The Czech National Bank (CNB) left its main policy rate on hold again today, at 7.00%, but we think that interest rate cuts are not far away, with policymakers likely to kickstart the loosening cycle in September. …
Surprise hike, but no more tightening in 2023 Malaysia’s central bank (BNM) unexpectedly raised its main policy rate today by 25bps (to 3.0%), citing the resilient economy as grounds to “further normalise the degree of monetary accommodation”. However, …
Tight labour market raises the risk of outsized RBNZ hike The strength of New Zealand’s labour market last quarter poses upside risks to our view that the RBNZ will lift rates by 25bp later this month. The 0.8% q/q rise in employment in Q1 was stronger …
Tightening cycle over but rates will only be lowered in Q2 2024 The Reserve Bank of Australia retained its tightening bias when it lifted the cash rate by 25bp at today’s meeting, but we suspect that it won’t raise interest rates any further over the …
2nd May 2023
Inflation figures suggest 50bp ECB hike next week still likely National inflation figures released today suggest that euro-zone headline and core inflation edged up in April. That adds to the reasons for the ECB to opt for a 50bp hike at its meeting next …
28th April 2023
CBR keeps rates on hold, hike still on the table Russia’s central bank maintained its hawkish tone today as it left interest rates unchanged at 7.50% and continued to emphasise pro-inflation risks in the economy. So far these risks do not seem to be …
Yield Curve Control here to stay for now The B ank of Japan predicted that inflation will fall well below its 2% target in FY2025 when it kept policy settings unchanged today. And while it pledged to conduct a review into the Bank’s policy measures, the …
Calm before the storm? Turkey’s central bank (CBRT) left its key policy rate on hold at 8.50% again today, but all eyes are now firmly on next month’s election for a possible change in the stance of monetary policy. Polls are close, but an opposition …
27th April 2023
Inflation will only return to target in H2 2024 While inflation is moderating slightly faster than the RBA had anticipated, price gains remain far too strong to be consistent with the Bank’s 2-3% inflation and we’re sticking to our forecast of a final …
26th April 2023
MNB kickstarts loosening cycle The Hungarian central bank (MNB) slashed the upper end of its interest rate corridor today by 450bp, to 20.50%, and while this move alone won’t affect monetary conditions, it is likely to be followed by cuts to the effective …
25th April 2023
Price pressures show signs of easing Amid ongoing concerns that non-tradables inflation will settle at an uncomfortably high level, we still expect the RBNZ to push ahead with one final 25bp rate hike in May. The 1.2% rise in consumer prices last quarter …
20th April 2023
On hold for the rest of the year Bank Indonesia (BI) kept its main policy rate unchanged today (at 5.75%), and appeared to signal that further rate increases this year were unlikely. With inflation falling and growth easing, we expect interest rates to be …
18th April 2023
Inflation concerns will prompt a final 25bp rate hike in May The minutes of the RBA’s April meeting reinforce our view that the decision to leave rates on hold did not signal an end to the Bank’s tightening cycle. Indeed, the Board did discuss the case …
MAS keeps policy unchanged while GDP contracts The Monetary Authority of Singapore (MAS) kept monetary policy on hold today and with the economy set to struggle and inflation likely to fall sharply over the coming quarters we expect today’s decision to …
14th April 2023
The Bank of Canada delivered mixed messages today, noting that it is more confident that inflation will decline in the next few months but less confident that inflation will return to 2% as quickly as it previously anticipated. Nonetheless, with the …
12th April 2023
On hold again, first cut likely in August The Bank of Korea left its policy rate unchanged (3.5%) for a second consecutive meeting today, and we don’t think it will be long before rate cuts come onto the agenda. With the economy struggling badly and …
11th April 2023
RBI unlikely to tighten any further The RBI’s decision to keep the repo rate on hold (at 6.50%) today comes as a surprise and belies the central bank’s recent hawkish communications. The door remains ajar for hikes in the future but with headline …
6th April 2023
Rates on hold, but cutting by year end Poland’s central bank (NBP) left its main policy rate on hold as expected again today, at 6.75%, and policymakers look set to keep interest rates at this level at the upcoming meetings. But with inflation likely to …
5th April 2023
Hawkish RBNZ will push New Zealand into recession The RBNZ’s decision to lift its official cash rate by 50bp, to 5.25%, came as an upside surprise to all. 22 out of 24 analysts polled by Reuters, including ourselves, had predicted a 25bp rate hike. The …
Rates on hold, policy to stay tight throughout 2023 Romania’s central bank (NBR) left its policy rate on hold as expected today, at 7.00%, and we think that it will only start to cut interest rates in early 2024, which is later than its regional peers. …
4th April 2023
RBA will deliver one final rate hike in May The RBA’s decision to keep rates on hold does not signal an end to its tightening cycle. The RBA’s decision to pause was correctly predicted by 21 out of 37 analysts polled by Reuters, including ourselves. The …
Note: Join our 6th April online briefing all about the risks to EMs from banking turmoil. Register now . CBE delivers, but more tightening still needed The Central Bank of Egypt (CBE) announced that it raised interest rates by 200bp, taking the overnight …
30th March 2023
Hawkish CNB will turn to cuts in Q3 The Czech National Bank (CNB) left its policy rate on hold today, at 7.00%, for a sixth meeting in a row, and we now think that rate cuts are unlikely until the second half of this year. The decision to leave rates …
29th March 2023
Further tightening unlikely The Bank of Thailand (BoT) raised its main policy rate today by 25bps, to 1.75%. While most analysts expect at least one more hike we think a sharp drop in inflation will allow the central bank to hold fire and that this marks …
MNB to keep rates higher for longer as inflation risks persist Hungary’s central bank (MNB) left its benchmark base rate on hold today (at 13.00%) and it is looking increasingly likely that this rate will not be cut until Q4 at the earliest. The phasing …
28th March 2023
Softness in retail sales raises risk of RBA pause The tepid rise in retail sales in February all but locks in a contraction in sales volumes in Q1 and adds to the case for the RBA pausing its rate hiking cycle next week. The 0.2% m/m rise in retail sales …
This webpage has been updated with a Table and Chart of the key figures. Stronger services inflation to keep Banxico tightening Mexico’s headline inflation rate dropped back by more than expected, to 7.1% y/y, in the first half of March but the further …
23rd March 2023
CBRT keeps rates on hold after one-off cut in February Turkey’s central bank (CBRT) left its key policy rate on hold at 8.50% today as policymakers kept monetary conditions loose to support activity after the earthquakes in February. Interest rates are …
SNB looks through Credit Suisse turmoil and hikes by 50bp This morning’s 50bp interest rate hike by the SNB, to 1.50%, was in line with expectations and shows that, like the ECB and Fed, Swiss policymakers have not been distracted from their …
Norges Bank not done yet The Norges Bank’s 25bp rate hike was accompanied by new guidance signalling that it is likely to raise rates further in May. Together with the new, higher interest rate forecast, this supports our view that the policy rate will …
Surprise hike, but cuts still likely in H2 In a surprise move, Taiwan’s central bank (CBC) today raised its main policy rate by 12.5bps (to 1.875%), but with the economy struggling badly and inflationary pressures set to ease further, we think this was …
More tightening still to come The central bank of the Philippines (BSP) today slowed the pace of tightening as it raised its main policy rate by 25bps (to 6.25%), and hinted that the tightening cycle was now approaching an end. Although inflation has now …
Fed opts for dovish hike The 25bp rate hike and new projections unveiled by the Fed today were towards the more dovish end of potential outcomes – with officials acknowledging the likely economic hit from recent banking sector turmoil and leaving their …
22nd March 2023
Bank likely to be feeling more confident about inflation outlook The latest Summary of Deliberations reveals that the Bank of Canada is not overly concerned by signs of sticky core inflation elsewhere, but the Bank still needs to see more evidence of …
Reacceleration in inflation may force 25bps rate hike The reacceleration in overall CPI inflation from 10.1% in January to 10.4% in February (consensus 9.9%, BoE 10.2%) and core inflation from 5.8% to 6.2% (consensus 5.7%) may be enough to tilt the Bank …
RBA not done hiking yet The minutes of the RBA’s latest meeting confirm that the RBA is close to ending its tightening cycle, but we suspect that the strength of the latest labour force data will prompt it to deliver two more 25bp rate hikes. Contrary to …
21st March 2023
CBR keeps Q2 rate hike on the table The statement accompanying the Russian central bank’s (CBR’s) decision to keep its policy rate unchanged at 7.50% stuck to the hawkish script from February. While it didn’t confirm that an interest rate hike is on the …
17th March 2023
RRR cut not a major easing move The People’s Bank (PBOC) has just announced a cut to the required reserve ratio (RRR). This will provide a bit of financial relief for China’s large and medium-sized banks. It may also help nudge down lending rates …
ECB prioritises inflation fight The ECB’s decision to raise interest rates by 50bp today was the riskiest of the available options – we think investors would have understood if the Bank decided to pause. But the Bank has hinted that it could offer new …
16th March 2023
No more hikes this year Bank Indonesia (BI) kept its main policy rate unchanged today (at 5.75%), and signalled that further rate increases this year were unlikely. The rupiah has held up relatively well over the past week despite the turmoil in global …
RBNZ will cut rates by year-end as recession takes hold The -0.6% q/q contraction in production GDP was weaker than most had expected, but a tad stronger than our forecast (Refinitiv Consensus: -0.2%; CE: -1.5%). And crucially, it was much weaker than the …
15th March 2023
Just when financial markets appeared to be calming down after the SVB saga, the sell-off in European bank shares has resumed this morning due to concerns about the viability of Credit Suisse. At this stage, a huge amount is unclear, but a few points are …
Strong inflation data unlikely to outweigh financial stability concerns The 0.5% m/m rise in core consumer prices last month adds to the evidence that inflation remains stubbornly high, but the ongoing fallout from the SVB crisis over the coming days is …
14th March 2023
Credit growth benefiting from reopening boost Bank loan growth jumped to a 14-month high in February. And broad credit growth accelerated for the first time since September. This rebound should continue in the near-term thanks to a reopening revival in …
10th March 2023
BoJ still likely to end Yield Curve Control The Bank of Japan didn’t make any policy changes at Governor Kuroda’s last meeting today but we expect incoming Governor Ueda to abandon Yield Curve Control in April. We were among the few who expected the Bank …
This webpage has been updated with additional analysis, Chart and Table of key figures. Inflation continues to soar, tightening cycle to resume Egypt’s headline inflation rate jumped to 31.9% y/y in February, leaving it just shy of an all-time high and …
9th March 2023
Rates set to remain on hold in 2023 Malaysia’s central bank (BNM) left its main policy rate unchanged today (at 2.75%) and stated again that it would continue to take time to monitor the impact of past rate hikes before deciding if further tightening was …
Policy unchanged, but Bank leaves the door open to future hikes There were no surprises from the Bank of Canada today as it kept the policy rate unchanged at 4.5%, as it previously hinted it would, and reiterated that it is still prepared to resume …
8th March 2023
Rates on hold, door for rate cuts this year remains open Poland’s central bank (NBP) left its main policy rate on hold as expected again today, at 6.75%, and we don’t think the NBP will rule out further interest rate hikes just yet. But with inflation …
