Filtered by Topic: Monetary Policy Use setting Monetary Policy
Inflation appears to have peaked Swiss inflation appears to have peaked in July at an enviably low level compared to that of most other advanced economies. That said, the core rate reached its highest level in more than two decades, which is likely to …
3rd August 2022
Labour market to remain tight In June, the number of unemployed people rose in the euro-zone for the first time in 14 months. Nevertheless, we expect the labour market to remain tight even as the economy heads into recession, maintaining the upward …
1st August 2022
Re-opening boost to fade, fast The chunky increase in euro-zone GDP in Q2 was due to the re-opening of the services sector which has masked a deterioration in most other parts of the economy. We expect a triple whammy of high inflation, tighter monetary …
29th July 2022
Consumers borrowing more to cope with higher inflation The chunky increase in unsecured borrowing in June suggests that households are having to rely more on credit due to the cost of living crisis. But households won’t be able to fully offset the hit to …
Rising core inflation adds to pressure on ECB With headline and core inflation rising more than expected yet again, the case for the ECB to pursue further aggressive tightening of interest rates is unassailable. A 50bp hike in September now looks nailed …
GDP in Taiwan contracted last quarter as a surge in COVID-19 cases weighed heavily on consumer-facing sectors and exports slowed. Although consumption should bounce back now that virus cases are falling and mobility is rebounding, the worsening prospects …
Downbeat surveys raise the spectre of recession The bigger-than-expected decline in the EC Economic Sentiment Indicator in July adds to a growing list of indicators pointing to activity slowing markedly in July. With the region’s gas supply now reduced …
28th July 2022
Inflation has peaked, but will remain high The drop in inflation in Brazil to 11.4% y/y in the first half of July provides the first clear sign that inflation has passed its peak and is now on a downwards path. But even so, with the headline rate far …
26th July 2022
Heading for recession The further decline in the German Ifo Business Climate Index (BCI) in July adds to the evidence that the German economy is on the brink of a recession as high energy prices and worries about energy security take their toll on firms’ …
25th July 2022
Slump in confidence points to sales weakness ahead Retail sales rose by a bit more than we anticipated in May, but the preliminary estimate implies that most of the gain in sales volumes was reversed in June and the slump in consumer confidence suggests …
22nd July 2022
Pipeline price pressures have peaked Spending on travel and leisure is supporting activity and has so far prevented the UK composite flash PMI from joining the euro-zone’s PMI in contraction territory. Perhaps even more encouraging was that price …
Euro-zone on brink of recession July’s flash PMIs suggest that the euro-zone is teetering on the brink of recession due to slumping demand and rising costs while inflationary pressures remain intense. The ECB will have to follow up on yesterday’s historic …
Policymakers in a bind after another jump in inflation The jump in inflation in South Africa to 7.4% y/y in June keeps a 75bp interest rate hike on the table at the SARB’s meeting tomorrow. But with policymakers clearly concerned about the weakness of the …
20th July 2022
Global pressures peaking, domestic pressures strengthening There are some encouraging signs that the upward pressure on underlying inflation from global factors has started to ease. But as it is being replaced by stronger upward pressure from domestic …
Inflation has probably peaked The stronger-than-expected rise in consumer prices in Q2 adds some upside risks to our forecast that the Reserve Bank of New Zealand will lift rates to 3.5%, but we still think that weaker economic activity will force the …
18th July 2022
Stronger-than-expected inflation strengthens case for front loading hikes The stronger-than-expected increase in Swedish inflation in June will only strengthen the resolve of policymakers to squeeze inflation out of the system and raises the chance that …
14th July 2022
WPI inflation has probably peaked Wholesale price inflation in India dropped back in June from its record high, and now appears to have passed its peak. CPI inflation will also peak in the next few months, but in the near term it’s still likely to rise …
Another inflation shocker nails on a 75bp hike this month The stronger than expected 1.3% rise in consumer prices in June, which pushed headline inflation to 9.1%, from 8.6%, nails on another 75bp rate hike at the July FOMC meeting. But with commodity …
13th July 2022
Inflation holds steady, but will climb again soon Headline consumer price inflation held steady in June, but the core rate rose further. We expect inflation to climb higher above the RBI’s target in July and August, which should be enough for the MPC to …
12th July 2022
Another 50bp hike looking tempting for the Norges Bank The services-driven increase in Norway’s core inflation rate in June increases the chance that the Norges Bank will raise its policy rate by another 50bps at its August policy meeting. The increase in …
11th July 2022
Robust payrolls undermine recession claims The strong 372,000 gain in non-farm payrolls in June appears to make a mockery of claims the economy is heading into, let alone already in, a recession. That may be enough to solidify the case for another 75bp …
8th July 2022
Inflation to rise further and more monetary tightening on the cards Egypt’s headline inflation rate slowed for the first time since November to 13.2% y/y in June, but inflation will remain above the upper bound of the Central Bank of Egypt’s (CBE’s) …
7th July 2022
Inflation to remain above BoJ target until early-2023 While inflation didn’t rise any further in May, it will remain above the BoJ’s 2% target until early-2023, while underlying inflation will approach 2%. However, the Bank won’t respond with tighter …
24th June 2022
Housing downturn just beginning The monthly decline in house prices in May is the start of a significant housing downturn as the RBA’s hiking cycle continues. There’s a risk that this prompts the RBA to end its hiking cycle early, but our central forecast …
1st June 2022
Inflation to surpass 6% Inflation surged in Q1 and is on track to surpass 6% later this year, exceeding the levels reached around the GST hike in 2000. With trimmed mean inflation already higher than at the start of previous tightening cycles, the Reserve …
27th April 2022
All set for 2% Inflation picked up in March due to a further rise in utilities inflation and a jump in food inflation. And headline inflation will hit 2% in the April data released in just under a month’s time as most of the drag from mobile phone tariffs …
22nd April 2022
Credit growth rebounds to an eight-month high Broad credit growth was much stronger than expected last month amid increased policy support. With more easing on the horizon, we expect a further acceleration although a sharp pick-up in lending still seems …
11th April 2022
Stronger-than-expected start to 2022 Activity data for the first two months of the year was stronger than anticipated, which probably explains why the People’s Bank (PBOC) unexpectedly kept its policy rates on hold today. But the economy looks set to come …
15th March 2022
Rising inflation to keep Copom’s tightening cycle going The rise in Brazilian inflation to 10.5% y/y in February will be followed by further increases to more than 11% in the coming months on the back of higher fuel prices. While Copom hinted at its last …
11th March 2022
Credit growth disappoints Broad credit growth was much weaker than expected last month, reversing much of the acceleration of the past few months. This suggests that more easing measures will be needed to meet the policy objectives that were recently laid …
Inflation smashes through 50% Turkey’s headline inflation rate leapt again to reach 54.4% y/y in February due to the combination of the lira’s collapse in late-2021 as well as higher domestic energy prices and a large minimum wage hike at the start of …
3rd March 2022
Inflation still not a concern in China Chinese inflation continued to drop back last month. Although there are some signs of supply disruption, we think these will be temporary. Factory-gate inflation should moderate further while consumer price inflation …
16th February 2022
Rising core inflation to prompt another 50bp hike from Banxico The fall in Mexican inflation to 7.1% y/y suggests that the headline rate has peaked, but the central bank will remain concerned about rising core inflation. As such, we expect another 50bp …
9th February 2022
Back to the early 2000s Turkey’s headline inflation rate rose to a stronger-than-expected 48.7% y/y in January due to the effects of the recent collapse in the lira and large hikes to energy tariffs and it is likely to stay close these high rates …
3rd February 2022
Tight labour market will keep RBNZ hiking cycle going The further decline in the unemployment rate to a record low of 3.2% will keep the RBNZ on its hiking cycle in the months ahead. But we suspect the unemployment rate will rise again before long. The …
2nd February 2022
Surging inflation will keep RBNZ hiking cycle underway The persistent rise in inflation to the highest levels in 30 years will be worrying the RBNZ. That’s why we expect the Bank to hike aggressively in the first half of this year. Consumer prices rose …
26th January 2022
Inflation above target mid-point sets stage for rate hikes this year The strong rise in underlying inflation at the end of last year means the RBA is all but certain to end its asset purchase scheme at its meeting next week. And with underlying inflation …
25th January 2022
Virus disruptions and property downturn continue to hold back economy Industry in China continued to rebound last month from disruptions caused by power shortages while the recovery in services activity was held back by renewed virus outbreaks. A new …
15th December 2021
Inflation rises again, set to breach 25% soon The rise in Turkey’s headline inflation rate to 21.3% y/y in November will almost certainly be followed by further chunky increases over the coming months that take it to 25-30% as the effects of the recent …
3rd December 2021
Wage growth will firm up next year putting pressure on the RBA The 0.6% q/q rise in the wage price index in Q3 will provide the RBA with some confidence that rates need to remain low in the near term. But we think that wage growth will rise over 2022, …
17th November 2021
Factory-gate inflation hits a 13-year high Producer price inflation reached its highest since August 2008 last month due to the rally in global commodity prices. But the breakdown suggests that upward pressure on the factory-gate prices of consumer goods …
9th September 2021
While the spike in August inflation in the Philippines makes the central bank’s (BSP) policy decision this month an even closer call, the worsening outlook for the economy means we are sticking with our non-consensus view of a 25bp cut on 23 rd September. …
7th September 2021
The slowdown in credit growth resumes After stabilising in June, broad credit growth resumed its downward trajectory in July and is now at its slowest since February last year. We expect the slowdown and resulting headwind to the economy to continue in …
11th August 2021
Inflation will keep surprising to the upside Most of the surge in inflation in Q2 was driven by base effects that will unwind over the next couple of quarters, but we think that inflation will remain stronger than the RBA is anticipating. The 0.8% q/q …
28th July 2021
Price pressures start to ease After reaching a 12-year high in May, producer price inflation dropped back in June as the rally in global commodity prices faltered. Consumer price inflation declined too, on the back of a sharp drop in pork prices. We think …
9th July 2021
Rising inflation to prompt rate hikes in Brazil and Chile The further rise in Brazilian inflation, to 8.3% y/y, means Copom will continue to hike when it meets next month. But the data are not quite enough to prompt a shift from 75bp hikes to a larger …
8th July 2021
Strong inflation will keep Banxico in tightening mode The rise in Mexico’s core inflation to 4.6% y/y in June was largely driven by temporary factors which will gradually unwind. Nonetheless, given Banxico’s recent hawkish shift, and with headline and …
CBE to keep rates on hold for now as inflation drifts higher Egypt’s headline inflation rate edged up to 4.9% y/y in June and is likely to increase further over the coming months. Against this backdrop, we think the Central Bank of Egypt (CBE) will keep …
Inflation rise will spook CBR The further rise in Russian inflation to a stronger-than-expected 6.5% y/y in June means the central bank (CBR) is likely to up the pace of tightening when it meets in a couple of weeks. A 75bp hike (to 6.25%) seems most …
7th July 2021
WPI inflation close to peaking Wholesale price inflation surged to a three-decade high in May on the back of the sharp rise in global commodity prices and will be a concern for policymakers. However, there are reasons to think that WPI inflation has …
14th June 2021
