Filtered by Topic: Monetary Policy Use setting Monetary Policy
Household incomes will continue to rebound The sharp drop in the number of furloughed workers in May supports our view that household incomes will rebound in the second half of the year. And while industrial production plunged again in May, it should also …
30th June 2020
Rebound in consumption will continue to disappoint The subdued rise in retail sales in May suggests that the lifting of the state of emergency didn’t provide a big boost to consumption and we reiterate our forecast of a 9% q/q plunge in Q2 GDP . And the …
29th June 2020
Inflation drops sharply and will turn deeply negative Headline inflation turned negative in April for the first time since 2016 adjusting for the impact of October’s sales tax hike. We expect it to weaken further over the coming months as services and …
22nd May 2020
Italy and Spain suffering most, but some encouraging signs The Bank Lending Survey highlights the fact that demand has fallen much further in Italy and Spain than elsewhere. But it also suggests that loan guarantees and the ECB’s cheap loans to banks are …
28th April 2020
Not quite the bloodbath expected, but worse to come While the Q1 Tankan survey held up slightly better than we were expecting, it still showed a marked deterioration in business conditions. And with sentiment set to deteriorate further as lockdowns across …
1st April 2020
Drop in WPI inflation increases rate cut chances amid virus threat The drop in wholesale price inflation in February is an added source of comfort for the RBI following the fall in CPI inflation last month. We think it will follow its global peers by …
16th March 2020
Policy support keeps the credit taps on Credit growth was stable last month despite the slump in economic activity. In most countries, credit growth would slow sharply in response to a shock such as the coronavirus, as households defer large purchase and …
11th March 2020
Spread of coronavirus will deal severe blow to economy The plunge in the Economy Watcher’s Survey (EWS) in February to its lowest level since the 2011 tsunami suggests that the intensified spread of the coronavirus will cause consumer spending to fall …
9th March 2020
Inflation rises again, but rate cuts still in play (for now) The further increase in Turkish inflation in February probably won’t be enough to deter the central bank from easing monetary policy a little more in the next couple of months. But policymakers …
3rd March 2020
Japan’s economy to contract in 2020 The sharp drop in output after October’s sales tax hike supports our view that Japan’s economy will shrink this year. But with capacity shortages still tight and underlying inflation holding up, we still expect the Bank …
17th February 2020
Underlying price pressures are building The RBI doesn’t put much weight on the wholesale price measure of inflation, but the pick-up in core WPI inflation supports our view that the room for further monetary easing has diminished. Headline WPI inflation …
14th February 2020
Lower unemployment rate should keep RBNZ on hold The decline in the unemployment rate to 4.0% in New Zealand all but ensures that the RBNZ will keep rates on hold in February. And given that we forecast employment growth to rise in 2020 , we think the …
4th February 2020
Underlying inflation should fall further below target in 2020 The pick-up in headline inflation in Q4 should be the final nail in the coffin for hopes of a February rate cut. Even so, weak economic activity should force the bank to cut rates again before …
29th January 2020
Strong inflation should mark the end of the RBNZ’s easing cycle The strong rise in headline inflation from 1.5% in Q3 to 1.9% in Q4 should be enough to prevent the RBNZ cutting rates in February. And given that we now expect a strengthening in economic …
23rd January 2020
Fall in unemployment gives RBA breathing space The fall in the unemployment rate to a nine-month low shows that monetary and fiscal stimulus is starting to work and reduces the pressure on the RBA to cut interest rates. The 28,900 rise in employment was …
Gradual recovery to follow rebound in Q4 GDP growth rebounded more strongly than expected at the end of last year, and the economy should continue to stage a recovery over the coming quarters. The strong outturn in Q4 means we no longer think that the …
22nd January 2020
Survey points to continued sluggish GDP growth The latest ECB Bank Lending Survey suggests that while consumer spending growth will maintain a steady pace, investment growth will weaken. It also implies that future TLTRO-III operations will be a little …
21st January 2020
Headline WPI jumps to highest in seven months The RBI doesn’t put much weight on the wholesale price measure of inflation, but the fact that it accelerated to a seven-month high in December nevertheless supports our view that the rate-cutting cycle is now …
14th January 2020
CBRT to shrug off higher inflation and cut interest rates this month The stronger-than-expected rise in Turkish inflation in December means that this month’s interest rate decision will be a close call. For now, we think that the central bank will cave …
3rd January 2020
External demand recovering but construction cooling The manufacturing PMIs ended 2019 higher than where they started the year but we doubt this means the worst is over for China’s economy. While it does appear that export growth is bottoming out, downside …
2nd January 2020
Headline WPI inflation rebounds Headline wholesale price inflation rose for the first time in eight months in November. While not the preferred measure of inflation for India’s policymakers, this adds to the impression that the inflation backdrop is …
16th December 2019
Inflation jump won’t prevent rate cuts, for now The rise in Turkish inflation in November is likely to mark the start of a steady upward trend over the next couple of years. This won’t prevent the central bank from cutting interest rates further at the …
3rd December 2019
House price growth to ease in 2020 Our sales to new listings ratio suggests that house price growth will moderate before long . Even so given the sharp increase in recent months, we now expect prices to rise by around 7% in 2020 and 5% in 2021. The 2.0% …
2nd December 2019
Governor keeps faith with unconventional policy Nigerian policymakers left their key rate unchanged today, preferring to use unconventional policy rather than rate cuts to boost the economy. We suspect that most of these measures will fail, prompting a …
26th November 2019
Headline WPI inflation drops to 40-month low Wholesale price inflation is not the preferred measure of inflation for India’s policymakers, but the fact that the headline rate dropped to a 40-month low in October won’t go unnoticed. Another rate cut in …
14th November 2019
Unemployment rate to rise further The sharp fall in employment will be causing concern for the RBA and we think the unemployment rate has further to rise in the coming months. The sharp 19,000 fall in employment in October was the largest decline in three …
Wage growth will slow to 2.0% soon The slowdown in wage growth in the third quarter doesn’t come as a complete surprise to the RBA and we still expect the Bank to wait until February before cutting rates again. The 0.5% quarterly rise in the wage price …
13th November 2019
Inflation remains soft, rate cuts ahead Mexican inflation remained at 3.0% y/y October, which supports our view that policymakers will cut their key rate from 7.75% to 7.25% by the end of this year. Figures released today showed that Mexican inflation …
24th October 2019
50bp cut almost certain now The fall in Brazilian inflation to 2.7% y/y in the middle of October, one of its lowest rates on record, means policymakers will (barring any hiccups in the final vote on pension reform later today) almost certainly cut the …
22nd October 2019
Unemployment set to rise again before long The RBA will breathe a sigh of relief after the unemployment rate declined in September. But we think it won’t be long before unemployment starts to rise again, forcing the RBA to provide additional stimulus. The …
17th October 2019
Persistently weak WPI inflation raises likelihood of another rate cut The weakness in wholesale price inflation in September is likely to persist until the end of the year and, although not the preferred measure of inflation for India’s policymakers, …
14th October 2019
Higher unemployment rate puts pressure on RBA The unemployment rate rose to 5.3% in August and we think a slowing in employment growth should drive the unemployment rate even higher, to 5.4% by the end of the year. Employment rose by a solid 34,700 in …
19th September 2019
Inflation still weak, rate cut likely tomorrow South African inflation remained below the target midpoint in August, which we think will allow policymakers to cut their key rate from 6.50% to 6.25% at their meeting tomorrow. Figures released this morning …
18th September 2019
Rate cut almost certain as WPI inflation remains weak Wholesale price inflation is not the preferred measure of inflation for India’s policymakers but even so, the continued weakness in the headline rate in August increases the likelihood of another rate …
16th September 2019
Credit growth holds steady Monetary easing has so far failed to generate much of a pick-up in credit growth, which remained unchanged last month. This should push policymakers to take further action. Chinese banks extended RMB1,210bn in net new local …
11th September 2019
Rebound in WPI inflation still on the cards Wholesale price inflation is not the preferred measure of inflation for India’s policymakers but even so, the weakness in the headline rate in July increases the likelihood of another rate cut at the RBI’s next …
14th August 2019
Strength in the labour market won’t last long The sharp fall in the unemployment rate is unlikely to prevent the RBNZ from cutting rates tomorrow given that labour market data are volatile and often prone to revision. What’s more, we expect the …
6th August 2019
Fall in Swiss inflation adds to pressure on the SNB The unexpected fall in Swiss inflation in July, and signs of a deepening downturn in the industrial sector, will only strengthen the resolve of the SNB to resist the rising franc. There is a growing …
2nd August 2019
Two-year manufacturing expansion won’t stop a rate cut India’s manufacturing PMI reading for July is consistent with decent output in the sector at the start of Q3. But this won’t be a barrier to further monetary easing, and we’ve pencilled in another …
1st August 2019
Underlying inflation to fall further below RBA’s target Underlying inflation remained subdued in the second quarter and we think increasing spare capacity in the Australian economy means it will fall further below the RBA’s 2-3% target over the next year. …
31st July 2019
Another weak survey supports the case for an ECB rate cut in September July’s decline in the euro-zone Economic Sentiment Indicator (ESI) is consistent with our view that, after probably slowing to 0.2% q/q in Q2, GDP growth in the currency union will …
30th July 2019
Survey won’t change the ECB’s mind about loosening policy The latest ECB Bank Lending Survey adds to the evidence that the euro-zone economy will remain sluggish. The euro-zone does not seem to be on the brink of recession, but continued slow growth …
23rd July 2019
Labour market to deteriorate further this year We think the slowdown in employment growth has further to run and suspect that the deterioration in the labour market will cause the unemployment rate to rise before the year is out. Employment was almost …
18th July 2019
Underlying inflation won’t pick up much from here We doubt the strength in inflation in Q2 will be maintained for long and we expect underlying inflation to remain below the mid-point of the RBNZ’s 1-3% target band for the foreseeable future. That’s why …
16th July 2019
Falling WPI inflation raises likelihood of another rate cut The wholesale price index is not the preferred measure of inflation for India’s policymakers, but the continued decline in the headline rate in June will help the MPC to justify another rate cut …
15th July 2019
Inflation back below target opens door to easing The sharp drop in Brazilian inflation to 3.4% in June, which took it below the central bank’s target, suggests that policymakers will soon start to ease monetary policy. Barring any major hiccups with the …
10th July 2019
Renewed drop in inflation to continue The renewed drop in inflation in June is likely to continue as the headline rate is dragged down by falling food and fuel price inflation, providing a green light for the central bank to cut rates in August. Today’s …
5th July 2019
PMI readings not a barrier to policy loosening India’s manufacturing PMI reading remained consistent with decent output in June but it is unlikely be a barrier to further policy loosening. There is a high chance that a looser fiscal stance will be adopted …
1st July 2019
