Filtered by Topic: Monetary Policy Use setting Monetary Policy
Sydney lockdown could set back the recovery in employment Bank to delay reduction in bond purchases from $5bn to $4bn to November However, we still expect QE to end in mid-2022, with first rate hike in early-2023 We expect the Reserve Bank of Australia to …
28th July 2021
Next week’s meeting unlikely to bring new guidance on asset purchases Tapering still on track to begin in early 2022; September announcement possible Rates to remain on hold until 2023 A few regional Fed Presidents are pushing for the Fed to begin …
21st July 2021
Governing Council will not change its key policy settings next week. However, it will amend its forward guidance to reflect its new, more dovish strategy. The new guidance will push back the likely timetable for any future rate hike. The ECB will set out …
15th July 2021
Security holdings may edge down as JGB purchases are tapered further Near term inflation forecasts to be revised up Climate change funds likely to be interest-free but impact will be small At its July meeting we expect the Bank of Japan to outline that it …
9th July 2021
Economy has developed as expected, so Bank likely to announce further taper Bank to keep signalling interest rates on hold until at least second half of 2022 New measures of labour market slack may shed light on reaction function As it is widely …
7th July 2021
Economic recovery continues to beat RBNZ expectations Bank likely to end QE in the months ahead We expect the RBNZ to hike rates in May next year We doubt the RBNZ will adjust any policy settings when it meets next Wednesday 14 th July. However, as the …
High inflation has driven up rate expectations everywhere. But the inflation outlook is varied, and other aims will determine policy too. Norway and New Zealand will be first to tighten among DMs, others will delay. The rise in inflation and the question …
30th June 2021
Bank to move to flexible QE while keeping weekly pace of bond purchases at $5bn RBA expects wage growth to pick up slowly and gradually; we expect a faster rebound We expect the Bank to taper QE in November, with first rate hikes in early-2023 The Reserve …
29th June 2021
After last week’s hawkish shift by the Fed, and the erasure of any doubt about the start of hikes by the Norges Bank , the Riksbank may also pencil a rate hike into its projections next Thursday (1 st July). However, policy action will be centred on the …
24th June 2021
MPC to acknowledge stronger activity and inflation But it will probably continue to hint policy won’t need to be tightened until late in 2022 We think 2024 is more realistic, and that some QE will be unwound before interest rates rise Even though the …
17th June 2021
We expect both the Swiss National Bank and Norges Bank to leave interest rates on hold next Thursday. But while rate hikes by the SNB are many years away, a tightening cycle in Norway is edging closer. Given that the SNB last changed interest rates in …
11th June 2021
Application deadline for emergency lending facility to be extended to end of year Security holdings set to remain flat as shrinking TB holdings offset rising JGB holdings Bank may only purchase ETFs when stock market falls sharply At its June meeting we …
Fed to begin discussion of how asset purchases might eventually be tapered But disappointing payrolls suggest “substantial further progress” still some way off Surging inflation means Fed’s projections need a re-think Fed officials may finally begin …
9th June 2021
The ECB is likely to set the stage next week for a very gradual taper. It will probably end net PEPP purchases next March, but scale up the APP. No big forecast changes likely, but Bank will acknowledge the outlook is brighter. We think the ECB will tweak …
3rd June 2021
Recent economic weakness should be offset by stronger third quarter Tone of policy statement likely to be similar to April Bank may signal further reduction in asset purchases likely at the July meeting Inflation surpassed the upper limit of the Bank of …
2nd June 2021
RBI likely to keep rates on hold next week as second virus wave subsides However, recovery may be more gradual than last year as states reopen with caution As such, policy will stay loose for a long while yet We agree with financial markets and the …
27th May 2021
Dovish RBA set to extend asset purchases by another $100bn in July However, early signs that inflation is about to recover strongly We think RBA will start to lift interest rates in late-2023 The Reserve Bank of Australia will still sound dovish at the …
25th May 2021
RBNZ will tackle soaring house prices by restraining credit rather than raising rates However, economy should continue to recover towards tightening threshold We still expect the RBNZ to hike rates in 2022 While the Bank will acknowledge the new house …
19th May 2021
Stronger labour outturns largely offset by Bank’s lower estimate of natural rate Inflation very weak and set to pick up only slowly We expect a third $100bn round of QE and first rate hike only by end-2023 The Reserve Bank of Australia will revise down …
28th April 2021
Tolerance band around 10-year yield target unlikely to be widened any further Bank has started to reduce its JGB purchases ETF purchases will be resumed during periods of market turmoil After tweaking a range of policy measures in March, the Bank of Japan …
20th April 2021
RBNZ should shrug off second technical recession and keep policy unchanged The Bank’s new house price focus shouldn’t change the policy outlook We still expect the RBNZ to hike rates in 2022 New Zealand has probably experienced a second technical …
7th April 2021
Mandates have spread into equality, climate change and house prices in recent months Implications are mixed; Fed lower for longer, but RBNZ may need to hike sooner On average, mission creep points to more variable and probably higher future inflation …
29th March 2021
Several EM central banks have hiked policy rates in recent weeks… …but risks to India’s economic recovery mean the RBI is unlikely to follow suit Inflation target likely to remain unchanged for the next five years EM monetary policy has turned decidedly …
MPC won’t respond to higher gilt yields by stepping up the pace of its QE purchases But it will reiterate its guidance that rates will remain unchanged for a long time The change to the MPC’s remit may alter the composition of bond purchases, but not the …
11th March 2021
Board acknowledges that bond market functioning has deteriorated But policymakers may be worried about impact of higher yields on activity Tolerance band to remain unchanged until vaccines allow activity to rebound fully The pendulum seems to have swung …
The financial markets have started to price in a rate hike as soon as early-2023 Labour market tightening but wage growth and inflation set to fall short of RBA’s targets We expect the first rate hike to be delayed until early-2024 and bond yields to fall …
24th February 2021
Economic rebound means the RBNZ done easing The Bank has already slowed the pace of asset purchases We expect the Bank to end quantitave easing this year before hiking rates in 2022 Economic data since the Bank’s last meeting have shown the New Zealand …
17th February 2021
Taper talk is premature and purchases typically won’t slow until next year There is absolutely no rush for central banks to shrink their balance sheets But when they do, the process will require some creative thinking Talk of tapering in recent weeks has …
4th February 2021
The Riksbank is highly likely to leave its repo rate and other policy settings on hold next Wednesday (10 th February), but we expect it to beef up its asset purchase programme again before long. Recall that the Riksbank left its repo rate unchanged at …
3rd February 2021
Bank to emphasise it is willing to provide more support and has the tools to do so But there is a lot of QE already in the pipeline and we doubt it’s ready to use negative rates Our relatively optimistic economic forecasts suggest it won’t need to either …
28th January 2021
Consensus is for rates to remain on hold next week But we think sharp drop in inflation could trigger a 25bp policy rate cut We also doubt expectations of rate hikes over the next 12-18 months will materialise Financial markets and analysts appear …
27th January 2021
RBA may choose to keep up with large asset purchases by overseas central banks But labour market doing much better than Bank had anticipated Balance of financial stability risks starting to shift as credit growth set to surge While the Reserve Bank of …
Policy settings & guidance will be left unchanged Vaccinations & additional fiscal relief shift debate towards tapering asset purchases Fed won’t taper until 2022, but may pre-announce plans around Jackson Hole Aside from acknowledging the weakness in the …
20th January 2021
Governing Council under no pressure to loosen policy further… …but will commit to keeping financial conditions loose for as long as needed. Main risk is that the lockdowns are extended well into the second quarter. Having adjusted their policy settings in …
14th January 2021
The Norges Bank will almost certainly leave its key interest rate on hold at zero next Thursday, but there is an outside chance that it could start to re-tighten macroprudential policy to tame the housing market. Having slashed the policy interest rate by …
No signs of stress in financial markets and policy already extremely loose Bank has already started to address side effects of aggressive easing Upcoming review still shrouded in mystery The Bank of Japan is unlikely to respond to the worsening virus …
Speculation that Bank could cut interest rates looks overdone. Bank set to upgrade its GDP forecasts. Macklem faces communications challenge as Bank attempts to keep yields low. The Bank of Canada is set to upgrade its growth forecasts next week, despite …
13th January 2021
Vaccines mean the recovery may not need a further monetary boost But monetary policy will remain extremely loose for years yet And a no deal Brexit could yet prompt further easing The next Monetary Policy Committee (MPC) meeting on Thursday 17 th December …
10th December 2020
Recovery has surprised to the upside but third wave is a downside risk Bank to extend emergency lending facility New facility to support regional banks highlights discomfort with negative rates With the ongoing wave of infections in Japan the most severe …
Officials unconvinced of need for, or benefits of, further stimulus But guidance on asset purchases is set to be updated Strength of rebound in inflation next year could catch the Fed off-guard We expect the Fed to keep its main policy settings unchanged …
9th December 2020
The Bank will play down the chances of a quick return to economic health. We expect it extend the PEPP until at least mid-2022 and announce more TLTROs. But the Governing Council will probably leave the deposit rate unchanged. Policymakers at the ECB have …
3rd December 2020
Central banks keen to bridge a difficult period before vaccines are rolled out… … and reduced fiscal stimulus shifts onus of supporting recovery to monetary policy The legacy of the virus will warrant rock bottom interest rates for several years The …
25th November 2020
Vaccine may be available by Q2 2020, allowing full reopening of the economy Labour market doing much better than Bank had anticipated Case for additional stimulus is diminishing The Reserve Bank of Australia won’t make any policy changes at its meeting on …
24th November 2020
The Riksbank is likely to leave its repo rate on hold at zero next Thursday (26 th November). But with the economy heading south, and the ECB gearing up to ease again, we think there is a good chance that policymakers will take the opportunity to expand …
19th November 2020
Economic data have been mixed but generally support further easing RBNZ to launch lending programme to lower funding costs RBNZ to cut OCR to -0.25% in April and hold rates steady thereafter At its meeting on 11 th November, the Bank will likely unveil a …
5th November 2020
The Norges Bank will almost certainly leave its key interest rate on hold at zero next Thursday and will probably reiterate that it is in no rush to hike. However, given the backdrop of rising house prices, we think that policymakers will start to …
29th October 2020
Consensus comes round to our view that MPC will expand QE by £100bn in November This won’t be the last QE expansion Negative rates are possible, but probably not for another 6-12 months Back in June, we were pretty much alone in forecasting that the MPC …
28th October 2020
Cash rate target, three-yield target and TFF interest rate to be lowered to 0.10% Interest rate on Exchange Settlement balances to remain at 0.10% Quantitative easing is coming and the Bank may buy $150bn in government bonds The Reserve Bank of Australia …
Bank set to lower GDP growth and inflation forecasts slightly Expansion in BoJ’s assets already very large by international comparison Bank is unlikely to announce additional easing The Bank of Japan may revise down its GDP growth and inflation forecasts …
21st October 2020
