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
The partial recovery in oil prices points to a rise in the number of rigs drilling for oil However, the relationship between rigs and oil production is less clear cut In addition, changes in rigs take longer to translate into changes in output in the US …
17th November 2020
Progress on a vaccine could lead OPEC to push up its 2021 demand forecasts OPEC’s oil production jumped in October as Libyan output surged. But we expect that OPEC and its allies will extend their current level of supply cuts into early 2021, which will …
11th 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
Solid incoming data mean Fed officials in no rush to provide more accommodation More serious wave of coronavirus infections could prompt more easing Expectations of a big post-election stimulus would pose a dilemma Having rolled out major changes over the …
28th 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 …
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 …
PEPP “envelope” likely to be raised in December, perhaps to €2trillion. ECB may also cut the interest rate charged on TLTROs. A deposit rate cut unlikely unless the euro appreciates further. With the economy flagging again, policymakers at the ECB are …
22nd October 2020
Bank to emphasise downside risks to the outlook. Policy rate to remain near-zero until “inflation target is sustainable achieved”. Balance sheet expansion set to resume next year. The economy has recovered faster than the Bank of Canada expected, but …
21st October 2020
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 …
OPEC production to remain low, even as Libya comes back on stream OPEC’s oil production fell in September and, except for Libya, we expect output by individual member states to either stabilise or decline a touch in the coming months as prices remain weak …
13th October 2020
Bank coming round to our view that wage growth and inflation will remain soft Cash rate target, three-yield target and TFF interest rate to be lowered to 0.10% Additional bond purchases to lower long-term yields also on the cards The Reserve Bank of …
29th September 2020
Elevated inflation will keep new-look MPC on the side-lines next week But dire economic outlook means it will resume loosening cycle soon Markets expect no change for prolonged period We agree with market and analyst expectations that the Reserve Bank’s …
23rd September 2020
Table of Key Forecasts Overview – The effects of demand weakness should continue to dominate those of supply constraints, leaving underlying inflation subdued in most parts of the world over the next few years. Policy measures including temporary VAT cuts …
21st September 2020
Persistently weak demand could force an extension of OPEC production cuts OPEC’s oil production rose sharply in August on the back of higher output quotas. However, if concerns persist about global oil demand, which was discussed at length at yesterday’s …
18th September 2020
We expect the Swiss National Bank and the Norges Bank to both leave their policy settings unchanged next Thursday (24 th September). But while the former will no doubt sound as dovish as ever, Norwegian policymakers will probably further prepare the …
17th September 2020
RBNZ pushing QE to its limits Second wave delays the economic recovery The RBNZ set to launch negative rates next year The RBNZ is reaching the limits of its asset purchase program. We therefore doubt the Bank will make any significant policy changes at …
After a tweak-laden last policy meeting, the Riksbank is likely to maintain the status quo next Tuesday (22 nd September). While there is no burning platform for policy change, we think that the next move in interest rates will eventually be down. Recall …
15th September 2020
Downside risks to the Bank of England’s forecasts are crystallising MPC will wait until the current QE program is ending before adding more stimulus QE still the tool of choice, negative rates possible further ahead The initial recovery has been …
10th September 2020
New average inflation framework points to more policy support But Fed officials apparently in no rush to provide more accommodation Modest tweaks risk disappointing markets The Fed’s new average inflation framework implies that more stimulus measures are …
9th September 2020
Other central banks won’t follow the Fed immediately… …but direction of travel is towards greater tolerance of inflation in advanced economies Japan’s experience highlights that some will have more success than others For the past thirty years the …
Bank will stay the course at upcoming meeting Likely future PM Suga has indicated that he sees scope for interest rate cuts But recent comments suggest he won’t interfere in monetary policy decisions The Bank of Japan will leave policy settings unchanged …
No major policy changes on the cards at next week’s Governing Council meeting. Recent developments mean that the ECB will stick firmly to its dovish course. We think the Bank will eventually add to its planned emergency asset purchases. The ECB will not …
3rd September 2020
Economy doing better than Bank anticipated. Bank unlikely to enact any major policy changes. Rates will not be raised until 2% inflation “sustainably achieved”. As the economy is doing better than the Bank of Canada expected and there are signs that core …
2nd September 2020
Draconian lockdown in Victoria to weigh on recovery and lift unemployment Inflation and wage growth set to soften further We still expect the Bank to start buying-longer dated bonds early next year The Reserve Bank of Australia isn’t keen on providing …
25th August 2020
The Norges Bank will almost certainly leave its key interest rate on hold at zero next Thursday (20 th August), and we expect it to reiterate that it is in no rush to tighten policy. Having cut its key policy interest rate to a record low of zero at its …
13th August 2020
Rising OPEC production to limit price gains OPEC production rose in July and the recent introduction of higher quotas means that output will almost certainly continue to increase in the coming months . The OPEC Monthly Oil Market Report (MOMR), released …
12th August 2020
RBNZ on track to meet its QE targets New Zealand economy broadly recovered The RBNZ will hold off until 2021 to launch negative rates to combat weak inflation The RBNZ has stabilised the pace of asset purchases in recent months and is on track to meet its …
5th August 2020
The MPC is unlikely to expand QE before November But it may signal that further stimulus will be needed at some point It could revise down the effective lower bound, leaving the door open to negative rates We expect the Monetary Policy Committee (MPC) to …
30th July 2020
Initial bounce-back in activity has been stronger than expected But renewed lockdown in Melbourne is weighing on recovery and inflation is slumping We still expect a resumption in asset purchases before long The renewed lockdown in Melbourne is set to …
29th July 2020
Signs that recovery is stalling should prompt further easing Aware of inflation risks, a smaller 25bp policy rate cut is likely next week But persistent economic weakness means loosening cycle won’t end there The Reserve Bank of India (RBI) has been …
28th July 2020
Officials prefer strengthening forward guidance over yield caps New language in statement might introduce a soft form of average inflation target Fed may eventually need to expand Treasury purchases again The upcoming FOMC meeting, which concludes on 29 …
22nd July 2020
OPEC to increase production quotas as it forecasts faster demand growth OPEC production continued to decline in June, largely due to a contraction in Saudi output. However, with OPEC becoming more optimistic on demand, we think that (new) higher quotas …
14th July 2020
Now that quarantine restrictions are being lifted, mine supply should recover But still-high rates of infection in Latin America may act as a constraint The risks look largest for copper, but iron ore supply could also take a hit In this Metals Watch , we …
10th July 2020
The ECB is very unlikely to change policy next week... … but we think it will reiterate its willingness to do more if needed… … and, later in the year, expand the PEPP even further. We don’t expect any changes to ECB policy next week, but Christine …
9th July 2020
Bank unlikely to announce any major policy changes. May present only partial set of forecasts in its new Monetary Policy Report. Little need for yield curve control at this stage. As the latest high-frequency data and surveys look encouraging, and policy …
8th July 2020
Lending schemes still well below ceilings and appetite for bank lending has declined Strains in foreign currency funding markets subsiding Concerns about financial stability will prevent rate cuts The Bank of Japan is likely to leave policy settings …
Uptake of central bank lending facilities has been mixed But lending is reaching firms, either through governments or central banks… … and central bank backstops are offering important reassurance to investors This month has seen a further shift among the …
2nd July 2020
Activity and labour market exceeding Bank’s expectations But unemployment set to remain far above pre-virus levels, weighing on wage growth Bank may resume bond purchases at some point, perhaps early next year Given that the economy has coped better with …
30th June 2020
Table of Key Forecasts Overview – Over the next few months, inflation will be dominated by oil price effects as the previous slump unwinds and headline rates rise from their current lows. Some components of core inflation, such as airfares and …
25th June 2020
While we still expect the Riksbank to cut its repo rate back into negative territory later this year, it is set to keep its powder dry at its policy announcement next Wednesday (1 st July). Recall that the Riksbank left its repo rate unchanged at zero …
24th June 2020
Relatively high rates of compliance unlikely to last May saw the latest OPEC production cuts come into force, with compliance among members fairly good. That said, a gradual pick-up in oil prices and demand, together with the prospect of some Libyan …
18th June 2020
RBNZ beginning to slow the pace of QE New Zealand economy recovering solidly The RBNZ will hold off until 2021 to launch negative rates to address low inflation The RBNZ has started to reduce the pace of asset purchases as economic activity has recovered. …
The Swiss National Bank and the Norges Bank are all but certain to leave their policy settings unchanged at the scheduled announcements next Thursday (18 th June) and for the foreseeable future. Recall that the SNB left interest rates on hold at -0.75% at …
11th June 2020
MPC likely to announce another £100bn of QE in June… …and that won’t be the last expansion Negative interest rates possible, but far from guaranteed The Bank of England has much more work to do. It will probably start by announcing £100bn more …
Existing lending schemes still well below ceilings But latest supplementary budget foresees additional subsidised lending Bank to secure funding for commercial lenders by further increase in lending schemes The Bank of Japan has already done a lot to …
9th June 2020
Low yields mean there is no rush to adopt yield curve control FOMC could make an impact just by publishing interest rate projections again Fed slow to roll out its 13( 3 ) emergency lending facilities The Fed has several different policy options for …
3rd June 2020
Stimulus announced at China’s NPC is positive for commodities demand and prices But credit growth will be much lower than it was post-GFC Accordingly, the stimulus is unlikely to send prices soaring like in 2009 China’s stimulus spending in 2009 in the …
29th May 2020
The ECB is likely to increase the PEPP by a minimum of €500bn next week. Policymakers may also say the PEPP will run until at least mid-2021. We no longer anticipate a further reduction in the deposit rate. Policymakers have signalled their intention to …
28th May 2020
