Filtered by Topic: Monetary Policy Use setting Monetary Policy
Sticky price pressures strengthening hawks’ hand Recently-released inflation figures out of Sub-Saharan Africa’s two biggest economies are likely to put pressure on policymakers in Nigeria and South Africa to raise interest rates further. March CPI data …
21st April 2023
We now expect the Fed to press ahead with another 25bp rate hike at the FOMC meeting early next month but, with the economic data softening and the risks of a debt ceiling crisis rising, we still think the Fed’s next move after that will be a cut. The …
MNB takes its first steps towards interest rate cuts The deputy governor of the Hungarian central bank (MNB) made a splash this week by signalling that policymakers may cut the upper end of the bank’s interest rate corridor at their meeting next Tuesday. …
The stubbornness of CPI inflation in March, which seems more marked than elsewhere (see here ), has left us more comfortable than we were at the start of this week with our view that the Bank of England will raise interest rates by 25 basis points (bps) …
More signs of economic resilience… GDP data due next week are likely to confirm that, after stagnating in Q4, the euro-zone economy returned to growth in Q1. We have pencilled in a 0.2% q/q expansion in the region as a whole, with positive outturns in …
Door remains ajar for further tightening… The minutes of the MPC’s April meeting – in which the committee voted unanimously to keep the repo rate on hold (at 6.50%) for the first time in a year – were published this week. While it has been clear for some …
Note: We’ll be discussing the BOJ’s April decision and the fate of YCC in a 20-minute online briefing at 09:00 BST/16:00 SGT on Friday, 28 th April . Register here . BoJ will signal inflation target close to being met The Bank of Japan will release …
Bank of Canada Governor Tiff Macklem used his press conference this week to push back against expectations for interest rate cuts later this year. That partly reflects the Bank’s less downbeat assessment of the economic outlook, but the nascent rebound in …
14th April 2023
The strength of the March CPI data may be enough to persuade the Fed to squeeze in a final 25bp rate hike at the early-May FOMC meeting. But with mounting evidence that economic growth is weakening again, we doubt that strength will last much longer. Core …
Data point to positive growth in Q1 The latest official activity data suggest that the euro-zone economy posted a small expansion in Q1. Admittedly, retail sales fell in February, continuing the downward trend they have been on for over a year. But lower …
The local real estate board data suggest that new listings fell again in March, defying expectations that high interest rates could lead to forced home sales. With supply falling by more than demand, the risks to our house price forecasts lie to the …
6th April 2023
Current market pricing suggests that there is around a 60% chance that, at the next policy meeting in May, the Monetary Policy Committee (MPC) raises interest rates by 25bps, from 4.25% now to 4.50%. This isn’t surprising given the decision will probably …
Argentina-IMF: targets a hard ask A read between the lines of the IMF’s Fourth Review of Argentina’s $44bn Extended Fund Facility suggests that the deal could be starting to fray at the seams. To start with, the government and the IMF don’t appear to be …
Raising exports to US$2trn by 2030 a tough task This week marked the start of the government’s new Foreign Trade Policy (FTP). While previous FTPs have had a five-year span and have typically focussed on financial incentives for exporters such as …
Weak economy and elevated inflation in Singapore Having been one of the star performers during the pandemic, Singapore’s economy has weakened considerably in recent months. GDP grew by just 0.1% q/q in the final quarter of last year, and recent data …
The RBA’s decision to keep rates on hold at its April meeting has reignited debate over whether the Bank’s tightening cycle is at an end. Financial markets certainly seem to think this is the case. However, our view, and the analyst consensus, is that the …
The strength of GDP growth at the start of the year reflected several temporary factors. The Bank of Canada’s latest quarterly surveys, released next week, will provide a better guide to how firms and consumers are coping with higher interest rates. GDP …
31st March 2023
Copom’s minutes will leave a sour taste for Lula The minutes from last week’s Copom meeting , released on Tuesday, will have dashed any hopes (not least in the government) that policymakers might turn to interest rate cuts any time soon. Three points …
Note: Join our 6 th April online briefing all about the risks to EMs from banking turmoil. Register now . Central banks re-upping the pace of tightening Central banks in South Africa, Kenya and Ghana all delivered more aggressive interest rate hikes this …
Note: Join our 6th April online briefing all about the risks to EMs from banking turmoil. Register now . Rosneft, IOC deal will keep Russian oil flowing We’ve made the case in much of our research that, in an increasingly fractured global economy that …
BoJ facing dilemma The economic data released this week underline the dilemma facing incoming Bank of Japan Governor Ueda. On the one hand, price pressures continue to strengthen. Inflation excluding fresh food and energy rose from 3.1% to 3.4% in the …
Note: Join our 6 th April online briefing all about the risks to EMs from banking turmoil. Register now . H2-oh… Droughts in the Middle East and North Africa are becoming more frequent and more severe, with Morocco and Tunisia experiencing them right now. …
30th March 2023
Bolivia walking into a crisis Bolivia’s balance of payments problems entered a more acute phase this week. Commercial banks stopped providing FX to residents, forcing the central bank to do so itself. And there was some doubt (now resolved) whether the …
24th March 2023
SARB to follow CBN in delivering dovish hike Nigeria’s central bank shrugged off the recent banking sector turmoil and kept its eye firmly focussed on tackling inflation as it hiked interest rates this week and, on balance, we think the South African …
As we discussed in our “Drop In” webinar after this week’s Bank of England policy decision (see here ), the 25 basis points (bps) hike in interest rates, from 4.00% to 4.25%, could prove to be the end of the tightening cycle. But it is the data on the …
The Fed will need to wait at least another few weeks for clearer evidence of the impact from the recent banking sector turmoil, but we expect economic weakness will convince officials to move to the side-lines before long. Although the Fed pressed ahead …
Norges Bank and SNB raise rates Undeterred by global banking turmoil, the Norges Bank and SNB focused on inflation this week and – in line with decisions by the ECB, Bank of England and the Fed – raised interest rates. The Norges Bank lifted its policy …
A few key points on Europe’s banks We discussed the recent turmoil in the banking sector in a Drop-in this week. (See here , or you can listen to a shorter version on our podcast here .) The big picture is that there are reasons to be cautiously …
The dovish tone of the RBA's March minutes has heightened the risks to our forecast for two more 25bp rate hikes in April and May. However, the Board did reiterate that its decision regarding a pause would hinge on the economic data released before its …
Crisis of confidence at crunch CBE meeting The Central Bank of Egypt’s decision in February to leave interest rates on hold looks to have been a policy misstep and, with inflation surging and growing concerns over the commitment to orthodox policymaking, …
23rd March 2023
The fixed payment structure of most variable rate mortgages has cushioned households from the impact of high interest rates so far, with the data this week confirming that debt service costs remained low last quarter. But that only delays the pain in …
17th March 2023
After concerns over US regional banks progressed to panic over the health of a Global Systemically Important Bank in Credit Suisse, a sense of calm was returning by the end of this week. No new banks have followed SVB and Signature to the wall, the ECB …
Worries about the health of the global banking system dominated headlines this week after the collapse of Silicon Valley Bank (SVB) and concerns about the viability of Credit Suisse. Our coverage of ongoing developments can be found here . In terms of the …
SVB, Credit Suisse and Latin America Concerns about the health of the global banking system following the collapse of Silicon Valley Bank (SVB) and problems at Credit Suisse have triggered a sharp-sell off in Latin American financial markets this week …
Strains in the global banking system have roiled financial markets. (For our full coverage and latest insights, visit our dedicated webpage .) While affected banks may be far away from Sub-Saharan Africa and direct exposures seem limited, the global …
The past week has provided a worrying reminder of the fragility of banking systems to rising interest rates. All our analysis on this can be found on our key themes page . Many metrics of financial market functioning have deteriorated worryingly fast and …
Euro-zone bank equities have come under severe pressure this week after troubles at some US regional banks and at Credit Suisse raised concerns about the health of banking systems more generally. At the time of writing, the Eurostoxx bank index is down …
Amid growing concerns about the global economic backdrop , financial markets not only believe that the RBA is done tightening, but that rate cuts are on the horizon. (See Chart 1.) However, we’re not convinced. The latest data don’t yet show domestic …
Global financial risks creeping up The troubles at Silicon Valley Bank and Credit Suisse have dominated the headlines this week and have further weakened the case for the Bank of Japan ending Yield Curve Control (YCC). Market expectations for the Fed …
Despite the renewed hawkishness of central bankers elsewhere, the speech that followed the Bank of Canada’s policy announcement this week suggests that the bar to resume rate hikes remains high. Bank still comfortable with its “conditional pause” The …
10th March 2023
Powell in hawkish mood Fed Chair Jerome Powell confirmed this week that interest rates are set to rise higher than we previously anticipated. Powell noted that the strength of the January activity, employment and inflation data indicated that …
Brazil: is a Q2 rate cut plausible? The prevailing monetary policy story in Brazil so far this year has been one of ‘higher for longer’. We set out such a view recently , the BCB’s communications point this way and analyst expectations have shifted up. A …
The view that interest rates in developed markets may rise further and stay higher for longer than previously anticipated gained further traction this week following US Fed Chair Jerome Powell’s hawkish comments on Tuesday. Our US Economics team revised …
GDP shrank in Q4 (to two decimal places) The third estimate of euro-zone GDP in Q4, released earlier this week, strengthened our conviction that the economy will underperform most forecasters’ expectations. The 0.1% q/q expansion in GDP in the fourth …
We have revised up our forecasts for real GDP and no longer think the economy will be quite as weak. This has very little to do with the 0.3% m/m rise in real GDP in January released this morning. Most of that was a rebound after the widespread strikes …
Thailand forecast change The recent inflation data from Emerging Asia have made for encouraging reading, with headline inflation falling in seven out of the nine countries to have published February data. (See Chart 1.) Chart 1: Consumer Prices (%, …
Governor Phil Lowe’s proclamation at Wednesday’s AFR business summit that the RBA was closer to a pause in interest-rate increases has fed speculation of a dovish pivot on the part of the Board. Indeed, financial markets have tamped down their …
Case for end of YCC a touch weaker but still strong Contrary to our expectations, the Bank of Japan did not make any changes to Yield Curve Control (YCC) at today’s meeting. And the case for abandoning the policy now looks a little less compelling than a …
Koruna strength will add to disinflation in Czechia The recent strength of the Czech koruna, which hit a 14-year high of 23.3/€ this week, adds to a number of disinflationary forces that are currently taking hold in the country. And we think that …
3rd March 2023
The latest data give the Bank of Canada plenty to think about ahead of its policy announcement next week. The data appear to lend support to the Bank’s view that a soft landing is still achievable, with the stagnation in fourth-quarter GDP followed by a …
