Filtered by Topic: Monetary Policy Use setting Monetary Policy
Quick action by the Turkish central bank appears to have stemmed pressure in Turkey’s financial markets after the recent sell-off. But the rapid depletion of FX reserves means that policymakers have less scope to act in the event of a renewed spike in …
2nd April 2025
NBP remains on hold, although case for rate cuts starting to build The National Bank of Poland (NBP) left is policy rate on hold again today, at 5.75%, and while our forecast is for policy settings to remain unchanged throughout 2025, the risks of an …
We expect the Reserve Bank of New Zealand to cut its Official Cash Rate by 25bp, to 3.5%, at its next meeting on 9 th April. Although activity is now on the mend, spare capacity will ease only gradually, consistent with a sustained decline in …
The latest PMIs suggest that global industry is heading into Q2 on a weaker footing. Meanwhile, price pressures accelerated sharply in the US but generally eased elsewhere. The output component of the global manufacturing PMI fell to 50.5 in March from …
1st April 2025
Underlying inflation problems in Central and Eastern Europe and Latin America and perennial exchange rate worries in Indonesia mean that their central banks are, if anything, likely to react hawkishly to the effects of US import tariffs. Interest rates …
Falling inflation will prompt another cut to repo rate next week, regardless of tariffs Another 25bp cut to 6.00% seems most likely We expect more cuts in this cycle than the consensus is forecasting The recent sharp drop in headline CPI inflation means …
Central Europe recovering, Russia faltering The rise in the manufacturing PMIs in Central Europe in March adds to evidence that the region is recovering from its recent soft patch. In contrast, the drop in Russia’s PMI suggests the economy may be starting …
While the RBA is becoming increasingly confident that inflation will sustainably return to target, we still expect its easing cycle to be shallower than most anticipate. The RBA’s decision to leave its policy rate unchanged at 4.10% was correctly …
RBA’s easing cycle will be shallow While the RBA is becoming increasingly confident that inflation will sustainably return to target, we still expect its easing cycle to be shallow. The Bank’s decision to leave the cash rate unchanged at 4.10% was …
Australian house price growth remained soft in March, amid still-weak housing demand. Although the RBA’s easing cycle could help deliver a shift in momentum later this year, stretched affordability is likely to constrain the strength of the rebound. Much …
Our View: The economies of Central and Eastern Europe appear to have ended Q1 on a positive note, and Germany’s fiscal U-turn has improved prospects for regional export demand – we have recently revised up our GDP growth forecasts slightly for this year …
31st March 2025
Overview – We’ve become more concerned about the outlook for the economy due to the drags from higher businesses taxes and the more uncertain global backdrop being bigger than we thought and the boost from government spending being smaller. Our forecasts …
Africa Chart Pack (Mar. 2025) …
China Chart Pack (Mar. 25) …
28th March 2025
With all the major business surveys for March now published, it is clear that while sentiment in the euro-zone has jumped, activity is still growing slowly at best. The more sentiment-driven ZEW and Sentix indices recorded big increases but the Composite …
Overview – Economies across Sub-Saharan Africa are amongst the least affected EMs by the protectionist shift that the US is embracing. And growth in the region is set for a modest pick-up on the back of lower inflation and easing monetary policy. But …
In a further escalation of his trade war, US President Trump on Wednesday announced a 25% tariff on assembled motor vehicles and some key components: engines and engine parts, transmissions and powertrain parts, and electrical components. (See our initial …
Autos now in the crosshairs The Trump administration’s announcement of a 25% import tariff on autos and some auto parts will have a particularly large impact on Hungary and Slovakia. Our detailed response on Thursday to the tariff news can be found here . …
RBA will cut two more times this year Australian Prime Minister Anthony Albanese confirmed today that the next general election will be held on 3 rd May. The announcement comes closely on the heels of the government’s 2025/26 Budget , which includes an …
Time to act decisively has come The US this week announced a 25% tariff on auto imports and Japan will be among those economies most affected. (See here .) While PM Ishiba has said that “all options are on the table” when it comes to Japan’s response, our …
While US tariffs are a headwind, the continued acceleration in consumer prices will only heighten concerns among Bank of Japan’s Board members about inflation overshooting its 2% target. As the Bank should have a rough sense of the severity of US trade …
Door is open for another 50bp cut in May The statement accompanying the Mexican central bank’s (Banxico’s) decision to lower its policy rate by another 50bp cut, to 9.00%, today suggests that growth concerns are rapidly overtaking inflation concerns. …
27th March 2025
Overview – We’ve raised our GDP growth forecasts across most of the region for this year and think that Central and Eastern European (CEE) economies will pick up pace going into 2026, despite the headwind from US tariffs. An end to the war in Ukraine …
Table of Key Forecasts Global Overview – We expect the world economy to grow a touch slower in the next couple of years than it did in 2024. Trump’s policies will drag on US growth, policy support will not prevent a slowdown in China’s economy, and looser …
Overview – We have raised our assumption for the average US tariff rate that Canadian exporters will face, to a level that will likely push the economy into recession. The downturn should be only moderate if, as we expect, the government steps in with …
Overview – GDP growth in the Middle East and North Africa will pick up over the next couple of years supported by rising oil and LNG output from the Gulf. However, lower oil prices will result in tighter fiscal policy in parts of the Gulf, particularly …
Inflation rises again, more rate cuts on the cards The further rise in Brazil’s headline inflation rate to 5.3% y/y in the first half of March means that, with Copom shrugging off the weakness of the latest activity data and inflation likely to rise …
Data released this morning showed that euro-zone money and lending growth continued to accelerate in February, supporting the case of those at the ECB who would prefer to pause interest rate cuts in April. The narrow M1 measure of the money supply – which …
Norges Bank to cut very cautiously, if at all This morning’s decision by Norges Bank not to follow through with the rate cut that it signalled in January was no surprise. The Bank also revised its interest rate projection up. We forecast two interest rate …
Table of Key Forecasts Overview – EM GDP growth picked up towards the end of last year, but the outlook is increasingly challenging – and not just because of US import tariffs. Weaker capital inflows, lower commodity prices and tight policy will all drag …
26th March 2025
The protectionist shift in the US will weigh heavily on Mexico’s economy, which at best might just eke out positive growth this year. The rest of the region is less exposed to tariffs, but tight policy and worsening terms of trade will weigh on growth, …
Overview – Increased US tariffs will exacerbate a broader slowdown in exports. China’s economy will also face continued drags from the property downturn and wider deflationary dynamics. A sizeable fiscal loosening will provide a partial offset but won’t …
Easing cycle paused, and space for additional rate cuts narrows The Czech National Bank (CNB) left its policy rate on hold today, at 3.75%, and we think that the scope for further interest rate cuts this year has become more limited. We had previously …
The outlook for EM GDP growth appears increasingly challenging and our growth forecasts for this year generally sit below the consensus. Monetary easing will continue although, outside Asia, high inflation means that interest rate cuts will be smaller …
The Reserve Bank of Australia will leave policy settings unchanged at its upcoming meeting that ends on 1 st April and will probably still sound hawkish. However, with inflation set to soften a touch faster than the Bank had anticipated, we still expect …
Overview – We expect economic growth across the region to remain subdued, with most economies set to record below-trend and below-consensus growth this year. While lower interest rates will provide some support to growth, this boost is likely to be offset …
25th March 2025
As expected, Australian Treasurer Jim Chalmers unveiled a slew of new spending measures in today’s pre-election Budget. However, we don’t believe the scope of fiscal expansion is large enough to keep the RBA from cutting rates a bit further this year. In …
MNB on hold, high inflation to tie new governors hands The Hungarian central bank (MNB) left its base rate unchanged today, at 6.50%, and we think its easing cycle will remain on pause throughout 2025 as inflation remains stuck above target. Analysts have …
Overview – Both Antipodean economies seem to have turned a corner at the end of last year, and we expect the recoveries to gather momentum in the coming quarters. Given the tight labour market and elevated public demand, we believe the RBA will only …
The latest flash PMIs suggest that while economic activity may have picked up a bit in advanced economies towards the end of Q1, the outlook remains fairly bleak. And while inflation seems to finally be receding in the euro-zone, price pressures remain …
24th March 2025
The further easing of core services inflation in Mexico in the first half of March combined with recent weak activity data paves the way for Banxico to deliver another 50bp cut at its meeting on Thursday. The headline rate was unchanged from the first …
Weak data to bolster calls for monetary easing The weaker-than-expected February retail sales data out of Poland suggests that the economy may have slowed a bit more sharply than we had been anticipating this quarter. While this won’t prompt the central …
Could a ‘Mar-a-Lago Accord’ fix what ails the US balance of payments? Group Chief Economist Neil Shearing is on the show this week to tackle the various ideas around what the Trump administration could do to address long-standing global imbalances. He …
21st March 2025
With the Fed almost certain to leave interest rates unchanged on Wednesday, the real focus was on how FOMC participants would update their economic forecasts to fit the policy course being charted by the new Trump administration. In the end, policymakers …
Structural weakness weighs on long-run outlook While China’s treasury yields have picked up in recent weeks, we don’t think that the trend decline of the last decade is over. We expect China’s 10-year government bond yield to fall below Japan’s this year, …
A pause for thought? The Bank of England was never going to do anything but continue the cut-hold-cut-hold pattern and keep interest rates unchanged at 4.50% this week. But the Monetary Policy Committee’s (MPC) hawkish tone suggests it is preparing to …
Colombia: public finance risks back to the fore The resignation of Colombia’s finance minister Diego Guevara after just over three months in office has thrown the Andean nation into renewed disarray and raises big questions about the outlook for the …
Kenya and the IMF agree to disagree Kenya and the IMF abandoned talks over the ninth review of the country’s existing financing programs this week and, while a new deal is in the offing, public debt concerns are likely to build. It’s been clear for some …
The latest data suggest that the world economy has made a relatively weak start to 2025. Activity in China has been soft so far this year amid a pullback in fiscal spending, while a surge in US imports due to tariff front-running appears to have caused US …
Overview – The euro-zone will get a boost from Germany’s decision to ditch its fiscal rules and ramp up defence spending, as well as the relaxation of the EU’s budget rules. But governments other than Germany won’t loosen policy very much, and the …
