Filtered by Topic: Monetary Policy Use setting Monetary Policy
We think that UK public sector net borrowing remained elevated in August (07.00 BST) Policymakers in Sweden look likely to leave rates on hold … (08.30 BST) … but we expect Hungary’s central bank to hike its policy rate by another 30bp (13.00 BST) Key …
20th September 2021
The race to become the new LDP leader – and with it PM – formally began on Friday. With Delta cases plunging and the vaccination rate having caught up with many other advanced economies, whoever wins should be able to lift domestic restrictions and ride a …
The State Bank of Pakistan (SBP) today raised interest rates by 25bp and made clear further tightening is likely as the central bank shifts its focus away from supporting the recovery and towards boosting the currency. We expect more rate hikes over the …
SA: withering commitment to fiscal consolidation Momentum behind proposals for a basic income grant (BIG) in South Africa appear to be building, suggesting that the authorities are leaning towards providing more fiscal support than their harsh austerity …
17th September 2021
Probably too soon for the Fed to announce tapering; new 2024 rate projections due (Wed.) Brazil’s central bank likely to raise its policy rate by a further 100bp (Wed.) We think Norway’s central bank will begin its tightening cycle with a 25bp hike (Thu.) …
Policymakers in Nigeria kept their benchmark rate on hold at 11.50% at today’s MPC meeting and will probably continue to do so over 2021-23. And the central bank’s insistence on maintaining a strong currency using disruptive foreign exchange rules is …
Argentina’s PASO boosts bonds The loss for Argentina’s ruling Peronists in the open primary (PASO) for mid-term legislative elections in November suggest that the political tides might be shifting and boosted local financial markets. But the country’s …
Policymakers at a three-pronged fork in the road Next week’s three central bank announcements from Sweden, Switzerland, and Norway (in that order) promise to offer something for everyone, whatever their predilection on the policy front. The Riksbank will …
Indonesia and Taiwan on hold There are four major monetary policy meetings scheduled in the region next week. While we expect the central banks of Indonesia and Taiwan to leave rates unchanged, we are pencilling in a hike by the State Bank of Pakistan …
The Central Bank of Egypt (CBE) kept interest rates unchanged at Thursday’s MPC meeting amid rising price pressures. However, we still think that inflation will slow in the final months of this year and re-open the door for the CBE to resume its easing …
Solid GDP consistent with October rate hike The 2.8% rise in New Zealand’s production GDP in Q2 nearly returned output to its pre-virus trend. That’s an incredible achievement given the slump in net migration and that foreign tourists were just 14% of …
Struggling telecoms get a financial lifeline Parliament this week approved several relief measures for India’s embattled telecoms sector. The most significant is a four-year moratorium on dues owed to the government. To operate in India, telecoms firms …
Japan will remain the inflation outlier We launched our CE Spotlight series on inflation this week and one of the key messages is that the inflation outlook is more nuanced than the current polarised debate suggests. For example, while inflation is now …
MPC’s position that interest rate hikes are on the horizon won’t have changed But the weak near-term growth outlook means that a rate rise is unlikely soon We think that Bank Rate will remain unchanged at 0.10% until 2023 The Monetary Policy Committee …
16th September 2021
Falling foreign exchange reserves, a declining currency and a high level of foreign currency debt mean the risk of a sovereign default in Sri Lanka is growing. While the country should be able to muddle through for the next few months, it faces a crunch …
LDP leadership favourite Kono Taro may set his sights on shrinking BoJ balance sheet Next PM likely to be involved in choosing Governor Kuroda’s successor Both short- and long-term policy rates won’t be touched any time soon Dug in for an extended hold, …
Following a surge in inflation across the region this year, we think that headline rates are at, or close to, a peak in major Latin American economies. But strong underlying price pressures will prevent inflation from falling below central banks’ targets …
15th September 2021
We doubt that any independent review of Australia’s monetary policy framework would result in a change to the RBA’s 2-3% inflation target. But the Bank could be forced to put more emphasis on house prices, reduce the frequency of Board meetings, and …
Measures by the Reserve Bank to drain banking sector liquidity have caught attention over the past few days. But with liquidity still abundant, interbank rates at the very bottom of the rate corridor and financial conditions exceptionally loose, these …
14th September 2021
Our financial conditions indices show that conditions remain loose by historic standards in most EMs. The key exception is Latin America, where conditions have tightened sharply this year due to rising interest rates and fiscal risks. This could pose a …
13th September 2021
The speech by Governor Tiff Macklem this week suggests that, when the Bank of Canada next tapers its asset purchases, it may do so by less than is commonly assumed. Macklem starts talking about the end of QE The Bank kept policy unchanged at its meeting …
10th September 2021
Norway is a riddle, in a mystery, inside an enigma Norwegians will go the polls in parliamentary elections on Monday in what has been dubbed the “climate election”. The run-up to the vote has been dominated by a debate over the appropriate speed at which …
The future of ECB QE On Thursday, the ECB announced a slight reduction in the pace of its PEPP purchases but delayed more important decisions to December. (See here .) So October’s meeting looks set to be dull, and Christine Lagarde might need to channel …
Virus outbreaks starting to ease Virus outbreaks across South East Asia are in retreat. The biggest improvement has been in Indonesia, where daily cases of COVID-19 are now just over 10% of the level they reached in July. Numbers are also coming down in …
Yesterday’s larger 50bp rate hike, to 1.00%, delivered by Peru’s central bank (BCRP) suggests it is becoming increasingly concerned about the inflation outlook. With inflation set to stay above the 1-3% target range over the coming quarters, and GDP …
The broadening of the recent product and labour shortages appears to be holding back activity and adding to the upward pressure on inflation. The risk is twofold. First, these shortages may prevent GDP from returning to its pre-pandemic peak until next …
9th September 2021
We think the UK economy lost some momentum in July (07.00 BST) We expect Russia’s central bank to hike by 50bp at its meeting on Friday (11.30 BST) US producer prices for August may show further inflationary pressure (13.30 BST) Key Market Themes The ECB …
The ECB today confirmed that it will slow its asset purchases slightly but this is a long way from a “full taper”. We think inflation will drop even further than the ECB expects over the medium term and expect the Bank to continue with asset purchases of …
Malaysia’s central bank (BNM) left interest rates unchanged at 1.75%, and won’t be in any rush to adjust rates soon. Although the economy should start to rebound now that virus restrictions are being eased, output is likely to remain below potential for …
Factory-gate inflation hits a 13-year high Producer price inflation reached its highest since August 2008 last month due to the rally in global commodity prices. But the breakdown suggests that upward pressure on the factory-gate prices of consumer goods …
Economic activity in New Zealand took a significant hit as the country was plunged into its strictest level of lockdown in August. But New Zealand’s success at taming the virus means output should return to its pre-Delta path by Q1 and the RBNZ will begin …
There are some emerging downside risks to the economic outlook both domestically and globally but, after taking a well-anticipated pause at this meeting, we do not expect those risks to prevent the Bank from tapering its asset purchases at the next …
8th September 2021
The fact that the Swedish GDP indicator was nearly 2% above its pre-virus level in July puts a question mark over the wisdom of the Riksbank’s plan to exhaust its asset purchase envelope by end-2021. We think there is a rising chance that policymakers …
This year’s monsoon has so far been weaker than usual. This won’t have as big an economic impact as it would have a couple of decades ago. But it will harm employment and energy production. Some comfort can be taken from the fact that food inflation is …
7th September 2021
While the RBA pressed ahead with tapering its asset purchases today, the financial markets are too optimistic in pricing in rate hikes as soon as next year . The RBA kept its interest rate targets unchanged at 0.10% as widely anticipated, but the more …
While the spike in August inflation in the Philippines makes the central bank’s (BSP) policy decision this month an even closer call, the worsening outlook for the economy means we are sticking with our non-consensus view of a 25bp cut on 23 rd September. …
Headline inflation came in higher than our above-consensus forecast in August and, at 3.0%, reached its highest level for a decade. It is likely to rise a bit further in the coming months: producer price inflation has risen recently and the price …
6th September 2021
Clouds gather over Brazil’s recovery The disappointing economic data out of Brazil this week has cast some clouds over the economy’s recovery prospects. As it happens, we think that GDP growth will pick up quite strongly in Q3, but we’re increasingly …
3rd September 2021
Korea keeping fiscal policy supportive Korea’s proposed budget for 2022 indicates that fiscal policy will remain supportive. In nominal terms, expenditure in 2022 is set to be roughly in line with this year’s (which has been boosted by two stimulus …
For most of the pandemic period, policymakers have been worrying that there will be too much unemployment. But now the fear is that there aren’t enough workers to fill all the jobs! Admittedly, there are still some lingering concerns that when the …
Poland’s inflation surge splits opinion at the NBP The surge in Polish inflation to a fresh two-decade high in August has shown no sign of prompting a more hawkish shift at the central bank. But with inflation likely to remain stuck above target for some …
Delta undefeatable in Australia Victoria joined New South Wales (NSW) in abandoning the zero-Covid strategy this week, declaring the Delta Variant ‘undefeatable’. Even so, the state government opted not to meaningfully ease restrictions. Instead, the …
ECB likely to signal that it will reduce its weekly PEPP purchases in the months ahead. But we think it will leave interest rates unchanged until beyond 2025. The Bank will also nudge up its inflation and growth forecasts for this year. The ECB is likely …
2nd September 2021
The data released over the northern hemisphere summer break have suggested that economic recoveries in most countries have started to lose some steam. At the same time, while inflation is generally higher now that at the start of the summer, there are …
The latest data show that growth in the main monetary aggregates is slowing even before the Fed starts tapering its monthly asset purchases, although it remains strong by historic standards. (See Chart 1.) With the Fed likely to begin reducing its monthly …
1st September 2021
The surprise 75bp interest rate hike by Chile’s central bank late on Tuesday (which took the policy rate to 1.50%) underscores policymakers’ concerns about the inflation outlook. Our forecasts for the policy rate had in any case been on the hawkish side, …
Acceleration in vaccine rollout means lockdowns unlikely to last much longer RBA will probably press ahead with tapering However, Bank unlikely to tighten as early as next year as financial markets expect The health situation in Australia continues to …
Q2 GDP data released over the past month or so did not show a repeat of the across-the-board rises in exports seen in previous quarters, but the external sector still proved an important prop to GDP in many places. Thailand’s economy unexpectedly grew …
31st August 2021
A WeChat post by a prominent blogger voicing support for Xi Jinping’s “ common prosperity ” campaign has been widely re-published by state media, giving it a rare seal of Party approval. The post argues that the recent regulatory crackdown is just the …
Brazil’s institutions take a beating The newsflow out of Brazil this week has made for grim reading, with open disputes between the presidency and supreme court putting the country’s democratic institutions under strain. In such circumstances, it’s hard …
27th August 2021
