Filtered by Topic: Monetary Policy Use setting Monetary Policy
The Monetary Policy Committee’s (MPC) policy statement sent a clear signal that higher interest rates are on the horizon. But there were few signs that it is preparing to hike rates soon. What’s more, we continue to envisage inflation dropping back more …
5th August 2021
The hawkish statement accompanying yesterday’s 100bp rate hike by the Brazilian central bank (to 5.25%) means that the Selic rate will increase further than we had anticipated. We now expect it to be raised to 7.50% by year-end (previously 6.50%). The …
The surge in spending as coronavirus restrictions have been lifted will bring the euro-zone economy close to its pre-pandemic level in the coming months. After expanding by 2% q/q in Q2, we expect a similar increase in Q3. Both business and consumer …
4th August 2021
The Bank of Thailand (BoT) left its policy rate on hold at 0.5% today as expected. Given the deteriorating outlook for the economy and with two of the six MPC members voting for a rate cut, we now think the central bank will loosen policy further this …
US ADP report will give first clues about the health of the labour market in July (13.15 BST) We expect Brazil’s central bank to hike its policy rate by 100bp, to 5.25% (22.30 BST) Euro-zone retail sales probably rose by around 2% m/m in June (10.00 BST) …
3rd August 2021
The Reserve Bank of Australia delivered a hawkish surprise by not delaying the tapering of its bond purchases. And by predicting that it will hit its full employment mandate and make further progress towards its inflation target, it has opened the door …
The slightly disappointing second-quarter GDP data released this week and another dovish press conference from Chair Jerome Powell strengthen our belief that the Fed is unlikely to begin tapering its asset purchases until early next year. The 6.5% …
30th July 2021
Peru’s President Castillo off to a concerning start The first steps from Peru’s newly-inaugurated President, Pedro Castillo, provide plenty of worrying signs for investors. The president officially took office on Wednesday and his inauguration speech …
Global factors driving Swiss industry and the franc We would not overplay the importance of the second consecutive fall in the Swiss KOF Economic Barometer (July data were released this morning). After all, the indicator is still well above its long-run …
With new virus cases hitting fresh highs this week, Sydney’s lockdown has been extended until end-August and looks set to last for months given the high transmissibility of the Delta variant. Melbourne also briefly re-entered lockdown this month, though …
Questions about the strength of China’s post-lockdown rebound have become louder since the People’s Bank cut the required reserve ratio three weeks ago. But the trigger for this week’s sharp equity market sell-off was instead growing disquiet about the …
GDP to contract, but recession unlikely As new infections in Sydney have hit fresh highs this week, the lockdown there has been extended until end-August. The blanket ban on construction has been lifted, but construction will remain banned in hotspots. …
A bankruptcy code to aid the COVID recovery The amendments to the Insolvency and Bankruptcy Code (IBC) that were approved in the Lok Sabha (lower house of parliament) this week would, if passed in the Rajya Sabha, provide much-needed support to India’s …
The highly contagious Delta variant of COVID-19 seems to be dominant now across much of Sub-Saharan Africa and is driving new waves in many of the large economies. South Africa appears to be over the worst of its latest outbreak, although it now has to …
29th July 2021
Table of Key Forecasts Overview – Low vaccine coverage means that the threat to economic recoveries from the highly-contagious Delta variant is much larger in the emerging world than in developed economies. And EMs will take longer to return to their …
RBI likely to keep rates on hold next week as inflation pressure looks set to ease Central bank will underline its commitment to supporting the economic recovery Policy normalisation will happen only very gradually, and not until well into next year …
The Fed took a small step toward the eventual tapering of its asset purchases by altering the language in the statement released today, but officials appear to be in no rush. We still expect an announcement in August or September, with the taper itself …
28th July 2021
Sweden’s GDP likely to have risen back above pre-pandemic level (08.30 BST) We think the euro-zone’s ESI rose to a 22-year high this month (10.00 BST) US GDP growth probably accelerated in Q2, but Q3 looks less promising (13.30 BST) Key Market Themes The …
The end of the impasse within OPEC+ this month will result in higher oil output and boost recoveries in the Gulf over the second half of this year and in 2022 . Output quotas will rise by 400,000bpd each month after the UAE backed down in return for …
The region’s economies have continued to rebound strongly over the past month as virus outbreaks have largely been contained and restrictions have been lifted. Surveys of sentiment in the services sector have surged and high-frequency mobility data have …
In a bold move that will be closely watched across the region, Singapore is set to drop its implicit target of pursuing zero local COVID-19 cases, with restrictions set to be eased gradually from August. In other words, Singapore will learn to live with …
Table of Key Forecasts Global Overview – The initial post-pandemic resurgence is nearing its zenith, but strong policy support and limited private sector net debt should allow most economies to grow at a healthy pace over the next two years. The US and …
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 …
Inflation will keep surprising to the upside Most of the surge in inflation in Q2 was driven by base effects that will unwind over the next couple of quarters, but we think that inflation will remain stronger than the RBA is anticipating. The 0.8% q/q …
Policymakers in Nigeria kept their benchmark rate on hold at 11.50% at today’s MPC meeting and, if we’re right in expecting the economic recovery to disappoint, policy settings are likely to remain unchanged for some time. Meanwhile, the announcement on …
27th July 2021
Fed unlikely to be ready to issue tapering guidance (19.00 BST) Canada’s headline inflation probably fell from 3.6% to about 3.2% in June (13.30 BST) We are now anticipating a faster tightening cycle in Hungary Key Market Themes Although equity indices in …
While the regional economic recovery stuttered in Q2, it appears to be gathering pace in Q3. New COVID-19 cases have dropped back, particularly in Chile and Uruguay suggesting that their rapid vaccination programmes are proving effective. Restrictions …
The larger-than-expected 30bp interest rate hike by Hungary’s central bank (MNB) today was accompanied by hawkish comments that send a strong message about its intention to bring inflation back to its target. The tightening cycle is likely to be sharper …
We believe that the slump in net migration is holding back supply more than demand. Unless the government allows net migration to overshoot its pre-virus level for a prolonged period once the border reopens next year, we think that staff shortages will …
While the US dollar has fallen back a little against most currencies in the second half of the week as the sharp sell-off in risky assets and currencies on Monday was reversed, it looks set to end the week slightly stronger, continuing its strong run …
23rd July 2021
Delta variant unlikely to derail the recovery Concerns have grown over the past week about the spread of the Delta variant of COVID-19 but high vaccine coverage across much of the region has reduced the risk that policymakers will be forced to reimpose …
Overview – China’s economy has been defying gravity thanks to elevated global demand but this support may now be fading. Meanwhile, last year’s policy easing has been fully reversed. An abrupt slowdown is not likely to follow, but highly-indebted firms, …
Mexico: Possible fallout from the third virus wave The third virus wave currently underway in Mexico, driven by the contagious Delta variant, will probably weigh on activity this quarter. But, for now, we don’t think that it will derail the economic …
Russia’s central bank (CBR) opted for a larger 100bp interest rate hike, to 6.50%, at today’s meeting and the accompanying communications provided clear guidance that the tightening cycle is nearing an end. With inflation likely to rise further and …
RBA to delay tapering until November With New South Wales today declaring a “national emergency” as virus cases continue to rise, we now expect the Reserve Bank of Australia to reverse the tapering of its bond purchases and leave them unchanged at least …
We think UK retail sales fell further in May as consumption shifted to services (07.00 BST) Markit PMIs for the euro-zone are likely to indicate a continued expansion in July (09.00 BST) Russia’s central bank is likely to raise its policy rate by 100bp …
22nd July 2021
The ECB followed through on its strategy review today by raising the bar for interest rate hikes in language which was probably a touch more dovish than expected. The Bank made no change to its guidance on asset purchases, but we think it will continue …
Policymakers in South Africa kept their benchmark rate unchanged at 3.50% today and the dovish tone of the communications supports our view that interest rates won’t rise until the middle of next year. Today’s decision by the South African Reserve Bank …
Bank Indonesia (BI) left interest rates unchanged today at 3.5%, and despite the worsening near-term outlook caused by a surge in COVID-19 cases, the central bank made clear further cuts are unlikely. We expect interest rates to remain unchanged until the …
As elsewhere in mainland Europe, activity in Switzerland and the Nordic economies rebounded in Q2 as services sectors re-opened and the strength of global trade has buoyed exports. Our GDP forecasts for 2021 are generally above the consensus and output …
While infections are now rising sharply nationwide – particularly in Tokyo where the Delta variant has the strongest hold – most of the vulnerable population are now fully vaccinated so we doubt restrictions will have to be tightened any further. …
Overview – Strong COVID-19 vaccine rollouts in most of the Gulf and Morocco mean that remaining virus restrictions should be lifted by the end of this year, providing a boost to recoveries that, in the Gulf, will be turbo-charged by the recent OPEC+ deal …
21st July 2021
Overview – Rapid recoveries are underway across the region and GDP should return close to its pre-pandemic path sooner than in most other EM regions. While the spread of highly transmissible virus strains poses the greatest threat to the near-term …
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 …
Amid the ongoing debate over inflation in a post-pandemic world, one thing that does appear clear is that near-term price pressures in India have peaked. Consumer price inflation held steady in June at 6.3% y/y, while wholesale price inflation dropped for …
This Focus has been updated to incorporate the latest publicly-available information on China’s eCNY project, including the PBOC White Paper published on 16 th July 2021. The original version of the Focus , published on 27 th May 2021, is here . In this …
Overview – Surging infections across South East Asia and the slow progress of vaccine rollouts mean that COVID-19 will continue to cause widespread economic disruption across large parts of the region until at least the end of the year. We have cut our …
20th July 2021
Overview – Our forecast that COVID-19 won’t significantly reduce potential supply means that the economy can run a bit hotter for longer without generating the persistent rise in inflation that would require monetary policy to be tightened. Admittedly, …
Overview – Virus outbreaks are easing in much of Latin America which should support activity in the near term. And while vaccination coverage is still weak in most of the region, suggesting there is still a clear risk of further virus waves, economies are …
19th July 2021
There are signs that the worst of the violence and unrest that has gripped South Africa this week may be over. Any hit to economic activity is unlikely to be long-lasting but the risk that the government’s austerity plans are watered down has increased. …
16th July 2021
