Filtered by Topic: Monetary Policy Use setting Monetary Policy
Property prices flat last month One reason the Bank of Korea pushed back against the prospect of another near-term rate cut at its meeting last week was fear of a rebound in property prices that might threaten financial stability. We think this concern is …
18th October 2024
The euro-zone construction output data for August, released earlier today, were the final activity data to be published ahead of the preliminary euro-zone Q3 GDP data release in two weeks’ time. While activity data for the third quarter have been a mixed …
Donald Trump says ‘tariff’ is “the most beautiful word in the dictionary”. That’s up for debate – but what’s less arguable is that raising taxes on imports as much as the Republican presidential candidate is threatening would be bad trade policy, …
Firms will take higher labour costs on the chin With the Australian labour market remaining resilient as ever, financial markets have come around to our view that the Reserve Bank of Australia won’t cut interest rates before Q1 2025. That’s a notable …
Recessions fears continue to go unfounded, with the labour market still in good health after the strong September employment report. Prospects for October look weaker due to recent temporary disruptions but, with core inflation pressures heating up a …
17th October 2024
Before the global financial crisis, 50bp interest rate cuts by the ECB were more common than 25bp reductions. Circumstances today are different, but if ECB policymakers are convinced that they need to keep cutting, we think they would not shy away from a …
Christine Lagarde’s message in today’s ECB press conference was distinctly dovish and supports our view that the ECB will cut interest rates by 25bp at each of the next few meetings, at the very least. It wouldn’t be surprising if the Bank opted for a …
25bp rate cuts likely to keep coming Alongside its decision to cut interest rates by 25bp, the ECB stuck to its guidance about data dependence and making decisions on a meeting-by-meeting basis. But the press release also acknowledged the recent weakness …
Slow pace of disinflation will prevent monetary easing this year The decision by the Turkish central bank (CBRT) to leave its policy rate on hold again today, at 50.00%, was accompanied by communications which support our view that monetary easing is …
GDP growth and inflation have surprised to the downside of Bank’s forecasts That should persuade the Bank to enact a larger 50bp cut next week We expect another 50bp cut in December to take the policy rate to 3.25% by year-end The Bank of Canada has said …
16th October 2024
Balancing investing in the economy and fiscal credibility In her first Budget on Wednesday 30 th October the Chancellor, Rachel Reeves, faces the unenviable task of trying to achieve three objectives. First, being able to say there will be “no return to …
We will be holding an online briefing later today to discuss the outlook for economic policy across Asia. You can register here . Hold does not mark the end of the easing cycle Bank Indonesia today left interest rates on hold (at 6.00%), but we think …
Another 25bps cut, with more to come The central bank in the Philippines cut rates by 25bps and signalled that the recent economic data support its shift towards a looser monetary policy stance. Further gradual loosening lies in store in the coming …
We will be holding an online briefing later today to discuss the outlook for economic policy across Asia. You can register here . BoT cuts as deflation risks mount Thailand’s central bank (BoT) today cut interest rates by 25bps (to 2.25%), but appeared to …
This page has been updated with additional analysis since first publication. Soft inflation data tee up another 50bp cut by the RBNZ The weaker-than-expected Q3 CPI data reinforce our conviction that the RBNZ will loosen policy more aggressively than most …
15th October 2024
Israel’s economy is under strain from the conflicts in Gaza and Lebanon, with supply constraints both holding back growth and causing inflation concerns to build. The softer-than-expected inflation figures for September released today will provide some …
We’ve long held the view that the Bank of Canada will need to cut rates at an aggressive pace – and market pricing is quickly aligning with our forecast for a 50-basis point move next Wednesday. But how far will the Bank go to ease policy, and how quickly …
Inflation picks up, one more rate hike lies in store Nigeria’s headline inflation picked up to 32.7% y/y in September, confirming that the CBN’s fears about upside risks from last month’s petrol price hikes were not misplaced. We think the CBN will …
The ECB’s latest Bank Lending Survey suggests that demand for credit is recovering, but the rebound in housing loans is much stronger than in consumer or enterprise loans. The Bank Lending Survey for Q3 provides grounds for optimism that the housing …
The next moves in interest rates are starting to become clearer. In the US, the incoming data continue to paint a picture of an economy that remains relatively resilient and suggest that, having kickstarted its easing cycle with a 50-basis point (bps) cut …
14th October 2024
It’s a rare thing for a press conference from China’s Minister of Finance to excite quite so much, but there were widespread hopes in markets that Saturday’s briefing from Lan Fo’an would finally provide the details of fiscal easing plans that had been …
12th October 2024
Hurricanes add to upside inflation risks Inflation risks more balanced Based on the combined CPI and PPI data, we calculate that the Fed’s preferred core PCE deflator price measure increased by 0.24% m/m in September which, at 2.9% annualised, is a little …
11th October 2024
The stronger labour market data makes the Bank of Canada’s decision in October a close call but, with upside inflation risks fading, and demand still very weak, we think the Bank will want to bring interest rates to a more neutral stance relatively …
Inflation declines, but another rate hike looking more likely Headline inflation fell to 8.6% y/y in Russia in September but this was a touch less than expected and the breakdown showed that core price pressures are easing only very slowly. It now looks …
The key activity and labour market indicators in the Bank of Canada’s surveys did not deteriorate last quarter, but they remain consistent with weak GDP growth, rather than the pick-up the Bank is looking for. The weak results mean that, despite the …
Kenya’s second consecutive 75bp cut Kenya’s lowered its policy rate by 75bp this week and continued disinflation alongside an improved external environment mean that Kenya will deliver further monetary loosening over the coming months. Similar trends are …
Worrying developments in Mexico There had been a lot of debate about what to expect from Claudia Sheinbaum ahead of her inauguration as Mexico’s (first female) president and her first two weeks in office have provided the first insights into where her …
Some encouraging signs in the latest CPI data The batch of September inflation data out of the region this week offered some welcome signs for central banks. In Hungary, the headline rate fell to 3.0% y/y – its lowest rate since January 2021 and slightly …
France needs austerity Having survived a vote of no confidence on Tuesday evening, on Thursday France’s government presented its 2025 budget. The key points had been well signposted in advance: €60bn of savings next year, equivalent to 2% of GDP, made up …
Bank of Korea cuts The Bank of Korea kickstarted its easing cycle earlier today with a 25bps cut. As we outlined here , with GDP growth struggling and price pressures very weak, further easing is likely over the coming months. BI unlikely to cut again …
It’s a busy week for Asia’s central banks, with three key decisions expected on Wednesday following on from the latest Reserve Bank of India and Bank of Korea meetings. Investors will also be watching to see how much fiscal support Beijing is willing to …
RBI on course for December rate cut In a busy week for India Watchers, the key event was the Reserve Bank’s policy announcement on Wednesday. The MPC opted to keep the repo rate unchanged at 6.50%, with new member Nagesh Kumar the sole dissenter. But …
The Bank of Korea today cut interest rates by 25bps (to 3.25%), but tried to dampen speculation that it would cut rates at its final meeting of the year in November. With growth struggling and inflation low, we think it is too early to rule out another …
Consumer support and a larger deficit Tomorrow’s press conference will provide a platform for the Ministry of Finance (MoF) to reveal its fiscal plans. The stakes are high - most observers agree that recent stimulus announcements won’t amount to much …
Easing monetary restraint is the need of the hour As was widely anticipated, the Reserve Bank of New Zealand cut its Official Cash Rate by 50bp at its meeting on Wednesday. But it’s worth noting that the Committee sounded rather dovish. In contrast to …
Interest rates cut, further easing ahead The Bank of Korea kickstarted its easing cycle today with a 25bps cut. With growth struggling and inflation below target, we expect more easing over the coming months. The decision to lower the policy rate from …
The latest data are consistent with our view that the world economy is in a soft patch. There are signs that global manufacturing is headed for recession and trade will soften. Consumers in DMs outside the US seem reluctant to spend, and banks in major …
10th October 2024
ECB is certain to cut interest rates by 25bp next week. And we think it will cut at each meeting until the deposit rate hits 2.5%. Inflation likely to be below 2% next year, so risks are skewed towards more cuts. A 25bp interest rate cut looks nailed on …
Fed split on whether to kick off with 50bp or 25bp rate cut last month The minutes of the mid-September FOMC meeting reveal that support among Fed officials for kicking off the loosening cycle with a bigger 50bp rate cut was a little weaker than the lone …
9th October 2024
Given the amount of signalling by Governing Council officials, it would be surprising if the ECB didn’t cut rates at its October meeting. But how far will the Bank go to ease monetary policy from here, and how quickly will it get there? Our Europe team …
Sweden’s economy is likely to see a strong rebound next year as consumption will benefit from fiscal stimulus and lower household interest expenditure. We think that the recovery will encourage the Riksbank to only cut its policy rate from 3.25% to 2.5% …
War concerns drive further hawkish tilt at the BoI The communications alongside the decision by the Bank of Israel (BoI) to leave its policy rate on hold again today, at 4.50%, underline that policymakers have grown more concerned about the escalation of …
We think the Chancellor will raise taxes in line with the planned £16bn (0.6% of GDP) a year increase in public spending at the Budget on 30th October. The main influence of this will just be a rotation in the shape of GDP growth away from consumer …
Brazil inflation rises, more Selic hikes incoming The rise in Brazil’s headline inflation rate to 4.4% y/y in September was mainly due to drought-related effects on food and electricity prices but, even so, it will reinforce the hawkishness of Copom and …
Inflation ticks up again, CBE to wait until Q1 ’25 before first rate cut The second consecutive rise in Egypt’s headline inflation rate, to 26.4% y/y in September, on the back of electricity and fuel price hikes further reduces the chances of a first …
The Reserve Bank of India’s new-look MPC voted to keep the repo rate unchanged at 6.50% today as expected but struck a less hawkish tone in its communications, which included a change in the official policy stance to more neutral language. This …
RBI lays groundwork for December rate cut The Reserve Bank of India’s new-look MPC voted to keep the repo rate unchanged at 6.50% today as expected but struck a less hawkish tone in its communications, which included a change in the official policy stance …
RBNZ hands down a dovish 50bp cut The RBNZ is likely to hand down a couple more 50bp rate cuts over the next few months . And we think it will end up cutting rates more aggressively than most are predicting. The RBNZ’s decision to cut its Official Cash …
With the inflation battle seemingly won, the Bank of Canada has indicated that it is prepared to cut interest rates more quickly if warranted, with that decision hinging on developments in business hiring, investment and consumption. While the focus on …
8th October 2024
Inflation down again September’s drop in inflation in Sweden will reinforce the Riksbank’s inclination to keep cutting interest rates at the next few meetings. Statistics Sweden’s first ever “flash” estimate of inflation revealed that headline CPI …
