Filtered by Topic: Monetary Policy Use setting Monetary Policy
The budget surplus recorded in Russia in 2018 has put the spotlight on austerity measures, but it actually looks like fiscal policy will provide more support to the economy this year than it did in 2018. Meanwhile, the Turkish central bank’s latest …
1st February 2019
Senior Deputy Governor Carolyn Wilkins this week outlined the Bank of Canada’s thinking on wage growth. But by failing to repeat the Bank’s normal mantra about raising interest rates further, what Wilkins didn’t say is perhaps more significant than what …
Kenyan policymakers left their key policy rate unchanged this week, and we think that they will hold rates over the remainder of the year. Peers in Angola and Ghana – who cut this week – will probably continue to loosen policy over the coming months. Next …
In advanced economies, monetary and credit conditions remain supportive. But bond issuance has been declining sharply in recent months, and credit growth in China is still slowing. … Monetary Indicators Monitor …
The RBA will probably continue to signal that the next move in rates is up at Tuesday’s meeting. But with mounting signs that the housing downturn is spreading to other parts of the economy and price pressures abating, we think the Bank will have to cut …
While it is guaranteed that the Monetary Policy Committee will leave interest rates at 0.75% at the policy meeting on Thursday 7th February, the accompanying Inflation Report may provide some crucial clues to how keen the MPC is to change rates once …
31st January 2019
Although we expect the US federal funds rate to end 2020 lower than it is now, we don’t think that the dollar will decline this year. The reason is our bearish view of the global economy. … A dovish Fed won’t keep the US$ down if the S&P …
Signs of weakness in the global economy seem to have prompted a significant change of tack from central banks. Even in the US, where growth has so far held up well, the Federal Reserve appears reluctant to raise interest rates again and we are …
The statement accompanying the Chilean central bank’s decision to hike its policy rate by 25bp to 3.00% last night was slightly less hawkish than the previous one, and supports our view for fewer rate hikes than the markets are pricing in. We expect rates …
A new strand of economics called “Modern Monetary Theory” (MMT) is seen by its advocates as a solution to the flawed economic thinking that contributed to the financial crisis. The ideas behind it could be a useful addition to the possible toolkit if …
The dovish tone of the policy statement and press conference following today’s FOMC decision will reinforce expectations that the Fed is almost done raising interest rates. We think a sharp economic slowdown over the course of this year means the Fed will …
30th January 2019
The RBA will probably reduce its GDP growth forecasts at next week’s meeting but should still signal that the next move in rates will be up. Our more pessimistic outlook for economic activity, the labour market and inflation suggest that the Bank may …
Inflation remained below the lower end of the RBA’s target range in the fourth quarter and we think it won’t rise within the target band any time soon. And if GDP growth slows as sharply as we anticipate, that means the RBA may soon have to consider …
We agree with financial market expectations and the analyst consensus that interest rates will stay on hold at the conclusion of the RBI’s meeting on 7th February – the first under the stewardship of Governor Shaktikanta Das. But Mr Das is likely to use …
With the “patient” Fed set to leave interest rates unchanged, attention has shifted to its plans for balance sheet normalisation. But focusing on the terminal size of the balance sheet misses an important point. Its composition matters too, and if the Fed …
29th January 2019
Mexican inflation has been stubbornly above Banxico’s 2-4% target over the past two years, but we think it will fall back within this range by year-end. And with the Fed’s tightening cycle near its peak, we expect Banxico to shift into easing mode later …
Two of our big non-consensus calls are that in time fiscal policy will become more supportive for the economy than the Chancellor’s current plans suggest and that interest rates will rise a bit more quickly than the markets and most forecasters have been …
With inflation set to remain within target, we expect that Kenyan policymakers will leave their key rate on hold this year. Their Angolan and Ghanaian counterparts, however, will continue their easing cycles. … Africa rates: Kenya on hold, Ghana & Angola …
28th January 2019
The turn towards a slightly more dovish tone by the ECB at its meeting on Thursday will have made policymakers at the SNB and the Riksbank even more hesitant to hike rates anytime soon. Next week, we expect economic sentiment indicators for Switzerland, …
25th January 2019
The latest batch of business surveys suggest that the euro-zone economy may be stalling rather than just slowing. We think the ECB will tweak its forward guidance in March, and will at least consider more radical options soon. Meanwhile, we’re braced for …
At next week’s policy meeting, the Fed is likely to reiterate its current mantra that it can be “patient” in waiting to hike interest rates. Admittedly, stock markets have recovered most of the losses from December and credit spreads have narrowed again, …
A raft of weak activity and survey data released this week reinforces our relatively downbeat view on the outlook for growth across Emerging Europe this year. Slowing growth seems to be worrying some central banks in the region – policymakers in Poland …
After a very weak 2018, we expect that growth in Sub-Saharan Africa will strengthen this year. The major oil exporters will, of course, suffer the effects of lower oil prices and our growth forecasts for Nigeria and Angola are below-consensus. But most …
24th January 2019
Following today’s ECB press conference, we think that the Bank will soon change its forward guidance to make it clear that it won’t raise interest rates until 2020 at the earliest. We also suspect that it will unveil a new round of TLTROs before long. … …
On the face of it, the slowdowns currently seen in many countries appear attributable to a range of country-specific factors. But could we be missing the wood for the trees? Although there is little evidence of any particular global factor driving down …
Following today’s monetary policy announcement, the Norges Bank is almost certain to raise interest rates in March. But we think that it is still too optimistic about prospects for the economy this year and, as a result, its tightening cycle will be much …
Bank Negara Malaysia (BNM) today left interest rates unchanged, but the slightly more dovish statement supports our view that rate cuts will creep onto its agenda later this year. Whereas the consensus is expecting interest rates in Malaysia to be left on …
Today’s decision from the Bank of Korea (BoK) to keep rates on hold, and the downgrade in its forecasts, adds weight to our view that rates are likely to remain on hold throughout 2019. … Bank of Korea unlikely to raise rates this …
The Fed will leave rates unchanged next week and may well include references to being “patient” in the policy statement and post-meeting press conference, to signal more clearly that a March rate hike is off the table. With equity markets rebounding from …
23rd January 2019
Economic growth is set to slow after October’s sales tax hike while inflation will remain well below the Bank of Japan’s 2% target. But with high hurdles to additional policy easing, we think that the Bank will keep policy settings unchanged both this …
Election giveaways in India have been ramped up significantly this month, with small and medium-sized enterprises (SMEs) the main beneficiaries. Firms with annual sales of less than INR0.4m are now exempt from the Goods and Services Tax. Meanwhile, banks …
While inflation remained just below target in Q4, it will probably fall further over coming months as the full impact of the recent drop in the oil price has yet to be felt. However, the RBNZ won’t be too concerned as underlying inflation should continue …
22nd January 2019
There are good reasons to believe the next recession will be modest, which means that, even though the nominal interest rate would probably hit the near-zero lower bound again, the Fed should have the tools to counter that downturn by employing some of …
Whoever becomes the next ECB President is likely to be more “hawkish”, and perhaps less effective, than Mario Draghi. That may not matter if the economy recovers from its recent soft patch, allowing the ECB to normalise monetary policy; but it could be a …
Nigerian policymakers held their key rate at 14.00% today, and reiterated their support for the closely managed FX system. The controversial FX regime will almost certainly remain in place, unless a win for the opposition in next month’s closely-fought …
Weaker growth in China is already weighing on exports from the rest of Asia, and a further slowdown in the economy is one of the biggest risks clouding the outlook for the rest of the region. A slump in China would hurt economies with close trade links, …
We believe that the downturn in Australia’s housing market will become by far the deepest and longest on record. By curbing dwellings investment, consumption and bank lending, we think it will result in GDP growth slowing from close to 3% last year to 2% …
We expect GDP growth in Switzerland and across the Nordics to slow this year and next. As a result, price pressures should generally remain subdued and central banks look set to raise interest rates very gradually. We think that the Norges Bank and …
21st January 2019
The Fed’s promise to be “patient” is why we now forecast just one additional rate hike in the first half of this year, with the fed funds rate peaking at 2.50-2.75%. But we are increasingly confident in our view that a slowdown in economic growth to below …
18th January 2019
Sweden’s new government has agreed to cut income taxes and relax labour laws. It has also brought an end to four months of political uncertainty, at least for now. But we suspect that all this will have little impact on the economy. … Swedish fiscal boost …
EM GDP growth has started to slow and will be weaker than most expect in the coming quarters. Domestic strains are growing following previous policy tightening and external headwinds are building, regardless of how the US-China trade war develops. … A …
The euro-zone should regain some momentum in the coming months, at least compared to its dire performance at the end of last year. But we think the economy will expand by just 1% in 2019 as a whole. Demand in key export partners is set to slow further, …
December’s rise in inflation mainly reflected a statistical quirk and will be more than reversed in January. Indeed, we expect inflation to drop below 1.5% in the coming months. … Consumer Prices …
The liquidity injection by the PBOC this week was the largest on record. But it was mainly intended to manage the usual cash crunch ahead of Chinese New Year rather than loosen monetary conditions. The main constraint on further easing at the moment is …
Hawkish comments from Hungary’s MPC this week support our view that monetary policy will be tightened by more than is priced into markets. Meanwhile, emergency economic powers granted to Turkey’s President Recep Tayyip Erdogan heighten the risk of policy …
The latest manufacturing PMIs add to the evidence that economic growth in Switzerland and Sweden will continue to slow. The Swiss index is consistent with annual growth in industrial production of about 3%, compared to almost 8% at the end of 2017. And …
Policymakers in South Africa toned down their hawkish language at their meeting this week, suggesting that rate hikes are now off the agenda. Elsewhere, Nigeria’s leading opposition politician laid out a bold economic reform plan. Given divisions within …
Australia’s housing downturn is deepening. Prices will probably fall by more than we had previously anticipated and the drag from falling dwellings investment will be larger. The experience from housing downturns in other advanced economies is that …
At next week’s monetary policy meeting, the Governing Council of the ECB will have little option but to acknowledge that the downside risks to its forecasts have increased further since it last met in December. Having tweaked its forward guidance only …
17th January 2019
