Filtered by Topic: Monetary Policy Use setting Monetary Policy
Figures released this month showed that Sub-Saharan Africa’s largest two economies remained weak in late 2018, but that activity picked up faster elsewhere in the region. These readings strengthen our view that Africa’s smaller economies will continue to …
20th December 2018
The Bank of Japan left interest rates unchanged today and Governor Kuroda’s dovish comments suggest that policy tightening remains a long way off. … Bank of Japan Meeting …
2018 has been a mixed bag for India’s financial markets. The bond market has seen significant gyrations, only for yields to end the year virtually flat from 12 months ago. Meanwhile, the 7% rise in the Sensex means it has outperformed most other major EM …
The Fed hiked the fed funds target range by 25bp today, to between 2.25% and 2.50%, as most still expected, but tempered the move by slightly revising down Fed officials' projections for additional rate increases in 2019 and beyond. Still, with the vote …
19th December 2018
We expect Emerging Asia to grow at its weakest rate in 2019 since the 2008-09 global financial crisis. With inflation also set to drop back, the regional tightening cycle is likely to come to an end. We expect a few countries to start cutting rates by the …
Thanks to the recent sharp drop in oil prices, the fall in inflation in November is likely to be the precursor to a larger fall in December. Inflation could even reach the 2% target, bringing some Christmas cheer both to the Bank of England and seasonal …
The fall in inflation across much of Emerging Europe last month was surprisingly sharp, which in part was due to lower oil prices but also (and more unexpectedly) a dip in food inflation. One consequence is that the Turkish central bank is likely to cut …
Today’s rate hike by the Bank of Thailand (BoT) is unlikely to mark the start of a prolonged tightening cycle. In fact, with growth likely to slow in 2019 and inflation set to remain very weak, we think today’s hike could be a case of “one and done”. In …
As oil prices have fallen over the past few months, investors’ expectations for interest rates in Norway have fallen roughly into line with our own. Rate expectations in Switzerland have edged down too, reflecting the weakness of the latest economic data. …
18th December 2018
The statement accompanying today’s Hungarian MPC meeting provided the clearest sign yet that policymakers are shifting towards the start of a tightening cycle. For our part, we think that interest rates will rise further next year than financial markets …
The past month has brought signs that Egyptian policymakers are trying to simplify the country’s exchange rate setup, which is ultimately likely to result in a weaker pound. Over the past six months or so, Egypt’s government appears to have leaned on …
17th December 2018
The boost to purchasing power from the recent plunge in gasoline prices has already fed through to stronger real consumption growth. Even assuming a more modest rise in December, control group retail sales are on track for a 5% annualised gain in the …
EM growth has slowed over the course of 2018 and our GDP Tracker suggests that aggregate growth fell to its weakest pace in two years in Q4, at around 4.0%. 2019 is unlikely to be better. We expect slower growth across large parts of the emerging world …
14th December 2018
Following this week’s ECB meeting, and the latest data on economic growth in the currency union, the chance that the Bank raises interest rates next year has fallen. … ECB dovish as PMI confirms growth …
In normal times, the MPC would be preparing the ground for another interest rate hike. After all, pay growth has picked up far more sharply than the Bank of England had anticipated. But as it is still unclear how Brexit will pan out, the Committee seems …
Central bank meetings in Norway and Iceland this week suggested that interest rate hikes are on the horizon in both economies. By contrast, the Swiss National Bank again signalled that it won’t raise rates anytime soon. Next week we expect the Riksbank to …
Russian central bank governor Elvira Nabiullina’s hawkish post-meeting press conference reinforced our impression that another hike in interest rates is likely over the next few months. We now expect a 25bp hike to 8.00% early next year. We have revised …
With growth in the euro-zone slowing faster than expected and the chances of the ECB delaying its first interest rate hike increasing, property yields are now more likely to plateau next year, than rise. … Property yields to …
The Bank of Thailand (BoT) is likely to raise its policy rate for the first time since 2011 at its meeting on Wednesday due to concerns about accelerating credit growth. Meanwhile, having widened to a record US$4.2bn in October, we think the trade deficit …
Headline wholesale price inflation eased in November and, taken alongside the drop in CPI inflation last month as well as the appointment of an ally of Prime Minister Modi as the new governor of the RBI, a rate hike at the next policy meeting now looks …
The state election results announced this week were a clear setback for Prime Minister Modi’s BJP, as they suggest that goodwill is fading ahead of next year’s general election. While we still think the BJP will win the general election, it is unlikely to …
While the ECB has ended its net asset purchases, it plans to reinvest funds from maturing securities for a long time to come and has stressed that any future rate hikes will depend on a build-up of inflationary pressure. We are still pencilling in a first …
13th December 2018
We think 2019 is likely to be a year in which EM growth slows, and by more than most expect, while asset prices fall. In this Focus , we outline our key calls for next year. … Key calls for EMs in …
Headline inflation is set to decline in the coming months, due to the recent slump in oil prices, and we think it will remain below 2% in most advanced economies next year. Tightening labour markets have already fed through to higher average earnings …
The statement accompanying today’s decision by Turkey’s central bank to leave policy on hold suggests that the MPC is contemplating rate cuts. With inflation falling back and political pressure on the central bank to lower rates set to build ahead of …
In today’s statement, the Norges Bank clearly signalled that an interest rate hike in March is a near certainty. But beyond that, we think that lower oil prices will prompt the Bank to end its tightening cycle sooner than investors expect, causing the …
The Swiss National Bank reiterated its commitment to its ultra-accommodative policy stance today and revised down its forecasts for inflation and GDP. As we think inflation will be even lower than they forecast, we continue to expect the SNB to keep its …
The Brazilian Central Bank’s (BCB’s) statement from last night’s meeting suggests that interest rates will be left unchanged over the next few months at least. We think a tightening cycle will start next year, probably in Q2, as some of the optimism …
The central bank in the Philippines (BSP) left interest rates unchanged today, but with inflation set to fall back sharply over the coming months and policymakers sounding increasingly dovish on the outlook for inflation, the BSP is likely to cut rates …
With the political crisis in Sri Lanka showing no sign of coming to an end, we are changing our GDP growth and interest rate forecasts for next year. … Sri Lanka political crisis: growth to slow, rates to …
12th December 2018
The recent volatility in financial markets will not stop the Fed raising rates at its meeting next week. A bigger concern for the Fed is the renewed weakness in core inflation, which may prompt some officials to revise their interest rate projections …
The first briefing from the RBI’s new governor, Shaktikanta Das, sought to provide assurance that the central bank will continue to prioritise inflation fighting. But his background at the finance ministry and as a Modi loyalist suggests that he is more …
The Central Bank of Iceland left interest rates unchanged today, but hinted strongly that hikes are on the horizon. We think that it will raise interest rates twice next year, leaving the deposit rate at 5.00%. … Central Bank of Iceland tightening cycle …
The slight drop in core inflation in November further decreases the chances of the Riksbank raising rates next week. Nonetheless, we still expect the first hike in February as underlying inflation is set to rebound. … Swedish Consumer Prices …
Recent comments by Governor Kuroda and analysis published by the Bank of Japan have again fuelled speculation that policy may be tightened soon. But with the economic expansion sputtering, the consumption tax clouding the outlook and inflation set to slow …
The resignation of RBI Governor Urjit Patel signals that the government has come out on top in its dispute with the central bank, but at the cost of undermining the RBI’s credibility and its inflation-fighting credentials. The rupee has dropped 1.5% …
11th December 2018
November’s unexpectedly-sharp rise in inflation in Norway is unlikely to change the Norges Bank’s mind about leaving policy unchanged at Thursday’s meeting. The Bank is likely to raise interest rates again in Q1, but the recent decline in oil prices …
10th December 2018
While the flattening of the US yield curve suggests that the US economy is likely to slow soon, it doesn’t tell us much about developments in Australia. And while we expect Australia’s yield curve to steepen a little, low short-term interest rates mean …
The latest data on economic activity in the euro-zone have been weak, but policymakers at the ECB will have been encouraged by the continued acceleration in wage growth. At its meeting on Thursday, the Bank looks set to confirm that it will end its net …
7th December 2018
Signs of softer inflation and weak economic activity will almost certainly prompt the Turkish MPC to strike a dovish tone at Thursday’s meeting. Investors seem to share our concerns that policymakers will move too quickly to loosen policy and fail to …
At next week’s monetary policy meeting, the Swiss National Bank is set to reiterate its ultra-dovish stance. Meanwhile, recent developments in Sweden and Norway suggest that policymakers in both countries will give more dovish messages than at previous …
October’s industrial production data for Germany and France add to the evidence that the euro-zone economy is unlikely to bounce back strongly after Q3’s slowdown in GDP growth. … German & French Industrial Production …
Some have interpreted the small cuts to the statutory liquidity ratio announced by the RBI this week as evidence that the central bank is loosening policy, but we disagree. Meanwhile, the state election taking place in Rajasthan today is significant for a …
The financial markets are now pricing in a small chance of a rate cut by the RBA next year following the release of weak GDP data this week. But while we expect GDP growth to slow further next year, we think that the improvement in the labour market since …
While the ECB will confirm the end of its net asset purchases at its December meeting, it will keep its options open about the future path of policy. The weakness of recent data may well lead it to concede that the risks to growth have shifted to the …
6th December 2018
After contracting in Q3, activity surveys suggest that Italy’s economy is on the brink of recession. Indeed, the Composite PMI was unchanged at 49.3 in November, which on past form points to GDP falling by as much as 0.3%. Whether or not the economy tips …
Despite the recent slump in oil prices, the Bank of Canada confirmed today that it intends to raise interest rates at least three more times. However, we think that a deterioration in the economy will cause the Bank to stop hiking rates sooner than it …
5th December 2018
Following the solid rise in GDP in the third quarter, the recent news has been disappointing. The business surveys suggest that output barely increased at all in November. And following a brief period of resilience, the news on household spending has …
The Reserve Bank of India (RBI) kept rates on hold today, but continued to flag several upside risks to the inflation outlook in its accompanying statement and maintained the hawkish description of its policy stance. As such, we think that the tightening …
Sweden’s private sector production data for October suggest that the economy bounced back after Q3’s contraction. This reduces the risk of the Riksbank delaying its first rate hike beyond February. … Swedish Private Production …
