Filtered by Topic: Monetary Policy Use setting Monetary Policy
Today’s surprise 25 basis point interest rate hike by Bank Indonesia (BI) clearly indicates that the central bank’s main focus will be on supporting the currency and reducing the country’s external vulnerabilities. With downward pressure on the rupiah …
15th November 2018
With inflation set to drop back steadily over the coming months, we think today’s rate hike by the central bank of the Philippines (BSP) will be the last in the current cycle. … Philippines: Today likely to be the last hike in the …
The Bank of Uganda will probably buck the regional trend next year by tightening policy further in response to a widening current account deficit. This will add to headwinds for economic growth. … Uganda: Policy tightening to add headwinds to …
The Bank of Thailand (BoT) left interest rates unchanged at 1.50% today, but the hawkish tone of the accompanying statement suggests that a rate hike is now only a matter of time, as the central bank looks to clamp down on growing risks in the financial …
14th November 2018
The slight fall in Swedish inflation in October will not significantly influence the Riksbank’s decision on the timing of its first rate hike, which we still expect in December. Underlying inflation will be strong enough next year to allow for a steeper …
The rise in wholesale price inflation in October was due in large part to a jump in core inflation. With underlying price pressures set to remain elevated, we think the RBI’s tightening cycle still has a little further to run. … Wholesale Prices …
The decision by the Central Bank of Sri Lanka (CBSL) to hike its main policy rates underlines its concerns about the weakness of the currency. Policy over the months ahead will depend on the political situation. For now we are forecasting no further …
The rise in regular pay growth to a fresh post-crisis high and weak productivity growth suggests that we are right to think that rates will rise further than is priced into markets next year if a Brexit deal is agreed. … Labour Market …
13th November 2018
We estimate that Labor’s plans to tighten fiscal policy would dampen consumer spending by around 0.3 percentage points in both 2019 and 2020, shaving 0.2 percentage points off GDP in each of those years. Meanwhile, its proposals for a number of regulatory …
The recent slump in crude oil and gasoline prices means that headline CPI inflation could fall well below 2% for most of next year. But, given that lower prices would also provide a small boost to real GDP growth, the temporary inflation undershoot won’t …
12th November 2018
A renewed drop in food inflation pulled down headline inflation in October, but with core inflation rising again we still think that the Reserve Bank’s tightening cycle has a little further to run. … Consumer Prices (Oct.) & Industrial Production …
The further rise in Egyptian inflation in October, taking it above the upper bound of the central bank’s end-year target range, raises the risk that policymakers will hike interest rates at this week’s MPC meeting. But with underlying price pressures …
The results of this week’s midterm elections were in line with expectations, but President Donald Trump’s unexpected decision to fire his Attorney General Jeff Sessions would seem to reduce the odds of a bipartisan fiscal stimulus with the House …
9th November 2018
A bill to make Brazil’s central bank formally independent, which has been rumoured this week, would boost market optimism about Jair Bolsonaro’s reform promise and have positive long-term economic effects. Elsewhere, markets are pricing in an interest …
The opening up of Vietnam’s economy has gathered pace over the pace couple of months, with the government pressing ahead with a series of reforms which should boost the country’s economic prospects. Regional growth looks to have slowed in Q3. Of the six …
October’s weaker-than-expected inflation data suggest that the Norges Bank will be in no hurry to raise interest rates again. We expect it to wait until next March before making its next move, and then to end its tightening cycle sooner than investors …
Both the Reserve Bank of Australia and the Reserve Bank of New Zealand displayed a little more confidence in their optimistic forecasts when they left interest rates unchanged this week. We think that in both economies, GDP growth will fall well short of …
As universally anticipated, the Fed left rates on hold today and there was nothing in the policy statement to suggest that officials are wavering from their plans to hike interest rates again in December. … December rate hike …
8th November 2018
The slowdown in quarterly euro-zone GDP growth to just 0.2% in Q3 came as a major disappointment, but there are good reasons to expect the economic expansion to regain a little pace in the quarters ahead. For a start, we estimate that about half of the …
China is the only major economy which is likely to implement a significant policy stimulus in the coming year. However, its impact on the rest of the world will be small. … China stimulus will not prevent global …
Bank Negara Malaysia today left interest rates unchanged at 3.25% and gave no hint in its accompanying statement that it is in a rush to change its policy stance anytime soon. Whereas the consensus is expecting the central bank to resume its tightening …
We expect the slowdown in GDP growth in Q3 to continue over the coming quarters as the economy faces headwinds from tighter monetary policy and a weakening external environment. … Philippines GDP …
The Reserve Bank of New Zealand (RBNZ) lifted its inflation forecasts a little bit when it decided to leave interest rates unchanged at 1.75% today. But it still signalled that rates won’t rise until late in 2020. We are more pessimistic about the outlook …
7th November 2018
The relatively more hawkish tone adopted by the Polish MPC in its post-meeting press conference today suggests that the start of a monetary tightening cycle isn’t too far away. We think that policymakers will raise their policy interest rate around the …
The slightly smaller-than-expected increase in Brazilian inflation last month, to 4.6% y/y, reinforces our view that Copom will hold off from starting a tightening cycle for a few more months. … Brazil IPCA …
Higher inflation and inflation expectations have prompted the Central Bank of Iceland to raise interest rates today, sooner than we had anticipated. And as upcoming wage negotiations look likely to result in inflation-busting pay deals, we expect the Bank …
The hawkish tone of the Bank of England’s “Super Thursday” announcements have helped to push up interest rate expectations a little and have fuelled a rise in sterling over the past week. But we doubt that investors have gone far enough in revising up …
6th November 2018
The recent uptick in Chilean unemployment has prompted some analysts to suggest that interest rates may not rise much further. But the central bank doesn’t seem too concerned and we think that any weakness that does exist in the labour market will soon …
The slightly smaller-than-expected rise in Russian inflation, to 3.5% y/y, last month supports our view that the central bank will refrain from tightening monetary policy further. Markets, in contrast, are still pricing in some additional interest rate …
The upward revision to the RBA’s growth and inflation forecasts suggest that the Bank is moving closer to tightening policy. But we still think that the downturn in the housing market will result in slower growth before long and retain our forecast that …
The large fall in the PMIs in October suggests that the economy slowed sharply at the start of Q4. Admittedly, some slowdown from rolling three-month GDP growth of 0.7% in July and August always looked likely. Indeed, much of that strength can be put down …
5th November 2018
Concerns that “super minister” Paulo Guedes’ plan to reduce the Brazilian government’s interest payments by selling FX reserves would increase external vulnerabilities look overdone. However, the plan would only make a minor dent in the country’s fiscal …
The benefits of the government’s demonetisation policy should be evident by now, two years after the shock announcement that the bulk of the country’s bank notes were being withdrawn. But the promised gains haven’t materialised and the positive …
Philip “the fiscal hawk” Hammond was surprisingly generous in the Budget on Monday, spending his entire windfall from the downward revision to the OBR’s borrowing forecast. This means that rather than acting as a small headwind on growth next year, fiscal …
2nd November 2018
Surveys published this week suggest that the Swiss economy is faltering after a strong first half of 2018, while inflationary pressures remain weak. This supports our view that the SNB will keep interest rates on hold much longer than investors expect. By …
The Politburo statement this week gave a clear signal that further policy support for China’s economy is on the way. But with headwinds building, we don’t expect to see clear signs of economic stabilisation for some time yet. That statement, plus the …
The betting odds suggest that there are few uncertainties surrounding the broad outcomes of Tuesday’s midterm elections, with the Democrats likely to win control of the House while the Republicans maintain a majority in the Senate. That is most likely to …
Inflation can now be added to the list of problems facing Pakistan after figures published today showed headline inflation rose to a four-year high last month. Meanwhile, the chances of an improvement in policymaking look to be receding, with Prime …
The latest comments from Turkey’s central bank suggest that policymakers are considering unwinding some of the recent rate hikes, reinforcing our view that the MPC isn’t serious about tackling the country’s inflation problem. Meanwhile, PMI data released …
While the minutes to the Riksbank’s October meeting all but confirmed that interest rates will start to rise in the coming months, a December hike is not a done deal. But regardless of whether the Bank starts tightening in December or February, we think …
The announcement that the Trans-Pacific Partnership will come into force on 30th December is important in a number of ways. Not only should it provide a boost to growth prospects across parts of Asia, but it also shows that, despite the shift towards …
Rising tension between the government and the RBI has dominated headlines this week, and also caused jitters in local markets. This comes as little surprise - after all, at the heart of the matter is the independence of the central bank. Any erosion of …
The fiscal loosening announced in the Autumn Budget has prompted us to raise our forecasts for GDP growth and interest rates. In our base case, which assumes a Brexit deal is secured, we now expect GDP to rise by 2.2% next year and by 2.0% in 2020 (up …
1st November 2018
The forecasts accompanying today’s Czech monetary policy meeting imply that the CNB’s tightening cycle is now finished. Following seven interest hikes, we agree that the bulk of tightening has already happened, but we think that there is still scope for …
The “Super Thursday” releases from the Bank of England support our view that the Monetary Policy Committee (MPC) will raise interest rates more quickly than markets expect, if a Brexit deal is struck. … MPC hints rates will rise quicker than markets …
The Brazilian Central Bank’s (BCB’s) statement from last night’s meeting hints that Copom is waiting to see if president-elect Jair Bolsonaro can deliver on his reform promise when he takes office at the start of 2019. We now expect the Selic rate to stay …
The Reserve Bank of New Zealand will keep interest rates unchanged at 1.75% at the policy meeting on Thursday 8th November, with recent encouraging economic data making a cut less likely. Even so, we think that future economic activity will fall short of …
The Reserve Bank of Australia (RBA) will welcome the continued tightening of the labour market when it holds interest rates steady at 1.50% on Melbourne Cup Day, which falls on Tuesday 6th November. But with the housing downturn accelerating and inflation …
Although the Fed is unlikely to make any policy changes at next week’s meeting, we expect the statement to reiterate the FOMC’s plan to continue gradually raising interest rates, with the next move coming in December. With the latest data showing that …
31st October 2018
The current political crisis in Sri Lanka, which has seen the country’s president, Maithripala Sirisena, replace Prime Minister Ranil Wickremesinghe with former President Mahinda Rajapaksa, comes at a bad time for the economy. Growth has been very weak …
