Filtered by Topic: Monetary Policy Use setting Monetary Policy
Policy easing efforts were expanded this week. Fiscal loosening was given the green light. The People’s Bank adopted a more proactive approach to ensuring that its liquidity injections translate into lower corporate borrowing costs and support lending to …
27th July 2018
The latest activity figures suggest that EM growth faltered a bit in the middle of Q2. Consumer spending slowed in April and May, while EM industry seems to have started to lose momentum. Forward-looking surveys suggest that things will continue to weaken …
The available evidence suggests that fears of a pre-election surge in Nigerian inflation are misplaced. Elsewhere, we doubt that violence will derail gas investment in Mozambique and expect that President Emmerson Mnangagwa will win next week’s election …
There was a broad-based rise in price pressures in the capital region last month. But while the rise in energy inflation won’t be sustained, the recent pick-up in underlying inflation has further to run. … Tokyo CPI …
The latest figures show that inflation rose across Latin America in June and early July, but the reaction from the region’s central banks is likely to differ. Policymakers in Mexico will focus more on the peso – which is up against the dollar this month. …
26th July 2018
The ECB made no changes to its policy or forward guidance today and strongly endorsed financial markets’ expectations for interest rates to remain on hold until autumn next year. It also made clear that it would not be rushed into early rate hikes by …
We anticipate a 220,000 gain in non-farm payroll employment in July, with the unemployment rate falling back below 4% and average hourly earnings posting a 0.3% m/m increase. Despite objections from the White House, that will prompt the Fed to continue …
While a vote to raise interest rates on 2nd August is unlikely to be unanimous, we think that the Monetary Policy Committee (MPC) will press ahead with the second interest rate rise since July 2007. … MPC to press ahead with second rate rise in a …
We expect GDP growth across Emerging Europe to slow by more than most expect over 2019-20 and monetary policy is set to be tightened further than is priced into markets. The important exception to this regional story is Russia, whose recovery over the …
Imran Khan looks set to be confirmed as Pakistan’s next prime minister just as the economy teeters on the brink of a full-blown economic crisis. His plans to boost social spending will have to be shelved. Instead, monetary and fiscal policy are likely to …
Leaks from the Bank of Japan ahead of next week’s Policy Board meeting have prompted speculation that the Board will adjust its policy framework. Any changes would be intended to address the strains on financial institutions caused by ultra-loose policy, …
When hiking interest rates at its most recent meeting in June, the RBI made clear that the future path of monetary policy will be determined in large part by incoming data. With several indicators showing that activity remained strong in Q2 and core …
Market concerns over fragile balance sheets have forced policymakers in a number of frontier economies to take action over the past month. Strains in the balance of payments prompted the authorities in Pakistan and Tunisia to allow their currencies to …
25th July 2018
The Fed is unlikely to make any policy changes at next week’s FOMC meeting. But we expect the post-meeting statement to signal that, despite uncertainty over trade policy and criticism from President Donald Trump, officials are still planning to raise …
Poland’s economy is set to expand at a robust pace over the remainder of 2018, but rising inflation and tighter monetary policy will cause the economy to slow by more than is widely anticipated in 2019 and 2020. What’s more, the country’s longer-term …
Widespread fears that Nigeria’s upcoming election will spur inflation are not supported by the available evidence. We think that price pressures will continue to ease over the rest of this year. … Nigeria: Pre-election inflation fears …
The very low level of long-term bond yields across the euro-zone suggests that there is no urgent need for the ECB to copy the US Fed’s “Operation Twist” by replacing short-dated securities with longer-dated ones. But this is a tool that it could deploy …
The statement accompanying the decision by Chile’s central bank to hold its policy interest rate at 2.50% provided the clearest sign yet that policymakers are moving towards tightening. This supports our view that interest rate hikes will come sooner, and …
The collective view of the Monetary Policy Committee (MPC) in June was that “an ongoing tightening of monetary policy over the forecast period” would be necessary if the economy evolves in line with its forecast. Since then, the hard and survey data have …
The improvement in Egypt’s balance of payments position over the past eighteen months should be sustained, providing some support to the pound. Accordingly, inflation should resume its downward trend later this year, allowing the central bank to resume …
24th July 2018
The recovery in Latin America stalled in Q2, but we expect regional growth to accelerate over the coming quarters and our GDP forecasts for 2018-19 are generally above consensus. The main exception is Argentina, where we remain more bearish than most …
Nigeria’s MPC left its key rate on hold at 14.00%, and hawkish language has led us to remove the rate cuts that we’d previously pencilled in for Q4. Confusingly, the governor also announced unorthodox policy tools to loosen credit conditions, which will …
The Hungarian MPC’s post-meeting communications reinforced the message that the MPC is inching towards a tightening cycle. For our part, we think inflation is likely to rise further than most think and, as a result, interest rates will ultimately be …
The Turkish central bank’s decision to leave its one-week repo rate unchanged at 17.75%, when most had expected at least a 100bp hike, suggests that President Erdogan is already using his strengthened position to influence monetary policy. The lira has …
The State Council has called for more proactive fiscal policy, including additional tax cuts. This follows further, large liquidity injections by the People’s Bank. While the direct impact of these moves will be small, they leave little doubt over the …
Inflation in Nigeria slowed in June, and we think that it will continue to ease over the coming months. While policymakers will keep their key rate on hold tomorrow, they will probably cut later this year. … Nigeria Consumer Prices …
23rd July 2018
Prime Minister Modi’s BJP comfortably defeated the vote of no-confidence initiated by opposition parties on Friday. The result isn’t a major surprise given that the BJP holds a majority in the Lok Sabha (lower house of parliament). In fact, the overall …
The BoJ has been able to drastically slow the pace of its acquisition of Japanese Government Bonds since it adopted a 0% yield target, which should quells doubts about the policy’s long-run viability. And while ultra-loose policy creates some challenges …
Central banks in Colombia and Chile are set to leave interest rates unchanged at their meetings next week, but we think rates are likely to rise sooner, and a little further, than the markets are currently pricing in. Meanwhile, there remains a long way …
20th July 2018
Recent euro-zone data releases have generally been encouraging, supporting our view that GDP growth picked up from 0.4% in Q1 to 0.5% in Q2. Meanwhile, the EU-Japan trade deal, signed this week, is unlikely to have a significant macroeconomic effect. Next …
The GDP data due next week are likely to show the economy expanding at a solid pace in the second quarter. Uncertainty over trade policy appears to be worrying some firms but, with little sign so far of any impact on activity, that won’t stop the Fed from …
The People’s Bank appears to be leaning against downward market pressure on the renminbi. But the depreciation it has allowed so far will already provide a cushion for China’s exporters as they face the prospect of further US tariffs – potentially on all …
Economic growth in Switzerland and across the Nordics looks set to remain pretty strong over the coming years. But inflationary pressures vary significantly between countries. We think that central banks in Sweden and Norway will start to raise interest …
The financial markets are probably right to assume that an interest rate rise in August is still more likely than not. Somewhat counterintuitively, lower inflation might make it easier for the MPC to raise rates, as it will relieve the pressure on …
Activity data released in Russia, Turkey and Poland suggest that regional GDP growth remained strong at around 4% y/y in Q2. Among a number of monetary policy decisions due next week, we expect Turkey’s central bank to hike interest rates by another …
The decision earlier this week to raise the hourly minimum wage by a further 11% next year will undermine President Moon Jae-in’s goal to reduce inequality and boost private consumption growth. … Korea’s minimum wage policy …
South African activity data out this week supported our view that the economy strengthened in the middle of Q2. Even so, growth will probably disappoint over 2018 as a whole. Elsewhere, Abuja’s efforts to re-launch Nigeria Air threaten to burden the …
The financial markets are probably right to assume that the release of June’s bumper labour market figures has increased the chances that the Reserve Bank of Australia will raise interest rates a bit earlier than otherwise. But there’s unlikely to be …
Having announced last month that asset purchases will end in December, the ECB is unlikely to make any policy changes at its July meeting. We doubt that President Draghi will offer more explicit forward guidance than to reiterate that interest rates will …
19th July 2018
The raft of quarterly GDP data released over the past month confirmed that the MENA region rebounded at the start of this year and more timely figures suggest that the recovery is gathering momentum. Saudi Arabia pulled out of recession and Egypt’s …
South African policymakers adopted even more hawkish language at today’s MPC meeting, but we still doubt that they will hike rates in 2019. The risks to our non-consensus view are, admittedly, growing. … SA: SARB talks tough, but rate hikes still …
There is growing evidence that, despite Banxico’s best efforts, inflation expectations in Mexico are becoming unanchored. One consequence is that the monetary policy debate over the coming months will focus on the need for more rate hikes. However, we …
The Ministry of Finance is pushing back against calls to loosen policy. It may have little choice but to oblige, however, if headwinds to growth intensify in the coming quarters as we expect. … A shift in fiscal policy is …
Bank Indonesia (BI) left interest rates on hold today, but the hawkish tone of Governor Perry Warjiyo’s press conference and the accompanying policy statement reaffirm our view that further monetary policy tightening is likely later in the year. … …
Corporate bond defaults in China have jumped recently, adding to worries about the economic outlook. July is on track to more than double the previous monthly record for the scale of onshore bonds entering default. The economic slowdown that we are …
Most European economies have experienced a slowdown since last year, but growth is still strong by historic standards and prospects are fairly bright. Admittedly, trade protection poses a serious threat, particularly to the most open economies like …
Our calculations suggest that second-quarter GDP growth was as strong as 4.5% annualised, driven by a rebound in consumption growth and a big export-fuelled contribution from net external trade. It should be all downhill from here, however. The dollar’s …
18th July 2018
The lower-than-expected rate of CPI inflation means that a hike in interest rates in August is less clear cut. However, we still think that it remains more likely than not. … Consumer Prices & Producer Prices …
June’s softer-than-expected inflation print supports our view that fears of a rate hike are misplaced. We think that the SARB will keep policy on hold this year, before cutting its key interest rate in 2019. … South Africa CPI …
The recovery in the MENA region will be stronger than most anticipate over the coming quarters. The Gulf economies are set to benefit from rising oil output and fiscal stimulus, while Egypt’s cyclical upturn also has further to run. Fragile balance sheets …
17th July 2018
