Filtered by Topic: Monetary Policy Use setting Monetary Policy
In March, broad money growth slowed a bit in the euro-zone, UK and Japan. Indeed, in the euro-zone it dropped to its slowest rate since the ECB started its Asset Purchase Programme in early 2015. However, in all of these cases, the pace of money growth is …
11th May 2018
After the sea of downbeat economic news in recent weeks, the Monetary Policy Committee (MPC)’s decision to keep rates unchanged at its meeting in May came as little surprise. Of course, the MPC’s decision to hold fire largely reflected a desire to confirm …
The batch of preliminary Q1 GDP figures for Emerging Europe due next week should confirm that, while regional growth peaked last year, it remained relatively strong at the start of 2018. The pace of expansion accelerated in Russia, and growth in Turkey …
Hong Kong’s economy expanded last quarter at the fastest pace in nearly seven years. We think GDP growth has now peaked though and will slow over the coming months as headwinds from tightening monetary conditions build. The city’s overheated property …
After cutting its lending rate just a month ago, it was no surprise that the central bank of Sri Lanka (CBSL) decided to leave policy on hold today. However, with inflation benign and the economic recovery likely to disappoint, we expect further loosening …
The Central Bank of Iceland is likely to leave policy unchanged next week. But with inflation set to rise, we expect it to raise interest rates later this year. … Central Bank of Iceland on hold for …
10th May 2018
While Malaysia’s central bank (BNM) left interest rates unchanged at today’s scheduled monetary policy meeting, the outlook for monetary policy has been thrown into considerable uncertainty following yesterday’s shock election result. For now we are …
While the MPC thinks that the economy’s slow start to the year should prove temporary, it sees the costs of waiting a few more months to be sure as being relatively low. As a result, we still expect the next hike in interest rates to come in August. And …
The Philippines central bank (BSP) today hiked its key policy rate from 3.00% to 3.25%, but also left the door open to further rate increases later this year. While we think interest rates will be raised again in 2018, we doubt the BSP is about to embark …
While new Governor Adrian Orr’s communication style is clearer and more conversational than his predecessors, the outlook for policy remains much the same. The RBNZ left interest rates at 1.75% and Orr repeated previous suggestions that they won’t be …
Euro-zone GDP data for Q1 were pretty weak. Indeed, quarterly growth in the euro-zone economy slowed from 0.7% in Q4 to just 0.4%, its weakest rate since Q3 2016. And national data showed that growth declined in France and remained subdued in Italy, while …
9th May 2018
The surge in base pay in March underlines that the tight labour market is now generating noticeable cost pressures. However, it will still take a few more years before wage growth is strong enough to meet the Bank of Japan’s 2% inflation target. … Labour …
The minutes to the Riksbank’s April meeting were slightly hawkish and suggest that the Bank is on track to raise interest rates this year. We think that markets have gone too far in pushing the krona to a nine-year low against the euro and see the …
8th May 2018
Consumer price inflation is likely to have risen in April, due in large part to a rise in fuel inflation. Core price pressures are also continuing to build. We are one of only a handful of forecasters expecting the RBI to tighten policy before the end of …
Indonesia’s growth eased to 5.1% y/y in Q1, from 5.2%, and we see little prospect of a rebound. With policymakers running out of scope to stimulate the economy further, we expect growth to remain stuck at around 5% over the next couple of years. … …
7th May 2018
Earlier this week, Bank of Canada Governor Stephen Poloz gave a remarkably sanguine speech on the build-up in household debt. He concluded that, although record-high debt represented a risk and means the economy is more sensitive to rising interest rates, …
4th May 2018
Today’s 675bp interest rate hike by the Argentine central bank, the third emergency hike in a week, finally seems to have brought some support to the currency. Evidence from other EM central banks that have been forced to hike rates when faced with …
A further rise in inflation in April and more hawkish comments from policymakers suggest the central bank of the Philippines (BSP) is likely to raise interest rates at its upcoming meeting on Thursday. However, with the recent rise in inflation likely to …
The continued slowdown in bank lending seems to vindicate the Bank of Japan’s concerns that low policy rates are undermining financial intermediation. But broader measures of credit availability suggest that firms’ ability to raise funds has rarely been …
While the income tax cuts that the Australian Treasurer is planning to announce in Tuesday’s Federal Budget will provide a small boost to the economy over the next couple of years, we doubt they will prompt the RBA to raise interest rates before late in …
The Reserve Bank of Australia’s Statement on Monetary Policy provided a clearer sign that the RBA has moved on from wondering if interest rates need to rise to considering when they will rise. But the Bank also appears to be all-but ruling out a hike this …
A string of weak economic data, as well as comments by Governor Carney, have all but ruled out another interest rate hike on 10th May. Indeed, the MPC is likely to err on the side of caution until it is confident that the recent softening in the data is …
3rd May 2018
In today’s monetary policy announcement, the Norges Bank reiterated that it expects to raise interest rates this year. But we still suspect that it will ultimately wait until Q1 2019 before beginning to tighten policy. Together with our forecast for oil …
The only thing we expect to change at the Reserve Bank of New Zealand‘s monetary policy meeting on Thursday 10 th May is the Governor, as interest rates will almost certainly stay on hold at 1.75% at Adrian Orr’s first meeting. It is possible that Orr …
The Fed was never likely to signal a major shift in policy at the conclusion of the FOMC meeting today, with the fed funds target range left unchanged at 1.5% to 1.75% and the accompanying statement little different from the one issued in March. …
2nd May 2018
The Argentine central bank’s interest rate hike at an unscheduled meeting on Friday has provided little relief for the peso, which is down by another 2.5% against the dollar today. Against a backdrop of growing economic vulnerabilities, the currency is …
We think that after the ECB has ended its asset purchases, bond yields will generally rise only slowly. The biggest increases are likely to come in the periphery, with Italy most at risk of a sharp sell-off. … How will the end of ECB QE affect bond …
The Reserve Bank of Australia held interest rates at 1.5% for the 19th meeting in a row today and continued to signal that a near-term rate hike is unlikely. Further ahead, with GDP growth likely to stay below potential and inflation to remain subdued, we …
1st May 2018
Today’s inflation figures support our view that policymakers will cut their key rate in July. Meanwhile, the rebate surrounding Kenya’s lending rate cap suggests that the controversial law will be scrapped. … Kenya: Weaker inflation points to rate …
30th April 2018
Despite economic activity slowing in Q1, we expect the Fed to press on with three more rate hikes this year, not least because inflation has been higher than anticipated in recent months. But in the euro-zone and Japan, where both economic activity and …
The decision by Colombia’s central bank to cut its policy interest rate on Friday night by 25bp (to 4.25%) probably marks the last move in the easing cycle. We expect the policy rate to be left unchanged over the rest of this year before being raised in …
Despite facing a resurgent opposition, Prime Minister Najib Razak is favourite to win a third term in a general election due on 9 th May. A victory for Najib would probably lead to a short-term fiscal boost for the economy. However, the election will do …
A weakening housing market and the high level of household debt will probably prevent GDP growth in Australia from accelerating above 2.5% in the coming years, while the end of the migration boom may mean that growth in New Zealand slows from 2.9% last …
Amid escalating international trade tensions, the Nordic and Swiss currencies depreciated across the board in April. Weaker exchange rates helped to give equities a boost, while the main bourses in Norway and to a lesser extent Finland also benefitted …
27th April 2018
The further rise in 10-year Treasury yields to their highest level since 2011 dominated the markets this week and there are signs that the Fed’s policy tightening is starting to feed through to the wider economy, with the borrowing costs faced by …
The sell-off in the ruble caused the Russian central bank (CBR) to pause its easing cycle today, but the dovish tone of the accompanying statement supports our view that rates are likely to be lowered further over the rest of 2018. The market’s response …
The Bank of Japan today refrained from providing a concrete timeframe for hitting its 2% inflation target for the first time since Governor Kuroda took over. This highlights that policymakers have little confidence in their lofty inflation projections and …
We suspect that a tightening in lending standards as a result of the Royal Commission into banking misconduct will more than offset any further relaxation in APRA’s lending restrictions to leave Australia’s housing market looking pretty weak in 2019 and …
The ECB opted to leave its policy and guidance unchanged today, expressing caution about the softer tone of economic data. But it argued that growth was merely moderating from a strong pace and expressed confidence in the inflation outlook. We suspect …
26th April 2018
The Norges Bank is unlikely to respond to recent weak data by altering its forward guidance next week. But we still think that it will ultimately tighten policy a little more slowly than generally expected. … Norges Bank to keep guidance unchanged, for …
The Riksbank now expects interest rates to remain unchanged until Q4. We think that the Bank will raise rates gradually this year and next, before adopting a faster pace of tightening in 2020. … Riksbank delays interest rate …
The latest data suggest that, while GDP growth in Central Europe has now peaked, it remained strong at 4.5-5.0% y/y in Q1. That came in spite of a raft of softer activity and survey figures from key euro-zone trading partners (notably Germany). …
25th April 2018
The Fed is unlikely to make any policy changes at next week’s FOMC meeting. But with signs that underlying inflationary pressures are continuing to build, officials may use the post-meeting statement to hint that they will step up the pace of tightening …
The move by the Turkish MPC to hike its late liquidity rate by 75bp today only brought temporary relief for the lira and suggests that markets are unconvinced about policymakers’ willingness to shore up the currency. Taking that together with a widening …
Argentina’s central bank left its policy interest rate unchanged at 27.25% last night, but the statement accompanying the decision struck a notably more hawkish tone and suggested that the easing cycle could reverse. We think policymakers will refrain …
Despite underlying inflation coming in slightly stronger than the Reserve Bank of Australia expected in the first quarter, the RBA will almost certainly leave interest rates at 1.5% at its next policy meeting on Tuesday 1 st May. And it may revise down …
24th April 2018
Indian GDP growth hit a five-quarter high in Q4 2017, and various indicators suggest that the economy strengthened further in the first quarter of 2018. Industrial production growth last quarter may have been stronger than at any time since 2011, while …
Even though in the first quarter underlying inflation essentially rose back within the RBA’s 2-3% target range for the first time in two years, we doubt this means that the RBA will raise interest rates this year. … Australia Consumer Prices …
The unusual strength of wage growth in Japan has attracted attention recently. But the main development at the upcoming Bank of Japan meeting is likely to be another reduction in the Board’s forecast for inflation, underlining that policy tightening …
The recent string of weak inflation data released across EMs has been due largely to a drop in food inflation and, while we think that many central banks will look through this, policymakers in some countries (mainly in Latin America) will continue to use …
23rd April 2018
