Filtered by Topic: Monetary Policy Use setting Monetary Policy
While it looks set to be quite a close call, on balance we think that a majority of the Monetary Policy Committee (MPC) will vote in favour of hiking interest rates at next Thursday’s meeting, for the first time in a decade. … MPC to press ahead with …
26th October 2017
The hawkish tone of today’s Turkish MPC statement showed an overdue concern with high inflation (and expectations) and suggests that cuts in interest rates are off the agenda. That said, with inflation set to ease over the first half of 2018 and the …
The weakness of October’s CBI Distributive Trades survey was undeniably disappointing. But there are a number of reasons to take the sharp fall in the headline figure with a pinch of salt. … CBI Distributive Trades Survey …
The latest data on retail sales during China’s National Day “Golden Week” period suggest that consumer demand remains strong. Despite a further increase in overseas tourism during the holiday, domestic spending was 10.3% higher than last year, only …
While both the Riksbank and the Norges Bank kept policy unchanged today, the outlooks for monetary policy in the two countries are very different. We think that policy in Sweden will be tightened early next year, sooner than the Riksbank’s guidance …
While Malaysia has made good progress in bringing down its budget deficit, there remains limited room for a pre-election giveaway in the 2018 budget, which is due to be announced on 27th October. Given that Prime Minister Najib Razak must hold an election …
GDP growth in South Korea rose to a seven-year high in q/q terms last quarter as the economy brushed off the rising tensions on the Korean peninsula. Provided conflict is avoided, South Korea should continue to grow strongly over the coming year, helped …
If President Donald Trump is serious about being a “low-interest rate guy”, markets are probably right to brush off John Taylor’s chances of being nominated for Fed Chair. That said, we don’t agree with recent claims that Taylor could prove to be dovish …
25th October 2017
The Bank of Canada’s decision to hold interest rates at 1.00% and its less hawkish policy statement indicate it will take a cautious approach, supporting our view that there will be no further rate hikes this year. Next year, however, we expect the …
The Fed’s policy meeting next week could provide some insight into whether the majority of officials still support a December interest rate hike. But it will otherwise be overshadowed by the imminent announcement from the White House on who President …
The decision by Argentina’s central bank to hike its policy interest rate, when most analysts had been expecting the next move to be a cut, is an encouraging sign that policymakers are serious about bringing inflation down. With balance sheet …
Economic prospects for the Nordic and Swiss economies are fairly bright. Although Switzerland had a disappointing start to the year in terms of GDP growth, the surveys are universally positive about the coming quarters, suggesting that the recent weakness …
The Bank of Japan will leave policy settings unchanged at the upcoming meeting while further reductions in the Board’s inflation forecasts will underline that policy tightening remains a distant prospect. … Lower inflation forecasts underline case for …
Our measure of M3 shows broad money growth rising in September to its fastest pace in more than two years, although growth in narrow money continues to slow gradually. … Monetary Indicators Monitor …
24th October 2017
Our relatively sanguine view on the outlook for EMs over the next 12-18 months has prompted several clients to ask about risks to our forecasts. While risks – both positive and negative – are by their nature difficult to anticipate, we think there are …
The rapid expansion of the central government’s deficit in the early stages of the fiscal year is a regular occurrence, as revenues tend to get ramped up in latter months. Nevertheless, there are several reasons to think that the deficit will exceed the …
We are re-sending this publication because the previous one contained an error. Mr Abe is now entering his fourth term as Prime Minister. Fiscal policy will probably be tightened further during PM Abe’s fourth term and the economic expansion is set to …
23rd October 2017
Despite net external trade being a drag, the economy managed to grow by close to 2.0% q/q annualised in the third quarter, partly thanks to a big rebound in non-residential buildings investment. Nevertheless, that’s considerably slower than the torrid …
20th October 2017
The latest economic data suggest that growth in Emerging Europe as a whole picked up further in Q3 and one of the main drivers behind this appears to have been stronger consumer spending. Retail sales in Russia rose at their fastest pace since 2014 last …
The markets are right to remain relatively sanguine over the upcoming decision on who will be the next Fed Chair, since the Fed’s low rate regime will probably continue with President Donald Trump picking Jerome Powell. But there is still uncertainty over …
Market expectations towards South African interest rates have shifted markedly in recent weeks. While a rate cut next month is no-longer likely, we think that the markets have moved too far, and are now under-estimating the chance of looser policy over …
The headline inflation rate rose to 1.6% in September, from 1.4%, but the increase was partly due to higher energy prices, which have already begun to fall back. Although some of the core inflation measures edged higher, they remain well below the 2.0% …
While it is far from a done deal, there was nothing in the comments made by MPC members this week, or the latest economic data releases, to make us alter our view that the MPC will press ahead and raise interest rates for the first time in a decade on …
In an otherwise quiet month for EM markets, the sharp falls in the Mexican peso and Turkish lira have stood out. In each case, the triggers have been different – the 7% fall in the peso against the dollar since the start of the month reflects concerns …
The steady economic expansion in advanced economies is set to continue for the next year or two, led by rising household consumption and business investment. Although most economies are approaching full employment, inflation will probably remain subdued. …
19th October 2017
Today’s decision by Bank Indonesia to leave interest rates unchanged at 4.25% probably represents a pause in the central bank’s easing cycle, rather than a halt. We continue to think that with inflationary pressures under control and the economy …
The ECB has now laid some very firm groundwork to announce after its meeting on 26th October that it will taper its asset purchases from January. Unlike most forecasters, we expect the Bank to set out a full roadmap to taper down to zero by next …
The Riksbank is unlikely to shift its policy stance until it sees firmer signals of the outlook for policy in the euro-zone. So despite above-target inflation in Sweden, we do not expect the Riksbank to announce any changes to its policies or forward …
The recent slowdown in the housing market suggests that there is scope for monetary policy to be looser over the coming years than the Norges Bank currently anticipates. That said, we don’t expect any changes in policy, or the Bank’s forward guidance, at …
We are not yet changing our forecasts for GDP growth, inflation, interest rates or the dollar due to the news that a Labour-NZ First-Greens coalition led by Jacinda Ardern will form the next government, but the less growth-friendly policies of those …
The minutes of the Reserve Bank of India’s (RBI’s) October policy meeting reveal that most members expressed caution about recent fiscal developments and the inflation outlook. Indeed, with inflation data for September showing a further rise in core price …
The Bank of Korea (BoK) left interest rates on hold today and the governor’s accompanying press conference makes clear that monetary policy will remain accommodative. We continue to expect the policy rate to be kept at 1.25% not just for the rest of this …
The Bank of Canada will probably err on the side of caution at its policy meeting next week by deciding to keep interest rates at 1.00%. Although the Bank still seems confident in the economy, NAFTA renegotiations are clearly going from bad to worse. In …
18th October 2017
Employment growth came off the boil a little in August. But with surveys of hiring suggesting that this will be a temporary development while wage growth more-or-less maintained its recent pace, we think the Monetary Policy Committee is still on course …
The centre-right ANO is likely to emerge as the single largest party in Friday’s parliamentary election in the Czech Republic, which may open the door to looser fiscal policy. That said, there are reasons to think that any fiscal stimulus would be more …
17th October 2017
The rise in CPI inflation in September took it close to its eventual peak and supports our view that the Monetary Policy Committee (MPC) will press ahead and raise interest rates in November. … Consumer Prices & Producer …
The modest rise in headline and underlying price pressures in the third quarter doesn’t dramatically alter the outlook for interest rates, but at the margin it indicates that rates may rise a little bit earlier than the RBNZ’s current suggestion of …
Wholesale price inflation unexpectedly eased in September. But stripping out the effect of volatile fuel and food prices, our measure of core WPI inflation accelerated further last month. With reasons to think that core price pressures will rise further …
16th October 2017
Core inflation rose to a near six-year high last month and producer price inflation continued to rebound, consistent with resilient growth ahead of the Party Congress. But the credit data suggest that tighter monetary conditions are weighing on lending, …
For most countries, our forecasts are a little bit below those of both the consensus and the IMF. However, there are three economies, Hong Kong, the Philippines and Pakistan where we think other forecasters are being much too optimistic for next year, and …
13th October 2017
The 0.5% m/m rise in headline consumer prices in September was driven by a spike in gasoline prices due to Hurricane Harvey, while there was a more muted 0.1% rise in core consumer prices. But the latter partly reflects a drop back in vehicle and drug …
Peru’s central bank left its policy interest rate unchanged at 3.50% last night, and while there could be scope to ease policy a little further in the next 3-6 months, as things stand we expect rates to remain unchanged over the next year. … Peru’s …
The Monetary Authority of Singapore (MAS) today left its monetary policy settings unchanged. The accompanying statement gives the MAS room to tighten policy if necessary, but given the subdued outlook for inflation we don’t think this will happen any time …
Interest rate hikes are commonly thought to cause recessions. However, the track record of G7 tightening cycles shows that this has usually not been the case. Central banks in the US and Canada are in the midst of policy tightening cycles, and the …
12th October 2017
While headline consumer price inflation was unchanged last month, core inflation rose again. Policymakers will put less weight on the erratic industrial production data that were also released today but, for what they are worth, they signal that output …
We believe the financial markets have gone too far by pricing in a strong possibility that the Reserve Bank of Australia will raise interest rates twice next year, from 1.5% to 2.0%. Economic conditions won’t be good enough to warrant higher rates and …
We expect global growth to slow only modestly as the era of easy money starts drawing to a close. The monetary tightening is set to be gradual, limited and staggered, with some countries only starting to tighten as others are finishing. And the …
11th October 2017
Victory for Prime Minister Abe in this month’s election would keep Japan on the same track it has been on since 2012, pursuing fiscal tightening, loose monetary policy and tentative structural reform. Given the economy’s relatively strong recent growth …
10th October 2017
The drop in Mexican inflation last month is likely to be the start of a rapid downwards trend and we expect the headline rate to fall back into the central bank’s target range by the middle of next year. Even so, interest rate cuts are unlikely to come …
9th October 2017
The rise in Czech inflation to a five-year high of 2.7% y/y in September supports our view that the next hike in the policy interest rate – taking it from 0.25% to 0.50% – will come at the CNB Board meeting in early November. … Czech CPI …
