Filtered by Topic: Monetary Policy Use setting Monetary Policy
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 …
9th October 2017
We expect consumer price inflation to have fallen in September as a shift in the timing of Mid-Autumn Festival probably caused a drop in food price inflation last month. This will reverse in October and food inflation is likely to rise further in the …
6th October 2017
September’s data confirm that the sharp drop in inflation in Brazil is bottoming out. This supports the view that Copom is likely to slow the pace of easing at this month’s policy meeting. … Brazil & Chile Consumer Prices …
Given the subdued outlook for inflation, we think the Monetary Authority of Singapore (MAS) will leave its policy settings unchanged not just at next week’s meeting, but throughout 2018 as well. In contrast, a growing number of analysts expect monetary …
Consumer price inflation is likely to have accelerated further in September, due in large part to another rise in vegetable price inflation. Core price pressures are also building, meaning there is no scope for further policy loosening. … Core price …
Economic growth looks set to strengthen in most EMs over the next year, but the cycle is now close to peaking in China and parts of Central and Eastern Europe. … Nearing the cyclical …
5th October 2017
The drop in Russian inflation to a fresh low of 3.0% y/y in September means that another cut in interest rates is all but guaranteed at this month’s CBR Board meeting. The fact that core inflation softened opens up the possibility of another 50bp cut but, …
Growth across the Middle East and North Africa has slowed further this year, but it should recover in 2018 and 2019. In the Gulf, the drag on GDP growth from this year’s oil production cuts will fade. Nonetheless, the recovery will be slow-going. Fiscal …
Poland’s MPC left interest rates unchanged today and the press statement and conference that followed struck a dovish tone. While headline inflation is likely to edge down in the final months of this year, we expect a pick-up in core inflation to cause …
4th October 2017
Despite the increased likelihood of looser fiscal policy next year following the collapse of the government last month, the Central Bank of Iceland (CBI) today opted to cut interest rates. We suspect that the CBI has now reached the end of its loosening …
The Reserve Bank of India (RBI) went with consensus expectations by keeping its repo rate on hold at 6.00% today. It also acknowledged the growing upside risks to the inflation outlook. As such, renewed policy loosening is unlikely. … RBI holds rates, …
Our recreated M3 measure shows broad money growth accelerating to a 12-month high of 4.6% in August, from 4.3%, although the Fed’s quantitative tightening will put modest downward pressure on the monetary aggregates for the next few years. … Monetary …
3rd October 2017
The Romanian MPC’s decision to raise its overnight deposit interest rate represents a move to tighten monetary policy – even though the policy rate was left unchanged. Policymakers struck a fairly hawkish tone in the post-meeting press statement and …
The jump in Turkish inflation, to 11.2% y/y last month, from 10.7% y/y in August, means that the interest rate cuts we had expected before the end of this year are looking less likely. We still think inflation will fall over the next six to nine months, …
The Reserve Bank of Australia may have left interest rates at 1.5% for the 14th month today, but its growing confidence in the outlook for activity and inflation may mean it will be prepared to signal early next year that it’s getting close to raising …
The debate surrounding the four candidates who were interviewed to become the next Fed Chair has focused almost exclusively on how they might affect the monetary policy outlook, but we suspect it will be the winning candidate’s views on regulatory policy …
2nd October 2017
The People’s Bank gave its devotees a twinge of nostalgia on Saturday as it announced a cut to reserve requirements out of office hours and at the start of a national holiday in China. This was how monetary policy announcements used to be made. But the …
After another soft start to the year, US economic growth is now benefitting from an upturn in global activity and a loosening of financial conditions. The weaker dollar should boost export growth, while domestic demand should benefit from low long-term …
Growth in Emerging Europe has generally surprised on the upside in recent quarters, which is consistent with the above-consensus forecasts we made at the start of this year. We expect further positive surprises from Russia over the next year but think …
Although the Fed is starting to shrink its balance sheet and the ECB is likely to taper its asset purchases next year, the monetary base in the world as a whole should continue expanding at least until 2019. … Global QE to remain positive for a while …
Private non-financial companies are unlikely to have any difficulty coping with increases in interest costs ahead. First, the scale of the increase in Bank Rate is set to be fairly trivial by past standards. Second, firms’ profitability has recovered to …
29th September 2017
In her speech earlier this week, Chair Janet Yellen stressed that, despite the weakness of core inflation this year, the Fed still intends to push ahead with further interest rate hikes, with most officials expecting to raise rates before the end of this …
Whereas the consensus is expecting monetary policy in Emerging Asia to be tightened next year, we think central banks will be in little hurry to raise interest rates. One of the main reasons is the subdued outlook for inflation, which is likely to remain …
The statement accompanying last night’s decision by Egypt’s central bank to leave interest rates on hold suggests that, with inflation now falling, policymakers are trying to downplay expectations that monetary easing will quickly follow. Accordingly, a …
While leading labour market indicators in Australia continue to point a decent pace of employment growth ahead, it is not just the rate of jobs growth that matters but also the composition. And at this stage it appears that future jobs growth may well be …
Mortgage rates are set to move back above 3% by the end of 2019. On its own, a rise in mortgage interest rates on that scale is unlikely to trigger another downturn in house prices. But it will act as a brake on any recovery in mortgage lending and …
28th September 2017
The encouraging signs about the health of the Australian economy have continued over the past month, with employment growth gathering pace and the outlook for business investment improving. (See Chart 1.) The economic outlook has clearly improved and GDP …
There remains plenty of uncertainty around the formation of the next government and who will be the next permanent Governor of the Reserve Bank of New Zealand, but the one consistency is the dovish message that the RBNZ sent today after leaving interest …
27th September 2017
In his speech today, Bank of Canada Governor Stephen Poloz showed that he remains confident in the economy, suggesting that another interest rate hike is coming this year. That said, we still expect the knock-on effects from a housing downturn to worsen, …
The US Fed’s decision to begin scaling back its balance sheet nearly eight years after it started QE is a major milestone, but global financial conditions should remain highly accommodative for a long time yet. They are probably more influenced by total …
The Czech MPC’s decision to keep rates on hold today was a very close call and we think that an interest rate hike at the next MPC meeting on 2nd November is highly likely. Following that, our central view is that there will be a further 50bp of hikes in …
GDP figures released this month showed that the economic fortunes of Africa’s largest economies diverged in Q2. South Africa’s economy rebounded after a brief recession at the turn of the year. While investment spending remained weak, strength elsewhere …
The past month has brought further evidence that the recovery in Latin America is picking up pace. Our GDP Tracker suggests that regional growth is now running at a three-year high of 3% y/y. The rebound has been widespread. In Brazil, a combination of …
We no longer expect the Central Bank of Iceland (CBI) to cut interest rates again this year. The Government’s collapse and prospect of a left-wing coalition taking power have increased the chance of a expansion. And if sustained the króna’s recent …
The Bank of Thailand (BoT) today resisted pressure from the government to loosen monetary policy, and instead left its key interest rate unchanged at 1.50%. With headwinds to the economy mounting and inflationary pressures subdued, we think interest rates …
The prospect of the first rise in interest rates in a decade has raised concerns about the impact on the already beleaguered consumer. Indeed, there is clearly a risk that the sheer shock of the first hike could dent sentiment. But we think there are …
We are in agreement with financial market and analyst expectations of a rate hold in the Reserve Bank of India’s (RBI’s) upcoming policy meeting on 4th October. Further ahead, some are still expecting further, albeit modest, policy loosening. However, …
The jump in oil prices, from $51pb at the start of September to around $59pb at the time of writing, should provide a fillip to the large frontier oil economies, such as Saudi Arabia, Nigeria and Kazakhstan. If sustained, we estimate that this would …
26th September 2017
Nigerian policymakers kept rates on hold today, but the accompanying statement made it clear that easing is on the way. We expect that the first cut will come in Q1 2018. … Nigeria: Rates on hold, but cuts are still on the …
The move by Hungary’s MPC to loosen monetary policy last week appears to have been aimed at weakening the forint, which looks to us like a step in the wrong direction. The key threat to inflation and external competitiveness stems from rising wages, …
We believe that the financial markets are wrong to price in the possibility that the Reserve Bank of Australia (RBA) will raise interest rates twice next year. Admittedly, it is possible that after leaving rates at the current record low of 1.5% at the …
Although the economy grew strongly over the first half of this year, that growth was still overly dependent on the heavily indebted household sector. That arrangement was possible when interest rates were near record lows and house prices were rising …
25th September 2017
Given the economy’s poor growth prospects and the subdued outlook for inflation, today’s rate cut by Bank Indonesia (BI) is unlikely to be the last in the current cycle. However, as the central bank hinted at in today’s statement, further rate cuts are …
22nd September 2017
As the statement and updated projections from this week’s FOMC meeting made clear, a majority of Fed officials remain convinced that the recent weakness of core inflation is mostly due to transitory factors and still expect to hike rates again in …
The prospect of the first rise in interest rates in a decade has raised concerns about what impact it would have on the already beleaguered consumer. But modest rises in interest rates shouldn’t put a big dent in household incomes. And the real pay …
Recently-released GDP data confirmed that Argentina’s economic recovery continued in Q2, with economy growing at its fastest pace in two years. However, the drivers of growth are looking unbalanced. … Argentina’s economic recovery looking …
The government is putting pressure on the Bank of Thailand (BoT) to cut interest rates in order to weaken the baht, which has been the best performing currency in Asia so far this year. The central bank guards its independence very closely, and with …
Philip Lowe has notched up an impressive scorecard in his first year as Governor of the Reserve Bank of Australia, but greater challenges lie ahead. There are reasons to believe that economic growth and inflation won’t live up to Lowe’s lofty …
The South African Reserve Bank has paused its loosening cycle, but we expect that it will cut rates at its November meeting, by which time inflation will have eased further. … South African loosening cycle put on …
21st September 2017
Tighter monetary policy in the UK, US and euro-zone in the next couple of years will undoubtedly cause risk-free rates to rise. However, given that property’s yield spread against risk-free rates is still elevated, we think there’s room for a gradual …
