Filtered by Topic: Monetary Policy Use setting Monetary Policy
The Reserve Bank of India (RBI) has started to put to use its new powers to clean up the banking sector. Earlier this month it instructed several commercial banks to begin insolvency proceedings against the biggest corporate defaulters. On some estimates, …
22nd June 2017
The Reserve Bank of New Zealand’s decision to leave interest rates at 1.75% today and repeat its comment that they will stay there for a “considerable period” should prompt the financial markets to further pare back their expectations that rates will rise …
21st June 2017
Even though the US Fed will start to reduce its asset holdings, probably in Q4, global monetary conditions are set to remain accommodative for a while yet. Meanwhile, growth in bank lending in advanced economies should continue to hold up well. … …
The Hungarian MPC’s extremely dovish post-meeting press statement provided further evidence that policymakers are as yet untroubled by growing signs of capacity constraints. Monetary policy is set to remain extremely loose over the rest of this year. But …
20th June 2017
It is often assumed that monetary policy is highly accommodative simply because nominal interest rates are very low. But if the neutral real interest rate has fallen, monetary policy may not be as loose as it appears. This is especially true of economies …
The surprise outcome of the General Election and the MPC’s unexpectedly tight vote on interest rates have triggered only a muted market reaction. Admittedly, trade-weighted sterling fell to its lowest level since March following the election, but that was …
19th June 2017
This week, the Bank of England’s Monetary Policy Committee came close to voting to tighten monetary policy. At the same time, we saw claims that austerity is now over. It is remarkable therefore that markets still think the MPC will leave rates on hold …
16th June 2017
The Bank of Canada mentioned this week that the economy is gathering momentum and indicated that it is considering hiking interest rates soon, prompting financial markets to quickly raise bets on a rate hike later this year. But we aren’t convinced the …
Relatively hawkish comments from the Russian central bank today appear to be aimed at dampening hopes that the pace of monetary easing might be stepped up. But while the policy rate is likely to be cut in small steps, low inflation should allow a lengthy …
The latest economic data from across the emerging world have been mixed but our EM GDP Tracker suggests that growth has levelled off at around 4% y/y. While China’s growth has now passed its peak, other economies are picking up the baton. Brazil and …
Fed officials continue to anticipate one more rate hike in the second half of this year, but markets are not even convinced that the Fed will hike rates again within the next two years. The Fed has brought some of the market scepticism on itself, by …
MSCI will announce on Tuesday whether it will include China’s domestically-listed A-shares in its benchmark indices. It has chosen not to in the past on concerns over market access and official intervention. Another issue is the sheer size of China’s …
The recent acceleration in credit growth in the Philippines is unlikely to lead the central bank (BSP) to hike interest rates at its meeting on Thursday. However, it could prompt the BSP to introduce more measures to clamp down on lending to the property …
Chile’s central bank left its policy interest rate unchanged at 2.50% following its latest MPC meeting, but with inflation set to remain below target and no sign of a turnaround in the economy, we expect rates to fall to 2.00% this year. This is below …
The Bank of Japan today turned more upbeat in its assessment of economic conditions, but Governor Kuroda remained cautious on the prospect of hitting the inflation target. With inflation set to undershoot the Bank’s projections by a wide margin, the …
Although the first-quarter GDP growth figures were notably weaker than the RBNZ had expected, the Bank will almost certainly keep the official cash rate (OCR) on hold at 1.75% at its monetary policy meeting on Thursday 22 nd June. Looking ahead, we expect …
In our baseline scenario, which still includes a fiscal stimulus early next year, we expect GDP growth to accelerate from 2.2% this year to 2.5% in 2018. The downside risks to that scenario have increased, however, in particular the danger of a damaging …
15th June 2017
The Norges Bank is likely to leave interest rates unchanged at its meeting in June, but we think that it will revise its rate forecast down. After all, while economic growth has strengthened since the Bank last produced forecasts, consumer price inflation …
While an interest rate hike in the UK within the next few months still looks unlikely, the hawkish tone of June’s Monetary Policy Committee (MPC) policy decision and minutes supports our view that rates will rise rather sooner than markets expect. … MPC …
The Turkish central bank ended the recent tightening cycle today, but high inflation, strong GDP growth (this year at least), and hawkish comments from the MPC, mean that a shift towards interest rate cuts this year is unlikely. … Turkish MPC ends …
The Fed’s decision to raise interest rates again yesterday does not change the big picture that global monetary policy will remain highly accommodative. We expect policy rates to stay close to zero in the euro-zone and Japan for the next two years, and …
Despite the poor growth outlook, Bank Indonesia left its policy rate on hold today at 4.75%. With inflation set to remain elevated over the coming months, the central bank is likely to be in little hurry to cut interest rates any further. … Inflation and …
Recent comments from the IMF and ratings agencies have put the focus back on the weak balance sheets of the Gulf’s two smallest economies, Bahrain and Oman. We have warned for some time that both countries faced a sizeable adjustment to low oil prices …
The Swiss National Bank’s decision to leave interest rates on hold and pledge continued currency intervention if needed reflected the fact that inflation is still very low. With price pressures likely to remain subdued, we think that the SNB won’t start …
As widely expected, the Fed raised its policy rate target by an additional 25bp today, to between 1.00% and 1.25% and, despite the recent weakness of core inflation, Fed officials still expect to raise that rate once more in the second half of this year. …
14th June 2017
Latin America’s economy finally returned to growth in Q1 and the latest data suggest that the recovery continued in Q2. While domestic political developments are a key downside risk to the outlook, we expect the recovery to strengthen in the coming …
There is little sign that the Central Bank of Iceland (CBI) expects to reduce interest rates further after today’s cut, but we think there is scope for a further appreciation of the króna to weigh on imported goods and services prices. As such, we suspect …
The US Fed looks almost certain to raise interest rates at its meeting later today. For most of Emerging Asia, higher rates in the US do not pose a major threat, even if the US Fed ends up hiking rates more aggressively than is generally expected over the …
Bank profits have continued to shrink as lenders’ net interest margins have declined. However, non-financial firms are benefitting from rock-bottom borrowing costs and corporate bankruptcies remain very low. … Monetary Indicators Monitor …
The drop in headline Indian wholesale price inflation in May will increase the clamour for rate cuts. But stripping out the effect of volatile fuel and food prices, our measure of core WPI inflation actually edged up last month. With reasons to think that …
The US Fed is poised to raise rates on Wednesday. When it last hiked back in March, the People’s Bank quickly followed suit. This time, however, we expect the PBOC to stay on hold and, indeed, to keep rates stable for the next few quarters as China’s …
13th June 2017
The sharp drop in Indian consumer price inflation in May is likely to raise further questions about the RBI’s reluctance to loosen policy. But we think the central bank’s unwillingness to cut rates is justified. Inflation is close to bottoming out, and is …
12th June 2017
The Indian government is treading on dangerous ground with calls for monetary easing and other moves that could put the independence of the Reserve Bank of India (RBI) at risk. A loss of credibility for the central bank could jeopardise its efforts to …
With the General Election resulting in a hung parliament, there is a lot of uncertainty about the outlook for demand, Brexit and policy. As a result, the MPC is even more likely to sit firmly on its hands than before the election at next week’s meeting …
9th June 2017
The Fed is almost certain to raise interest rates at its policy meeting next week, but faces a growing dilemma over its plans for the rest of the year. Core inflation has dropped back recently, while at the same time the unemployment rate has fallen …
The ECB revised its inflation forecast down this week, but we doubt that this has meaningfully changed the outlook for monetary policy. After all, the change was small, and largely reflected tweaks to the assumptions about oil prices and the euro exchange …
Peru’s central bank unexpectedly left its policy interest rate unchanged at 4.00%, but the accompanying statement hinted at further easing and we think additional rate cuts are likely. We expect the policy rate to ultimately fall to 3.50% over the coming …
Norwegian inflation resumed its decline in May, and we think that the fall has further to run. So we still forecast one interest rate cut by the Norges Bank later this year. … Norwegian Consumer Prices …
The Bank of Japan’s JGB purchases of ¥4.3 trillion in May were the lowest since it stepped up purchases in October 2014. If overseas yields rebound in coming months as we expect, we will probably see a couple of months with larger purchases. But the …
The Swiss National Bank will once again stress after its meeting on 15th June that it remains prepared to act to prevent any significant renewed appreciation of the Swiss franc. Granted, the recent depreciation of the currency against the euro, as …
8th June 2017
Ahead of next week’s meeting, today’s soft GDP data are unlikely to concern the Central Bank of Iceland too much. The fact that last month’s interest rate cut has done little to stem the króna’s strength will receive more attention. While we expect …
The ECB removed its reference to possible interest rate cuts today, judging that the threat of deflation has passed. But it is still far from convinced that inflation is on a sustained path towards its target, supporting our view that interest rate hikes …
Consumer price inflation is likely to have eased in May due in large part to another drop in food inflation, and we have nudged down our full-year inflation forecast in response to the weakness in the first few months of 2017. But the more important point …
The Bank of Japan will almost certainly leave policy settings unchanged at the upcoming meeting. And with inflation set to fall short of its forecasts for the current fiscal year, there is little chance of policy tightening anytime soon. … Board will have …
We expect the Fed will press ahead and raise interest rates for the third time in seven months at the FOMC meeting that concludes on 14th June. There is also a good chance that it announces formal plans to phase out the reinvestment of maturing securities …
7th June 2017
The press conference that followed today’s MPC meeting in Poland highlighted that some members of the Council are becoming more hawkish. While this supports our view that the policy interest rate will eventually be hiked by more than most expect over the …
Net trade probably contributed little to euro-zone GDP growth in Q1, but the outlook for exports is encouraging. The monthly goods export and import values data show a decline in the goods trade surplus from €65.3bn in Q4 to €57.3bn in Q1. Admittedly, …
The Reserve Bank of India (RBI) opted to keep policy unchanged today despite the weakness of the latest inflation and GDP data. However, the less hawkish tone of the policy statement suggests that rate hikes may not come onto the agenda until next year. … …
Turkish GDP figures due next week are likely to show that the recovery levelled off in the first quarter at around 3.5% y/y. But there are signs of a healthy rebalancing of the drivers of growth. … Turkey’s economic recovery levelling …
6th June 2017
Even though the economy may have contracted in the first quarter, the Reserve Bank of Australia left interest rates at 1.5% today and retained its optimistic view on the economic outlook. We suspect the RBA would be willing to look through a temporary …
