Filtered by Topic: Monetary Policy Use setting Monetary Policy
Despite the recent spike in inflation, it was no surprise that Malaysia’s central bank (BNM) kept its policy rate unchanged at 3.0% today. Looking ahead, we expect BNM to keep interest rates steady for the rest of 2017. … Interest rates in Malaysia to …
12th May 2017
May’s Bank of England Inflation Report confirmed that the Monetary Policy Committee is in no hurry to raise interest rates. But it also lent some support to our view that it will begin to tighten monetary policy somewhat sooner than markets expect. … UK …
11th May 2017
Today’s decision by the central bank in the Philippines (BSP) to keep its main policy rate on hold at 3.0% had been widely expected. But while the consensus among analysts is that the BSP will hike rates twice this year, we continue to think that rates …
Following the sharp drop in the Icelandic króna after the lifting of capital controls in March, we pushed back our forecast for an Icelandic interest rate cut from May to August. But since the currency has recovered quicker than even we had expected, a …
The sharp divergence in Swiss and Swedish inflation in April supports our views that the Swiss National Bank will need to keep monetary policy loose for a long time to come but that Sweden’s Riksbank will raise rates next year. … Swiss & Swedish Consumer …
Despite the criticisms levelled at them over the past year, central banks are not likely to be stripped of their independence anytime soon, or have their mandates radically changed. Politicians who were most critical in opposition have been quiet on the …
10th May 2017
Today’s Riksbank minutes suggest that the proponents of last month’s shock QE extension are unlikely to change their minds on the direction of monetary policy any time soon. So there is little chance of a material shift in the Riksbank’s policy stance …
The sharp decline in Norwegian CPI-ATE inflation has paused over the past three months, but it should soon resume. We think that it will fall to 1.0% later in the year, and remain well below the Norges Bank’s target in the medium term. … Norwegian & …
The central bank in Sri Lanka (CBSL) today left interest rates on hold, but a combination of rapid credit growth, high inflation and a weak currency suggests further tightening is only a matter of time. … Sri Lanka holds rates, pause unlikely to …
9th May 2017
There is less evidence of spare capacity in Japan’s economy than in the euro-zone which might suggest that the Bank of Japan is likely to hike rates before the ECB. However, the Bank has pledged to let inflation overshoot its 2% target which is unlikely …
8th May 2017
Recent news on the economy might suggest that the effects of the pound’s post-referendum depreciation will be closer to those seen after the pound’s fall in 2008 – which raised inflation and squeezed real incomes – than those seen after its 1992 ERM exit, …
5th May 2017
Even without the US, the Trans-Pacific Partnership (TPP) could still provide a decent boost to the four countries from Emerging Asia included in the deal. The risk is that without the carrot of access to the large US market, countries will row back on …
Weaker economic data and a rise in the pound is likely to silence some of the tentatively hawkish members of the MPC and mean that May’s Inflation Report strikes a relatively dovish tone. Nonetheless, we still think that the first hike in Bank Rate will …
Underlying price pressures in Japan are not quite as weak as the recent negative reading for core inflation might suggest: it was caused by a slump in mobile phone prices that won’t continue. But while we expect a rebound in inflation over coming months, …
We’re not too keen on the plans of the Australian Treasurer to distinguish “good” debt from “bad” debt in the Federal Budget on Tuesday, but we do like the sound of a budget that is expected to allocate more funds to spending on infrastructure. That would …
The upbeat tone of the Statement on Monetary Policy confirms that the Reserve Bank of Australia has become less worried about low inflation and that further interest rates cuts have become much less likely. But the RBA is not expecting inflation to rise …
Survey data suggest that economic momentum among the major euro-zone economies has converged in 2017. Indeed, in April the spread between the Composite PMIs for Germany, France, Italy and Spain was the second lowest on record. Each economy has benefited …
4th May 2017
The Czech MPC’s statement accompanying today’s rate-setting meeting was generally quite dovish, but it does looks like the Council intends to start raising interest rates, albeit very slowly, this year. Accordingly, we are now pencilling in one hike in …
The Norges Bank’s decision to leave interest rates unchanged came as no surprise, but we are among a very small minority of forecasters who think that the Bank will cut rates later in the year. … Norges Bank stands pat, but a rate cut not far …
While the Reserve Bank of New Zealand will almost certainly keep the official cash rate on hold at 1.75% at its policy meeting on Thursday 11 th May, in light of the stronger-than-anticipated first-quarter inflation figures the RBNZ may adjust its OCR …
The Fed left its policy rate unchanged today, but the statement kept the door open to another rate hike at the June FOMC meeting. We still expect another three 25bp hikes from the Fed this year, taking the fed funds target range to between 1.50% and 1.75% …
3rd May 2017
After depreciating against the euro in April, we think that the Swiss franc, Swedish krona and Norwegian krone will rebound, but for different reasons. Political risk could yet re-escalate in Europe and elsewhere, boosting demand for the safe-haven franc. …
There is now broad agreement in financial markets that interest rates in Brazil will fall into single digits this year, but keeping them there will require the “neutral” or “structural” level of interest rates in the economy to fall. This in turn will …
2nd May 2017
The Reserve Bank of Australia left interest rates on hold at 1.5% for the eighth meeting in a row today and we doubt it will be in a position to raise rates until at least 2019. There is still a risk that a further deterioration in the labour market …
The recent rises in underlying inflation suggest that the period of extremely low inflation in both Australia and New Zealand has come to an end. Underlying inflation, which excludes the temporary influence of the most volatile items, rose from 1.5% to …
1st May 2017
This week’s Bank Lending Survey brought more good news for the ECB. Lending conditions have continued to improve, and growth in the demand for credit points to a continued decent recovery in investment. Banks also reported that ECB policies had provided a …
28th April 2017
The Russian central bank’s 50bp interest rate cut to 9.25% today was larger than most (but not us) expected and, taken together with the relatively dovish tone of the statement, supports our view that the policy rate will come down much further than the …
A combination of loose monetary policy and increased infrastructure spending related to the China Pakistan Economic Corridor (CPEC) should push up growth in Pakistan to its fastest pace in over a decade this year. But further ahead, a lack of progress on …
The rise in inflation in Australia in the first quarter was good news as it suggests the period of very low inflation is now over. But it is also bad news as it means prices are now rising faster than wages. And the resulting squeeze on real wages is …
After falling for years, construction growth in China has stabilised since the start of 2016, supported by a rise in home sales. Dire warnings of developers collapsing have not materialised. But it is too early to sound the all-clear. … Construction …
27th April 2017
The Norges Bank is almost certain to leave monetary policy unchanged at its meeting next week. After all, the Bank will not be updating its forecasts, and there has been little to change policymakers’ minds about the economic outlook. So for now at least, …
Despite the pick-up in global growth in the past few months, most of the world’s major central banks are likely to leave policy highly accommodative this year. The ECB may tweak the language in its policy statement in June, but we don’t think it will …
Given the shift in Mr Draghi’s language at today’s press conference, we think that in June the ECB will remove the reference to “lower” interest rates from its forward guidance. While this would end the loosening bias, any policy tightening is still a …
Only the Riksbank Governor’s casting vote secured today’s unexpected QE extension. While we have pushed back our expectation for the first repo rate rise in Sweden, we still think that the Riksbank will have to raise rates sooner and faster than it …
The BoJ upgraded its assessment of the economy at today’s meeting but lowered its inflation forecast for the current fiscal year. We think that the Bank remains too optimistic about inflation and therefore do not share the consensus view that the Bank …
The Reserve Bank of Australia will almost certainly leave interest rates on hold at 1.5% at the meeting on Tuesday 2nd May and, in a change to our central forecast, we now no longer expect it to cut rates further this year. That said, interest rates are …
The Fed is almost certain to leave interest rates unchanged at its policy meeting, which concludes next Wednesday, but the statement should keep open the prospect of a hike in June. Admittedly, the surprise drop in core inflation in March may have …
26th April 2017
The Turkish MPC’s surprise move to tighten monetary policy further today via another hike in the late liquidity rate indicates that policymakers may have a greater resolve to tackle the country’s inflation problem than we (and most others) had …
Analysts are convinced that the renminbi can only go one way – down against the dollar. But a return to appreciation is looking increasingly plausible. … Renminbi may be approaching a turning …
We think that the best days are over for assets in the US, in both absolute and relative terms. For example, we expect bond yields to rise further there than in other developed economies over the next year or so, given the prospects for monetary policy. …
The sharp jump in the Swedish Economic Tendency Indicator is consistent with our view that in tomorrow’s monetary policy announcement the Riksbank will signal an end to its asset purchases programme. And with stronger growth consistent with rising …
Underlying inflation in Australia is by no means strong but, when coupled with the RBA’s financial stability concerns, it doesn’t appear to be weak enough to prompt the RBA to cut interest rates further. We no longer expect interest rates to fall from …
Indian equities have rallied over the past few months, with the benchmark Sensex stock index hitting an all-time high in early April. This reflects in part a broader pick-up across most major EM equity markets, but local factors including the BJP’s recent …
25th April 2017
Prospects appear to have improved for all of the Nordic and Swiss economies, with surveys pointing to annual GDP growth of up to 3% in Switzerland and 5% in Sweden. Inflation has been subdued on the whole, but several factors point to a marked divergence …
21st April 2017
The latest surveys and monthly activity figures suggest that the economies of Central and Eastern Europe (CEE) made a strong start to the year. And Poland appears to have seen one of its fastest growth rates since the global financial crisis. This all …
A sharp fall in the Philippines’ current account surplus is fueling fears that the economy is overheating. We think such fears are overdone. … Philippines – current account deficit no cause for …
The period of ultra-low inflation in New Zealand is well and truly over. While we still believe that the financial markets are too hawkish in expecting the official cash rate to start rising this year, the recent strengthening in underlying price …
The ECB is likely to stick to the script this month, with a weak outlook for underlying inflation justifying its plan to buy assets until at least the end of the year. The Bank will probably drop the possibility of future interest rate cuts from its …
20th April 2017
The escalation of political risks has dominated the headlines in EMs in recent weeks, but the fallout in financial markets has been surprisingly small. Equities in Russia and South Korea initially came under pressure following the increase in tensions in …
Household borrowing has soared over recent months, largely in the form of mortgages. But this boom is probably nearing an end. Restrictions on property purchases have been reintroduced in many cities as economic jitters have faded and concerns about price …
