Filtered by Topic: Monetary Policy Use setting Monetary Policy
Although the Reserve Bank of Australia’s meeting on Tuesday 4th April won’t be very exciting, as the RBA will leave interest rates at 1.5% for the sixth meeting in a row, events over the next month could make May’s meeting much more interesting. By then …
28th March 2017
In light of the Reserve Bank of India (RBI) signalling the end of the loosening cycle in its most recent policy meeting in February, most analysts are now expecting the central bank to keep rates on prolonged hold, including in next week’s announcement. …
The Bank of Ghana’s sharp rate cut suggests that policy loosening will be more aggressive than we’d previously thought. We’ve revised down our end of year rate forecast from 20.00% to 18.00%. The Central Bank of Kenya left rates on hold, but policy will …
27th March 2017
Underlying Swedish inflation is set to pick up further and means that the Riksbank’s ultra-loose policy is no longer justified. Conversely, the outlook for Norwegian inflation calls for an interest rate cut. Economic surveys for the largest two Nordic …
24th March 2017
Having cut the one-week repo rate by 25bp earlier in the day, Russia’s central bank governor, Elvira Nabiullina, used her post-meeting press conference to stress that further monetary easing will be gradual. While this suggests that interest rate cuts are …
Struggles to push through much-needed tax reform in the Philippines are the first sign that President Duterte’s controversial war on drugs and offensive behaviour is undermining the efforts of his administration to reform the economy. … Duterte …
Today’s 25bp rate hike by the Central Bank of Sri Lanka (CBSL) is unlikely to be the last in the current tightening cycle. A combination of rapid credit growth, rising inflation and a weakening currency mean rates are likely to be raised by a further 75bp …
The recent dip in oil prices has raised concerns in some quarters that the Saudi authorities may devalue the riyal, but we find this highly unlikely. Indeed, the probability that the dollar peg will be abandoned is lower now than at any time since fears …
23rd March 2017
Despite higher UK inflation and solid growth, there are good reasons why the MPC will not quickly follow the US Fed in tightening monetary policy. … Why won’t the MPC soon follow the …
The decision by Taiwan’s central bank (CBC) to keep its policy rate on hold today at 1.375% came as no surprise given the recent rebound in the economy. With inflationary pressures still very weak, we expect the central bank will keep rates low for some …
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. Looking ahead, while a growing number of analysts are predicting that the BSP will have to hike rates soon, we continue to …
The jump in inflation across much of Emerging Europe last month has shifted the focus onto policy tightening. But in most cases this has been a one-off rise from higher fuel inflation, and there is little evidence that a policy response is imminent. While …
The latest economic data for India suggest that the most acute impact from the government’s demonetisation measures has now passed. Both the manufacturing and services PMI readings for February came in above 50 for the first time since the demonetisation …
The Reserve Bank of New Zealand used today’s decision to leave interest rates at 1.75% to emphasise once again that rates won’t be raised either this year or next. The financial markets are slowly getting the message, but there is still plenty of scope …
22nd March 2017
Today’s MPC statement suggested that policymakers are – at the very least – considering a shift towards tightening monetary conditions. The communication was, as ever, a bit unclear. We do not expect a meaningful shift in policy anytime soon. … Nigeria: …
21st March 2017
Political campaigning in South Korea ahead of presidential elections due on 9th May is now well underway. Given the extent of public anger against ousted former president Park Geun-hye and her ruling party, the next president is likely to come from one of …
February’s CPI figures have increased the chances of an earlier interest rate hike than markets have been expecting. Meanwhile, the fall in public borrowing was in line with the OBR’s new downwardly-revised forecasts. … Consumer Prices & Public Finances …
The impending exit of two hawks from the Bank of Japan’s Policy Board suggests that calls for the Bank to scale back policy support will diminish. The Bank is likely to reduce the volume of its asset purchases whoever takes their place, but the shift in …
In the week Article 50 received Royal Assent, sterling halted its latest decline despite renewed calls for a second Scottish independence referendum. While the referendum announcement coincided with a change in fortunes for sterling, the far more …
17th March 2017
The Fed’s decision to hike interest rates by 25bp last week may initially seem a little hard to square with the apparent weakening in the economic data since the start of the year, with the Atlanta Fed’s first-quarter GDP tracker having fallen below 1% …
The Fed’s decision to raise interest rates this week has created ripples rather than waves among EM central banks. Policymakers in China and Turkey followed by tightening policy too, but this was as much to tackle domestic problems as it was to address …
While it came as no surprise that the US Federal Reserve pressed ahead and raised interest rates last week, markets were given a jolt by an unexpected split on the UK Monetary Policy Committee, with one member voting for an immediate hike and others …
Ahead of this month’s Fed and MPC interest rate setting meetings, the narrative had been one of markets preparing for a historic divergence in monetary policy between the US and UK. Sterling had been on a renewed leg down against the dollar and US …
According to our latest detailed estimates, China witnessed a net inflow of capital last month for the first time in almost three years. Tighter capital controls and seasonal factors helped drive this reversal. But more important may have been an easing …
Chile’s central bank cut its policy interest rate by 25bp, to 3.00%, and used the accompanying statement to signal that further easing is likely over the coming months. This supports our non-consensus view that the policy rate is set to fall to 2.50% by …
House prices in Australia are rising at their fastest pace since 2010 and the recent surge in auction clearance rates suggests that a further pick-up is on the cards. However, most other leading indicators point to an easing in house price inflation and …
There is an increasingly common view that we are on the cusp of a global policy tightening cycle. However, while we no longer expect many central banks to loosen policy further, we expect interest rates in many advanced economies to remain at rock-bottom …
16th March 2017
People’s Bank Governor Zhou Xiaochuan made clear at the National People’s Congress that the trend would be towards further monetary tightening over coming months. So today’s decision by the PBOC to raise the interest rates it charges on reverse repos was …
After raising rates yesterday, we expect the Fed to continue tightening the screws and hike by more than investors are expecting over the next couple of years. However, we think that few emerging market (EM) central banks will follow suit. If we are …
The decision by the Monetary Policy Committee to leave interest rates on hold and the scale of its asset purchases unchanged, at the same time as the US Fed tightened policy again, highlights the likely divergence in policy rates that is set to occur over …
The Turkish central bank had good domestic reasons to tighten monetary policy today given growing concerns about inflation. But the Fed’s rate hike last night made their job easier by providing some cover from political pressure from the government to …
Bank Indonesia (BI) left interest rates on hold today and struck a cautious tone in its statement which followed the meeting. Looking ahead, we think that worries about inflation and concerns about the currency will prevent the central bank from loosening …
The Norges Bank’s decision to leave interest rates unchanged came despite a deterioration in the outlook for inflation. Policymakers remain concerned about the impact of loose monetary policy on the housing market. But we still think that the Bank will …
The Swiss National Bank’s decision to leave interest rates on hold was as expected given the recent rise in inflation. But with euro-zone political developments likely to put upward pressure on the franc, we think that the SNB will continue to intervene …
The Bank of Japan left policy settings unchanged today as widely anticipated and Governor Kuroda remained cautious about the prospect of hitting the inflation target. While the consensus is increasingly shifting towards policy tightening in coming months, …
The People’s Bank has followed the Fed in raising the interest rate it charges when providing funds in China’s interbank market. But we believe that tighter policy in China continues to be primarily driven by efforts to tackle domestic credit risks, not …
While there is a consensus among economists and financial markets alike that the Reserve Bank of New Zealand will keep rates on hold at 1.75% when it meets next Thursday 23 rd March, we believe that financial markets have gone too far by pricing in the …
For most economies in Emerging Asia it will be local factors, not the actions of the US Federal Reserve, which will determine the next moves by the region’s central banks. … Asia will not follow the Fed’s …
The stronger than expected rise in the unemployment rate and the pick-up in the underutilisation rate, which is a broader measure of spare capacity, suggests that there is still plenty of slack in the labour market. As such, the labour market is unlikely …
While GDP growth in the fourth quarter of last year was weaker than most had expected, this was largely the result of temporary factors and as such we expect growth in New Zealand to bounce back early this year. … New Zealand GDP (Q4 …
15th March 2017
As everyone expected following the recent blitz by officials to prepare the markets, the Fed raised the fed funds target by another 25bp today, to between 0.75% and 1.00%, but officials left their interest rate projections largely unchanged. As a result, …
The Central Bank of Iceland’s decision to keep policy unchanged after the lifting of capital controls was unsurprising. The recent drop in the króna reduces the need for the CBI to cut interest rates soon. But with the króna set to rise again before long, …
After rising to a five-year high in February, Swedish headline inflation is set to ease back in the coming months as energy inflation cools. But with signs that underlying price pressures are rising, we expect the Riksbank to tighten policy this year. … …
14th March 2017
The rise in Indian wholesale price inflation in February to its highest rate in over three years supports our view that the Reserve Bank of India will have to reverse course and begin hiking interest rates much sooner than is generally anticipated. … …
Investors are now united in the belief that the Fed will raise interest rates this week, but we doubt that central banks in the emerging world will necessarily follow suit. Indeed, in several major EMs – notably Brazil and Russia – the bias over the …
13th March 2017
The strong US Employment Report for February has all but sealed the deal for an interest rate rise at this week’s FOMC meeting. Risky asset markets seem relatively unfazed by the prospect, given how they have reacted as the chances of a March hike have …
The Icelandic króna has fallen after the final step in the lifting of capital controls. But with tourism set to grow strongly, we suspect that the króna will rise and put downward pressure on import prices. That will prompt the Central Bank of Iceland to …
The Bank of Japan may upgrade its near-term outlook for inflation at its meeting this week. With inflation picking up again, a rising number of analysts now expect the Bank to tighten policy in coming months. But with inflation expectations still subdued, …
An easing in economic growth in China coupled with the downside risks to Australia posed by the potential policies of President Trump will mean that the Reserve Bank of Australia won’t follow the US Fed by raising interest rates until 2019 at the …
12th March 2017
We think that the Norges Bank will leave monetary policy unchanged at its meeting next week. While inflation has fallen much more quickly than policymakers expected, accelerating house prices are a concern. So for now, we expect the Bank to leave its …
10th March 2017
