Filtered by Topic: Monetary Policy Use setting Monetary Policy
The Nordic and Swiss economies’ reasonable economic performance, low public debt and stable political backdrop should help to maintain their safe haven status. But there will be some marked economic and policy divergences. Slow growth and low inflation in …
17th October 2016
Bank lending picked up in September and a broader measure of private sector credit expanded at the fastest pace since the launch of QQE in Q2. Meanwhile, low returns at home have encouraged Japanese investors to buy record amounts of foreign bonds. … …
Fears that domestic price pressures might prompt the Swiss National Bank to tighten monetary policy proved unfounded today as it left its interest rate target at 0.25%. The Bank’s tone was gloomier than expected and its low inflation forecast supports our …
16th October 2016
The marked slowdown in the rate at which the remaining slack in the labour market is being absorbed poses a big dilemma for the Fed. The standard unemployment rate has now been broadly unchanged at 5.0% for a full 12 months. The Fed needs to know why …
14th October 2016
Recent official activity data for the euro-zone have been fairly encouraging. Coupled with the unofficial survey evidence, they suggest that the region’s GDP growth might have maintained its pace or even picked up slightly in Q3. But it will still have …
The Peruvian central bank’s decision to keep interest rates on hold at 4.25% didn’t come as a surprise, but we expect a pick-up in inflation next year to trigger more rate hikes than the consensus expects. … Peru: Interest rates to rise by more than most …
The Bank of Canada is unlikely to announce any major changes to either its economic projections or policy stance next Wednesday. The apparent rebound in third-quarter GDP and the surge in employment in September will provide some comfort that the economy …
The Malaysian government is likely to prioritise maintaining fiscal discipline over supportingthe weak economy at its upcoming budget. … Malaysia to signal continued commitment to fiscal …
Indian wholesale price inflation edged down in September, but we expect it to resume accelerating over the coming months. The big picture is that there is still little room for further policy loosening. … Wholesale Prices …
The Monetary Authority of Singapore (MAS) today left its monetary policy settings unchanged, having loosened policy at its last meeting in April. With the economy set to exit deflation over the coming months, we expect monetary policy to stay on hold, …
The ECB’s Governing Council is unlikely to unveil any policy changes at its forthcoming meeting on 20th October. But we expect it to prepare the ground for an extension of its Asset Purchase Programme (APP) to be announced at its following meeting in …
13th October 2016
The Bank of Korea (BoK) kept its policy rate unchanged at 1.25% today, and while the consensus expects another rate cut in the coming months, we think rising concerns about Korea’s high household debt are likely to deter the central bank from lowering …
Clinton’s housing proposals will not give homeownership much of a boost. The focus on down payments ignores the fact that it is the need for a high credit score which is preventing many Americans from buying. And even if the proposals do help more people …
12th October 2016
The inflation figures for the third quarter would need to be much weaker than the Reserve Bank of Australia expects in order to prompt a cut in interest rates to 1.25% at November’s policy meeting. While we don’t think inflation was weak enough in the …
11th October 2016
The People’s Bank has taken a major step towards a more orthodox approach to monetary policy by adopting a de facto target for the interbank rate. Although this shift has taken place with little fanfare, it has important implications for how monetary …
10th October 2016
Recent data suggest that the economic recovery may be a touch stronger than we had been expecting. However, there are no signs that the tight labour market is fuelling price pressures. While the Bank of Japan can blame the stronger yen for a sharp fall in …
There is mounting evidence that the Turkish central bank’s pursuit of loose monetary policy has caused inflation expectations to become unanchored, risking an upward wage-price spiral. As we explain in this Focus, higher inflation is likely to be …
5th October 2016
Progress in implementing the Goods and Services Tax (GST) since the bill was passed in parliament in early August has so far been fairly smooth. However, there are still a number of sticking points that need to be addressed before the GST can be rolled …
21st September 2016
The Swiss National Bank’s decision to leave policy on hold came as no surprise as easing Brexit fearsand the ECB’s inaction have led upward pressure on the franc to abate. But the SNB made clear that itwill renew its currency interventions if needed. With …
15th September 2016
The Swiss National Bank’s decision to leave policy on hold came as no surprise as easing Brexit fears and the ECB’s inaction have led upward pressure on the franc to abate. But the SNB made clear that itwill renew its currency interventions if needed. …
It is always possible that the Fed could surprise us with an unexpected rate hike next week, but we very much doubt that will happen, it just doesn’t fit Chair Janet Yellen’s more cautious style. At this stage it would also be a big shock too, with the …
14th September 2016
A renewed pick-up in credit growth last month will add to the growing sense among investors that the near-term outlook for China’s economy is fairly bright. Credit growth is still likely to slow over the coming months as the PBOC refrains from further …
The Bank of Thailand (BoT) left its policy rate unchanged at 1.50% today, but with growth set to slowand inflationary pressures very low, further easing is likely in the coming quarters. … Thailand holds policy rate, but easing can’t be ruled …
Indian wholesale price inflation rose for the seventh consecutive month in August, and is set to accelerate further over the near term. This supports our view that there is little scope for further monetary loosening. … Wholesale Prices …
The Reserve Banks of Australia and New Zealand are likely to ignore suggestions that they should lower their inflation targets since that would drive inflation even lower. Targeting nominal GDP growth instead isn’t much more appealing either, partly as it …
As euro-zone inflation picks up over the coming months, short-term inflation expectations should rise.But long-term expectations are less responsive to movements in current inflation and are likely toremain very low. We think that the ECB will eventually …
13th September 2016
August’s stable CPI inflation rate is a temporary pause in an upward trend that should see it rise above the MPC’s target next year. But prospect of above-target inflation probably won’t stop the Committee from easing monetary policy further. … Consumer …
Despite weaker-than-expected Swedish inflation in August, price pressures are set to increase in the coming months. And as higher inflation feeds through to inflation expectations, the Riksbank will need to start to thinking about tightening policy. … …
We have warned for some time that emerging market (EM) equities will be more volatile as attention turns back to the Fed. Momentum may yet drive stocks lower in the near term, but we continue to expect EM equities to perform reasonably well in the next …
12th September 2016
The sudden sell-off in EMs that started on Friday, triggered by hawkish comments from the head of the Boston Fed Eric Rosengreen, points to a turbulent period ahead for EM financial markets as the next Fed rate hike draws closer. But economic …
Yet another scaling back of investors’ expectations about Fed policy has breathed new life into the rally in emerging market (EM) “junk” bonds. But we suspect that the best days are now behind them, and would not be surprised to see the recent rally go …
9th September 2016
August’s inflation data are not going to provide any reassurance to Brazilian policymakers that now is the time to begin lowering interest rates. The headline inflation rate rose to a three-month high, led by a further increase in food and transport …
The resilience of the recent data has prompted some commentators to question whether the MPC was wrong to cut Bank Rate to 0.25% and announce new gilt purchases of £60bn and corporate bond purchases of £10bn in August. But monetary policy loosening was …
Russia’s Central Bank has put increasing emphasis on the importance of inflation expectations in making monetary policy decisions, but it seems that these tend to be a lagging, rather than a leading indicator of actual inflation. Accordingly, we think …
With the economy showing some signs of improvement, the Bank of Korea (BoK) unsurprisingly kept its policy rate unchanged at 1.25% today. While benign inflation will give the BoK scope to keep rates low, concerns about high household debt are likely to …
President Draghi suggested today that a dramatic increase in ECB policy support is not imminent. But we still expect the Bank to extend its QE programme by six months to next September and it may yet have to increase the pace of its assets purchases next …
8th September 2016
The rebound in some activity data over the past month has led some to question whether the MPC jumped the gun with its bold package of measures in August. However, the loosening was no doubt one of the factors contributing towards the improvement in …
Negative interest rates have succeeded in lowering bond yields and bank lending rates in Japan without undermining lenders’ willingness to provide credit. However, credit growth has nonetheless continued to slow, and the measure has arguably contributed …
With global growth still lacklustre, monetary policy seemingly ineffective and government bond yields unprecedentedly low, the case for fiscal stimulus has become more compelling. Partly as a result, we now expect advanced economies overall to benefit …
7th September 2016
The Bank of Canada issued a relatively dovish statement today, warning that “risks to the profile for inflation have tilted somewhat to the downside since July”. … Bank of Canada opens door to rate …
With the Riksbank on hold, rising inflation means that real interest rates in Sweden are set to dropto a 40-year low. Such an accommodative stance seems unnecessary given the sound economic outlook and we suspect that the Bank will raise interest rates …
Following its move to cut rates in response to rising downside risks to growth at its last meeting in July, Malaysia’s central bank (BNM) today left its policy rate unchanged at 3.0%. With growth still on track to meet BNM’s forecast of 4.0-4.5% in 2016 …
With the Riksbank on hold, rising inflation means that real interest rates in Sweden are set to drop to a 40-year low. Such an accommodative stance seems unnecessary given the sound economic outlook and we suspect that the Bank will raise interest rates …
The unexpected slump in the ISM non-manufacturing index to a six-year low of 51.4 in August, from 55.5, should all but rule out any possibility of a September rate hike, particularly as the manufacturing index fell back below the 50 mark last month. … …
6th September 2016
The latest surveys suggest that the UK economy has slowed but not slumped following the EU referendum, while growth in the world as a whole has remained sluggish. The US economy looks set to pick up a bit after a very weak first half of the year while …
The policy statement released alongside the Reserve Bank of Australia’s decision to leave interest rates at 1.5% today provides no hint that another rate cut is around the corner. If the inflation data for the third quarter are very weak, the RBA’s hand …
Rapid economic growth, surging imports and strong credit growth have fuelled fears that the Philippines is overheating and that the central bank will be soon be forced to hike interest rates to bring the economy under control. We think such fears are …
5th September 2016
The fall in Russian inflation to 6.9% y/y in August, coming alongside last month’s drop in household inflation expectations, reinforces our view that the central bank will resume its easing cycle later this month. We expect the benchmark one-week repo …
CPI inflation data for August are likely to show that the headline rate eased a touch, but remained some way above the Reserve Bank’s 5.0% target for March 2017. With the new governor, Dr Urjit Patel, unlikely to alter this target or the target of 4±2% …
