Filtered by Topic: Monetary Policy Use setting Monetary Policy
This week’s data provided more evidence that business investment and the property market will be hit hard by the leave vote. But with signs of resilience in consumer spending, and the Bank of England’s monetary stimulus already having some effect, we …
12th August 2016
Whereas the collapse in Chinese equity prices sent global markets into meltdown last summer, they have begun to drive the outperformance of the MSCI Emerging Markets Index in recent weeks. A shift in expectations for US monetary policy, or renewed fears …
Broad credit is still expanding at a faster pace than during most of the past couple ofyears. But the impact of earlier monetary easing is now waning and after peaking in May, credit growth is starting to cool. … Bank Lending & Broad Credit …
Having left interest rates unchanged last night, the Chilean and Peruvian central banks both removed the reference to a tightening bias in their accompanying statements. However, with inflation likely to remain higher than policymakers expect over the …
Given the current backdrop of weak growth, low inflation and a stable currency, Bank Indonesia is likely to cut its new policy rate, the seven-day reverse repo rate, at its upcoming meeting. But more important for the economy will be what happens to …
Lower interest rates will do little to help frustrated first-time buyers get onto the housing ladder. But they will ensure that the income returns offered by BTL investments continue to be relatively attractive. As a result, we think investor demand for …
We don’t currently believe that the RBA or RBNZ will have to resort to unconventional monetary policy to boost inflation, but one lesson of the past decade is that we should be prepared for the unexpected. In this Economics Weekly we consider what would …
While some of the forces recently putting strong downward pressure on gilt yields may ease a bit in the coming months, the prospect of a further prolonged period of ultra-loose monetary policy suggests that very low yields are here to stay for some time …
11th August 2016
With the economy in good shape and inflation under control, today’s decision by the central bank inthe Philippines (BSP) to keep its main policy rate on hold at 3.0% came as no surprise. Looking ahead, we think the central bank will be in little hurry to …
Swedish inflation unexpectedly reached a fresh four-year high in July. But inflation is still below the Riksbank’s target and it is too soon to rule out further policy action. … Swedish Consumer Prices …
The Bank of Korea (BoK) today left its policy rate unchanged at a record low of 1.25%. With fiscal stimulus in the pipeline, we think it will take another downturn in the growth outlook to convince the BoK to deliver additional rate cuts. … Bank of …
Not only did the Reserve Bank of New Zealand today cut interest rates by 0.25% to a new record low of 2.00%, but it also suggested that rates will soon be cut again to 1.75%. In order to weaken the dollar and boost underlying inflation, we expect the RBNZ …
Swedish inflation unexpectedly reached a fresh four-year high in July. But inflation is still below the Riksbank’s target and it is too soon to rule out further policy action. … Swedish Consumer Prices (Jul. …
The latest JOLT survey suggests that labour market conditions continue to tighten, which should generate an acceleration in wage growth later this year. … JOLT survey points to tightening labour …
10th August 2016
This report is only available as a PDF. Click to download. … Brazil Consumer Prices (Jul.) …
While the uncertainty generated by the EU referendum result clearly means that business investment is likely to fall in the near term, the Bank of England’s corporate bond buying scheme should help to cushion the blow at least a little by lowering firms’ …
July’s high inflation reading in Egypt, of 14.0% y/y (the same as in June) confirmed that March’s devaluation of the pound is continuing to pass through into higher consumer prices. Against this backdrop, we still think it’s likely that the central bank …
Inflation in Norway has been much stronger than the central bank forecast in June, so an interest rate cut in September looks unlikely. But we still expect inflation to fall sharply over the next 12 months. So policy loosening should come back on the …
The increase in Mexican inflation in July, to 2.7% y/y from 2.5% y/y in June, is unlikely to prompt the central bank to raise interest rates again at Thursday’s MPC meeting. But with inflation likely to breach the central bank’s target over the coming …
9th August 2016
The prospect – and subsequent delivery – of monetary policy stimulus from the Bank of England in August has helped UK assets to continue their recovery from the shock of the vote to leave the EU. Admittedly, expectations that interest rates will stay …
The fall in Chilean inflation in July, coming on the back of a recent weakening in the economy, means that interest rate hikes this year are now looking unlikely. … Chile Consumer Prices …
8th August 2016
Fund managers have reported that they are lowering their return targets in response to the lower interest rate environment and increased competition for commercial property assets. This suggests that they will be willing to pay lower yields than would …
Weak survey evidence notwithstanding, the economy likely continued to recover in the second quarter, while the labour market has rarely been tighter. However, wage growth remains anaemic and the past strengthening of the exchange rate will likely dampen …
On Friday, commodity prices dipped in the wake of the second consecutive strong US non-farm payrolls reading, the subsequent appreciation of the dollar and the implication that rate hikes could come sooner rather than later. That said, we think that Fed …
5th August 2016
The first set of post-referendum housing market data is consistent with our expectations of a slump in transactions over the next 6 to 12 months. That said, while the picture painted by the main house indices has been benign, the collapse in house price …
The MPC’s decision to announce a package of stimulus measures yesterday was no doubt influenced by the thoroughly downbeat tone of this week’s survey data. While it’s clear that growth is set to slow, policy stimulus should help the economy do better than …
The Bank of England’s policy action last week added to the pressure on the ECB to do more. At the moment, the ECB’s self-imposed restrictions would prevent a large expansion of its asset purchase programme. But those limitations can be amended, so should …
The Reserve Bank of Australia hasn’t done itself any favours by providing no real hints that interest rates will fall below 1.5%, as the resulting strengthening in the dollar will make it even harder for it to raise inflation back to the 2-3% target. The …
The Reserve Bank of Australia used its new Statement on Monetary Policy to suggest that it hasn’t got much appetite for cutting interest rates below 1.5%, although its own inflation forecasts suggest it might have to. We suspect that the RBA’s hand will …
Further gains in emerging markets (EMs) seem likely as the Fed shies away from hiking rates again and other major central banks loosen monetary policy. But while that may cause some concerns that the rally has gone too far, valuations suggest otherwise. … …
4th August 2016
The initial evidence suggests that the UK’s vote to leave the EU has caused its economy to slow sharply. That has already prompted the Bank of England to ease policy, and we suspect it will cut rates again in the coming months. However, activity …
Today’s measures from the MPC met our expectations. And while mortgage interest rates are now likely to fall a little further, uncertainty amongst buyers means that this is unlikely to give lending volumes and transactions a material boost. … Will the MPC …
The larger-than-expected fall in Russian inflation to 7.2% y/y in July suggests that – barring an upside surprise in this month’s CPI figure – the central bank will resume its easing cycle at the next MPC meeting in mid-September. … Russia CPI …
The Romanian MPC’s press conference was a little more dovish than we had anticipated, but robust domestic demand and rising inflation mean gradual interest rate hikes still seem more likely than not over the next 12 months. Elsewhere, the Czech MPC’s …
The Bank of England’s Monetary Policy Committee (MPC) today made good on its pledge at July’s meeting to implement a package of policy measures to cushion the economy from the adverse effects of the Brexit vote and held the door wide open to further …
Concerns about growing credit risks mean that the People’s Bank has good reason to hold off from another round of broad easing measures until clear signs of a renewed downturn emerge. … PBOC probably won’t cut rates or the RRR anytime …
July’s consumer price inflation data is likely to show that the headline rate edged down but remained some way above the Reserve Bank’s 5.0% target for March 2017. Suggestions from many commentators that a strong monsoon this year would lead to a …
When the Reserve Bank of New Zealand meets on Thursday 11 th August, we expect it to cut interest rates from 2.25% to 2.00% and to confirm that it is willing to reduce rates further. A stubbornly high exchange rate, low inflation expectations and subdued …
The Bank of Thailand’s (BoT) decision to keep its policy rate unchanged at 1.5% today came as no surprise. However, with price pressures benign and growth likely to slow later this year, we think a rate cut is more likely than not in the coming months. …
3rd August 2016
The US stock market shrugged off some renewed appreciation of the dollarafter the UK’s vote for Brexit – indeed, the S&P 500 rose to a record high inJuly. However, we expect further strength in the US currency to take some tollon the index, given the …
2nd August 2016
The package of policy options the MPC will unveil on 4th August could include rate cuts, the purchase of gilts and corporate bonds, an expansion of the Funding for Lending Scheme (FLS), forward guidance and an adjustment to its policy horizon. While we …
The fiscal stimulus package approved by the Cabinet today will boost growth by much less than the headline figure suggests. As such, the Bank of Japan still has more work to do reach its 2% inflation target. … Stimulus package doesn’t let the BoJ off …
If it is going to weaken the Australian dollar to help solve its low inflation problem, the Reserve Bank of Australia may have to follow today’s 0.25% interest rate cut to a new record low of 1.5% with more cuts to 1.0% sometime next year. The dollar may …
Governor Raghuram Rajan has had a penchant for shocking financial markets during his three years at the helm of the Reserve Bank of India (RBI), but we doubt that there are any surprises in store when he delivers his final policy announcement on 9 th …
The rally in emerging market (EM) equities has been given another leg up as it has become less likely that the Fed will hike interest rates any time soon, and China’s economy has shown signs of improvement. While these props may begin to crumble before …
1st August 2016
We believe that a new era of stubbornly low underlying inflation will prompt policymakers to cut interest rates in Australia from 1.75% now to 1.00% next year and to reduce rates in New Zealand from 2.25% to 1.50%. The problem is that hardly any inflation …
We have scaled back our forecasts for rate hikes in the US, but still expect the Fed to raise interest rates further than is priced in by financial markets during the coming two years. At the same time, a lot more central banks are likely to reduce …
29th July 2016
Despite the more hawkish language in last week’s FOMC statement, the GDP data have significantly reduced the chances of a near-term rate hike. The economy has been growing at around 1% annualised for almost a year now and we suspect that Fed officials …
We think new Chancellor Philip Hammond’s fiscal policy “reset” resulting from Brexit will involve some discretionary loosening. This will come on top of automatic stabilisers which will lower receipts growth and increase welfare spending in response to …
Nigeria’s self-proclaimed move to a more “flexible” exchange rate last month was initially a disappointment, with the Central Bank of Nigeria reasserting its grip at N282/US$. Over the last week, however, the bank has belatedly allowed the currency to …
