Filtered by Topic: Monetary Policy Use setting Monetary Policy
The Riksbank minutes confirm a readiness to act if conditions deteriorate in the wake of the UK’s Brexit vote. But there are signs of diminishing appetite for further measures from some members. … Riksbank finds positives despite Brexit …
19th July 2016
The Egyptian pound has been held steady since March’s devaluation, but persistent strains in the balance of payments mean that it needs to fall further. Recent shifts towards more orthodox policymaking suggest that this is likely to happen sooner rather …
June’s rise should be the start of an upward trend in inflation in the wake of sterling’s referendum-related slide. But while inflation will probably breach the 2% target in a year’s time, this shouldn’t stop the MPC from loosening policy in August. … …
Today’s announcement by the Reserve Bank of New Zealand that it intends to tighten existing loan-to-value restrictions will not only go some way to addressing the risks to financial stability posed by the booming housing market, but will also allow the …
Despite the sharp rise in Nigerian inflation last month, we think it will still be some time before the headline rate peaks. This will force the central bank to tighten monetary policy even in the face of a very weak economy. … Nigeria: Rise in inflation …
18th July 2016
Low interest rates should continue to support economic growth in Emerging Asia for the rest of the year. Further ahead, however, we expect regional growth to slow. Much of this slowdown will be driven by China, where reduced policy stimulus and excess …
The Monetary Policy Committee’s surprise decision to leave policy on hold at Thursday’s meeting appears primarily to have reflected a desire to combine its remaining policy ammunition into a potentially more powerful package of measures in August. … The …
Speculation that the Bank of Japan has already embarked on “helicopter money” are wide off the mark. While we believe the measure would provide a solution to the country’s debt woes, the helicopter will remain grounded until other options have been …
The weak tone of the CPI inflation data for the second quarter probably means that at Thursday’s unusual inter-meeting economic update the RBNZ will hint that it intends to use tighter lending restrictions to control the housing market and further …
The decline in the unemployment rate to an 11-month low of 6.8% in June, from 7.1% as recently as April, is not as good as it looks. It went down primarily because people gave up looking for work not because they found jobs. As a result, the participation …
15th July 2016
What little data we have had so far suggest that the economy has weakened following the vote to leave the EU. Although this wasn’t enough to persuade the MPC to loosen policy in July, easing is by no means off the table – we will probably only have to …
Loose monetary policy should help to limit downside risks to economic growth over the coming months across most of Emerging Asia, but further ahead we expect regional growth to slow. Much of this slowdown will be driven by China, with growth around the …
The ECB is set to loosen policy in the coming months. But there is a limit to how much more monetary policy alone can do for growth. In the wake of the UK’s Brexit vote, Mario Draghi’s calls for fiscal support are thus set to grow. Unfortunately, …
The UK’s surprise vote to leave the EU sent a shockwave through global markets – but parts of the subsequent post-referendum response have been more muted than previously feared. Clearly, sterling was the biggest casualty, plummeting to its lowest since …
The decisions by the Chilean and Peruvian central banks to leave monetary policy unchanged didn’t come as a surprise as, for now, the inflation picture in both economies is improving. But with inflation unlikely to fall as far as policy makers expect, …
The UK’s vote to leave the EU has weakened the outlook for the European Economy. Admittedly, the financial market reaction has been muted and we think that the UK will ultimately fare well outside the EU. But there will be a near-term hit to UK demand, …
14th July 2016
The European Central Bank (ECB) may refrain from loosening policy this month following the Bank of England’s inaction. But the Brexit vote has increased what were already significant downside risks to the euro-zone economy and the inflation outlook …
The Monetary Policy Committee’s inaction today will probably delay a policy response to the UK’s vote to leave the EU by only three weeks. But with market confidence fragile, it is now vitally important that it meets expectations, and preferably exceeds …
Following its move last month to cut rates in response to rising downside risks to growth, the Bank of Korea (BoK) today left its policy rate unchanged at a record low of 1.25%. We think it will take a severe deterioration in the growth outlook to …
The Bank of Canada shocked no-one with its decision to leave its key policy rate unchanged at 0.50% today, but we still anticipate that it will eventually be forced to cut rates again, probably in the first half of next year, as the lacklustre performance …
13th July 2016
Malaysia's central bank (BNM) today unexpectedly lowered its policy rate by 25bp to 3.0%, adding to the list of Asian central banks that have cut rates this year. But with growth still on track to meet BNM's forecast of 4.0-4.5% in 2016, we doubt this …
Financial markets in the emerging world have sailed through recent headwinds stemming from a continued depreciation of the renminbi and the UK’s vote to leave the European Union. And the rally may not yet be over, given that one consequence of …
12th July 2016
The movements in housebuilder share prices in the past two weeks could be a sign that a slump in house price expectations is about to trigger a fresh house price correction. But if we are right, and the economy avoids a recession and a sharp rise in …
Planned changes by the National Bank of Hungary to its benchmark three-month deposit facility announced this afternoon could act to loosen monetary conditions, although in practice they seem unlikely to have a particularly large impact. … Hungary revamps …
We remain cautiously optimistic about the outlook for Japanese equities. However, this is based on the assumption that ‘conventional’ QE will drag the yen lower again, rather than the financing of additional fiscal stimulus by ‘helicopter money’. … Is …
Indian consumer price inflation held steady in June, but it remains some way above the RBI's target for March 2017. As such, the scope for further monetary loosening still looks very limited. … Consumer Prices (Jun.) & Industrial Production …
We think that Indian consumer price inflation dropped in June, but it is likely to have remained some way above the Reserve Bank’s 5.0% target for March 2017. There is little reason to think that further rate cuts are imminent. … Inflation to slow but …
Swedish inflation hit a four-year high in June, but it is still low. So although domestic price pressures are rising, the Riksbank may still have to take further policy action. … Swedish Consumer Prices …
The Riksbank minutes confirm a readiness to act if conditions deteriorate in the wake of the UK’s Brexit vote. But there are signs of diminishing appetite for further measures from some members. … Swedish Consumer Prices (June …
The Bank of England’s Monetary Policy Committee (MPC) is likely to look through the inflationary consequences of the drop in the pound seen since the Brexit vote and focus instead on cushioning the impact on the economy. … How will policymakers respond to …
11th July 2016
The Russian economy is through the acute phase of its crisis and a recovery should begin over the coming quarters. However, it will be extremely weak. We expect the economy to stagnate over 2016 as a whole and grow by just 1.5% in 2017. Inflation and …
The latest Bank of Canada surveys support our view that falling business investment, particularly in the oil and gas sector, will weigh on the economy in the second half of the year. Making matters worse, non-energy exports have barely risen at all in …
8th July 2016
The latest evidence suggests that GDP growth accelerated to around 3% annualised in the secondquarter. Furthermore, the rebound in both of the June ISM surveys suggests that this strengtheningin activity is set to continue. While we are doubtful that the …
This report is only available as a PDF. Click to download. … Doves rule the roost despite strong US payrolls …
The 700 decline in employment in June was below consensus expectations of a 5,000gain, in part because of a fall back in the number of public administration workers asthe majority of temporary census-related hires in May were no longer working inJune. …
The headlines this week have concentrated on the negative impact that Brexit has had on sterling and confidence, as well as the temporary suspension of trading in a number of commercial property funds. But support for the economy appears to be on its way, …
There is no easy solution to the euro-zone’s banking problems, but the risks of doing nothing are too large for policymakers to simply sit on their hands. We think that policymakers will find a way to support the banks. And the forthcoming ECB stress test …
The drop in Brazil inflation, from 9.3% in May to 8.9% in June, should be followed by further falls over the coming months. That said, our view remains that the central bank will resist lowering interest rates until Q4 of this year. … Brazil & Chile …
Taiwan’s central bank is running out of good options as it looks to boost an economy which has struggled badly over the past year. We see little prospect of a decent recovery in the coming quarters. … What options does Taiwan’s central bank have …
Looser fiscal policy is likely to support an acceleration in economic growth next year but it will fizzle out again in 2018 leaving ample amounts of spare capacity and little in the way of inflationary pressure. By that point though, the Bank of Japan …
The relatively calm market reaction to the EU referendum might suggest that there is no urgency for the Monetary Policy Committee (MPC) to deliver additional policy stimulus at its policy meeting on July 14 th . But we think the Committee will recognise …
7th July 2016
The modest fall in Mexico’s headline inflation rate in June, to 2.5% y/y from 2.6% y/y in May, hides the fact that core inflation pressures are creeping up. Coupled with continued pressure on the peso, this means further interest rate hikes are still …
We expect inflation in Brazil to fall back over the next year but, despite a recent repricing, the centralbank may still not cut interest rates as quickly as the markets expect. … Brazil inflation set to fall but interest rate cuts to be …
The latest data survey data suggest that growth slowed further in the second quarter, ahead of the referendum. Indeed, the Markit/CIPS composite PMI ended June at a level consistent with no quarterly growth in GDP. That being said, the official data have …
The surprise increase in the value of China’s foreign exchange reserves last month could be the result of the People’s Bank marking to market the value of some reserve assets at the end of June, in the midst of the post-Brexit vote financial volatility. …
EM growth is likely to accelerate over the second half of this year, but a downward shift in potential growth means the recovery could hit the buffers in 2017-18. … EM pick-up to prove …
Continued declines in the renminbi against both the dollar and the official trade-weighted basket make a mockery of the PBOC’s suggestion that its policy is to keep the currency’s value stable. Another upsurge of speculative pressure on the currency is …
6th July 2016
Despite an apparent return to below-potential GDP growth and the financial market turmoil triggered by the UK's decision to leave the EU, we expect the Bank of Canada to leave its policy rate unchanged at 0.5% at the upcoming meeting (Wednesday 13 th …
June’s survey data confirmed that GDP growth in Q2 is very unlikely to have matched Q1’s 0.6% quarterly expansion, with both the EC Survey and the PMI appearing consistent with around a 0.3% rise. Industrial production and retail sales data have supported …
