Filtered by Topic: Monetary Policy Use setting Monetary Policy
Bank Indonesia today left its policy rate unchanged at 6.25%, but the central bank’s dovish commentary supports our view that rates will be cut before the end of the year. Today’s decision was correctly predicted by all 30 analysts polled by Reuters, …
21st August 2024
Thailand’s central bank (BoT) today left interest rates unchanged but if, as we expect, growth slows further and inflation remains very low, we think the central bank will start loosening policy from October. Today’s decision came as little surprise and …
The South African Reserve Bank’s (SARB’s) new “supercore” inflation measure adds yet another piece of evidence that price pressures are being brought under control. We think the SARB should now be confident that it can start its interest rate cutting …
20th August 2024
CBRT staying the course The Turkish central bank (CBRT) left its main policy rate unchanged again today, at 50.00%, and offered little sign that it will soon start an easing cycle. While most other analysts expect monetary loosening to start in Q4, we …
After a summer of extraordinary economic, market and political developments, what can investors expect through the end of 2024? Our senior economists held this special briefing all about the risks we’re watching in the final months of the year. During …
We think the Riksbank will follow today’s 25bp rate cut with a cut at each of the three remaining meetings this year to take the policy rate to 2.75%. But we expect the terminal rate to be 2.5% which will be reached in early 2025. This is higher than the …
Riksbank cut will be followed by one at each remaining meeting this year Alongside the Riksbank’s decision to reduce the policy rate by 25bp today to 3.5%, policymakers also lowered their rate expectation for the end of this year from either 3.25% or 3.0% …
RBA won’t be rushed into rate cuts The minutes of the RBA’s August meeting confirmed what we already knew from Governor Bullock's post-meeting press conference: the Board discussed the case for a 25bp hike before ultimately deciding to leave rates …
The weaker July employment report and another set of mild inflation data mean the Fed remains on track to cut interest rates in September. With the activity data still supportive of our view that the economy is heading for a soft landing, we doubt the Fed …
19th August 2024
The global macroeconomic risks surrounding a possible ceasefire deal between Israel and Hamas are asymmetric. An agreement – while having significant economic consequences for countries in the region – would probably not itself be a game-changer for …
The 0.6% q/q fall in Chilean GDP in Q2 is mainly payback for a strong Q1, and we expect a return to positive growth in Q3. Still, the Q2 figures should the central bank confidence to deliver a couple of more cuts this year. The outturn was in line with …
While we expect inflation to fall below the Bank of Japan’s 2% next year, the Bank’s still very accommodative stance means that this alone won’t trigger interest rate cuts. We think it would require a major downturn in activity that results in a looser …
Thailand’s economy slowed in Q2 and we expect it to decelerate a bit further in the coming quarters as the boost from tourism fades and with uncertainty around fiscal policy now elevated, risks to our already downbeat growth outlook are skewed to the …
As markets have come roaring back from the recent growth scare, Group Chief Economist Neil Shearing talks to Jennifer McKeown, Capital Economics’ Chief Global Economist, about the true state of the global economy and the outlook for policy. Their …
18th August 2024
Winds of change in Venezuela? Hopes for a regime change in Venezuela have risen after leftwing governments in Brazil and Colombia made several suggestions to overcome Venezuela’s impasse, including holding fresh elections or forming a transitional …
16th August 2024
The good news just kept coming this week. The economy grew by an above-trend rate for the second quarter in a row in Q2 (see here ), the unemployment rate fell to 4.2%, well below most estimates of the natural rate of around 4.50%. (See here .) And at …
Corporate borrowing still growing at a decent clip China’s July credit data came in weaker than expected on Wednesday. In particular, despite the PBOC cutting the loan prime rate last month, net new bank loans to the real economy turned negative for the …
Further political uncertainty in Thailand Today’s election by Thailand’s parliament of Paetongtarn Shinawatra as prime minister is unlikely to draw a line under the country’s mounting political instability. Paetongtarn’s father Thaksin and aunt Yingluck …
Real labour incomes rising again The 0.8% q/q rise in Q2 GDP was stronger than most had anticipated though close to our Nowcast estimate. The main driver was a 1% q/q jump in consumption, the first increase following four consecutive quarterly falls. That …
Downside risks abound in New Zealand Our non-consensus call that the RBNZ would start normalising policy this week came to fruition, with the Bank handing down its first rate cut in over four years. But while the Committee reached a full consensus that it …
Strong domestic demand means BanRep likely to maintain the pace of easing The Colombian economy isn’t nearly as weak as the meagre 0.1% q/q rise in headline GDP in Q2 would suggest; there was a large drag from net trade while domestic demand remained very …
15th August 2024
Inflation finally on the way down Nigeria’s headline inflation rate eased to 33.4% in July, the first time it had slowed in 19 months, as the passthrough from previous naira falls has finally started to faded. With inflation having now peaked, we think …
Norges Bank’s decision to leave its policy rate unchanged at today’s meeting, at 4.5%, was never in doubt. However, we still suspect that continued declines in inflation will allow it to start cutting before the end of the year, which would be earlier …
Norges Bank at risk of falling behind the curve Norges Bank’s decision to leave its policy rate unchanged at 4.5% was never in doubt. We still suspect that continued declines in inflation will allow it to start cutting before the end of the year, which …
BSP cuts rates, more easing to come The central bank in the Philippines (BSP) kicked off its easing cycle today with a 25bps cut (to 6.25%), and hinted that further easing was likely over the coming months. With inflation set to drop back further and …
Our Australia & New Zealand Chart Pack has been updated with the latest data and our analysis of recent developments. The Antipodean central banks will tread different paths when it comes to policy setting in the near term. With the New Zealand economy …
Since the Riksbank’s last meeting in June, Swedish inflation and activity data have been weaker than policymakers expected. We think this will encourage them to cut the key policy rate from 3.75% to 3.5% next week and to indicate at least a further 50bp …
14th August 2024
This page has been updated with additional analysis since first publication. Soft surprise opens the door to more interest rate cuts later this year The smaller-than-expected rise in CPI inflation from 2.0% in June to 2.2% in July (consensus forecast …
The RBNZ began its easing cycle with a 25bp rate cut at its meeting today. Although the Bank appeared to strike a cautious tone about further policy easing, we think it will cut rates more aggressively than many are anticipating. We were among the 12 …
RBNZ will loosen policy aggressively The RBNZ began its easing cycle with a 25bp rate cut at its meeting today. Although the Bank seemed to strike a cautious tone about further policy easing, we think it will cut rates more aggressively than many are …
Housing inflation has become an increasingly important driver of core services inflation in Mexico – a key concern of the central bank, Banxico. And we think that robust household income growth and a lack of supply of dwellings will keep housing and, by …
13th August 2024
This page has been updated with additional analysis since first publication. Wage growth will cool in earnest The RBA probably won’t read too much into the fact that annual wage growth stalled last quarter. A gradual loosening of the labour market should …
With the Summary of Deliberations this week confirming that the Bank of Canada is putting more weight on the downside risks, we feel confident that the Bank will continue to cut interest rates at each remaining meeting this year. Still, with wage growth …
9th August 2024
At Banxico’s meeting yesterday, worries over the weakness in the Mexican economy outweighed concerns over the sell-off in the Mexican peso and prompted the central bank to restart its easing cycle. Banxico’s disregard for the peso’s depreciation seems …
Our Asia team will be holding a Drop-In on Wednesday 14th August at 0830 ET/1330 BST to discuss the timing of Asian interest rate cuts and the impact of global markets volatility. Register here for the 20-minute online briefing. Weakening against a weak …
Banxico looks through peso volatility and cuts The Mexican peso was on a rollercoaster ride this week. It was one of the hardest hit EM currencies in the market rout, briefly breaching 20/$ (the weakest level in over a year) in early hour trading on …
Rise in inflation will add to Copom’s hawkishness, but rate hike unlikely The rise in Brazil’s headline inflation rate to 4.5% y/y in July was mainly driven by a pick-up in underlying core services inflation which will do little to quell the hawkishness …
Domestic factors outweigh global turmoil Idiosyncratic factors seemed to play a bigger role than the recent global financial market turmoil in driving African markets this week. But while the fall in oil prices may be overdone, African producers should …
The brief turmoil in global financial markets following the release of weaker-than-expected US payrolls data and a resurgence of concerns about a hard landing there has been the main event of the past week. We think three points are worth making about the …
US recession fears grip global markets ... The turmoil in global financial markets late last week and early this week has been followed by some stabilisation over the past few days, but the situation remains fluid and you can find all our analysis on the …
Inflation in Norway has continued to fall more quickly than policymakers expected. But with the krone coming under renewed pressure recently, we think they will maintain a hawkish tone next week. At the last meeting, in June, Norges Bank left its policy …
Easing cycle continues despite peso weakness Mexico’s central bank opted to reduce its policy rate by 25bp, to 10.75%, at today’s meeting and the statement generally retained the moderately dovish tone from the last one. We think further rate cuts are …
8th August 2024
Recent safe haven flows into the franc may have prompted limited FX interventions by the SNB. But we think that the policy rate will remain its main policy tool, even for dampening the franc’s strength. Indeed, we now expect the SNB to cut its policy rate …
US recession risks yet to derail export outlook The recent batch of weaker-than-expected US data rattled global markets this week. But it hasn’t significantly altered China’s economic outlook. Admittedly, the risk of a US recession, which would hurt …
Even as most EM central banks outside of Asia started lowering interest rates a year ago, those within the region have kept their powder dry. That could be about to change. As growth slows, inflation returns to targets and currencies recover, the …
Rise in inflation leaves Banxico decision on a knife edge The rise in Mexico’s headline inflation rate, to 5.6% y/y in July, alongside the weakness in the peso means that Banxico’s interest rate decision later today will be a very close call between a cut …
No rush to loosen policy Although the Reserve Bank of Australia left rates on hold at its meeting this Tuesday, its messaging was unequivocally hawkish. In her post-meeting press conference Governor Michele Bullock stated that the Board had seriously …
This report has been updated with additional analysis and a chart and table of key figures. Inflation falls despite subsidy cuts Egypt’s headline inflation slowed from 27.5% y/y in June to 25.7% y/y in July, its lowest rate since December 2022. And this …
The recent market turmoil didn’t move the needle for the MPC today: it continued to strike a hawkish tone as the majority of members voted to keep the repo rate unchanged at 6.50%. But with inflation set to fall back towards the RBI’s 4% target over the …
Financial stress should be short-lived The Topix and the yen have reversed some of the large moves seen earlier this week, but BoJ Deputy Governor Uchida still signalled that those developments have reduced the chances of further policy tightening in a …
