Filtered by Topic: Monetary Policy Use setting Monetary Policy
Flash manufacturing PMIs for December show continued steady growth in the eurozone and Japan, but they also underline how much the US manufacturing sector is struggling. That said, we doubt that this will prevent the Fed from hiking later today. … Flash …
16th December 2015
The Czech National Bank’s MPC once again struck a dovish note in the post-meeting statement and, although the Council didn’t extend its commitment to the koruna cap beyond next year (as we thought might happen), we still expect monetary conditions to …
There are reasons to think that the advent of tighter monetary policy in the US will not have a materially negative impact on the currency union. But there is no room for euro-zone policymakers to be complacent. … Will the Fed’s lift-off cause a euro-zone …
The Bank of Thailand (BoT) unsurprisingly kept its policy rate on hold at 1.50% today ahead of the upcoming US rate decision and amid signs of a stabilising domestic economy. With price pressures benign and the economic recovery likely to be modest, we …
We have of course addressed the potential impact of higher US interest rates on global commodity markets before. But with the Fed almost certain to hike tomorrow for the first time since 2006, now is an obvious opportunity to revisit the key points. In …
15th December 2015
The accompanying press release to today’s MPC decision in Hungary, at which the deposit rate was left unchanged at 1.35%, was dovish and suggested that unconventional measures to loosen policy will be taken. As a result, although we don’t expect cuts in …
The latest consumer prices figures confirmed that the UK’s brief flirt with deflation came to an end in November. But price pressures look set to remain subdued for a long while yet. Accordingly, the MPC is in no rush to follow the Fed in hiking rates. … …
The ECB’s timidity and strong domestic demand has allowed Sweden’s Riksbank to leave monetary policy unchanged today. But with headline inflation in Sweden still close to zero and policy likely to be loosened further in the euro-zone, the Riksbank will be …
The decision by the Treasurer to use the Mid-Year Economic and Fiscal Outlook (MYEFO) to draw attention to the deterioration in the fiscal position triggered by the weak economic backdrop is one that could come back to haunt him. While it conveniently …
With economic activity recovering and underlying inflation holding up, there is little immediate pressure on the Bank to step up the pace of easing. However, we still believe that price pressures will moderate before long, so the odds are still tilted …
A recent series of unexpected cabinet reshuffles – in which South Africa had three finance ministers in four days – has dented the political and economic credibility of President Jacob Zuma. The rand fell by over 5% when respected finance minister …
14th December 2015
The likelihood that the Fed will begin to raise interest rates this week has sparked fresh concerns about the knock-on impact on emerging markets. However, we think that most EMs are now well placed to withstand Fed tightening. Countries with large …
Wholesale price inflation picked up in November and, looking ahead, we think that it will rise further over the coming months and return to positive territory by Q1 2016. … Wholesale Prices …
At this stage, it is almost universally expected that, after a seven-year period at near-zero, the Fed will raise interest rates this Wednesday. Like everybody else, we anticipate a 25 basis point increase in the target range for the fed funds rate, …
11th December 2015
While we have long argued that the fallout from the oil shock would be disruptive and that hopes for an export revival were misplaced, we doubt that the Bank of Canada will need to resort to negative interest rates or quantitative easing anytime soon. …
The surprise removal of South Africa’s respected finance minister has caused investors to reassess their views of South Africa’s struggling economy. Talk of an emergency rate hike is probably overdone, but it does look like inflation and interest rates …
The unexpected slide in oil prices last week, to a six-year low of about $40pb, has left most forecasters once again pulling down their CPI inflation projections and has led some to speculate that this could delay the first rate hike. The fall in oil …
The accompanying statement to today’s MPC meeting in Russia, at which the repo rate was left unchanged, was decidedly cautious and it’s clear that policymakers are waiting for firmer signs that inflation is easing. CPI figures published over the coming …
For most of Emerging Asia an increase in US interest rates is not a major cause for concern. Only in Malaysia, Hong Kong and Singapore do we think Fed tightening could cause some problems. … No need to panic about Fed …
The Central Reserve Bank of Peru’s decision to follow up September’s surprise interest rate hike with a second 25bp hike, to 3.75%, shows that policymakers are still concerned about the persistence of above-target inflation. We suspect it is just another …
Relative calm in most EM currencies over the past month (the Colombian peso and Russian ruble being the obvious exceptions) supports our view that emerging markets are generally well placed to withstand the onset of Fed tightening. Admittedly, countries …
10th December 2015
The MPC’s decision to leave interest rates on hold again today highlights how the UK is set to tread the middle path between a loosening ECB and a tightening US Fed. A further fall in oil prices and a flattening in wage growth – which should keep …
The surprise removal of Finance Minister Nhlanhla Nene is a very worrying development. Mr. Nene was a rare advocate of fiscal discipline, and his sacking adds to a string of increasingly autocratic decisions by President Jacob Zuma . Further debt …
The sharp pick-up in Turkish GDP growth in Q3, to 5.4% y/y, may help to alleviate some of the political pressure on the central bank to keep policy loose. This reinforces our view that the central bank will raise interest rates at this month’s MPC …
With the ECB’s cautious action last week reducing upward pressure on the franc against the euro, the Swiss National Bank (SNB) was able to leave policy on hold as expected today. But we still think that the ECB will expand its QE programme next year and …
With the domestic economy on the mend, the Bank of Korea (BoK) left its policy rate unchanged at a record low of 1.50% today. We expect the BoK to keep rates at their current lows throughout 2016. … Bank of Korea to keep rates on pause through …
After cutting interest rates today from 2.75% back to the record low of 2.50% seen during the Global Financial Crisis, the Reserve Bank of New Zealand sent a strong signal that it doesn’t think rates need to fall further. We think it will be proved wrong, …
November’s consumer prices data showed a continued divergence between the subdued rates of inflation in Sweden and Denmark and stronger price pressures in Norway, reflecting the recent depreciation of its currency. … Swedish, Danish & Norwegian Consumer …
The EM world looks to have grown by its weakest pace since the global financial crisis in 2015, but things should start to improve next year. In this Focus we outline the ten key issues that we think will shape the outlook for EM investors in 2016. … Ten …
9th December 2015
The recent further fall in oil prices and imminent commencement of monetary tightening in the US are unlikely to compensate for the ECB’s disappointingly timid action at last week’s policy meeting. … Will the Fed & oil prices bail out the …
It now looks odds on that the US Federal Reserve presses ahead and raises interest rates next week, while on the other side of the English Channel, the ECB has already loosened policy further. The UK lies somewhere in between, with the next move in …
At next week’s FOMC meeting, which concludes on 16 th December, the Fed is now almost universally expected to raise the fed funds rate by 25 basis points, to a range of between 0.25% and 0.50%. In the accompanying statement the Fed will stress again that …
Today’s decision by Iceland’s central bank to keep its key interest rates unchanged was merely a reflection of the improvement in the short-term inflation outlook and a tighter policy stance will still be required next year. … Iceland holds rates but more …
One factor that has supported growth in Central and Eastern Europe this year is a rise in EU structural funding, but this looks set to ease in 2016. As we explain in this Watch , while this will reduce one prop to investment, we don’t expect it to …
We do not think that higher US interest rates will derail the global recovery next year. The Fed is only likely to tighten policy if the economy continues to do well. Other major central banks will also be in no hurry to follow, meaning that global …
The euro-zone has proved relatively resilient in the face of global headwinds, but the region still has to contend with significant domestic problems. And with fiscal policy unlikely to provide a big boost to growth, the onus will remain firmly on the ECB …
8th December 2015
Although we expect GDP growth to be a moderate 2.5% next year, the big surprise will be how quickly inflation rebounds. With domestic price pressures mounting and this year’s deflationary shocks from lower commodity prices and the stronger dollar set to …
The solid growth in Iceland’s GDP in Q3 confirmed that the economy is performing strongly and has put the 2008 collapse of the banking sector behind it. With domestic demand very healthy, the central bank is unlikely to be deterred from hiking rates. … …
The further fall in Chilean inflation in November is an encouraging sign that price pressures in the economy are easing. While this reduces the likelihood of the central bank hiking interest rates later this month, inflation will remain high and a gradual …
7th December 2015
Today’s data suggest that capital outflows picked up sharply last month, leading the People’s Bank to resume selling FX in order to prop up the value of the renminbi. … FX reserves …
The RBI is expressing a high degree of faith in the finance ministry’s ability to offset a rising public sector wage bill by boosting tax revenues or trimming other forms of current spending. We fear this faith is misplaced and that public investment will …
Last week Chair Janet Yellen all but confirmed that the Fed will begin to raise interest rates from near-zero at the upcoming FOMC meeting, which ends on 16 th December. Any final doubts should have been erased by the news that employment increased by a …
4th December 2015
There was much talk about the emerging “transatlantic divergence” last week. It now looks odds on that the US Fed will press ahead and raise interest rates later this month. Meanwhile, on the other side of the English Channel, the European Central Bank …
The 211,000 gain in November's non-farm payrolls, along with the 35,000 upward revision to the gains in the preceding two months, would appear to seal an interest rate hike at the Fed's upcoming FOMC meeting, which concludes on the 16 th December. … …
The ECB’s failure to live up to its own hype at December’s Governing Council meeting looks likely to have at least some negative consequences, both on the economic outlook via the market response and on its own ability to influence markets verbally in the …
The UK economy appears to be regaining a little momentum, but the nature of the recovery is looking quite unbalanced. The breakdown of Q3’s 0.5% quarterly rise in real GDP showed solid growth in domestic demand, but a 1.5 percentage point drag from net …
3rd December 2015
And so another year of rock bottom interest rates is set to pass us by. It is getting on for seven years since interest rates reached 0.5% and it is over eight years since we saw an interest rate rise. So will 2016 be the year in which rates finally rise? …
