Filtered by Topic: Monetary Policy Use setting Monetary Policy
GDP growth not quite as rosy as it seemed The acceleration in GDP growth to 2.8% annualised in the second quarter, from 1.4%, was stronger than the consensus estimate of 2.0% but not a big surprise given the Atlanta Fed GDPNow was pointing to a 2.6% gain …
26th July 2024
Venezuela at a turning point? Venezuelans head to the polls on Sunday in what could be a pivotal election – the latest opinion polls put opposition candidate Edmundo González well ahead of incumbent President Nicolás Maduro, meaning there’s the biggest …
Growing drumbeat of support measures Policymakers’ concerns about the near-term outlook have become much more visible over the past couple of weeks. First, they took the unusual step of discussing the current economic situation in the Third Plenum …
AGOA: to extend or to not extend? The importance of the African Growth and Opportunities Act (AGOA) has waned over the past decade, which has focussed attention on efforts to improve it as it comes up for renewal in 2025. Even if it is extended (and …
CBR delivers bumper hike, leaves door open for further tightening Russia’s central bank (CBR) stepped up to the plate with a 200bp hike to its key policy rate today, to 18.00%, in response to the overheating economy and a renewed surge in inflation. While …
Weak Tokyo CPI may prompt BoJ inaction While we expect the Bank of Japan to lift its policy rate to 0.3% at next week’s meeting (see our BoJ Watch ), only one-third of analysts polled by Refinitiv expect a rate hike at that meeting. The financial markets …
Case for RBNZ to ease strengthens According to a new survey released by Retail NZ this week, things are going from bad to worse for the domestic retail industry. Indeed, more than two-thirds of retailers reported that they had failed to meet their sales …
The Monetary Authority of Singapore (MAS) kept policy unchanged today, but we think today’s marginally dovish statement raises the likelihood of monetary easing in October. The MAS conducts monetary policy by targeting the nominal effective exchange rate …
Almost ready to cut But economic resilience and sticky inflation will probably mean MPC waits until September We think rates will be cut to 3.00% next year, below current market pricing of 4.00% While it will be a very close call, the economy’s recent …
25th July 2024
Inflation rises, no more cuts this year The stronger-than-expected rise in Brazil’s headline inflation rate, 4.45% y/y in the first half of July, was mainly driven by a pick-up in underlying core services inflation. This, coming alongside fiscal concerns …
Overview – Inflation still looks set to be in line with central banks’ targets next year (see Chart 1), but upside risks have increased outside the US. With the sharp falls in energy and food inflation behind us, disinflation has slowed amid …
Surprise cut points to mounting policymaker concern The PBOC’s decision to cut the 1-year interest rate on its medium-term lending facility (MLF) earlier today is unusual for two reasons. First, the 20bp reduction is double the size of the PBOC’s usual …
Following a wobbly period around the turn of the year, the economy is on the mend and should gather further momentum as real wage growth turns positive in the second half of the year. With goods inflation still having strong momentum, we now expect the …
Regional growth appears to have slowed in Q2 and we think it will be sluggish in the next few quarters. At a country level, we expect the Andean economies to outperform Brazil and Mexico in the next couple of years. With inflation set to rise further in …
24th July 2024
Alongside its decision to cut interest rates today, the Bank of Canada struck a more dovish tone than in June, supporting our forecast that another cut is coming at the next meeting in September. The Bank’s second 25 bp cut, taking the policy rate to …
The latest flash PMIs suggest that while GDP growth probably slowed in Europe at the start of Q3, it continued to recover in Japan. Although the rise in shipping costs has caused manufacturers’ input prices to rise, central banks may take comfort from the …
Gradual loosening cycle continues and another cut in September looks likely Following its interest rate cut today, the Bank of Canada reiterated that further cuts are likely if inflation continues to ease in line with its expectations. Our forecast for …
Disinflationary trend broadening out Fed officials growing more concerned about labour market downside risks Interest rate cut likely in September With the disinflationary trend broadening out and the unemployment rate rising, recent comments from Fed …
The larger-than-expected rise in Mexican inflation in the first half of July, to 5.6% y/y, was driven entirely by a jump in non-core inflation; core inflation fell. Our base case remains that Banxico will resume its easing cycle next month (as has been …
The economy is primed to grow by 6.5-7% per year between 2024 and 2026, which would put India on course to become the world’s third-largest economy within the next couple of years. Headline CPI inflation will gradually fall over the coming months, …
Inflation edges down providing cover for interest rate cut in September South Africa’s headline inflation rate edged down to 5.1% y/y in June and with core inflation returning to the mid-point of the SARB’s 3-6% target range, we think the SARB will be in …
Bank has pledged that it will keep tightening policy if inflation evolves as expected If anything, weak yen creates upside risks to Board’s inflation forecasts Bank will hike its policy rate by 20bp in both July and October At its upcoming meeting, we …
Cardoso’s 50bp hike likely the last, but cuts a long time off The Central Bank of Nigeria delivered a 50bp hike to its policy rate, to 26.75%, at its meeting today and, while this probably marks the end of the tightening cycle, Governor Cardoso’s …
23rd July 2024
Easing cycle continues The Hungarian central bank (MNB) cut interest rates by 25bp again today, to 6.75%, and the post-meeting press conference suggests that, while there are some MPC members who want to pause the easing cycle, the balance is a bit more …
Rates on hold, cuts still some way off Turkey’s central bank left its key policy rate on hold today, at 50.00%, and the communications accompanying the decision suggest that interest rate cuts are still some way off. While most analysts expect a monetary …
We doubt the independent pay review bodies’ recommendations for the government to give teachers and NHS staff a 5.5% pay rise will prevent wage growth from slowing to 3.0% by the end of next year. But if the government chooses to extend this pay rise to …
The recent set of mild inflation data and growing concerns among Fed officials about downside risks to the labour market reinforce our view that the first interest rate cut will come in September. We forecast that core PCE inflation will return to the 2% …
22nd July 2024
PBOC responds to leadership's call for more easing The PBOC has lowered its short-term policy rate for the first time since last summer, in line with our expectation for a cut this quarter. Its efforts to prevent long-term yields from falling therefore do …
Nigeria: yet more spending…. Nigeria announced this week that it needs to raise its 2024 budget spending again, which will be funded by a windfall tax on banks. But efforts are needed to permanently boost revenues if Nigeria’s public finances aren’t to be …
19th July 2024
Despite some measures of monthly core price growth remaining above the rates consistent with 2% inflation, the June CPI release on the whole supported the case for another interest rate cut from the Bank of Canada next week. Downward trend in inflation …
Shelter disinflation adds to case for September rate cut Fed officials back September rate cut In comments ahead of the pre-July FOMC blackout that begins this weekend, Fed officials appeared open to a September rate cut. On Monday, Chair Jerome Powell …
The detailed breakdown of June inflation data, released this week, confirmed that the headline rate ticked down to 2.5% in June and that services inflation was unchanged at 4.1%. We, and ECB Chief Economist Philip Lane, had thought that services inflation …
Given the UK recently got much closer to the government’s target of building 300,000 homes a year than is acknowledged, you might think that the Planning and Infrastructure Bill announced in the King’s Speech this week would be enough to get new home …
External positions in good health ... Romania aside Balance of payments data released across the region this week showed that current account positions generally deteriorated in May. Poland recorded a monthly deficit of €63m, while Czechia had an external …
Slowdown in growth over the coming quarters The highlight of the coming week is the publication of the first estimate of Korean GDP growth for Q2. Korea’s economy rebounded strongly in the first quarter of the year, with growth hitting 1.3% q/q, which …
Full Budget a key test for new government For India watchers, the Union Budget announcement on Tuesday 23 rd July will be one of the key economic events this year. In election years, the Union Budget takes place later than normal and often contains new …
Mof intervenes again All signs are that Japan’s government sold US dollars to support the yen on Thursday and Friday last week. Bank of Japan data suggest that the intervention was a bit smaller than previous ones, perhaps because the yen was already …
China’s bond market seems to be caught between the country’s slowing economy and the PBOC’s desire to push long-end yields higher. The announcements from the Third Plenum this week probably won’t help the central bank, and we still think yields will fall …
A policy pivot is imminent If the RBNZ had any doubts that it had broken the back of inflation, they will have been quashed by the slew of weaker-than-expected data releases this week. Accordingly, we’re bringing forward our forecast for the Bank’s first …
The South African Reserve Bank’s decision to leave its repo rate unchanged at 8.25% was of little surprise but there was increased optimism on the MPC that inflation is moving towards the 4.5% mid-point of the target and that inflation expectations are …
18th July 2024
Today’s decisions to leave interest rates on hold and give no clear signals about the future path of interest rates were in line with expectations. The overall tone was arguably slightly dovish, making a September cut more likely. But the risks to our …
SARB holds interest rates but cut now likely in September The South African Reserve Bank decision to leave its repo rate unchanged at 8.25% was of little surprise but there was increased optimism that inflation is moving towards the 4.5% mid-point of the …
No cut, no guidance Today’s decisions to leave interest rates on hold and give no clear signals about the future path of interest rates was in line with expectations. A cut in September still seems more likely than not, but it will depend on whether …
EM recoveries have been stronger than expected this year, but growth in aggregate will slow over the coming quarters. Within this there will be regional variation, with Emerging Asia the outperformer and Latin America the laggard. While we still expect …
The latest data out of Emerging Europe suggest that economic growth in Central Europe strengthened further in Q2, while Russia’s economy continued to overheat. In Turkey there are signs that demand may be beginning to moderate in response to policy …
While the global monetary policy loosening cycle is now well underway, there is more nuance than you might assume. Recent data have made us more confident that cuts (or further cuts) are to come in the US and Canada. But in Australia, the UK and large …
DM central banks may not be done raising rates – a too-hot Australian Q2 inflation report on 31 st July could push the RBA to hike at its meeting the following week. Our ANZ and Markets teams still think there’s a case for the Bank to hold, and they …
This page has been updated with additional analysis since first publication. Encouraging, but interest rates may not be cut in August While the easing in wage growth in May was broadly in line with what the consensus and the Bank of England expected, it …
This page has been updated with additional analysis since first publication. A loosening labour market should forestall further rate hikes Although job growth remained healthy last month, it didn’t prevent the unemployment rate from rising anew. And we …
Totality of the data supports another cut Downside risks to activity rising, upside risks to inflation falling Bank to cut interest rates by 25bp at each meeting until 2.50% Despite stronger core price pressures in May and June, the totality of the data …
17th July 2024
