Filtered by Topic: Monetary Policy Use setting Monetary Policy
The raft of policy reforms announced by the Egyptian authorities yesterday, including a devaluation of the pound and new IMF deal, has put the economy on a path out of its current crisis. There have been false dawns before, but we think that momentum is …
7th March 2024
Lagarde likely to dash remaining hopes of April rate cut The ECB decision to leave rates unchanged and the key messages in the press release were in line with expectations. In the forthcoming press conference we suspect that Christine Lagarde will kill …
Rates on hold throughout 2024 Bank Negara Malaysia (BNM) left its overnight policy rate on hold (at 3.0%) today, and hinted in its statement that it was in little rush to change interest rates any time soon. This supports our view that the policy rate …
The Bank of Canada gave little away about the potential timing of interest rate cuts today, although its communications suggest that it is gaining a bit more confidence that inflation is moving in the right direction. We continue to expect the first rate …
6th March 2024
The announcement of an agreement over a new IMF package for Egypt, coming on the back of the rate hike and devaluation earlier today, represents a shift towards more orthodox policymaking. While it is still early, Egypt now appears to be on the path out …
NBP keeps rates on hold, limited window for rate cuts this year The National Bank of Poland (NBP) left interest rates on hold again today, at 5.75%, and the scope for monetary easing this year looks relatively limited. We still think there is a …
Powell content to wait for more data Fed Chair Jerome Powell looks set to stick to his previous script in his testimony to Congress today and, assuming we are right that the January strength in core inflation will prove to be a blip, his remarks do not …
We hosted a Drop-in following the announcement that can be viewed on demand here . Central Bank of Egypt shifts back towards orthodoxy The announcement minutes ago from the Central Bank of Egypt that it has devalued the pound and hiked interest rates by a …
Overview – The economy isn’t in recession but GDP growth will slow towards trend this year. With a virtuous cycle between wages and prices now in full swing, we expect the Bank of Japan to end negative rates at its April meeting. However, price …
The policy agenda laid out at the National People’s Congress today is a reasonably pro-growth one. The new fiscal plans are supportive, monetary policy continues to have an easing bias, and the Premier reiterated recent welcome messages about …
5th March 2024
Money growth remains weak but is rebounding steadily, with our broader M3 measure recovering to its strongest since mid-2022. But there is no reason to expect this to drive a rebound in inflation. Although M1 continues to decline, the pace of contraction …
4th March 2024
Morocco’s improving balance of payments position and the sharp slowdown in inflation should provide the central bank, Bank Al-Maghrib (BAM), with the confidence to take the next step toward a fully floating dirham. We think the currency will appreciate …
CBN delivers bold hike but inflation risks remain The Nigerian central bank’s 400bp rate hike and its reaffirmation of its inflation fighting credentials should help provide respite to the naira and inflation. But Nigeria will need to shift away from …
1st March 2024
Following the more hawkish speeches from Fed Vice Chair Philip Jefferson and Governor Christopher Waller last week, that tone continued this week – with regional Fed Presidents including New York’s John Williams repeating the suggestion that interest rate …
Reading the NPC tea leaves China’s legislature will kick off its annual gathering on Tuesday. This typically lasts a week or so. But from the perspective of analysts and investors, the key events are on the first day. These include the delivery of the …
ECB will leave its deposit rate at 4.0% again next week. Policymakers will cut growth and headline (but not core) inflation forecasts. We now anticipate 100bp of rate cuts this year starting in June. Next week’s ECB meeting looks set to be a fairly …
Could there be a tax-cutting Budget bombshell? The rumours this week suggest that the Chancellor may have a bit less to play with in the Budget on Wednesday 6 th March than the £15bn we estimated. As a result, he seems to be considering more revenue …
The main data releases in the euro-zone this week will have done little to dispel ECB policymakers’ view that they should wait patiently before making a decision on when to cut interest rates. Economic activity appears to have made a slow start to the …
This page has been updated with additional analysis since first publication. ECB rate cut in April is not going to happen February’s euro-zone inflation data look like the final nail in the coffin for an April interest rate cut . The decline in headline …
Third contraction in GDP now likely We doubt that the slump in industrial output in January will prevent the Bank of Japan from ending negative rates over the coming months, but the recent string of disappointing data reinforces our view that this will …
Canada Chart Pack (Feb. 2024) …
29th February 2024
Aggregate EM growth softened towards the end of last year and we think it will remain weak in 2024. But there will be divergence at the country level with growth slowing in those economies that outperformed in 2023 and growth picking up in last year’s …
Despite renewed inflation concerns pushing interest rate expectations and gilt yields higher, our forecast that CPI inflation will fall below 1.0% later this year makes us think that the markets are wrong to price in interest rates falling from 5.25% now …
China’s economy has regained some strength recently. We expect this to continue over the coming months, on the back of support from fiscal policy and a further pick-up in household spending. But with property construction likely to continue to decline and …
We think the Fed and most other DM central banks will deliver a bit more policy rate cuts this year and next than investors currently anticipate. As a result, we forecast that Treasury yields will end 2024 slightly below their current levels, putting …
28th February 2024
Africa Chart Pack (Feb. 2024) …
The Reserve Bank of New Zealand handed down another hawkish hold at its meeting today. However, with inflation on track to return to its 1-3% target by mid-year, we still expect the Bank to start cutting rates by August. The RBNZ’s decision to leave its …
RBNZ holds rates steady while retaining hawkish bias As had been widely expected, the Reserve Bank of New Zealand left its official cash rate unchanged at 5.50% today. 28 out of 29 analysts polled by Reuters, including ourselves, correctly predicted the …
Inflation will continue to undershoot RBA's expectations The weaker-than-expected inflation print for January all but ensures that the RBA won’t hike rates any further, even if it does retain its hawkish bias at its next meeting in March. And with price …
New MPC delivers large rate hike After a seven-month hiatus, the Central Bank of Nigeria’s (new-look) Monetary Policy Committee stepped up to the plate and hiked interest rates by 400bp, to 22.75%, as it showed greater appetite to tackle the inflation …
27th February 2024
Step up in pace of easing will soon be reversed The decision by the Hungarian central bank (MNB) to step up the pace of its easing cycle today, with a 100bp interest rate cut, will probably be followed by further large interest rate cuts over the next few …
Further signs that underlying inflation isn’t easing The breakdown of Brazil’s February mid-month inflation reading of 4.5% y/y showed that core services inflation remained elevated. And while further 50bp cuts in the Selic rate next month (to 10.75%) and …
Talk of the South African Reserve Bank’s inflation target being lowered has reared its head again. In this Update , we answer five key questions on what this could mean for the economy. In the near term, the adoption of a lower target would prompt us to …
January’s money and credit data are consistent with our view that the improvement in the data towards the end of last year was not the beginning of strong recovery. After falling sharply throughout most of last year, the money and credit data improved a …
This page has been updated with additional analysis since first publication. Inflation will jump above 2% in February Inflation at the national level held up better in January than the Tokyo CPI would have suggested, which brings a March rate hike back …
26th February 2024
BoI stands pat as inflation risks remain strong Israel’s central bank opted to leave interest rates on hold at 4.50% today – in contrast to the consensus view for a cut – and the communications continued to emphasise upside inflation risks. Policymakers …
Economic growth in the Middle East and North Africa will strengthen a little this year but is likely to come in well below consensus expectations. OPEC+’s output cuts should gradually reverse from the end of this quarter but will keep a lid on economic …
Long-term forecasting is perilous ground for economists. Predictions of what will happen in the long run tend to revert to the mean, implying that trend growth returns to an average recorded over the previous several years. It’s another way of saying that …
Key takeaways from South Africa’s Budget South Africa’s finance minister recommitted to fiscal restraint in this week’s Budget, but an inability to resist calls greater spending ahead of and after the election is likely to derail these fiscal ambitions, …
23rd February 2024
The encouraging January CPI data mean that the Bank of Canada’s April policy meeting is back in play for a potential interest rate cut, although it still seems more likely that the Bank will wait until June – unless the economic and labour market data …
Fed to delay first rate cut until June Fed to wait until June Based on comments from Fed officials this week, we now expect the Fed to wait until June to begin cutting interest rates. Moreover, when it does begin to loosen policy, we suspect that the Fed …
Venezuela’s inflation plunge In our last Weekly , we flagged Argentina’s inflation problem and the risk that things could get worse before they get better. Data out this week showed that Venezuela may be coming out at the other end of the tunnel. Headline …
Disappointing economic and fiscal forecasts from the OBR haven’t prevented the Chancellor, Jeremy Hunt, from unveiling a splash at previous fiscal events. This time last year, he was handed £14.5bn of headroom against his fiscal mandate to ensure the …
This week saw a raft of data releases as well as the publication of the ECB accounts . We think that there are three key takeaways . First, the broad trend of economic stagnation and disinflation in the euro-zone is continuing. The Composite PMI edged up …
Trouble in Thailand Figures published earlier this week showed that Thailand’s economy contracted by 0.6% in the final quarter of last year. Thailand has experienced by far the slowest recovery from the pandemic in the region – GDP is now just 0.5% …
Majority of MPC in no rush to pivot The minutes of the Reserve Bank’s February policy meeting released this week show the first signs of dissent as MPC member Jayanth Varma argued that a cut to the repo rate would be prudent to show that the committee is …
RBA won't hike rates again Flash PMI data released yesterday showed that Australia’s composite output index jumped to a 10-month high of 51.8 in February. The index is now consistent with annual real GDP growth of about 2.0% in Q1 (see Chart 1), which …
The latest monthly activity data suggest that Mexico and Brazil ended 2023 on a weak note, a trend we expect to continue this year. But we think the Andean economies are on track to stage a recovery. The big falls in inflation in the region are behind us …
22nd February 2024
India’s economy performed exceptionally well last year and the latest data suggest that it has made a flying start to 2024 too. While inflation eased last month, we think it will be a slow grind back to the 4% midpoint of the RBI’s 2-6% target range. That …
